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. 34 /X/
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 35 /X /
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(Check appropriate box or boxes.)
AmeriPrime Funds - File Nos. 33-96826 and 811-9096
1793 Kingswood Drive, Suite 200, Southlake, Texas 76092
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code: (817) 431-2197
Kenneth Trumpfheller, 1793 Kingswood Dr., Suite 200, Southlake, TX 76092
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/ / on _________ pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
ARISTON CONVERTIBLE SECURITIES FUND
PROSPECTUS
JANUARY __, 2000
INVESTMENT OBJECTIVE:
Total return
40 Lake Bellevue Drive, Suite 220
Bellevue, Washington 98005
(888)-387-2273
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.
10272
TABLE OF CONTENTS
PAGE
ABOUT THE FUND.................................................................
FEES AND EXPENSES 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 INVESTMENT INFORMATION...................................................
FINANCIAL HIGHLIGHTS...........................................................
FOR MORE INFORMATION.................................................BACK COVER
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVE
The investment objective of the Ariston Convertible Securities Fund is
total return.
PRINCIPAL STRATEGIES
Under normal circumstances, the Fund will invest at least 65% of its
total assets in a diversified portfolio of convertible securities (i.e.,
convertible into shares of common stock). The convertible securities acquired by
the Fund may include high yield securities rated as low as B by Moody's
Investors Service, Inc. ("Moody's") or Standard and Poor's Corporation ("S&P")
or, if unrated, of comparable quality in the opinion of the advisor.
Convertible securities are considered by the advisor to be an
attractive investment vehicle for the Fund because they combine the benefits of
higher and more stable income than the underlying common stock generally
provides, with the potential of profiting from an appreciation in the value of
the underlying security. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they do enable the investor to benefit from the increase in the market
price of the underlying common stock. The Fund's advisor selects convertible
securities based on the investment attractiveness of the underlying common stock
and it's convertible security, the special characteristics unique to convertible
securities and credit worthiness. Common stock received upon conversion or
exchange of such securities will either be sold in an orderly manner or held by
the Fund.
The Fund may sell a security if the Fund's advisor believes that the
investment attractiveness of the underlying common stock and it's convertible
security is deteriorating, the convertible security is called, there are more
attractive alternative issues, general market conditions are adverse, or to
maintain portfolio diversification.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o MANAGEMENT RISK. The advisor's strategy may fail to produce the intended
results.
o COMPANY RISK. When the market price of a common stock underlying a
convertible security decreases in response to the activities and financial
prospects of the company, the value of the convertible security will also
decrease. 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
and could cause the Fund's share price to fall.
o INTEREST RATE RISK. The value of your investment may decrease when interest
rates rise.
o HIGH YIELD RISK. The Fund may be subject to greater levels of interest
rate, credit and liquidity risk than funds that do not invest in such
securities because the Fund invests in high yield securities and unrated
securities of similar credit quality (commonly known as "junk bonds"). High
yield securities are considered predominately speculative with respect to
the issuer's continuing ability to make principal and interest payments. An
economic downturn or period of rising interest rates could adversely affect
the market for high yield securities and reduce a Fund's ability to sell
its high yield securities (liquidity risk). See "High Yield Debt
Securities" on page__ for a more detailed discussion of these lower rated
securities.
o CREDIT RISK. The issuer of the convertible security may not be able to make
interest and principal payments when due. Generally, the lower the credit
rating of a security, the greater the risk that the issuer will default on
its obligation.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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 total return strategy
o Investors who can tolerate the risks associated with high yield debt
securities
HOW THE FUND HAS PERFORMED
On April 30, 1999, the Fund acquired the assets and liabilities of the
Lexington Convertible Securities Fund in a tax-free reorganization. The Fund is
a continuation of the Lexington fund and, therefore, the bar chart shows changes
in the Fund's returns since the inception of the Lexington fund. The table shows
how the Fund's average annual total returns (which include the Lexington fund)
compare over time to those of a broad-based securities market index.
(Total return as of December 31) Insert bar chart with the following data
points:
1990....................(-3.38)%
1991....................(45.05)%
1992....................(12.82)%
1993.....................(6.53)%
1994.....................(1.30)%
1995....................(18.63)%
1996.....................(4.89)%
1997....................(13.16)%
1998.....................(2.09)%
During the period shown, the highest return for a quarter was (__)% (Q_,
199_); and the lowest return was (__)% (Q_, 199_).
AVERAGE ANNUAL TOTAL RETURNS:
One Year Five Year Ten Year
The Fund (___)% (___)% (___)%
____ Index (___)% (___)% (___)%
FEES AND EXPENSES 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..............................................................NONE
Exchange Fee................................................................NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees..........................................................[2.12%]
Distribution (12b-1) Fees1...............................................[0.10%]
Other Expenses ..........................................................[0.03%]
Total Annual Fund Operating Expenses ....................................[2.25%]
112b-1 fees may not exceed 0.25% annually.
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 5 YEARS 10 YEARS
------ -------- ------- --------
HOW TO BUY SHARES
The minimum initial investment in the Fund is $1,000 and minimum
subsequent investments are $50. The Fund may waive these minimums may for
accounts participating in an automatic investment program. 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- To be in proper form, your initial purchase request must
include: o a completed and signed investment application form (which accompanies
this Prospectus); and o a check (subject to the minimum amounts) made payable to
the Fund.
Mail the application and check to:
U.S. Mail: Overnight:
Ariston Convertible Ariston Convertible
Securities Fund Securities 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
888-387-2273 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: Ariston Convertible Securities Fund
Account Name _________________(write in shareholder name)
For the Account # ______________(write in account number)
D.D.A.#821601382
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 Ariston Convertible
Securities Fund
Checks should be sent to the Ariston Convertible Securities Fund at the address
listed above. A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account.
You may change the amount of your monthly purchase at any time.
DISTRIBUTION PLAN
The Fund has adopted a plan under Rule 12b-1 that allows the Fund to
pay distribution fees for the sale and distribution of its shares and allows the
Fund to pay for services provided to shareholders. Shareholders of the Fund pay
annual 12b-1 expenses of up to 0.25%. Because these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges.
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 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:
Ariston Convertible Ariston Convertible
Securities Fund Securities 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
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper form,
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 888-387-2273. 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
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.
ADDITIONAL INFORMATION - If you are not certain of the
requirements for a redemption please call the Fund's transfer agent at
888-387-2273. 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 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
$1,000 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax advisor concerning the tax consequences of involuntary
redemptions. 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 by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
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. 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 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. You may want to avoid making
a substantial investment when a Fund is about to make a capital gains
distribution because you would be responsible for any taxes on the distribution
regardless of how long you have owned your shares.
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
Ariston Capital Management, Corporation, 40 Lake Bellevue Drive, Suite
220, Bellevue, Washington 98005 serves as investment advisor to the Fund. The
advisor was founded in 1977 and provides investment management to client
portfolios that include individuals, corporations, pension and profit sharing
plans and other qualified retirement plan accounts, and as of December 31, 1999
manages over $_____ million in assets.
Richard B. Russell, President and controlling shareholder of the
advisor, has been primarily responsible for the day-to-day management of the
Fund's portfolio since its inception. Mr. Russell is a graduate of the School of
Business at the University of Washington and has completed additional training
at the New York Institute of Finance. He is a recognized authority on portfolio
management, particularly through the use of convertible securities and market
forecasting. He has spent his entire professional career as an independent money
manager, dating from 1972. Before founding Ariston in 1977, he was a full-time
manager of private family assets. Mr. Russell has conducted extensive research
on investment topics.
The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 2.25% of its average daily net assets, less the amount of its
12b-1 expenses and fees and expenses of non-interested person trustees. The
advisor (not the Fund) may pay certain financial institutions (which may include
banks, brokers, securities dealers and other industry professionals) a fee for
providing distribution related services and/or for performing certain
administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
<PAGE>
OTHER INVESTMENT INFORMATION
GENERAL
The investment objective of the Fund may be changed without shareholder
approval.
From time to time, the Fund may take temporary defensive positions which
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, U.S. government 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.
CONVERTIBLE SECURITIES
Convertible securities are securities that may be exchanged or
converted into a predetermined number of the issuer's underlying common shares,
the common shares of another company or that are indexed to an unmanaged market
index at the option of the holder during a specified time period. Convertible
securities may take the form of convertible preferred stock, convertible bonds
or debentures, stock purchase warrants, zero-coupon bonds or liquid-yield option
notes, Eurodollar convertible securities, convertible securities of foreign
issuers, stock index notes, or a combination of the features of these
securities. Prior to conversion, convertible securities have the same general
characteristics as non-convertible debt securities and provide a stable stream
of income with generally higher yields than those of equity securities of the
same or similar issuers. When the market price of a common stock underlying a
convertible security increases, the price of the convertible security
increasingly reflects the value of the underlying common stock and may rise
accordingly. As the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis and thus may
not depreciate to the same extent as the underlying common stock. Convertible
securities are ranked senior to common stock on an issuer's capital structure
and they are consequently of higher quality and entail less risk than the
issuer's common stock, although the extent to which risk is reduced depends in
large measure to the degree to which convertible securities sell above their
value as fixed income securities.
HIGH YIELD DEBT SECURITIES
High yield debt securities in which the Fund may invest (rated Ba or B)
are commonly referred to as "junk bonds." The economy and interest rates affect
high yield securities differently from other securities. The prices of high
yield securities have been found to be more sensitive to interest rate changes
than higher-rated investments, and more sensitive to adverse economic changes or
individual corporate developments. Also, during an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations to meet projected
business goals, and to obtain additional financing. If the issuer of a security
defaulted, the Fund may incur additional expenses to seek recovery. In addition,
periods of economic uncertainty and changes can be expected to result in
increased volatility of market prices of high yield securities and the Fund's
net asset value. To the extent that there is no established retail secondary
market, there may be thin trading of high yield securities, and this may have an
impact on the Advisor's ability to accurately value high yield securities and on
the Fund's ability to dispose of the securities. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high yield securities, especially in a thinly traded
market. There are risks involved in applying credit ratings as a method for
evaluating high yield securities. For example, credit ratings evaluate the
safety of principal and interest payments, not market value of high yield
securities. Also, since credit rating agencies may fail to timely change the
credit ratings to reflect subsequent events, the Advisor will continuously
monitor the issuers of high yield securities in the Fund to determine if the
issuers will have sufficient cash flow and profits to meet required principal
and interest payments, and to assure the securities' liquidity.
<PAGE>
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period ________________________, and for the fiscal year ended December 31, 1999
is derived from the audited financial statements of the Fund. The financial
statements of the Fund have been audited by McCurdy & Associates CPA's, Inc.,
independent public accountants, and are included in the Fund's Annual Report.
The Annual Report contains additional performance information and is available
upon request and without charge.
<PAGE>
FOR MORE INFORMATION
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. Annual
and semi-annual 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 Fund at 888-387-2273 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 review and copy information about the Fund (including the SAI
and other reports) at the Securities and Exchange Commission (SEC) Public
Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours
and operation. You may also obtain reports and other information about the Fund
on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and
copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
AUXIER FOCUS FUND
PROSPECTUS
JANUARY __, 2000
INVESTMENT OBJECTIVE:
Long term capital appreciation
8050 S.W. Warm Springs
Suite 130
Tualatin, OR 97062
877-3-AUXIER (877-328-9437)
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...............................................................1
FEES AND EXPENSES OF INVESTING IN THE FUND...................................3
HOW TO BUY SHARES............................................................3
HOW TO REDEEM SHARES.........................................................5
DETERMINATION OF NET ASSET VALUE.............................................6
DIVIDENDS, DISTRIBUTIONS AND TAXES...........................................6
MANAGEMENT OF THE FUND.......................................................6
FOR MORE INFORMATION................................................BACK COVER
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVE
The investment objective of the Auxier Focus Fund is to provide long term
capital appreciation.
PRINCIPAL STRATEGIES
The Fund invests primarily in a portfolio of common stocks that the
Fund's advisor believes offer growth opportunities at a reasonable price. The
advisor selects stocks on the basis of several criteria, including:
o price-earnings ratio
o rate of earnings growth
o depth of management
o consistency in past operating results
o present and projected industry position
The Fund may invest in foreign equity securities by purchasing American
Depository Receipts ("ADRs"). ADRs are certificates evidencing ownership of
shares of a foreign-based issuer held in trust by a bank or similar financial
institution. They are alternatives to the direct purchase of the underlying
securities in their national markets and currencies. The Fund will not invest
more than 20% of its net assets in ADRs.
Under normal circumstances, the Fund will invest primarily in the
common stock of medium to large U.S. companies (those with market
capitalizations above $1 billion). As the Fund is non-diversified it's portfolio
may at times focus on a limited number of companies that the advisor believes
offer superior prospects for growth.
The Fund may sell a security when the advisor believes that there has
been a deterioration in the company's fundamentals, such as changes in the
company's competitive position or a lack of management focus.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o MANAGEMENT RISK. The advisor's growth-oriented approach may fail to produce
the intended results.
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
and could cause the Fund's share price to fall.
o VOLATILITY RISK Common stocks tend to be more volatile than other
investment choices. The value of an individual company can be more volatile
than the market as a whole. This volatility affects the value of the Fund's
shares.
o FOREIGN RISK. To the extent the Fund invests in ADRs, the Fund could be
subject to greater risks because the Fund's performance may depend on
issues other than the performance of a particular company. Changes in
foreign economies and political climates are more likely to affect the Fund
than a mutual fund that invests exclusively in U.S. companies. The value of
foreign securities is also affected by the value of the local currency
relative to the U.S. dollar. There may also be less government supervision
of foreign markets, resulting in non-uniform accounting practices and less
publicly available information.
o NON-DIVERSIFICATION RISK. As a non-diversified fund, the Fund will be
subject to substantially more investment risk and potential for volatility
than a diversified fund because its portfolio may at times focus on a
limited number of companies.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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 growth investment strategy o
Investors who can tolerate the greater risks associated with common stock
investments o Investors who can tolerate the increased risks and price
fluctuations associated with a non-diversified fund
GENERAL
The investment objective of the Fund may be changed without shareholder
approval.
From time to time, the Fund may take temporary defensive positions which
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.
HOW THE FUND HAS PERFORMED
Although past performance of a fund is no guarantee of how it
will perform in the future, historical performance may give you some indication
of the risk of investing in the fund because it demonstrates how its returns
have varied over time. The Bar Chart and Performance Table that would otherwise
appear in this prospectus have been omitted because the Fund is recently
organized and has a limited performance history.
FEES AND EXPENSES 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..............................................................NONE
Exchange Fee................................................................NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees..........................................................[1.35%]
Distribution (12b-1) Fees...................................................NONE
Other Expenses ............................................................___%
Total Annual Fund Operating Expenses ......................................___%
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 5 YEARS 10 YEARS
------ -------- ------- --------
HOW TO BUY SHARES
The minimum initial investment in the Fund is $2,000 and minimum
subsequent investments are $100. 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- To be in proper form, your initial purchase request must
include: o a completed and signed investment application form (which accompanies
this Prospectus); and o a check (subject to the minimum amounts) made payable to
the Fund.
Mail the application and check to:
U.S. Mail: Overnight:
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
877-3-AUXIER 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: Auxier Focus Fund
Account Name _________________(write in shareholder name) For the
Account # ______________(write in account number) D.D.A.#489022988
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 Auxier Focus Fund
Checks should be sent to the Auxier Focus Fund at the address listed above. A
bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
TAX SHELTERED RETIREMENT PLANS
Since the Fund is oriented to longer-term investments, 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 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:
Auxier Focus Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper form,
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 877-3-AUXIER. 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
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.
ADDITIONAL INFORMATION - If you are not certain of the
requirements for a redemption please call the Fund's transfer agent at
877-3-AUXIER. 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 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 by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
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. 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 [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. You may want to avoid making
a substantial investment when a Fund is about to make a capital gains
distribution because you would be responsible for any taxes on the distribution
regardless of how long you have owned your shares.
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
Auxier Asset Management, LLC, 8050 S. W. Warm Springs, Suite 130,
Tualatin, OR 97062, serves as investment advisor to the Fund. As of January 1,
2000, the advisor manages over $__million in assets.
J. Jeffrey Auxier is President and Chief Investment Officer of the
advisor and is responsible for the day-to-day management of the Fund's
portfolio. He is a graduate of the University of Oregon, and began his
investment career in 1982. Mr. Auxier has extensive money management experience.
As a portfolio manager with Smith Barney, Mr. Auxier managed money for high net
worth clients on a discretionary basis from 1988 until he founded the advisor in
July 1998. In 1993, Mr. Auxier was designated a Smith Barney Senior Portfolio
Management Director, the highest rank in the company's Portfolio Management
Program, and was chosen as the top Portfolio Manager from among 50 Portfolio
Managers in the Smith Barney Consulting Group. In 1997 and 1998, Money Magazine
named him as one of their top ten brokers in the country. Mr. Auxier was a
Senior Vice President with Smith Barney when he left to found the advisor.
The Fund is authorized to pay the advisor a fee equal to an annual
average rate of 1.35% of its average daily net assets. The advisor (not the
Fund) may pay certain financial institutions (which may include banks, brokers,
securities dealers and other industry professionals) a fee for providing
distribution related services and/or for performing certain administrative
servicing functions for Fund shareholders to the extent these institutions are
allowed to do so by applicable statute, rule or regulation.
<PAGE>
FOR MORE INFORMATION
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. Annual
and semi-annual 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 877-3-AUXIER 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 review and copy information about the Fund (including the SAI
and other reports) at the Securities and Exchange Commission (SEC) Public
Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours
and operation. You may also obtain reports and other information about the Fund
on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and
copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
COLUMBIA PARTNERS EQUITY FUND
PROSPECTUS
JANUARY __, 2000
INVESTMENT OBJECTIVE:
Long term capital growth
1775 Pennsylvania Ave, N.W.
Washington, D.C. 20006
(888) 696-2733
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.................................................................
FEES AND EXPENSES 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.........................................................
FOR MORE INFORMATION.................................................BACK COVER
10303
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVE
The investment objective of the Columbia Partners Equity Fund is to
provide long term growth for its shareholders.
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks of small, medium and large
capitalization U.S. companies in varying amounts depending on the comparative
attractiveness of the companies. The advisor selects stocks which it believes
offer strong growth prospects and are reasonably valued. The advisor uses
computer analysis and fundamental research to select stocks that have all or
some of the following characteristics:
o strong earnings growth
o improving analysts' expectations for future earnings growth o reasonable
price/earnings ratios relative to their historic ranges o improving stock price
performance and momentum.
The Fund will invest at least 65% of its net assets in equity
securities.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o MANAGEMENT RISK. The advisor's strategy may fail to produce the intended
results.
o [SMALLER COMPANY RISK. To the extent the Fund invests in smaller
capitalization companies, the Fund will be subject to additional risks.
These 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 experience.]
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
and could cause the Fund's share price to fall.
o SECTOR RISK. If the Fund's portfolio is overweighted in a certain sector,
any negative development affecting that sector will have a greater impact
on the Fund than a fund that is not overweighted in that sector. The Fund
may have a greater concentration in technology companies and weakness in
this sector could result in significant losses to the Fund.
o VOLATILITY RISK. Common stocks tend to be more volatile than other
investment choices. The value of an individual company can be more volatile
than the market as a whole. This volatility affects the value of the Fund's
shares.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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.
<PAGE>
IS THE FUND RIGHT FOR YOU?
The Fund may be suitable for:
o Long-term investors seeking a fund with a growth investment strategy
o Investors who can tolerate the risks associated with common stock
investments, and the greater risks of focusing on certain sectors of the
economy
o Investors willing to accept the greater market price fluctuations of
smaller companies
GENERAL
The investment objective of the Fund may be changed without shareholder
approval.
From time to time, the Fund may take temporary defensive positions which
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.
HOW THE FUND HAS PERFORMED
Although past performance of a fund is no guarantee of how it will
perform in the future, historical performance may give you some indication of
the risk of investing in the fund because it demonstrates how its returns have
varied over time. The Bar Chart and Performance Table that would otherwise
appear in this prospectus have been omitted because the Fund is recently
organized and has a limited performance history.
FEES AND EXPENSES 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..............................................................NONE
Exchange Fee................................................................NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees..........................................................[1.20%]
Distribution (12b-1) Fees...................................................NONE
Other Expenses ..........................................................._.__%
Total Annual Fund Operating Expenses ....................................._.__%
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 5 YEARS 10 YEARS
------ -------- ------- --------
HOW TO BUY SHARES
The minimum initial investment in the Fund is $5,000 ($2,000 for
qualified retirement plans) and minimum subsequent investments are $500. These
minimums may be waived by the advisor for accounts participating in an automatic
investment program. 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- To be in proper form, your initial purchase request must
include: o a completed and signed investment application form (which accompanies
this Prospectus); and o a check (subject to the minimum amounts) made payable to
the Fund.
Mail the application and check to:
U.S. Mail: Overnight:
Columbia Partners Equity Fund Columbia Partners Equity 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 (888)
696-2733 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: Columbia Partners Equity Fund
Account Name _________________(write in shareholder name) For the
Account # ______________(write in account number) D.D.A.#823257860
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 Columbia Partners
Equity Fund
Checks should be sent to the Columbia Partners Equity Fund at the address listed
above. A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
TAX SHELTERED RETIREMENT PLANS
Since the Fund is oriented to longer-term investments, 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 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:
Columbia Partners Equity Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper form,
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 (888) 696-2733. 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
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.
ADDITIONAL INFORMATION - If you are not certain of the
requirements for a redemption please call the Fund's transfer agent at (888)
696-2733. 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 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
$10,000 due to redemption, or such other minimum amount as the Fund may
determine from time to time. An involuntary redemption constitutes a sale. You
should consult your tax advisor concerning the tax consequences of involuntary
redemptions. 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 by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
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. 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 [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. You may want to avoid making
a substantial investment when a Fund is about to make a capital gains
distribution because you would be responsible for any taxes on the distribution
regardless of how long you have owned your shares.
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
Columbia Partners, L.L.C., Investment Management, 1775 Pennsylvania
Ave. N.W., Washington, D.C. 20006 serves as investment advisor to the Fund. As
of December 31, 1999 the advisor manages $_ billion] in assets for pension
funds, endowment funds and individuals in large, medium and small capitalization
equity portfolios and fixed income and balanced portfolios. [The advisor was
organized in 1995 and currently has a staff of 25 with average experience of 17
years among the investment professionals.]
The day-to-day management of the Fund will be directed by a team of
three senior professionals: Robert A. von Pentz, Managing Partner; Gary
Dickinson, CFA, Principal; and Rhys H. Williams, CFA, Principal.
Mr. von Pentz has responsibility for all equity investment activities
at the advisor. Prior to forming the advisor Mr. Von Pentz was chairman of the
board and the chief investment officer at Riggs Investment Management Company
(RIMCO) in Washington. Mr. von Pentz has a BA in economics and an MBA from the
University of New Mexico.
Mr. Dickinson has responsibility for equity research and management and
was a research analyst at RIMCO before joining the Advisor in 1995. He has a BS
in business administration (summa cum laude) from Georgetown University.
Mr. Williams also has responsibility for equity research and management
at the advisor and oversees the firm's hedge fund. From 1990 to 1997, Mr.
Williams was Senior Vice President at Prudential Securities, where, among his
responsibilities, he successfully managed small and medium capitalization
portfolios. He has a BA from Duke University (magna cum laude) and a MA in
international economics from Johns Hopkins University.
The Fund is authorized to pay the advisor a fee equal to 1.20% of its
average daily net assets. The advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a fee for providing distribution related services and/or
for performing certain administrative servicing functions for Fund shareholders
to the extent these institutions are allowed to do so by applicable statute,
rule or regulation.
OTHER INVESTMENT INFORMATION
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ. The
Statement of Additional Information provides more information.
EQUITY SECURITIES. Equity securities consist of common stock,
convertible preferred stock, convertible bonds, rights and warrants. Common
stocks, the most familiar type, represent an equity (ownership) interest in a
corporation. Convertible stocks and bonds are securities that can be converted
into common stock pursuant to their terms. Warrants are options to purchase
equity securities at a specified price for a specific time period. Rights are
similar to warrants, but normally have a short duration and are distributed by
the issuer to its shareholders. Although equity securities have a history of
long term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market and economic conditions. The
Fund may not invest more than 5% of its net assets in either convertible
preferred stocks or convertible bonds. The Advisor will limit the Fund's
investment in convertible securities to investment grade (those rated BBB or
better by Moodys Investors Service, Inc. or Standard & Poor's Rating Group) or,
if unrated, of comparable quality in the opinion of the Advisor.
Equity securities include S&P Depositary Receipts ("SPDRs") and other
similar instruments. SPDRs are shares of a publicly traded unit investment trust
which owns the stock included in the S&P 500 Index, and changes in the price of
the SPDRs track the movement of the Index relatively closely. Similar
instruments may track the movement of other stock indexes.
The Fund may invest up to 20% of its net assets in foreign equity
securities by purchasing American Depositary Receipts (ADRs). ADRs are
certificates evidencing ownership of shares of a foreign-based issuer held in
trust by a bank or similar financial institution. They are alternatives to the
direct purchase of the underlying securities in their national markets and
currencies. To the extent that the Fund does invest in ADRs, such investments
may be subject to special risks. For example, there may be less information
publicly available about a foreign company than about a U.S. company, and
foreign companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of the Fund will fluctuate. Securities in the Fund's portfolio may decrease in
value or not increase as much as the market as a whole. Although profits in some
Fund holdings may be realized quickly, it is not expected that most investments
will appreciate rapidly.
At times, a portion of the Fund may be invested in companies with short
operating histories ("new issuers") and in initial public offerings ("IPOs"),
and such investments could be considered speculative. New issuers are relatively
unseasoned and may lack sufficient resources, may be unable to generate
internally the funds necessary for growth and may find external financing to be
unavailable on favorable terms or even totally unavailable. New issuers will
often be involved in the development or marketing of a new product with no
established market, which could lead to significant losses. To the extent the
Fund invests in smaller capitalization companies, the Fund will also be subject
to the risks associated with such companies. Smaller capitalization companies,
IPOs and new issuers may experience lower trading volumes than larger
capitalization, established companies and may experience higher growth rates and
higher failure rates than larger capitalization companies. Smaller
capitalization companies, IPOs and new issuers also may have limited product
lines, markets or financial resources and may lack management depth.
REAL ESTATE INVESTMENT TRUSTS (REITS). The Fund may invest up to 20% of
its assets in real estate investment trusts ("REITs"). A REIT is a corporation
or business trust that invests substantially all of its assets in interests in
real estate. Equity REITs are those which purchase or lease land and buildings
and generate income primarily from rental income. Equity REITs may also realize
capital gains (or losses) when selling property that has appreciated (or
depreciated) in value. Mortgage REITs are those which invest in real estate
mortgages and generate income primarily from interest payments on mortgage
loans. Hybrid REITs generally invest in both real property and mortgages. In
addition, REITs are generally subject to risks associated with direct ownership
of real estate, such as decreases in real estate values or fluctuations in
rental income caused by a variety of factors, including increases in interest
rates, increases in property taxes and other operating costs, casualty or
condemnation losses, possible environmental liabilities and changes in supply
and demand for properties. Risks associated with REIT investments include the
fact that equity and mortgage REITs are dependent upon specialized management
skills and are not fully diversified. These characteristics subject REITs to the
risks associated with financing a limited number of projects. They are also
subject to heavy cash flow dependency, defaults by borrowers, and
self-liquidation. Additionally, equity REITs may be affected by any changes in
the value of the underlying property owned by the trusts, and mortgage REITs may
be affected by the quality of any credit extended.
FIXED INCOME SECURITIES. Although the Fund intends to invest primarily
in U.S. common stocks, the Advisor reserves the right, during periods of
unusually high interest rates or unusual market conditions, to invest in fixed
income securities for preservation of capital, total return and capital gain
purposes, if the Advisor believes that such a position would best serve the
Fund's investment objective. Fixed income securities include corporate debt
securities, U.S. government securities and participation interests in such
securities. Fixed income securities are generally considered to be interest rate
sensitive, which means that their value will generally decrease when interest
rates rise and increase when interest rates fall. Securities with shorter
maturities, while offering lower yields, generally provide greater price
stability than longer term securities and are less affected by changes in
interest rates.
CORPORATE DEBT SECURITIES - Corporate debt securities are long
and short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Advisor considers
corporate debt securities to be of investment grade quality if they are rated
BBB or higher by Standard & Poor's Corporation, or Baa or higher by Moody's
Investors Services, Inc., 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.
U.S. GOVERNMENT OBLIGATIONS - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the agency that issued them, and not by the U.S. government.
Securities issued by the Federal Farm Credit System, the Federal Land Banks, and
the Federal National Mortgage Association (FNMA) are supported by the agency's
right to borrow money from the U.S. Treasury under certain circumstances, but
are not backed by the full faith and credit of the U.S. government.
OPTIONS ON STOCKS OR BONDS. The Fund may write covered call options,
and purchase put or call options, on stocks or bonds. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security at the exercise price at any time during the option period.
Similarly, a put option gives the purchaser of the option the right to sell, and
obligates the writer to buy the underlying security at the exercise price at any
time during the option period. A covered call option with respect to which the
Fund owns the underlying security sold by the Fund exposes the Fund during the
term of the option to possible loss of opportunity to realize appreciation in
the market price of the underlying security or to possible continued holding of
a security which might otherwise have been sold to protect against depreciation
in the market price of the security.
OPTIONS ON STOCK AND BOND INDICES. The Fund may write covered call
options, and purchase put or call options, on stock or bond indices listed on
domestic and foreign stock exchanges, in lieu of direct investment in the
underlying securities or for hedging purposes. A stock or bond index fluctuates
with changes in the market values of the securities included in the index.
Options on securities indices are generally similar to options on stocks except
that the delivery requirements are different. Instead of giving the right to
take or make delivery of securities at a specified price, an option on a stock
or bond index gives the holders the right to receive a cash "exercise settlement
amount" equal to (a) the amount, if any, by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of the exercise,
multiplied by (b) a fixed "index multiplier." To cover the potential obligations
involved in writing call options, the Fund will either (a) hold a portfolio of
stocks substantially replicating the movement of the index, or (b) the Fund will
segregate with the Custodian high grade liquid debt obligations equal to the
market value of the stock index option, marked to market daily. Successful use
by the Fund of options on security indices will be subject to the Advisor's
ability to predict correctly movement in the direction of the security market
generally or of a particular industry. This requires different skills and
techniques than predicting changes in the price of individual securities.
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements
fully collateralized by obligations of the U.S. Government and its agencies. A
repurchase agreement is a short-term investment in which the purchaser (i.e.,
the Fund) acquires ownership of a U.S. Government or agency obligation (which
may be of any maturity) and the seller agrees to repurchase the obligation at a
future time at a set price, thereby determining the yield during the purchaser's
holding period (usually not more than seven days from the date of purchase). Any
repurchase transaction in which the Fund engages will require full
collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with Firstar Bank, N.A. (the Fund's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Advisor (subject to review by the Board of Trustees) to be creditworthy. The
Advisor monitors the creditworthiness of the banks and securities dealers with
which the Fund engages in repurchase transactions.
<PAGE>
FOR MORE INFORMATION
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. Annual
and semi-annual 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 888-696-2733 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 review and copy information about the Fund (including the SAI
and other reports) at the Securities and Exchange Commission (SEC) Public
Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours
and operation. You may also obtain reports and other information about the Fund
on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and
copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
GLOBALT GROWTH FUND
PROSPECTUS
JANUARY ___, 1999
INVESTMENT OBJECTIVE:
Provide long-term growth of capital
3060 Peachtree Road, N.W.
One Buckhead Plaza, Suite 225
Atlanta, Georgia 30305
http://www.globalt.com
877-Buy-GROWX (877-289-4769)
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.
10061
<PAGE>
TABLE OF CONTENTS
PAGE
ABOUT THE FUND
FEES AND EXPENSES 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
FINANCIAL HIGHLIGHTS
FOR MORE INFORMATION
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVE
The investment objective of the GLOBALT Growth Fund is to provide long
term growth of capital.
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks of larger capitalization
U.S. companies (those with market capitalizations of $3 billion or more). The
Fund's investment adviser, GLOBALT, Inc., selects investments which it believes
offer superior growth potential, based on certain fundamental and technical
standards of selection. These standards of selection may include o positive
trends in stock analyst's estimates, o positive quarterly earnings surprises o
low price-to-value ratios, and o superior long term growth rate potential The
Adviser seeks to limit investment risk by diversifying the Fund's investments
across a broad range of economic sectors, industries and companies.
As the adviser believes exposure to rapidly growing foreign markets
enhances growth potential, stocks in the Fund's portfolio will be of companies
which compete in both U.S. and foreign economies and thus, in the adviser's
opinion, are globally positioned for success. It is anticipated that, in the
aggregate, the stocks in the Fund's portfolio will derive a substantial portion
of their future business outside of the U.S. and as a result will provide higher
relative growth than the typical company in the S&P 500 Index.
After screening for securities with greater exposure to foreign
markets, the adviser uses a disciplined stock selection process to assemble the
portfolio. As the Fund will primarily invest in growth-oriented stocks, it is
expected that the Fund will generate a total return that is predominantly
derived from long term capital appreciation, although current income is also
expected.
The Fund may sell a security when the adviser believes that a company's
fundamental position is deteriorating or when quantitative or technical factors
worsen.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o MANAGEMENT RISK. The strategy used by the Fund's adviser may fail to
produce the intended results.
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
and could cause the Fund's share price to fall. Because the companies in
which the Fund invests depend heavily on foreign sales, any serious foreign
economic or political problems could have a significant negative impact on
the Fund.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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 growth investment strategy o
Investors willing to accept price fluctuations in their investment o Investors
who can tolerate the greater risks associated with common stock investments
GENERAL
The investment objective of the Fund may be changed without shareholder
approval.
From time to time, the Fund may take temporary defensive positions which
are inconsistent with the Fund's principal investment strategies, in an attempt
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.
HOW THE FUND HAS PERFORMED
The bar chart shows changes in the Fund's returns since the Fund's
inception. The table shows how the Fund's average annual total returns compare
over time to those of a broad-based securities market index.
(Total return as of [October 31, 1999]) [Insert bar chart with the following
data points*:
1999...............(__)%
1998...............(__)%
1997...............(__)%
1996...............(__)%
During the period shown, the highest return for a quarter was (__)% (Q_,
1999); and the lowest return was (__)% (Q_, 1999).
AVERAGE ANNUAL TOTAL RETURNS:
One Year Since Inception
The Fund (___)% (___)%
S&P 500 Index (___)% (___)%
FEES AND EXPENSES 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.............................................................NONE
Exchange Fee...............................................................NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees...........................................................1.17%
Distribution (12b-1) Fees.................................................NONE
Other Expenses............................................................____%
Total Annual Fund Operating Expenses1.....................................____%
<PAGE>
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 5 YEARS 10 YEARS
------ -------- ------- --------
HOW TO BUY SHARES
The minimum initial investment in the Fund is $25,000 and minimum
subsequent investments are $5,000. If your investment is aggregated into an
omnibus account established by an investment adviser, broker or other
intermediary, the account minimums may apply to the omnibus account, not to your
individual investment. [If you choose to purchase or redeem shares directly from
the Fund, you will not incur charges on purchases and redemptions. However], 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:
GLOBALT Growth Fund GLOBALT Growth 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 (877)
289-4769 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: GLOBALT Growth Fund
Account Name _________________(write in shareholder name) For the
Account # ______________(write in account number) D.D.A.# 483889739
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.
<PAGE>
ADDITIONAL INVESTMENTS
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain:
-your name -the name of your account(s)
-your account number(s) -a check made payable to GLOBALT Growth Fund
Checks should be sent to the GLOBALT Growth 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 adviser 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 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:
GLOBALT Growth Fund GLOBALT Growth 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
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 (877) 289-4769. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the transfer agent and the custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The 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.
ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the Fund's transfer agent at (877) 289-4769.
Redemptions specifying a certain date or share price cannot be accepted and will
be returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing, or under any emergency circumstances (as
determined by the Securities and Exchange Commission) the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund 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
$25,000 due to redemption, or such other minimum amount as the Fund may
determine from time to time. An involuntary redemption constitutes a sale. You
should consult your tax adviser concerning the tax consequences of involuntary
redemptions. 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. Requests to purchase and sell shares are processed at the NAV next
calculated after we receive your order in proper form.
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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. The Fund typically distributes
substantially all of its net investment income in the form of dividends to its
shareholders. 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
[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. You may want to avoid making
a substantial investment when a Fund is about to make a capital gains
distribution because you would be responsible for any taxes on the distribution
regardless of how long you have owned your shares.
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 adviser about your
investment.
MANAGEMENT OF THE FUND
GLOBALT, Inc., 3060 Peachtree Road, N.W., One Buckhead Plaza, Suite
225, Atlanta, Georgia 30305, serves as investment adviser to the Fund. The
adviser manages large capitalization equity, medium capitalization equity,
balanced and fixed income portfolios for a variety of tax-exempt and taxable
clients. During the fiscal year ended October 31, 1999, the Fund paid the
advisor a fee equal to [1.17]% of its average daily net assets.
The investment decisions for the Fund are made by a committee of the
Adviser, which is primarily responsible for the day-to-day management of the
Fund's portfolio.
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period December 1, 1995 (commencement of operations) to October 31, 1996, and
for the fiscal years ended October 31, 1997, 1998 and 1999 is derived from the
audited financial statements of the Fund. The financial statements of the Fund
have been audited by McCurdy & Associates CPA's, Inc., independent public
accountants, and are included in the Fund's Annual Report. The Annual Report
contains additional performance information and is available upon request and
without charge.
[HIGHLIGHTS TO BE SUPPLIED]
<PAGE>
FOR MORE INFORMATION
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 Fund at 877-289-4769 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 review and copy information about the Fund (including the SAI
and other reports) at the Securities and Exchange Commission Public Reference
Room in Washington, D.C. Call the SEC at 800-SEC-0330 for room hours and
operation. You may also obtain reports and other information about the Fund on
the SEC's Internet site at http.//www.sec.gov, and copies of this information
may be obtained 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
LEADER CONVERTED MUTUAL BANK FUND
PROSPECTUS
JANUARY __, 2000
INVESTMENT OBJECTIVE:
Long term capital appreciation
121 S.W. Morrison Street, Suite 425
Portland, Oregon 97204
(800) 788-9454
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.................................................................1
FEES AND EXPENSES OF INVESTING IN THE FUND.....................................3
HOW TO BUY SHARES..............................................................3
HOW TO REDEEM SHARES...........................................................5
DETERMINATION OF NET ASSET VALUE...............................................6
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................................6
MANAGEMENT OF THE FUND.........................................................6
FOR MORE INFORMATION..................................................BACK COVER
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVE
The investment objective of the Leader Converted Mutual Bank Fund is to
provide long term capital appreciation.
PRINCIPAL STRATEGIES
The Fund invests primarily in mutual banks that have converted to
public stock ownership (converted mutual banks). A non-public mutual bank is a
type of thrift institution that is owned by its depositors and does not issue
stock. Many thrifts were originally organized as non-public mutual banks and in
recent years converted to public stock ownership. Under normal circumstances, at
least 65% of the Fund's portfolio will be invested in common stock of converted
mutual banks, and the holding and parent companies of converted mutual banks,
with assets of $600 million or more. The Fund may also invest in savings
accounts of non-public mutual banks, which may entitle the Fund to participate
in the thrift institutions' initial public offerings upon conversion.
While the Fund's advisor intends the Fund to be fully invested in
converted mutual banks and savings accounts of non-public mutual banks, the Fund
may also invest in the common stock of other thrift institutions (thrifts).
Thrifts include savings and loan associations, savings banks, building and loan
associations, cooperative banks, homestead associations, and similar
institutions. The principal business of thrifts has traditionally consisted of
originating or purchasing mortgage loans secured by liens on residential real
estate and attracting deposits from the general public. Thrifts now also
participate in other areas, including consumer and commercial loans, and
construction loans on both residential and commercial real estate developments.
The Fund may also invest up to 35% of its portfolio in publicly traded community
banks and publicly traded "demutualized" insurance companies.
Community banks are similar in many ways to converted mutual banks
except community banks were not mutually held by the depositors prior to their
public offering. Community banks principally engage in the same business as
converted mutual banks including originating mortgage, consumer, small business,
commercial and agricultural loans, and attracting deposits from the general
public.
"Demutualized" insurance companies are mutual insurance companies that
have converted to a stock form of ownership. Mutual insurance companies are
owned by the policyholders, who either receive stock, increased policy benefits
or cash for their membership interests. The principal business of "demutualized"
insurance companies is life and disability insurance, investment products and
other insurance products.
The Fund's advisor selects thrifts that the advisor believes are able
to produce predictable earnings. The advisor evaluates thrifts based on several
factors that may affect the value of thrift stocks, and seeks to select thrifts
that exhibit some or all of the following characteristics: o Location in a
regional economy experiencing economic growth o Experienced and pro-active
management team o Strong franchise and deposit base, making the thrift an
attractive acquisition target for other financial
institutions
o Acting as acquirer, selecting acquisition targets that strategically expand
its banking market and that should increase earnings in a reasonable amount
of time
o Using technology effectively to expand services, attain efficiencies,
increase productivity and improve profitability
o Developing new sources of revenue through fee-based business and other
services.
o Managing assets effectively to avoid volatility in interest rates
o Adapting effectively to regulatory changes
o Capturing new markets and competing effectively as thrift bank regulations
change
o Attracting savings of an aging population
The Fund is a non-diversified fund, which means that the Fund may take
larger positions in a small number of companies than a diversified fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o MANAGEMENT RISK. The advisor's investment strategy may fail to produce the
intended results.
o THRIFT BANKING SECTOR RISK. THE CONCENTRATION OF THE FUND'S INVESTMENTS IN
THE THRIFT BANKING SECTOR WILL SUBJECT THE FUND TO RISKS IN ADDITION TO
THOSE THAT APPLY TO THE GENERAL EQUITY MARKET. Investors in the Fund should
consider the following risk factors:
o The Fund may invest in thrifts in regions of the United States that may
suffer from adverse economic conditions. o Thrifts are subject to extensive
governmental regulations. Changes or proposed changes in these regulations
may adversely impact the industry. For example, regulatory changes may make
the industry more competitive and some thrift banks may be negatively
affected.
o Thrifts may be adversely affected if other financial institutions that
compete with thrifts are able to use technology to their competitive
advantage.
o Thrifts may be adversely affected by changes in the value of real estate,
which is the primary collateral of thrift loan portfolios.
o A thrift's profitability is largely dependent on interest rates. Thrifts
must obtain funds at a lower rate than they lend out to customers. Changes
in the interest rate environment may have a negative effect on thrifts.
o CONCENTRATION RISK. The thrifts in which the Fund invests may share common
characteristics and are likely to react similarly to market, regulatory or
economic developments. A negative development that affects the value of one
stock in the Fund's portfolio could affect the value of all of the stocks
in the Fund's portfolio. Because of this concentration, an investment in
the Fund's shares cannot be considered a complete investing program.
o SMALLER COMPANY RISK. Thrifts are primarily small and sub-small
capitalization companies, which will not be as liquid as other types of
securities. To the extent the Fund invests in smaller companies, the Fund
will be subject to the risks associated with such companies.
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 Companies in which the Fund is likely to invest may have limited markets,
product lines or financial resources and may lack management depth.
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 MARKET RISK. Overall stock market risks may also affect the value of a
Fund. Factors such as domestic economic growth and market conditions,
interest rate levels, and political events affect the securities markets
and could cause a Fund's share price to fall. Additionally, an investment
strategy focused on a single, albeit large, economy may be subject to
greater risk. For example, changes in the Austin economy may have a
disproportionate effect on the Austin Opportunity Fund and changes in the
Texas economy may have a disproportionate effect on the Texas Opportunity
Fund.
o COMPANY RISK. The value of an individual company can be more volatile than
the market as a whole. The value of the Fund may decrease in response to
the activities and financial prospects of an individual company in the
Fund's portfolio.
o NON-DIVERSIFICATION RISK. As a non-diversified fund, the Fund will be
subject to substantially more investment risk and potential for volatility
than a diversified fund because the Fund's portfolio may at times focus on
a limited number of companies.
o AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF ANY BANK AND IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
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 growth investment strategy
o Investors willing to accept the greater market price fluctuations of
smaller companies, such as thrift banks o Investors that wish to
concentrate a portion of their investment portfolio in the thrift banking
sector
HOW THE FUND HAS PERFORMED
Although past performance of a fund is no guarantee of how it will
perform in the future, historical performance may give you some indication of
the risk of investing in the fund because it demonstrates how its returns have
varied over time. The Bar Chart and Performance Table that would otherwise
appear in this prospectus have been omitted because the Fund is recently
organized and has a limited performance history.
FEES AND EXPENSES 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..............................................................NONE
Exchange Fee................................................................NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees............................................................1.70%
Distribution (12b-1) Fees..................................................0.25%
Other Expenses1 ...........................................................0.00%
Total Annual Fund Operating Expenses ......................................1.95%
1 The Fund estimates that other expenses (fees and expenses of the trustees who
are not "interested persons" as defined in the Investment Company Act) will be
less than 0.004% of average net assets for the first fiscal year.
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
------ --------
HOW TO BUY SHARES
The minimum initial investment in the Fund is $2,500 and minimum
subsequent investments are $100. These miminums may be waived by the advisor for
accounts participating in an automatic investment program. 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.
<PAGE>
INITIAL PURCHASE
BY MAIL- To be in proper form, your initial purchase request must
include: o a completed and signed investment application form (which accompanies
this Prospectus); and o a check (subject to the minimum amounts) made payable to
the Fund.
Mail the application and check to:
U.S. Mail: Overnight:
Leader Converted Mutual Bank Fund Leader Converted Mutual Bank Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Str
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)
788-9454 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: Leader Converted Mutual Bank Fund
Account Name _________________(write in shareholder name)
For the Account # ______________(write in account number)
D.D.A.#488886904
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 Leader Converted
Mutual Bank Fund
Checks should be sent to the Leader Converted Mutual Bank Fund at the address
listed above. A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
DISTRIBUTION PLAN
The Fund has adopted a plan under Rule 12b-1 that allows the Fund to
pay distribution fees for the sale and distribution of its shares and allows the
class to pay for services provided to shareholders. Because these fees are paid
out of the Fund's assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
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 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:
Leader Converted MutualBank Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper form,
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) 788-9454. 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
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.
ADDITIONAL INFORMATION - If you are not certain of the
requirements for a redemption please call the Fund's transfer agent at (800)
788-9454. 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 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
$2,500 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax advisor concerning the tax consequences of involuntary
redemptions. 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 by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
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. 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 [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. You may want to avoid making
a substantial investment when a Fund is about to make a capital gains
distribution because you would be responsible for any taxes on the distribution
regardless of how long you have owned your shares.
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
Leader Capital Corp., 121 S.W. Morrison St., Suite 425, Portland
Oregon, 97204 serves as investment advisor to the Fund. The Fund is authorized
to pay the advisor a fee equal to an annual average rate of 1.70% of its average
daily net assets.
John Lekas is the President of the advisor and is responsible for the
day-to-day management of the Fund's portfolio. He has also been a registered
representative with First Allied Securities, Inc. since 1997. Prior to founding
the advisor, Mr. Lekas was a registered representative with Smith Barney from
1993 to 1997 and completed Smith Barney's highly-rated Investment Advisory
Program for Portfolio Managers. He has been licensed as a registered
representative since 1985. As of January 1, 2000, Mr. Lekas provides investment
advice on a discretionary basis for approximately [$20 million] in assets for a
management fee, and an additional [$80 million] in assets on a non-discretionary
basis for traditional commission compensation.
The advisor (not the Fund) may pay certain financial institutions
(which may include banks, brokers, securities dealers and other industry
professionals) a fee for providing distribution related services and/or for
performing certain administrative servicing functions for Fund shareholders to
the extent these institutions are allowed to do so by applicable statute, rule
or regulation.
OTHER INFORMATION ABOUT INVESTMENTS
GENERAL
The investment objective of the Fund may be changed without shareholder
approval.
From time to time, the Fund may take temporary defensive positions which
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.
PAST PERFORMANCE OF THRIFTS
The following graph and accompanying data illustrates the past
performance of the SNL All Thrift Index (the "Thrift Index") compared to the S&P
500 Index. It is presented to give you an idea of how the thrift industry as a
whole has performed over the past ten years.
o THE PERFORMANCE OF THE THRIFT INDEX DOES NOT REPRESENT THE HISTORICAL
PERFORMANCE OF THE FUND, AND SHOULD NOT BE CONSIDERED INDICATIVE OF FUTURE
PERFORMANCE OF THE FUND.
o THE FUND IS NOT AN "INDEX" FUND, AND IT WILL NOT ATTEMPT TO REPLICATE THE
PERFORMANCE OF THE THRIFT INDEX.
o THE FUND WILL OWN ONLY A SMALL PERCENTAGE OF THE SECURITIES COMPRISING THE
THRIFT INDEX.
SNL All Thrift Index vs. S&P 500 Index
Cumulative Total Return Since 1990
[Insert Graph with the following plot points]
<TABLE>
===========================================================================
<CAPTION>
S&P 500 INDEX SNL ALL THRIFT
===========================================================================
===========================================================================
DATE TOTAL RETURN INDEX TOTAL RETURN
===========================================================================
===========================================================================
<S> <C> <C> <C>
12/29/89 0.000 0.000
===========================================================================
===========================================================================
03/30/90 -3.008 -7.776
===========================================================================
===========================================================================
06/29/90 3.093 -9.213
===========================================================================
===========================================================================
09/28/90 -11.075 -36.583
===========================================================================
===========================================================================
12/31/90 -3.104 -36.119
===========================================================================
===========================================================================
03/28/91 10.971 -14.858
===========================================================================
===========================================================================
06/28/91 10.716 -12.363
===========================================================================
===========================================================================
09/30/91 16.637 -2.446
===========================================================================
===========================================================================
12/31/91 26.416 -0.314
===========================================================================
===========================================================================
03/31/92 23.223 7.762
===========================================================================
===========================================================================
06/30/92 25.566 19.805
===========================================================================
===========================================================================
09/30/92 29.525 15.712
===========================================================================
===========================================================================
12/31/92 36.048 40.355
===========================================================================
===========================================================================
03/31/93 41.989 60.650
===========================================================================
===========================================================================
06/30/93 42.680 55.060
===========================================================================
===========================================================================
09/30/93 46.367 79.952
===========================================================================
===========================================================================
12/31/93 49.760 76.151
===========================================================================
===========================================================================
03/31/94 44.080 68.548
===========================================================================
===========================================================================
06/30/94 44.687 88.972
===========================================================================
===========================================================================
09/30/94 51.761 97.336
===========================================================================
===========================================================================
12/30/94 51.737 74.078
===========================================================================
===========================================================================
03/31/95 66.512 96.726
===========================================================================
===========================================================================
06/30/95 82.407 123.002
===========================================================================
===========================================================================
09/29/95 96.903 158.422
===========================================================================
===========================================================================
12/29/95 108.757 171.105
===========================================================================
===========================================================================
03/29/96 119.960 176.039
===========================================================================
===========================================================================
06/28/96 129.810 182.904
===========================================================================
===========================================================================
09/30/96 136.923 212.120
===========================================================================
===========================================================================
12/31/96 156.481 253.240
===========================================================================
===========================================================================
03/31/97 163.356 285.189
===========================================================================
===========================================================================
06/30/97 209.335 357.905
===========================================================================
===========================================================================
09/30/97 232.501 442.345
===========================================================================
===========================================================================
12/31/97 242.075 501.062
===========================================================================
===========================================================================
03/31/98 289.792 544.431
===========================================================================
===========================================================================
06/30/98 302.664 520.071
===========================================================================
===========================================================================
09/30/98 262.617 386.228
===========================================================================
===========================================================================
12/31/98 339.826 428.643
===========================================================================
===========================================================================
03/31/99 361.700 432.310
===========================================================================
===========================================================================
6/30/99
===========================================================================
===========================================================================
9/30/99
===========================================================================
</TABLE>
The S&P 500 Index is a widely recognized, unmanaged index of market activity
based upon the aggregate performance of a selected portfolio of publicly traded
common stocks, including monthly adjustments to reflect the reinvestment of
dividends and other distributions. The S&P 500 Index reflects the total return
of securities comprising the Index, including changes in market prices as well
as accrued investment income, which is presumed to be reinvested. Performance
figures for the S&P 500 Index do not reflect deduction of transaction costs or
expenses, including management fees.
The SNL All Thrift Index is an unmanaged index composed of all thrifts
that trade on the NASDAQ, New York, or American Stock Exchange. The Thrift Index
reflects the total return of the securities comprising the Index, including
changes in market prices as well as accrued investment income, which is presumed
to be reinvested. Performance figures for the Thrift Index do not reflect
deduction of transaction costs or expenses, including management fees. The
Thrift Index is maintained by SNL Securities LC, a Charlottesville,
Virginia-based research and publishing firm. As of December 31, 1999, the Index
consisted of [360] thrifts of which [83.6]% are converted mutual banks. The
information provided has been gathered by SNL Securities LC ("SNL") from sources
believed by SNL to be reliable and is believed by SNL to be true and accurate in
both form and content. However, although SNL makes every effort to ensure data
accuracy, SNL does not guarantee or warrant the correctness, completeness,
merchantability or fitness for a particular purpose of the information supplied.
The information provided was prepared by SNL for Leader Capital Corp. and SNL
reserves all copyright rights in the information.
<PAGE>
FOR MORE INFORMATION
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. Annual
and semi-annual 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 800-788-6086 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 review and copy information about the Fund (including the SAI
and other reports) at the Securities and Exchange Commission (SEC) Public
Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours
and operation. You may also obtain reports and other information about the Fund
on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and
copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
THE MARTIN CAPITAL OPPORTUNITY FUNDS
PROSPECTUS
JANUARY __, 2000
Martin Capital Austin Opportunity Fund
Martin Capital Texas Opportunity Fund
Martin Capital U.S. Opportunity Fund
Investment Objective: long term capital appreciation.
816 Congress Avenue
Suite 1540
Austin, Texas 78701
(888) 336-9757
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 FUNDS................................................................
FEES AND EXPENSES 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.........................................................
FOR MORE INFORMATION.................................................BACK COVER
10327
<PAGE>
ABOUT THE FUNDS
INVESTMENT OBJECTIVE
The investment objective of each Martin Capital Fund is long term capital
appreciation.
PRINCIPAL STRATEGIES
The Funds invest primarily in common stocks which the Funds' advisor
believes offer superior growth potential. After screening for stocks which meet
certain performance criteria. The advisor uses a variety of quantitative and
qualitative strategies to analyze the growth prospects of each company, focusing
on the company's: o management, o potential for product or service growth, and o
technical and economic cycle considerations. As the Funds will primarily invest
in growth-oriented stocks, it is expected that each Fund will generate a total
return primarily from capital appreciation, although current income is also
expected. The advisor's security selection process for each Fund will attempt to
reflect the diversification of the Fund's designated economic market; however
the advisor may adjust sector representation based upon the sector's performance
outlook and may at times focus on one or more sector.
THE AUSTIN OPPORTUNITY FUND The Fund's advisor primarily selects equity
securities of companies with significant operations in the city of Austin, Texas
(defined as the Austin-San Marcos Metropolitan Statistical Area, which includes
Bastrop, Caldwell, Hays, Travis and Williamson counties). Under normal
circumstances, at least 65% of the Fund's assets will be invested in equity
securities of companies: o headquartered in Austin, or o which have a majority
of their operations in Austin, or o that rank among the 25 largest publicly held
employers in Austin.
THE TEXAS OPPORTUNITY FUND The Fund's advisor primarily selects equity
securities of companies with significant operations in the state of Texas. Under
normal circumstances, at least 65% of the Fund's assets will be invested in
equity securities of companies: o headquartered in the state of Texas, or o
which have a majority of their operations in Texas, or o that rank among the 25
largest publicly held employers in Texas.
THE U.S. OPPORTUNITY FUND Under normal circumstances, at least 65% of the U.S.
Opportunity Fund's assets will be invested in equity securities of companies
headquartered in the United States, or which have a majority of their operations
in the United States.
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
o MANAGEMENT RISK. The advisor's growth-oriented approach may fail to produce
the intended results.
o SMALLER COMPANY RISK. The advisor believes that a significant portion of
the Austin Opportunity Fund, and some portion of the Texas Opportunity
Fund, will be invested in smaller capitalization companies. To the extent a
Fund invests in smaller capitalization companies, the Fund will be subject
to additional risks. These 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 experience.
o NEW ISSUES RISK. The advisor believes that a significant portion of the
Austin Opportunity Fund, and some portion of the Texas Opportunity Fund,
will be invested in common stock of new issuers. Investments in relatively
new issuers, i.e., those having continuous operating histories of less than
three years, may be more speculative because such companies are relatively
unseasoned.
o New issuers may lack sufficient resources, may be unable to generate
internally the funds necessary for growth and may find external financing
to be unavailable on favorable terms or even totally unavailable.
o New issuers will often be involved in the development or marketing of a new
product with no established market, which could lead to significant losses.
o COMPANY RISK. The value of a 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 a
Fund. Factors such as domestic economic growth and market conditions,
interest rate levels, and political events affect the securities markets
and could cause a Fund's share price to fall. Additionally, an investment
strategy focused on a single, albeit large, economy may be subject to
greater risk. For example, changes in the Austin economy may have a
disproportionate effect on the Austin Opportunity Fund and changes in the
Texas economy may have a disproportionate effect on the Texas Opportunity
Fund.
o NON-DIVERSIFICATION RISK. As a non-diversified fund, each fund will be
subject to substantially more investment risk and potential for volatility
than a diversified fund because its portfolio may at times focus on a
limited number of companies.
o SECTOR RISK. If a Fund's portfolio is overweighted in a certain sector, any
negative development affecting that sector will have a greater impact on
the Fund than a fund that is not overweighted in that sector. Texas
(including Austin) has a greater concentration of technology companies than
the rest of the United States and weakness in this sector could result in
significant losses to the Austin Opportunity Fund and the Texas Opportunity
Fund. The U.S. Opportunity Fund may also focus on technology companies.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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.
GENERAL
The investment objective of each Fund may be changed without shareholder
approval.
From time to time, the Funds may take temporary defensive positions which
are inconsistent with the Funds' principal investment strategies, in attempting
to respond to adverse market, economic, political, or other conditions. For
example, each 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 a 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, a Fund may not achieve its investment
objective. Each Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
PAST PERFORMANCE
Although past performance of a fund is no guarantee of how it will perform in
the future, historical performance may give you some indication of the risk of
investing in the fund because it demonstrates how its returns have varied over
time. The Bar Chart and Performance Table that would otherwise appear in this
prospectus have been omitted because each Fund is recently organized and has a
limited performance history.
FEES AND EXPENSES OF INVESTING IN THE FUNDS
The tables describe the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (fees paid directly from your investment) Austin Texas U.S.
Opportunity Fund Opportunity Fund Opportunity Fund
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases NONE.................NONE..................NONE
Maximum Deferred Sales Charge (Load) NONE.................NONE..................NONE
Redemption Fee (as a % of redemption amount)1 1.00%................1.00%.................1.00%
Exchange Fee NONE.................NONE..................NONE
</TABLE>
<TABLE>
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
<S> <C> <C> <C>
Management Fees 1.25%................1.25%.................1.25%
Distribution (12b-1) Fees2 NONE.................NONE..................NONE
Other Expenses ___%.................___%..................___%
Total Annual Fund Operating Expenses ___%.................___%..................___%
</TABLE>
1 Each Fund charges a redemption fee of 1% on shares redeemed less than one year
from the date of purchase. 2 Distribution expenses incurred by the Funds under
the 12b-1 Distribution Plan are paid by the advisor.
[Add footnote regarding estimated expenses for any fund with no history.]
Example:
The example below is intended to help you compare the cost of investing
in a 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:
<TABLE>
<S> <C> <C> <C> <C>
MARTIN CAPITAL AUSTIN OPPORTUNITY FUND 1 year 3 years 5 years 10 years
------ -------- ------- --------
MARTIN CAPITAL TEXAS OPPORTUNITY FUND 1 year 3 years [5 years] [10 years]
------ -------- -------- ---------
MARTIN CAPITAL U.S. OPPORTUNITY FUND 1 year 3 years 5 years 10 years
------ -------- ------- --------
</TABLE>
HOW TO BUY SHARES
The minimum initial investment in each Fund is $1,000 and minimum
subsequent investments are $100. The advisor may waive these minimums for
accounts participating in an automatic investment program. 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- To be in proper form, your initial purchase request must
include: o a completed and signed investment application form (which accompanies
this Prospectus); and o a check (subject to the minimum amounts) made payable to
the appropriate Fund.
Mail the application and check to:
U.S. Mail: Overnight:
Martin Capital Opportunity Funds Martin Capital Opportunity Funds
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 a 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 (888) 336-9757 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: Martin Capital Opportunity Funds
Account Name _________________(write in shareholder name)
For the Account # ______________(write in account number)
D.D.A.#488922444
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 each 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) -the name of the Fund
-a check made payable to Martin Capital Opportunity Funds
Checks should be sent to the Martin Capital Opportunity Funds at the address
listed above. A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
DISTRIBUTION PLAN
Each plan has adopted a plan under Rule 12b-1 that allows the Fund to
pay distribution fees for the sale and distribution of shares and allows the
Fund to pay for services provided the shareholders. All distribution expenses
incurred by a Fund under its Plan are Fund expenses, but they are paid by the
advisor pursuant to the management agreement.
TAX SHELTERED RETIREMENT PLANS
Since the Funds are 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 Funds' transfer agent about the IRA custodial fees.
OTHER PURCHASE INFORMATION
The Funds may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred by the Funds. If you are already a shareholder, the Funds can
redeem shares from any identically registered account in the 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
Funds 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:
Martin Capital Opportunity Funds
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper form,
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 Funds 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 Funds or the
Funds' 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 a Fund by
calling the Funds' transfer agent at (888) 336-9757. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Funds, the transfer agent and the custodian are
not liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The Funds or the transfer agent may terminate the telephone redemption
procedures at any time. During periods of extreme market activity, it is
possible that shareholders may encounter some difficulty in telephoning the
Funds, although neither the Funds nor the transfer agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Funds by
telephone, you may request a redemption or exchange by mail.
REDEMPTION FEE - Shares held less than 12 months and redeemed
(including exchanges) from a Fund are subject to a short term redemption fee
equal to 1.0% of the net asset value of shares redeemed. Solely for purposes of
calculating the one-year holding period, each Fund uses the "first-in, first
out" (FIFO) method. That is, the date of any redemption or exchange will be
compared to the earliest purchase date. If this holding period is less than one
year, the fee will be assessed. The fee will be prorated if a portion of the
shares being redeemed or exchanged has been held for more than one year. Shares
acquired through reinvested dividend or capital gain distributions are exempt
from the fee.
ADDITIONAL INFORMATION - If you are not certain of the
requirements for a redemption please call the Fund's transfer agent at (888)
336-9757. Redemptions specifying a certain date or share price cannot be
accepted and will be returned. You will be mailed the proceeds on or before the
fifth business day following the redemption. However, payment for redemption
made against shares purchased by check will be made only after the check has
been collected, which normally may take up to fifteen calendar days. Also, when
the New York Stock Exchange is closed (or when trading is restricted) for any
reason other than its customary weekend or holiday closing, or under any
emergency circumstances (as determined by the Securities and Exchange
Commission) the Funds may suspend redemptions or postpone payment dates.
Because the Funds incurs certain fixed costs in maintaining shareholder
accounts, the Funds may require you to redeem all of your shares in a Fund on 30
days' written notice if the value of your shares in the Fund is less than $500
due to redemption, or such other minimum amount as the Fund may determine from
time to time. An involuntary redemption constitutes a sale. You should consult
your tax advisor concerning the tax consequences of involuntary redemptions. 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 Funds.
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 by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
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. Each Fund typically distributes
substantially all of its net investment income in the form of dividends and
taxable capital gains to its shareholders. These distributions are automatically
reinvested in the Fund unless you request cash distributions on your application
or through a written request. Each Fund expects that its distributions will
consist primarily of [capital gains].
TAXES. In general, selling shares of a 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. You may want to avoid making a
substantial investment when a Fund is about to make a capital gains distribution
because you would be responsible for any taxes on the distribution regardless of
how long you have owned your shares.
Early each year, the Funds 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
Martin Capital Advisors, L.L.P., 816 Congress Avenue, Suite 1540,
Austin, Texas 78701, serves as investment advisor to the Funds. As of January 1,
2000, the firm manages over [$30] million for individuals, trusts and pension
plans.
Paul Martin is responsible for the day-to-day management of The Martin
Capital Opportunity Funds. Paul Martin is the managing and controlling partner
and Chief Investment Officer of the advisor, a registered investment advisor
managing investment portfolios for long-term income and capital appreciation.
Prior to establishing his advisory firm in 1989, Paul Martin worked four years
as a financial consultant in New York City, managing investment accounts at
Merrill Lynch and Oppenheimer & Company. Paul Martin served seven years active
duty with the U.S. Army and U.S. Navy. He also served thirteen years with the
U.S. Naval Reserve, which included eight years with Naval Special Warfare and a
two year assignment as the Commanding Officer of Naval Reserve SEAL Delivery
Vehicle Team Two. He retired as a commander in October, 1998. Paul Martin has a
B.A. degree in liberal arts from St. John's College in Santa Fe, New Mexico.
Each Fund is authorized to pay the advisor a fee equal to 1.25% of its
average daily net assets. The advisor (not the Funds) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a fee for providing distribution related services and/or
for performing certain administrative servicing functions for Fund shareholders
to the extent these institutions are allowed to do so by applicable statute,
rule or regulation.
ADVISOR'S PAST PERFORMANCE - The Paul Martin has been managing accounts with
investment objectives, policies and strategies substantially similar to those of
the Martin Capital U.S. Opportunity Fund since 1990 (the "U.S. Composite"). The
performance of the U.S. Composite appears below. The data is provided to
illustrate past performance of the Advisor in managing such accounts, as
compared to the S&P 500 Index. The person responsible for the performance of the
composite is the same person as is responsible for the investment management of
the Martin Capital U.S. Opportunity Fund. As of December 31, 1999 the assets in
the U.S. Composite totaled approximately $___ million.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
<S> <C> <C> <C> <C>
PERIOD U.S. OPPORTUNITY FUND U.S. COMPOSITE S&P 500 INDEX
One Year..................................N/A.....................__._%..................__._%
Five Years................................N/A.....................__._%..................__._%
Since Composite Inception (1-1-91)........N/A.....................__._%..................__._%
Since Fund Inception (_-_-99) ...........___%....................__._%..................__._%
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF MARTIN CAPITAL ADVISORS, L.L.P. ANNUAL INVESTMENT RETURNS**
<S> <C> <C> <C> <C>
PERIOD U.S. OPPORTUNITY FUND U.S. COMPOSITE S&P 500 INDEX
1991............................N/A...............................33.9%........................30.6%
1992............................N/A...............................26.8%.........................7.7%
1993............................N/A...............................14.5%........................10.0%
1994............................N/A...............................(2.1)%........................1.3%
1995............................N/A...............................27.5%........................37.6%
1996............................N/A...............................29.4%........................23.0%
1997............................N/A...............................41.4%........................33.4%
1998............................N/A...............................78.8%........................28.7%
1999............................___%...........................__._%........................__._%
</TABLE>
* Average Annual Returns for the periods ended December 31, 1999, using
calculation method of performance, which differ from the standardized SEC
calculations methods.
** U.S. composite performance is the time-weighted average total return
associated with a composite of equity income accounts having objectives
similar to the U.S. Opportunity Fund. Results include the reinvestment of
income on an accrual basis. Performance figures reflected are net of
management fees of the accounts and net of all expenses, including
transaction costs and commissions. Results include the reinvestment of
dividends and capital gains.
The S&P 500 Index is a widely recognized, unmanaged index of market
activity based upon the aggregate performance of a selected portfolio
of publicly traded common stocks, including monthly adjustments to
reflect the reinvestment of dividends and other distributions. The S&P
500 Index reflects the total return of securities comprising the Index,
including changes in market prices as well as accrued investment
income, which is presumed to be reinvested. Performance figures for the
S&P 500 Index do not reflect deduction of transaction costs or
expenses, including management fees.
The performance of the accounts managed by the advisor should not be
considered indicative of future performance of the Fund. Results may differ
because of, among other things, differences in brokerage commissions, account
expenses (including management fees), the size of positions taken in relation to
account size and diversification of securities, timing of purchases and sales,
and availability of cash for new investments. In addition, the managed accounts
are not subject to certain investment limitations, diversification requirements
and other restrictions imposed by the Investment Company Act and the Internal
Revenue Code which, if applicable, may have adversely affected the performance
results of the managed accounts composite. The results for different periods may
vary.
<PAGE>
FOR MORE INFORMATION
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. Annual
and semi-annual reports contain management's discussion of market conditions,
investment strategies and performance results as of the Funds' latest
semi-annual or annual fiscal year end.
Call the Funds at 888-336-9757 to request free copies of the SAI and
the Funds' annual and semi-annual reports, to request other information about
the Funds and to make shareholder inquiries.
You may review and copy information about the Funds (including the SAI
and other reports) at the Securities and Exchange Commission (SEC) Public
Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours
and operation. You may also obtain reports and other information about the Funds
on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and
copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
SHEPHERD VALUES FUNDS
PROSPECTUS
JANUARY __, 2000
Shepherd Values Growth Fund
Shepherd Values Small-Cap Fund
Shepherd Values International Fund
Shepherd Values VIF Equity Fund
Shepherd Values Fixed Income Fund
Shepherd Values Market Neutral Fund
6760 Corporate Drive, Suite 230
Colorado Springs, CO 80919
877-636-2766
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.
10334
<PAGE>
TABLE OF CONTENTS
PAGE
ABOUT THE FUNDS................................................................
SHEPHERD VALUES GROWTH FUND....................................................
SHEPHERD VALUES SMALL-CAP FUND.................................................
SHEPHERD VALUES INTERNATIONAL FUND.............................................
SHEPHERD VALUES VIF EQUITY FUND................................................
SHEPHERD VALUES FIXED INCOME FUND..............................................
SHEPHERD VALUES MARKET NEUTRAL FUND............................................
FEES AND EXPENSES OF INVESTING IN THE FUND.....................................
HOW TO BUY SHARES..............................................................
EXCHANGE PRIVILEGE.............................................................
HOW TO REDEEM SHARES...........................................................
DETERMINATION OF NET ASSET VALUE...............................................
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................................
MANAGEMENT OF THE FUND.........................................................
OTHER INFORMATION ABOUT INVESTMENTS............................................
FOR MORE INFORMATION.................................................BACK COVER
ABOUT THE FUNDS
INVESTMENT OBJECTIVES
The investment objective of the SHEPHERD VALUES GROWTH FUND, the SHEPHERD VALUES
SMALL-CAP FUND, and the SHEPHERD VALUES INTERNATIONAL FUND is long term capital
appreciation.
The investment objective of the SHEPHERD VALUES VIF EQUITY FUND is to track the
performance of the VIF 400 Values Index (the "Values Index").
The investment objective of the SHEPHERD VALUES FIXED INCOME FUND is a high
level of income over the long term consistent with the preservation of capital.
The investment objective of the SHEPHERD VALUES MARKET NEUTRAL FUND is long term
capital appreciation while maintaining minimal exposure to general equity market
risk.
VALUES BASED INVESTING
Each Fund utilizes a set of non-financial screening criteria to
maintain a portfolio of securities consistent with the Shepherd Values
investment philosophy. This specialization requires a substantial amount of
additional primary and secondary research and information resources above and
beyond traditional financial analysis. The Funds primarily utilize the services
of Values Investment Forum, Inc. ("VIF") for this non-financial screening
process.
Each Fund screens potential holdings to exclude issuers that, in the
advisor's opinion, are offensive to traditional Judeo-Christian values. The
Funds will not knowingly invest in businesses that are engaged to any
significant degree, directly or through subsidiaries, in the alcoholic beverage,
tobacco, pornographic and gambling industries or companies involved in the
business of aborting life before birth. This includes companies involved in
either the production or distribution of products or services related to these
activities. In addition, the advisor reserves the right to exercise its best
judgement to exclude ownership in other companies whose corporate practices are,
in the advisor's opinion, offensive to traditional Judeo-Christian values. For
example, the advisor excludes companies which, based on VIF's research, promote
same sex lifestyles.
The values based investment policy does not apply to short positions of
the Shepherd Values Market Neutral Fund whereby the Fund does not own the
relevant security when initiating short sales as a hedging strategy for the
Fund. As a result, the Fund may sell short the securities of businesses whose
corporate practices are in violation of the Fund's values based policy.
SHEPHERD VALUES GROWTH FUND
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks of large capitalization
U.S. companies that the Fund's sub-advisor, Cornerstone Capital Management,
Inc., believes are undervalued by the market based on the advisor's proprietary
valuation model. The model considers certain financial characteristics, such
as:
o return on equity
o cash flow
o earnings consistency, and
o debt load.
In searching for investments for the Fund, the sub-advisor employs a
style that focuses on securities with a low current price relative to the
sub-advisor's view regarding long term future value. The Fund engages in a "buy
and hold" strategy emphasizing long term investment.
PRINCIPAL RISKS OF INVESTING IN THE SHEPHERD VALUES GROWTH FUND
o MANAGEMENT RISK. The sub-advisor's value-oriented approach may fail to
produce the intended results.
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
and could cause the Fund's share price to fall.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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.
SHEPHERD VALUES SMALL-CAP FUND
PRINCIPAL STRATEGIES
Under normal circumstances, the Fund invests at least 65% of its net
assets in equity securities of small capitalization U.S. companies (as defined
by the Russell 2000 Value Index). The Fund's sub-advisor, Nicholas-Applegate
Capital Management, follows a value investment philosophy to select stock of
undervalued, fundamentally strong companies undergoing positive change, based on
certain financial characteristics. The sub-advisor looks primarily for stocks
with low price-to-earnings and low price-to-book ratios and high dividend
yields. The sub-advisor focuses on individual companies rather than on specific
industries, building the Fund one stock at a time.
The Fund may invest in "emerging growth companies." These are small
capitalization companies with limited operating histories, but companies that
the sub-advisor believes provide substantial up-side investment opportunity
because of their core businesses. In addition, the Fund will also include other
small capitalization stocks that would be considered out of favor with the
markets.
PRINCIPAL RISKS OF INVESTING IN THE SHEPHERD VALUES SMALL-CAP FUND
o MANAGEMENT RISK. The sub-advisor's value-oriented approach may fail to
produce the intended results.
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
and could cause the Fund's share price to fall.
o SMALLER COMPANY RISK. To the extent the Fund invests in smaller
capitalization companies, the Fund will be subject to additional risks.
These 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 experience.
o EMERGING COMPANY RISK. Emerging companies may be more speculative because
such companies are relatively unseasoned.
o New issuers may lack sufficient resources, may be unable to generate
internally the funds necessary for growth and may find external financing
to be unavailable on favorable terms or even totally unavailable.
o New issuers will often be involved in the development or marketing of a new
product with no established market, which could lead to significant losses.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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.
SHEPHERD VALUES INTERNATIONAL FUND
PRINCIPAL STRATEGIES
The Fund invests, under normal circumstances, at least 65% of its total
assets in equity securities of foreign companies. The Fund's sub-advisor,
Templeton Portfolio Advisory (a division of Templeton/Franklin Investment
Services, Inc.) applies a bottom-up stock selection approach, looking for the
best available bargains on a global basis, regardless of industry or location.
After identifying securities it believes are undervalued, the
sub-advisor focuses on those factors that may cause earnings and/or assets to
increase over the next five years. Included in the many factors considered in
the evaluation of a company are: o sales growth; o margin analysis; o new
product introductions; o new management; o financial restructuring; o adjusted
net asset values; o currency impact; and o global supply and demand for
products.
A stock must also be perceived as a real bargain relative to itself
historically, its industry globally, other names in its own market, and other
names in the sub-advisor's research database. As the Fund is non-diversified
it's portfolio may at times focus on a limited number of companies that the
advisor believes offer superior prospects for growth.
PRINCIPAL RISKS OF INVESTING IN THE SHEPHERD VALUES INTERNATIONAL FUND
o MANAGEMENT RISK. The sub-advisor's value-oriented approach may fail to
produce the intended results.
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 economic growth and market conditions, interest rate
levels, and political events affect the securities markets and could cause
the Fund's share price to fall.
o NON-DIVERSIFICATION RISK. As a non-diversified fund, the Fund will be
subject to substantially more investment risk and potential for volatility
than a diversified fund because its portfolio may at times focus on a
limited number of companies.
o FOREIGN RISK. The Fund's performance will depend on issues other than the
performance of a particular company. Changes in foreign economies and
political climates are more likely to affect the Fund than a mutual fund
that invests exclusively in U.S. companies. The value of foreign securities
is also affected by the value of the local currency relative to the U.S.
dollar. There may also be less government supervision of foreign markets,
resulting in non-uniform accounting practices and less publicly available
information.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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.
SHEPHERD VALUES VIF EQUITY FUND
PRINCIPAL STRATEGIES
The Fund seeks to achieve its objective by investing substantially all
of its assets in the common stocks comprising the Values Index. The Fund is not
actively managed by an investment advisor who buys and sells securities based on
research and analysis. Instead, the Fund is "passively managed" to try and
match, as closely as possible, the performance of the Values Index by holding
either all - or a representative sample - of the securities in the Values Index.
The Values Index was developed and is currently maintained by Values
Investment Forum, Inc. ("VIF"). To construct the Values Index, VIF begins with
the companies comprising the Standard and Poor's 500 Composite Stock Price Index
(the "S&P 500 Index"). The S&P 500 Index consists of 500 widely traded stocks
and is often used as an overall measure of stock market conditions. VIF then
screens the S&P 500 Index to exclude any companies that are not consistent with
Judeo-Christian values. The Values Index currently consists of the stocks of
approximately 400 companies. The weighting of each stock is based on the
company's total market capitalization as a percentage of the Values Index's
total capitalization. As a result, the stocks of a relatively few issuers may
dominate the Values Index.
If VIF determines that a company no longer meets the "values based"
criteria, the company will be removed from the Index and the Fund will sell the
company's stock as soon as practical. The Fund's sub-advisor, Cornerstone
Capital Management, Inc., will periodically adjust the Fund's portfolio in order
to maintain a close correlation between the composition (and performance) of the
Fund and the Values Index. Unlike the Values Index, the Fund has operating
expenses. Therefore, while the Fund is expected to track the Values Index as
closely as possible, it will not be able to match the performance of the Values
Index exactly.
As an alternative to holding all of the securities of the Values Index,
the Fund may select stocks through a "sampling" technique in which the Fund
selects a sampling of stocks that will approximate the Index in terms of
industry, size and other characteristics (such as projected earnings, financial
strength and debt). For example, if 10% of the Index is made up of utility
stocks, the Fund would invest 10% of its assets in utility stocks of the Index
with similar characteristics. Such a sampling technique is expected to be an
effective means of substantially duplicating the performance of the Index,
although use of the sampling technique will make it less likely that the Fund
will be able to match the performance of the Values Index exactly.
PRINCIPAL RISKS OF INVESTING IN THE SHEPHERD VALUES VIF EQUITY FUND
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 will 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 and could
cause the Fund's share price to fall.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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.
SHEPHERD VALUES FIXED INCOME FUND
PRINCIPAL STRATEGIES
The Fund invests primarily in a broad range of investment grade fixed
income securities. The Fund may invest in fixed income securities which are
unrated if the Fund's sub-advisor, Potomac Asset Management Company, Inc.,
determines that they are of comparable quality to securities rated investment
grade. Under normal circumstances the Fixed Income Fund will invest at least 65%
of its total assets in fixed income securities, including bonds, notes, domestic
and foreign corporate and government securities, mortgage backed securities,
municipal securities, zero coupon bonds and short term obligations (such as
commercial paper).
The sub-advisor selects securities for the Fund using a "top down"
methodology. This methodology involves the review of current economic conditions
and the interest rate environment, and analysis of key factors shaping the
economy and changes in the direction of interest rates. The sub-advisor then
reviews its investment strategy (adjusting duration targets and evaluating
sector allocations) and selects portfolio securities accordingly.
PRINCIPAL RISKS OF INVESTING IN THE SHEPHERD VALUES FIXED INCOME FUND
o MANAGEMENT RISK. The sub-advisor's strategy may fail to produce the
intended results.
o INTEREST RATE RISK. The value of your investment may decrease when interest
rates rise.
o CREDIT RISK. The issuer of the fixed income security may not be able to
make interest and principal payments when due.
o PREPAYMENT RISK . The mortgage securities held by the Fund may be
negatively affected by changes in prepayment rates on the underlying
mortgages.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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.
SHEPHERD VALUES MARKET NEUTRAL FUND
PRINCIPAL STRATEGIES
The Fund seeks to achieve the investment objective by taking long
positions in U.S. equity securities that the Fund's sub-advisor, Cornerstone
Capital Management, Inc., has identified as undervalued and short positions in
stocks that the sub-advisor has identified as overvalued, based on the
sub-advisor's proprietary valuation model. This strategy is commonly referred to
as "market neutral investing". The model considers certain financial
characteristics, such as: o return on equity; o cash flow; o earnings
consistency; and o debt load.
The term "long position" means the Fund purchases the stock. The term
"short position" means the Fund sells a stock that it does not own, borrows the
same stock from a broker or other institution to complete the sale, and buys the
same stock at a later date to repay the lender. If the stock is overvalued, and
the price declines before the Fund buys the stock, the Fund makes a profit. If
the price of the stock increases before the Fund buys the stock, the Fund loses
money. Cornerstone's strategy of using short positions in overvalued stocks
along with long positions in undervalued stocks is intended to reduce the
effects of general market movements on the Fund's performance, although there is
no assurance that Cornerstone will be able to do so.
Cornerstone will determine the size of each long or short position by
analyzing the tradeoff between the attractiveness of each position and its
impact on the risk characteristics of the overall portfolio. The Fund's long
positions will consist primarily of U.S. common stocks of large capitalization
companies (those with market capitalizations above $5 billion). The Fund's short
positions will consist primarily of U.S. common stocks of all capitalization
ranges. The Fund seeks to construct a diversified portfolio that has minimal net
exposure to the U.S. equity market generally and near neutral exposure to
specific industries, specific capitalization ranges and certain other risk
factors.
PRINCIPAL RISKS OF INVESTING IN THE SHEPHERD VALUES MARKET NEUTRAL FUND
o MANAGEMENT RISK. Although the Fund attempts to be market neutral, the
success of the Fund's strategy is dependent on the sub-advisor's ability to
correctly identify undervalued and overvalued stocks. If the sub-advisor is
not successful, the Fund may experience losses regardless of the overall
performance of the stock markets. In strong "bull" markets, when the prices
of nearly all stocks are rising regardless of the underlying value of the
companies, the Fund is expected to underperform the general markets because
the Fund's short positions will likely lose money. The Fund's advisor has
no prior experience managing the assets of a mutual fund.
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
and could cause the Fund's share price to fall.
o SHORT SALE RISK. The Fund engages in short selling activities which are
significantly different from the investment activities commonly associated
with conservative stock funds. Positions in shorted securities are more
risky than long positions (purchases) in stocks because the maximum
sustainable loss on a stock purchased is limited to the amount paid for the
stock plus the transactions costs, whereas there is no maximum attainable
price of the shorted stock. Therefore, in theory, stocks sold short have
unlimited risk. You should be aware of the intrinsic risk involved in the
Fund and be cognizant that any strategy which includes selling stocks short
and suffer significant losses.
o PORTFOLIO TURNOVER RISK. As the advisor adjusts the composition of the
portfolio to deal with the risk discussed above, the Fund may have a high
portfolio turnover rate. A high portfolio turnover rate can result in
increased brokerage commission costs and may expose taxable shareholders to
higher current realization of capital gains and a potentially larger
current tax liability.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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.
HOW THE FUNDS HAVE PERFORMED
Although past performance of a Fund is no guarantee of how it will
perform in the future, historical performance may give you some indication of
the risk of investing in the Fund because it demonstrates how its returns have
varied over time. The Bar Chart and Performance Table that would otherwise
appear in this prospectus have been omitted because each Fund is recently
organized and has a limited performance history.
<TABLE>
FEES AND EXPENSES OF INVESTING IN THE FUNDS
============================================================== ======================= ==================== ====================
<CAPTION>
GROWTH SMALL-CAP INTERNATIONAL
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
<S> <C> <C> <C>
Maximum Deferred Sales Charge (Load) None None None
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Exchange Fee None None None
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Management Fees 1.75% 1.80% 1.95%
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Distribution (12b-1) Fees 0.00% 0.00% 0.00%
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Other Expenses ____% ____% ____%
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Total Annual Fund Operating Expenses ____% ____% ____%
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
VIF EQUITY FIXED INCOME MARKET NEUTRAL
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Maximum Deferred Sales Charge (Load) None None None
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Exchange Fee None None None
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Management Fees 1.00% 1.25% 2.25%
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Distribution (12b-1) Fee 0.00% 0.00% 0.00%
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Other Expenses ____% ____% ____%
============================================================== ======================= ==================== ====================
============================================================== ======================= ==================== ====================
Total Annual Fund Operating Expenses ____% ____% ____%
============================================================== ======================= ==================== ====================
</TABLE>
Example:
The example below is intended to help you compare the cost of investing
in a 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:
<TABLE>
<S> <C> <C> <C> <C>
SHEPHERD VALUES GROWTH FUND 1 year 3 years 5 years 10 years
------ -------- ------- --------
SHEPHERD VALUES SMALL-CAP FUND 1 year 3 years 5 years 10 years
------ -------- ------- --------
SHEPHERD VALUES INTERNATIONAL FUND 1 year 3 years 5 years 10 years
------ -------- ------- --------
SHEPHERD VALUES VIF EQUITY FUND 1 year 3 years 5 years 10 years
------ -------- ------- --------
SHEPHERD VALUES FIXED INCOME FUND 1 year 3 years 5 years 10 years
------ -------- ------- --------
SHEPHERD VALUES MARKET NEUTRAL FUND 1 year 3 years 5 years 10 years
------ -------- ------- --------
</TABLE>
HOW TO BUY SHARES
The minimum initial investment in each Fund is $2,500 ($1,000 for
qualified retirement accounts) and minimum subsequent investments are $50. For
accounts participating in an automatic investment program, the minimum initial
investment is $500 and the minimum subsequent investment is $50 per month. 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- To be in proper form, your initial purchase request must
include: o a completed and signed investment application form (which accompanies
this Prospectus); and o a check (subject to the minimum amounts) made payable to
the appropriate Fund.
Mail the application and check to:
U.S. Mail: Overnight:
Shepherd Values Funds Shepherd Values Funds
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 Funds' transfer agent, at (877)
636-2766 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: Shepherd Values Purchase Account
Account Name _________________(write in shareholder name)
For the Account # ______________(write in account number)
D.D.A.#821602695
You must mail a signed application to Firstar Bank, N.A, the Funds'
custodian, at the above address in order to complete your initial wire purchase.
Wire orders will be accepted only on a day on which the Funds, custodian and
transfer agent are open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the
Funds. Any delays which may occur in wiring money, including delays which may
occur in processing by the banks, are not the responsibility of the Funds or the
transfer agent. There is presently no fee for the receipt of wired funds, but
the Funds may charge shareholders for this service in the future.
Your purchase of shares of a Fund will be effected at the public
offering price. The public offering price is the next determined net asset value
per share plus a sales load as shown in the following table.
<TABLE>
<CAPTION>
======================================= ------------------------------------------------ ==================
Sales Load as of % of:
Public Net
Offering Amount Dealer Reallowance as % of
Amount of Investment Price Invested Public Offering Price
======================================= ========================== ========================================
<S> <C> <C> <C>
Less than $100,000 3.50% 3.63% 3.50%
$100,000 but less than $250,000 2.50% 2.56% 2.50%
$250,000 but less than $500,000 1.50% 1.52% 1.50%
$500,000 but less than $1,000,000 1.00% 1.01% 1.00%
$1,000,000 or more None None None
======================================= =========================== =======================================
</TABLE>
Under certain circumstances, the Distributor may change the reallowance
to dealers. Dealers engaged in the sale of shares of the Fund may be deemed to
be underwriters under the Securities Act of 1933. The Distributor retains the
entire sales load on all direct initial investments in the Fund and on all
investments in accounts with no designated dealer of record.
ADDITIONAL INVESTMENTS
You may purchase additional shares of any 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) -the name of the Fund
-a check made payable to the appropriate fund
Checks should be sent to the Shepherd Values Funds at the address listed above.
A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
TAX SHELTERED RETIREMENT PLANS
Since the Funds are oriented to longer-term investments, the Funds may
be an appropriate investment medium for tax-sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit-sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the 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 Funds may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred by the Funds. If you are already a shareholder, the 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.
REDUCED SALES LOAD
You may use the Right of Accumulation to combine the cost or current
net asset value (whichever is higher) of your shares of a Fund with the amount
of your current purchases in order to take advance of the reduced sales load set
forth in the table above. Purchases made pursuant to a Letter of Intent may also
be eligible for the reduced sales loads. The minimum initial investment under a
Letter of Intent is $25,000. Shareholders should contact the Transfer Agent for
information about the Right of Accumulation and Letter of Intent.
PURCHASES AT NET ASSET VALUE
Purchases may be effected at net asset value for the benefit of the
clients of brokers-dealers and registered investment advisors affiliated with a
broker-dealer, if such broker-dealer or investment advisor has entered into an
agreement with the Distributor providing specifically for the purchase of Fund
shares in connection with special investment products, such as wrap accounts or
similar fee based programs.
Trustees, directors, officers and employees of the Trust, the advisors
and service providers to the Trust, including members of the immediate family of
such individuals and employee benefit plans established by such entities, may
also purchase shares of each Fund at net asset value.
EXCHANGE PRIVILEGE
By telephoning the Fund at (877) 636-2766 or writing the Fund at P.O.
Box 6110 , Indianapolis, Indiana 46206-6110, you may exchange, without charge,
any or all of your shares in the Funds for the shares of The Unified Taxable
Money Market Fund, a separately managed money market fund. Exchanges may be made
only if the money market fund is registered in your state of residence. The
exchange privilege with the money market fund does not constitute an offering or
recommendation of the money market fund.
It is your responsibility to obtain and read a prospectus of the money
market fund before you make an exchange. By giving exchange instructions, you
will be deemed to have acknowledged receipt of the prospectus for the money
market fund. You may make up to one exchange out of each Fund during a calendar
month and four exchanges out of each Fund during a calendar year. This limit
helps keep each Fund's net asset base stable and reduces the Fund's
administrative expenses. There currently is no limit on exchanges out of the
money market fund. In times of extreme economic or market conditions, exchanging
Fund or the money market fund shares by telephone may be difficult.
Redemption of shares in connection with exchanges into or out of a Fund
are made at the net asset value per share next determined after the exchange
request is received. To receive a specific day's price, your letter or call must
be received before that day's close of the New York Stock Exchange. A day or
more delay may be experienced prior to the investment of the redemption proceeds
into the money market fund. Each exchange represents the sale of shares from one
fund and the purchase of shares in another, which may produce a gain or loss for
Federal income tax purposes.
All exchanges out of the Fund into the money market fund are subject to
the minimum and subsequent investment requirements of the money market fund.
Exchanges may be made through a third party which maintains an omnibus account
with the money market fund for all shareholders of the Funds. Neither the Fund,
the money market fund, nor the Transfer Agent assume responsibility for the
authenticity of exchange instructions communicated by telephone or in writing
which are believed to be genuine.
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
Funds 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 a Fund at no
charge by mail. Your request should be addressed to:
Shepherd Values Funds
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper form,
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 Funds 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 Funds or the
Funds' 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 a Fund by
calling the Funds' transfer agent at (877) 636-2766. 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 Funds or the transfer agent may terminate the telephone redemption
procedures at any time. During periods of extreme market activity, it is
possible that shareholders may encounter some difficulty in telephoning the
Funds, although neither the Funds nor the transfer agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Funds by
telephone, you may request a redemption or exchange by mail.
ADDITIONAL INFORMATION - If you are not certain of the
requirements for a redemption please call the Funds' transfer agent at (877)
636-2766. Redemptions specifying a certain date or share price cannot be
accepted and will be returned. You will be mailed the proceeds on or before the
fifth business day following the redemption. However, payment for redemption
made against shares purchased by check will be made only after the check has
been collected, which normally may take up to fifteen calendar days. Also, when
the New York Stock Exchange is closed (or when trading is restricted) for any
reason other than its customary weekend or holiday closing, or under any
emergency circumstances (as determined by the Securities and Exchange
Commission) the Funds may suspend redemptions or postpone payment dates.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, the Fund may require you to redeem all of your shares in a Fund on 30
days' written notice if the value of your shares in the Fund is less than $2,500
due to redemption, or such other minimum amount as the Fund may determine from
time to time. An involuntary redemption constitutes a sale. You should consult
your tax advisor concerning the tax consequences of involuntary redemptions. You
may increase the value of your shares in a 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 Funds.
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 by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
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. Each Fund typically distributes
substantially all of its net investment income in the applicable form of
dividends and taxable capital gains to its shareholders. These distributions are
automatically reinvested in the applicable Fund unless you request cash
distributions on your application or through a written request. Each Fund
(except the Fixed Income Fund) expects that its distributions will consist
primarily of capital gains. The Fixed Income Fund expects that its distributions
will consist primarily of income.
TAXES. In general, selling shares of a 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. You may want to avoid making a
substantial investment when a Fund is about to make a capital gains distribution
because you would be responsible for any taxes on the distribution regardless of
how long you have owned your shares.
Early each year, the Funds 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
Shepherd Advisory Services, Inc., 6760 Corporate Drive, Suite 230,
Colorado Springs, CO 80919 serves as investment advisor to each Fund. Shepherd,
a recently registered investment advisory firm, was organized as a Tennessee
corporation on July 28, 1998. Shepherd has engaged a sub-advisor (at Shepherd's
expense) to provide portfolio management services to each Fund. Shepherd is
authorized to receive a fee equal to a percentage of each Fund's daily net
assets as follows: Small-Cap Fund, __%; International Fund, __%; Growth Fund,
__%; VIF Equity Fund, __%; Market Neutral Fund, __%; and Fixed Income Fund, __%.
Shepherd has entered into a Sub-Advisory Agreement with
Nicholas-Applegate Capital Management, 600 West Broadway, Suite 2900, San Diego,
California to serve as the sub-advisor of the Small-Cap Fund. As of January 1,
2000, Nicholas-Applegate manages approximately $__ billion in assets for
numerous clients, including employee benefit plans of corporations, public
retirement systems and unions, university endowments, foundations, and other
institutional investors and individuals. The investment decisions of the
Small-Cap Fund are made by a team of investment professionals who are primarily
responsible for the day-to-day management of the Fund: Catherine Somhegyi,
partner and Chief Investment Officer of Global Equity Management, joined the
firm in 1987; Larry Speidell, CFA, partner and Director of Global/Systematic
Portfolio Management and Research, joined the Firm in 1994; John J. Kane,
partner and Portfolio Manager , joined the firm in 1994; and Mark Stuckelman,
Portfolio Manager, joined the firm in 1995, prior to that time he had five years
prior investment experience with Wells Fargo Bank Investment Management Group,
Fidelity Management Trust Co., and BARRA. Shepherd has agreed to pay
Nicholas-Applegate a sub-advisory fee equal to an annual average rate of 0.65%
of the average daily net assets of the Small-Cap Fund.
Shepherd has entered into a Sub-Advisory Agreement with Templeton
Portfolio Advisory, 500 E. Broward Boulevard, Suite 2100, Fort Lauderdale,
Florida, to serve as the sub-advisor of the International Fund. As of January 1,
2000, Templeton Portfolio Advisory manages over [$1.9 billion] in assets for
various clients, including corporations, foundations and charitable endowments,
and individuals. The investment decisions of the International Fund are made by
a committee of Templeton Portfolio Advisory , which is primarily responsible for
the day-to-day management of the Fund. Shepherd has agreed to pay Templeton
Portfolio Advisory a sub-advisory fee equal to an annual average rate of 0.75%
of the average daily net assets of the International Fund.
Shepherd has entered into a Sub-Advisory Agreement with Cornerstone
Capital Management, Inc., 6760 Corporate Drive, Suite 230, Colorado Springs, CO
80919 to serve as the sub-advisor of the Growth Fund, the VIF Equity Fund and
the Market Neutral Fund. Cornerstone manages assets for corporations,
endowments, foundations, institutional investors, individuals and limited
partnerships. The investment decisions of the Growth Fund, the VIF Equity Fund
and the Market Neutral Fund are made by a committee of Cornerstone , which is
primarily responsible for the day-to-day management of the Fund. Shepherd has
agreed to pay Cornerstone sub-advisory fees equal to an annual average rate of [
%] of the average daily net assets of the Growth Fund , 0.20% of the average
daily net assets of the VIF Equity Fund, and [ %] of the average daily net
assets of the Market Neutral Fund.
Shepherd has entered into a Sub-Advisory Agreement with Potomac Asset
Management Company, Inc., 3 Bethesda Metro Center, Suite 530, Bethesda, MD 20814
, to serve as the sub-advisor of the Fixed Income Fund. As of January 1, 2000,
Potomac managed over [$700] million in assets for institutional clients,
including pension plans, non-profits, endowments, foundations and health care
organizations, and high net worth individuals. The investment decisions of the
Fixed Income Fund are made by Roger W. Marshall and Frederic M. Smoak, CFA, who
are primarily responsible for the day-to-day management of the Fund. Roger W.
Marshall is the Managing Director and Senior Fixed Income Portfolio Manager at
Potomac Asset Management, and a member of the firm's Investment Policy
Committee. His 21 years of industry experience includes both fixed income
management and capital markets research. Before joining Potomac in 1998, Mr.
Marshall was President of Wainwright Asset Management for four years; Senior
Vice President at A. Webster Dougherty Asset Management in 1994; and
President/Managing Director of Fixed-income Services at Riggs Investment
Management Corporation (RIMCO) from 1988-1994. Frederic M. Smoak, CFA is the
Managing Director and Senior Fixed Income Portfolio Manager at Potomac Asset
Management. He is a member of the firm's Investment Policy Committee and has
Senior Portfolio Management responsibility for the firm's Investment Grade Fixed
Income Strategy. Mr. Smoak has led Potomac's fixed-income effort since joining
the firm in 1988 and has 17 years of portfolio management and trading
experience. Shepherd has agreed to pay Potomac a sub-advisory fee equal to an
annual average rate of 0.35% of the average daily net assets of the Fixed Income
Fund.
The advisor (not the Fund) may pay certain financial institutions
(which may include banks, brokers, securities dealers and other industry
professionals) a fee for providing distribution related services and/or for
performing certain administrative servicing functions for Fund shareholders to
the extent these institutions are allowed to do so by applicable statute, rule
or regulation.
OTHER INFORMATION ABOUT INVESTMENTS
GENERAL
The investment objective of each Fund may be changed without shareholder
approval.
From time to time, the Funds may take temporary defensive positions which
are inconsistent with the Funds' principal investment strategies, in attempting
to respond to adverse market, economic, political, or other conditions. For
example, each 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 a Fund invests in shares of another mutual fund, the shareholders of the
Funds generally will be subject to duplicative management fees. As a result of
engaging in these temporary measures, a Fund may not achieve its investment
objective. The Funds may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
SHORT SALES. The Growth Fund and the Market Neutral Fund may a sell a security
short in anticipation of a decline in the market value of the security. When a
Fund engages in a short sale, it sells a security which it does not own. To
complete the transaction, the Fund must borrow the security in order to deliver
it to the buyer. The Fund must replace the borrowed security by purchasing it at
the market price at the time of replacement, which may be more or less than the
price at which the Fund sold the security. The Fund will incur a loss as a
result of the short sale if the price of the security increases between the date
of the short sale and the date on which the Fund replaces the borrowed security.
The Fund will realize a profit if the security declines in price between those
dates.
In connection with its short sales, each Fund will be required to
maintain a segregated account with the Custodian of cash or high grade liquid
assets equal to the market value of the securities sold less any collateral
deposited with its broker (not including the proceeds from the short sales). The
Growth Fund will limit its short sales so that no more than 10% 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. The
Fund will not make a short sale if, after giving effect to such sale, the market
value of all securities sold exceeds 100% of the value of the Fund's net assets.
However, the segregated account and deposits will not necessarily limit the
Fund's potential loss on a short sale, which is unlimited. Each Fund's use of
short sales may result in the Fund realizing more short-term capital gains
(subject to tax at ordinary rates) than it would if it did not engage in short
sales.
EQUITY SECURITIES. Equity securities consist of common stock, convertible
preferred stock, convertible bonds, rights and warrants. Common stocks, the most
familiar type, represent an equity (ownership) interest in a corporation.
Warrants are options to purchase equity securities at a specified price for a
specific time period. Rights are similar to warrants, but normally have a short
duration and are distributed by the issuer to its shareholders. Although equity
securities have a history of long term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions. Each Fund's investment in convertible securities will be
limited to those of investment grade.
Equity securities include S&P Depositary Receipts ("SPDRs") and other
similar instruments. SPDRs are shares of a publicly traded unit investment trust
which owns the stocks included in the S&P 500 Index, and changes in the price of
SPDRs track the movement of the Index relatively closely.
Equity securities also include common stocks and common stock
equivalents of domestic real estate investment trusts ("REITs") and other
companies which operate as real estate corporations or which have a significant
portion of their assets in real estate. A Fund will not acquire any direct
ownership of real estate.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the advisor. As a result, the return and net asset value
of the Fund will fluctuate. Securities in the Fund's portfolios may not increase
as much as the market as a whole and some undervalued securities may continue to
be undervalued for long periods of time. Although profits in some Fund holdings
may be realized quickly, it is not expected that most investments will
appreciate rapidly.
FOREIGN SECURITIES. Each Fund (except the Fixed Income Fund) may invest in
foreign equity securities by purchasing American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs") or Global Depositary Receipts ("GDRs").
These securities are certificates evidencing ownership of shares of a
foreign-based issuer held in trust by a bank or similar financial institution.
They are alternatives to the direct purchase of the underlying securities in
their national markets and currencies. The International Fund may invest
directly in foreign equity securities as well as ADRs. The Fixed Income Fund may
invest up to 25% of its net assets in foreign debt securities.
To the extent a Fund invests in foreign securities, either directly or
through the purchase of depositary receipts, the Fund will be subject to special
risks. Foreign debt and equity securities, and securities denominated in or
indexed to foreign currencies may be affected by the strength of those
currencies relative to the U.S. dollar, or by political or economic developments
in foreign countries. These developments could include restrictions on foreign
currency transactions and rules of exchange, or changes in administrations or
monetary policies of foreign governments. Foreign securities purchased using
foreign currencies may incur currency conversion costs. Foreign issuers and
brokers may not be subject to accounting standards or governmental supervision
comparable to U.S. issuers and brokers, and there may be less public information
about their operations. In addition, foreign markets may be less liquid or more
volatile than U.S. markets, and may offer less protection to investors.
The International Fund and Fixed Income Fund may enter into currency
forward contracts (agreements to exchange one currency for another at a future
date) to manage currency risks and to facilitate transactions in foreign
securities. Although currency forward contracts can be used to protect a Fund
from adverse exchange rate changes, the Fund may incur a loss if the advisor
incorrectly predicts foreign currency values.
With respect to certain countries in which capital markets are either
less developed or not easily accessed (emerging markets), investments by the
International Fund and the Fixed Income Fund may be made through investment in
other registered investment companies that in turn are authorized to invest in
the securities of such countries. Investment in other investment companies will
involve the indirect payment of a portion of the expenses, including advisory
fees, of such other investment companies and will result in a duplication of
fees and expenses.
There is no limitation on the amount of the International Fund's assets
that may be invested in foreign securities, except that no more than 25% of the
Fund's assets may be invested in any one foreign country or companies operating
exclusively in one foreign country.
FIXED INCOME SECURITIES. Fixed income securities are generally considered to be
interest rate sensitive, which means that their value will generally decrease
when interest rates rise and increase when interest rates fall. Securities with
shorter maturities, while offering lower yields, generally provide greater price
stability than longer term securities and are less affected by changes in
interest rates.
The Growth Fund and the Fixed Income Fund may invest in corporate debt
securities. These are long and short-term debt obligations issued by companies
(such as publicly issued and privately placed bonds, notes and commercial
paper). Each 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"), Baa or higher by Moody's Investors Services, Inc. ("Moody's"), or if
unrated, determined by the Advisor (or in the case of the Fixed Income Fund, by
the sub-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. Neither Fund will invest more than 20% of its assets in corporate debt
rated in the lowest investment grade category. If the rating of a security by
S&P or Moody's drops below investment grade, the advisor (or sub-advisor) will
dispose of the security as soon as practicable, (depending on market conditions)
unless the advisor (or sub-advisor) determines based on its own credit analysis
that the security provides the opportunity of meeting the Fund's objective
without presenting excessive risk.
Each Fund may invest in U.S. government obligations. These securities may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the agency that issued them, and not by the U.S. government.
Securities issued by the Federal Farm Credit System, the Federal Land Banks, and
the Federal National Mortgage Association (FNMA) are supported by the agency's
right to borrow money from the U.S. Treasury under certain circumstances, but
are not backed by the full faith and credit of the U.S. government.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Growth Fund and the Fixed
Income Fund may purchase securities on a when-issued or delayed delivery basis.
Delivery of and payment for these securities may take place as long as a month
or more after the date of the purchase commitment. The value of these securities
is subject to market fluctuation during this period and no income accrues to the
Fund until settlement takes place. The Fund maintains with the Custodian a
segregated account containing liquid securities in an amount at least equal to
these commitments.
INVESTMENT IN RELATIVELY NEW ISSUES. Each Fund may invest in securities of
selected new issuers. If a Fund invests in credit instruments of relatively new
issuers, it will only be in those issues where the advisor or sub-advisor (as
the case may be) believes there are strong covenant protections for the holder.
If issuers meet the investment criteria discussed above, the Fund may invest in
securities without respect to the age of the issuer. Investments in relatively
new issuers, i.e., those having continuous operating histories of less than
three years, may carry special risks and may be more speculative because such
companies are relatively unseasoned. Such companies may also lack sufficient
resources, may be unable to generate internally the funds necessary for growth
and may find external financing to be unavailable on favorable terms or even
totally unavailable. Those companies will often be involved in the development
or marketing of a new product with no established market, which could lead to
significant losses.
OPTIONS ON STOCKS OR BONDS. The Growth Fund, the VIF Equity Fund and the Market
Neutral Fund may write covered call options, and purchase put and call options,
on stocks or bonds. A call option gives the purchaser of the option the right to
buy, and obligates the writer to sell, the underlying security at the exercise
price at any time during the option period. Similarly, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy the
underlying security at the exercise price at any time during the option period.
A covered call option with respect to which a Fund owns the underlying security
sold by the Fund exposes the Fund during the term of the option to possible loss
of opportunity to realize appreciation in the market price of the underlying
security or to possible continued holding of a security which might otherwise
have been sold to protect against depreciation in the market price of the
security.
OPTIONS ON STOCK AND BOND INDICES. The Growth Fund, the VIF Equity Fund and
Market Neutral Fund may write covered call options, and purchase put and call
options, on stock or bond indices listed on domestic and foreign stock
exchanges, in lieu of direct investment in the underlying securities or for
hedging purposes. A stock or bond index fluctuates with changes in the market
values of the securities included in the index. Options on securities indices
are generally similar to options on stocks except that the delivery requirements
are different. Instead of giving the right to take or make delivery of
securities at a specified price, an option on a stock or bond index gives the
holders the right to receive a cash "exercise settlement amount" equal to (a)
the amount, if any, by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of the exercise, multiplied by (b) a fixed
"index multiplier." To cover the potential obligations involved in writing
options, the Fund will either (a) hold a portfolio of stocks substantially
replicating the movement of the index, or (b) the Fund will segregate with the
Custodian high grade liquid debt obligations equal to the market value of the
stock index option, marked to market daily. Successful use by the Fund of
options on security indices will be subject to the Cornerstone's ability to
predict correctly movement in the direction of the security market generally or
of a particular industry. This requires different skills and techniques than
predicting changes in the price of individual securities.
<PAGE>
FOR MORE INFORMATION
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. Annual
and semi-annual reports contain management's discussion of market conditions,
investment strategies and performance results as of the Funds' latest
semi-annual or annual fiscal year end.
Call the Funds at 877-636-2766 to request free copies of the SAI and
the Funds' annual and semi-annual reports, to request other information about
the Funds and to make shareholder inquiries.
You may review and copy information about the Funds (including the SAI
and other reports) at the Securities and Exchange Commission (SEC) Public
Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours
and operation. You may also obtain reports and other information about the Fund
on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and
copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
ARISTON CONVERTIBLE SECURITIES FUND
STATEMENT OF ADDITIONAL INFORMATION
January __, 2000
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Prospectus of Ariston Convertible
Securities Fund dated January __, 2000. This SAI incorporates by reference the
Fund's Annual Report to Shareholders for the fiscal year ended December 31, 1999
("Annual Report"). 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 1-888-387-2273.
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST AND FUND.............................................1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS...............................................................1
INVESTMENT LIMITATIONS........................................................5
THE INVESTMENT ADVISOR........................................................8
TRUSTEES AND OFFICERS.........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................9
DETERMINATION OF SHARE PRICE.................................................10
INVESTMENT PERFORMANCE.......................................................11
CUSTODIAN....................................................................12
TRANSFER AGENT...............................................................12
ACCOUNTANTS..................................................................12
DISTRIBUTOR..................................................................12
ADMINISTRATOR................................................................12
FINANCIAL STATEMENTS..........................................................
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
The Ariston Convertible Securities Fund (the "Fund") was organized as a
series of AmeriPrime Funds (the "Trust") February 24, 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 Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Fund's transfer
agent for the account of the shareholders. Each share of a series represents an
equal proportionate interest in the assets and liabilities belonging to that
series with each other share of that series and is entitled to such dividends
and distributions out of income belonging to the series as are declared by the
Trustees. The shares do not have cumulative voting rights or any preemptive or
conversion rights, and the Trustees have the authority from time to time to
divide or combine the shares of any series into a greater or lesser number of
shares of that series so long as the proportionate beneficial interest in the
assets belonging to that series and the rights of shares of any other series are
in no way affected. In case of any liquidation of a series, the holders of
shares of the series being liquidated will be entitled to receive as a class a
distribution out of the assets, net of the liabilities, belonging to that
series. Expenses attributable to any series are borne by that series. Any
general expenses of the Trust not readily identifiable as belonging to a
particular series are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. No shareholder
is liable to further calls or to assessment by the Trust without his or her
express consent.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely effects the rights of shareholders must be approved by the
shareholders affected. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion that failure to
so redeem may have materially adverse consequences to all or any of the Fund's
shareholders.
As of ______, 1999, [insert information regarding 5% shareholders.]
[As of _______, 1999, the officers and trustees as a group own less
than one percent of the Fund.]
For information concerning the purchase and redemption of shares of the
Fund, see "How to 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
Fund's Prospectus and this Statement of Additional Information.
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. High Yield Debt Securities ("Junk Bonds"). The widespread expansion
of government, consumer and corporate debt within our economy has made the
corporate sector, especially cyclically sensitive industries, more vulnerable to
economic downturns or increased interest rates. An economic downturn could
severely disrupt the market for high yield securities and adversely affect the
value of outstanding securities and the ability of the issuers to repay
principal and interest.
The prices of high yield securities have been found to be more
sensitive to interest rate changes than higher-rated investments, and more
sensitive to adverse economic changes or individual corporate developments.
Also, during an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
adversely affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a security owned by the Fund defaulted, the Fund
could incur additional expenses to seek recovery. In addition, periods of
economic uncertainty and changes can be expected to result in increased
volatility of market prices of high yield securities and the Fund's net asset
value. Furthermore, in the case of high yield securities structured as zero
coupon or pay-in-kind securities, their market prices are affected to a greater
extent by interest rate changes and thereby tend to be more volatile than
securities which pay interest periodically and in cash. High yield securities
also present risks based on payment expectations. For example, high yield
securities may contain redemption of call provisions. If an issuer exercises
these provisions in a declining interest rate market, the Fund would have to
replace the security with a lower yielding security, resulting in a decreased
return for investors. Conversely, a high yield securities value will decrease in
a rising interest rate market, as will the value of the Fund's assets. If the
Fund experiences unexpected net redemption, this may force it to sell its high
yield securities without regard to their investment merits, thereby decreasing
the asset based upon which the Fun's expenses can be spread and possibly
reducing the Fund's rate of return.
In addition, to the extent that there is no established retail
secondary market, there may be thin trading of high yield securities, and this
may have an impact on the Fund's ability to accurately value high yield
securities and the Fund's assets and on the Fund's ability to dispose of the
securities. Adverse publicity and investor perception, whether or not based on
fundamental analysis, may decrease the values and liquidity of high yield
securities especially in a thinly traded market.
New laws and proposed new laws may have an impact on the market for
high yield securities. For example, new legislation requiring federally-insured
savings and loan associations to divest their investments in high yield
securities and pending proposals designed to limit the use, or tax and other
advantages of high yield securities which, if enacted, could have a material
effect on the Fund's net asset value and investment practices.
There are also special tax considerations associated with investing in
high yield securities structured as zero coupon or pay-in-kind securities. For
example, the Fund reports the interest on these securities as income even though
it receives no cash interest until the security's maturity or payment date.
Also, the shareholders are taxed on this interest event if the Fund does not
distribute cash to them. Therefore, in order to pay taxes on this interest,
shareholders may have to redeem some of their shares to pay the tax or the Fund
may sell some of its assets to distribute cash to shareholders. These actions
are likely to reduce the Fund's assets and may thereby increase its expense
ratio and decrease its rate of return.
Finally, there are risks involved in applying credit ratings as method
for evaluating high yield securities. For example, credit ratings evaluate the
safety of principal and interest payments, not market value risk of high yield
securities. Also, since credit rating agencies may fail to timely change the
credit ratings to reflect subsequent events, the Fund (in conjunction with its
investment advisor) will continuously monitor the issuers of high yield
securities to determine if the issuers will have sufficient cash flow and
profits to meet required principal and interest payments, and to assure the
securities liquidity so the Fund can meet redemption requests.
A description of the rating categories is contained in the Appendix.
B. Warrants. The Portfolio may invest up to 5% of its total assets at
the time of purchase in warrants (not including those acquired in units or
attached to other securities). A warrant is a right to purchase common stock at
a specific price during a specified period of time. The value of a warrant does
not necessarily change with the value of the underlying security. Warrants do
not represent any rights to the assets of the issuing company. A warrant becomes
worthless unless it is exercised or sold before expiration. Warrants have no
voting rights and pay no dividends.
C. Options Transactions. The Fund may write (sell) covered call options
and may purchase put and call options on individual securities and securities
indices. A covered call option on a security is an agreement to sell a
particular portfolio security if the option is exercised at a specified price,
or before a set date. Options are sold (written) on securities and market
indices. The purchaser of an option on a security pays the seller (the writer) a
premium for the right granted but is not obligated to buy or sell the underlying
security. The purchaser of an option on a market index pays the seller a premium
for the right granted, and in return the seller of such an option is obligated
to make the payment. A writer of an option may terminate the obligation prior to
the expiration of the option by making an offsetting purchase of an identical
option. Options on securities which the Fund sells (writes) will be covered or
secured, which means that it will own the underlying security (for a call
option) or (for an option on a stock index) will hold a portfolio of securities
substantially replicating the movement of the index (or, to the extent it does
not hold such a portfolio, will maintain a segregated account with the Custodian
of high quality liquid debt obligations equal to the market value of the option,
marked to market daily). When the Fund writes options, it may be required to
maintain a margin account, to pledge the underlying security or to deposit
liquid high quality debt obligations in a separate account with the Custodian.
When a Fund writes an option, the Fund profits from the sale of the option, but
gives up the opportunity to profit from any increase in the price of the stock
above the option price, and may incur a loss if the stock price falls. Risks
associated with writing covered call options include the possible inability to
effect closing transactions at favorable prices and an appreciation limit on the
securities set aside for settlement. When the Fund writes a covered call option,
it will receive a premium, but will assume the risk of loss should the price of
the underlying security fall below the exercise price.
D. Collateralized Short SalesThe Fund may make short sales of common
stocks, provided they are "against the box," i.e., the Fund owns an equal amount
of such securities or owns securities that are convertible or exchangeable
without payment of further consideration into an equal or greater amount of such
common stock. The Fund may make a short sale when the Fund manager believes the
price of the stock may decline and for tax or other reasons, the Fund manager
does not want to sell currently the stock or convertible security it owns. In
such case, any decline in the value of the Portfolio would be reduced by a gain
in the short sale transaction. Conversely, any increase in the value of the
portfolio would be reduced by a loss in the short sale transaction. The Fund may
not make short sales or maintain a short position unless at all times when a
short position is open, not more than 10% of its total assets (taken at current
value) is held as collateral for such sales at any one time. Short sales against
the box are used to defer recognition of capital gains and losses, although the
short-term or long-term nature of such gains or losses could be altered by
certain provisions of the Internal Revenue Code.
E. U.S. Government SecuritiesThe Fund may invest in securities issued
or guaranteed by the U.S. Government, its agencies and instrumentalities (U.S.
Government Securities"). U.S. Government Securities may be backed by the credit
of the government as a whole or only by the issuing agency. U.S. Treasury bonds,
notes, and bills and some agency securities, such as those issued by the Federal
Housing Administration and the Government National Mortgage Association (GNMA),
are backed by the full faith and credit of the U.S. government as to payment of
principal and interest and are the highest quality government securities. Other
securities issued by U.S. government agencies or instrumentalities, such as
securities issued by the Federal Home Loan Banks and the Federal Home Loan
Mortgage Corporation, are supported only by the credit of the agency that issued
them, and not by the U.S. government. Securities issued by the Federal Farm
Credit System, the Federal Land Banks, and the Federal National Mortgage
Association (FNMA) are supported by the agency's right to borrow money from the
U.S. Treasury under certain circumstances, but are not backed by the full faith
and credit of the U.S. government.
F. Repurchase Agreements The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with Star Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Advisor (subject to review by the Board of
Trustees) to be creditworthy. The Advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.
[Add 10% Restricted Securities]
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
this Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not engage in borrowing.
3. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
4. Short Sales. The Fund will not effect short sales of securities
except as described in the Prospectus or Statement of Additional Information.
5. Options. The Fund will not purchase or sell puts, calls, options or
straddles except as described in the Prospectus or Statement of Additional
Information.
6. Illiquid Investments. The Fund will not invest more than 10% of its
total assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
7. Loans of Portfolio Securities. The Fund will not make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Ariston Capital Management Corporation
(the "Advisor"), 40 Lake Bellevue Drive, Suite 220, Bellevue, Washington 98005.
As sole shareholder of the Advisor, Richard B. Russell may be deemed to be a
controlling person of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees. As compensation for its management services, the Fund is obligated to
pay the Advisor a fee computed and accrued daily and paid monthly at an annual
rate of 2.25% of the average daily net assets of the Fund less the amount of the
Fund's 12b-1 expenses and fees and expenses of the non-interested person
trustees. For the period __________, 1998 (commencement of operations) through
December 31, 1999, the Fund paid advisory fee of $_________.
The Advisor retains the right to use the name "Ariston" 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 "Ariston"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act (the "Plan"). The Plan permits the Fund to pay directly, or
reimburse the Advisor and Distributor, for distribution expenses in amount not
to exceed 0.25% of the average daily net assets of the Fund. The Trustees expect
that the Plan will significantly enhance the Fund's ability to distribute its
shares. Under the Plan, the Trust may engage in any activities related to the
distribution of Fund shares, including without limitation the following: (a)
payments, including incentive compensation, to securities dealers or other
financial intermediaries, financial institutions, investment advisors and others
that are engaged in the sale of shares, or that may be advising shareholders of
the Trust regarding the purchase, sale or retention of shares, or that hold
shares for shareholders in omnibus accounts or as shareholders of record or
provide shareholder support or administrative services to the Fund and its
shareholders; (b) expenses of maintaining personnel who engage in or support
distribution of shares or who render shareholder support services, including,
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; (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,
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 Trust
may deem advisable; and (g) costs of implementing and operating the Plan.
The Plan has been approved by the Fund's Board of Trustees, including a
majority of the Trustees who are not "interested persons" of the Fund and who
have no direct or indirect financial interest in the Plan or any related
agreement, by a vote cast in person. Continuation of the Plan and the related
agreements must be approved by the Trustees annually, in the same manner, and
the Plan or any related agreement may be terminated at any time without penalty
by a majority of such independent Trustees or by a majority of the outstanding
shares of the Fund. Any amendment increasing the maximum percentage payable
under the Plan must be approved by a majority of the outstanding shares of the
Fund, and all other material amendments to the Plan or any related agreement
must be approved by a majority of the independent Trustees. As an executive
officer of the Fund's Distributor, Kenneth Trumpfheller, a Trustee of the Trust,
may benefit indirectly from payments received by the Fund's Distributor.
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,
1793 Kingswood Drive Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
Suite 200 Inc., the Fund's distributor, since 1994; President and Trustee of
Southlake, Texas 76092 AmeriPrime Advisors Tust and AmeriPrime Insurance Trust; prior to
Year of Birth: 1958 December, 1994, a senior client executive with SEI Financial Services.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
1793 Kingswood Drive Treasurer Financial Service, Inc. and AmeriPrime Financial Securities Inc. since
Suite 200 January 1999; Secretary and Treasurer of AmeriPrime Advisors Trust
Southlake, Texas 76092 and AmeriPrime Insurance Trust; various positions with Fidelity
Year of Birth: 1959 Investments from 1987 to 1998; most recently Fund Reporting Unit
Manager.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
2001 N. Indianwood Avenue services company; various positions with Carbo Ceramics, Inc., oil
Broken Arrow, OK 74012 field manufacturing/supply company, from 1984 to 1997, most recently
Year of Birth: 1957 Vice President of Marketing.
==================================== ---------------- ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
600 Jefferson Street Company since 1992; President and Director of Heritage Trust
Suite 350 Company form 1994-1996; Vice President and Manager of Investments
Houston, Texas 77002 of Kanaly Trust Company from 1988 to 1992.
==================================== ================ ======================================================================
</TABLE>
<PAGE>
The compensation paid to the Trustees of the Trust for the Fund's
fiscal year ended December 31, 1999 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>
NAME AGGREGATE TOTAL COMPENSATION
====================================== -------------------------- =======================================
====================================== -------------------------- =======================================
<S> <C> <C>
Kenneth D. Trumpfheller 0 0
====================================== -------------------------- =======================================
====================================== -------------------------- =======================================
====================================== -------------------------- =======================================
====================================== -------------------------- =======================================
Steve L. Cobb $_____ $_____
====================================== -------------------------- =======================================
====================================== ========================== =======================================
====================================== ========================== =======================================
====================================== ========================== =======================================
Gary E. Hippenstiel $_____ $_____
====================================== ========================== =======================================
</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
Fund's 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 effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
When the Fund and another of the Advisor's clients seek to purchase or
sell the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. The allocation may be adjusted by the Advisor, taking into account such
factors as the size of the individual orders and transaction costs, when the
Advisor believes adjustment is reasonable. For the period ______, 1998
(commencement of operations) through December 31, 1999, the Fund paid brokerage
fees of $_____.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Determination of Net
Asset Value" in the Prospectus.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Fund's advisor's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Fund's advisor determines
the last bid price does not accurately reflect the current value or when
restricted securities are being valued, such securities are valued as determined
in good faith by the Fund's advisor, subject to review of the Board of Trustees
of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Fund's advisor believes such prices accurately reflect the fair
market value of such securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's advisor, subject to review of the Board of Trustees.
Short term investments in fixed income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity, are
valued by using the amortized cost method of valuation, which the Board has
determined will represent fair value.
INVESTMENT PERFORMANCE
The Fund may periodically advertise "average annual total returns".
"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
for the period indicated that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end
of the applicable period of the
hypothetical $1,000 investment made
at the beginning of the applicable
period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
In addition to providing average annual total return, the Fund may also
provide non-standardized quotations of total return for differing periods and
may provide the value of a $10,000 investment (made on the date of the initial
public offering of the Fund's shares) as of the end of a specified period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period
_________, 1998 (commencement of operations) through December 31, 1999, the
Fund's average annual total return was _____%.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
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
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Fund with 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). For the period _____, 1998 (commencement of
operations) through December 31, 1999, Unified received $_____, from the Advisor
(not the Fund) for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Fund for
the fiscal year ending November 30, 2000. 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. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the Distributor. The Distributor is obligated to sell the shares of
the Fund on a best efforts basis only against purchase orders for the shares.
Shares of the Fund are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period _______, 1998 (commencement of operations) through
December 31, 1999, the Administrator received $_____, from the Advisor (not the
Fund) for these Services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information will be incorporated
herein by reference to the Fund's Annual Report to Shareholders for the period
ended December 31, 1999 by subsequent amendment. The Trust will provide the
Annual Report without charge by calling the Fund at 1-888-387-2273.
<PAGE>
APPENDIX
SUMMARY OF RATINGS
Corporate and Municipal Debt Securities Ratings
Moody's Standard & Poor's
Investor Service Corporation
Aaa AAA Highest quality Aa AA High quality A A Upper medium grade Baa BBB Medium
grade Ba BB Speculative B B More speculative
A. CCC, CC, C Highly speculative
B. CI Income bond, no interest paid currently Caa, Ca, C - Probably in default
C. D In default
Not rated Not ratedAPPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS SERVICES
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform any audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obliger as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature and provisions of the obligation.
III. Protection afforded by, and relative position of the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC", and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rate "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB" rating.
B - Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.
CC - The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C - The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 - The rating "C1" is reserved for income bonds on which no interest is
being paid.
D - Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which make the long-term risk appear somewhat greater than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements:
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers: 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category, the modifier 2 indicates a mid-range ranking, and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
AUXIER FOCUS FUND
STATEMENT OF ADDITIONAL INFORMATION
January __, 2000
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Prospectus of Auxier Focus Fund dated
January __, 2000. 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 Toll Free 1-877-3-AUXIER (877-328-9437).
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST AND FUND.............................................1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS................................................................2
INVESTMENT LIMITATIONS........................................................6
THE INVESTMENT ADVISOR........................................................8
TRUSTEES AND OFFICERS.........................................................9
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................10
DETERMINATION OF SHARE PRICE..................................................11
INVESTMENT PERFORMANCE........................................................11
CUSTODIAN.....................................................................12
TRANSFER AGENT................................................................12
ACCOUNTANTS...................................................................13
DISTRIBUTOR...................................................................13
ADMINISTRATOR.................................................................13
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
The Auxier Focus Fund (the "Fund") was organized as a series of
AmeriPrime Funds (the "Trust") ______________, 1998. The Trust is an open-end
investment company established under the laws of Ohio by an Agreement and
Declaration of Trust dated August 8, 1995 (the "Trust Agreement"). The Trust
Agreement permits the Trustees to issue an unlimited number of shares of
beneficial interest of separate series without par value. The Fund is one of a
series of funds currently authorized by the Trustees.
The Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Fund's transfer
agent for the account of the Shareholder. 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.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely effects the rights of shareholders must be approved by the
shareholders affected. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion that failure to
so redeem may have materially adverse consequences to all or any of the Fund's
shareholders.
As of ______, 1999, [Charles Schwab & Co. ("Schwab"), 101 Montgomery
Street, San Francisco, CA was the record owner of ______% of the Fund. As a
result, Schwab may be deemed to control the Fund. The Schwab accounts are
omnibus accounts, and the Fund is unaware of any individual investor owning 5%
or more of the Fund.]
[As of _______, 1999, the officers and trustees as a group own less
than one percent of the Fund.]
For information concerning the purchase and redemption of shares of the
Fund, see "How to 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" Share
Price Calculation" in the Fund's Prospectus and this Statement of Additional
Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a discussion of some of the investments the Fund
may make and some of the techniques it may use.
A. Equity Securities. Equity securities consist of common stock,
preferred stock, convertible preferred stock, convertible bonds, rights and
warrants. Common stocks, the most familiar type, represent an equity (ownership)
interest in a corporation. Warrants are options to purchase equity securities at
a specified price for a specific time period. Rights are similar to warrants,
but normally have a short duration and are distributed by the issuer to its
shareholders. Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's financial
condition and on overall market and economic conditions. The Fund will not
invest more than 5% of its net assets in each of the following:
preferred stock, convertible preferred stock and convertible bonds.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Adviser. As a result, the return and net asset value
of the Fund will fluctuate. Securities in the Fund's portfolio may not increase
as much as the market as a whole and some undervalued securities may continue to
be undervalued for long periods of time. Although profits in some Fund holdings
may be realized quickly, it is not expected that most investments will
appreciate rapidly.
ADRs are subject to risks similar to those associated with direct
investment in foreign securities. For example, there may be less information
publicly available about a foreign company then about a U.S. company, and
foreign companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
B. Debt Securities. The Fund may buy debt securities of all types and
qualities. Bonds and other debt instruments are used by issuers to borrow money
from investors. The issuer pays the investor a fixed or variable rate of
interest, and must repay the amount borrowed at maturity. Some debt securities,
such as zero coupon bonds, do not pay current interest, but are purchased at a
discount from their face values. Debt securities are generally interest rate
sensitive, which means that their volume will generally decrease when interest
rates rise and increase when interest rates fall. Debt securities, loans, and
other direct debt have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally more
sensitive to interest rate changes than short term bonds.
CORPORATE DEBT SECURITIES. Corporate debt securities are bonds or notes
issued by corporations and other business organizations, including business
trusts, in order to finance their credit needs. Corporate debt securities
include commercial paper which consist of short term (usually from one to two
hundred seventy days) unsecured promissory notes issued by corporations in order
to finance their current operations. Fixed rate corporate debt securities tend
to exhibit more price volatility during times of rising or falling interest
rates than securities with floating rates of interest. This is because floating
rate securities behave like short-term instruments in that the rate of interest
they pay is subject to periodic adjustments based on a designated interest rate
index. Fixed rate securities pay a fixed rate of interest and are more sensitive
to fluctuating interest rates. In periods of rising interest rates the value of
a fixed rate security is likely to fall. Fixed rate securities with short-term
characteristics are not subject to the same price volatility as fixed rate
securities without such characteristics. Therefore, they behave more like
floating rate securities with respect to price volatility.
Many corporate debt obligations permit the issuers to call the security
and thereby redeem their obligations earlier than the stated maturity dates.
Issuers are more likely to call bonds during periods of declining interest
rates. In these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely be
required to reinvest the proceeds at lower interest rates, thus reducing income
to the Fund.
Corporate zero coupon securities are: (i) notes or debentures which do
not pay current interest and are issued at substantial discounts from par value,
or (ii) notes or debentures that pay no current interest until a stated date one
or more years into the future, after which the issuer is obligated to pay
interest until maturity, usually at a higher rate than if interest were payable
from the date of issuance.
VARIABLE RATE SECURITIES. Variable rate demand notes are long-term
corporate debt instruments that have variable or floating interest rates and
provide the Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par. The
interest rate may float or be adjusted at regular intervals (ranging from daily
to annually), and is normally based on an interest index or a stated percentage
of a prime rate or another published rate. Many variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven days
prior notice. Other notes only permit the Fund to tender the security at the
time of each interest rate adjustment or at other fixed intervals.
FLOATING RATE SECURITIES. Floating rate securities are debt securities
with interest payments or maturity values that are not fixed, but float
inversely to an underlying index or price. These securities may be backed by
U.S. Government or corporate issuers, or by collateral such as mortgages. In
certain cases, a change in the underlying index or price may have a leveraging
effect on the periodic coupon payments, creating larger possible swings in the
prices of such securities than would be expected when taking into account their
maturities alone. The indices and prices upon which such securities can be based
include interest rates, currency rates and commodities prices.
Floating rate securities pay interest according to a coupon which is
reset periodically. The reset mechanism may be formula based, or reflect the
passing through of floating interest payments on an underlying collateral pool.
The coupon is usually reset daily, weekly, monthly, quarterly or semi-annually,
but other schedules are possible. Floating rate obligations generally exhibit a
low price volatility for a given stated maturity or average life because their
coupons adjust with changes in interest rates. If their underlying index is not
an interest rate, or the reset mechanism lags the movement of rates in the
current market, greater price volatility may be experienced.
INVERSE FLOATING RATE SECURITIES. Inverse floating rate securities are
similar to floating rate securities except that their coupon payments vary
inversely with an underlying index by use of a formula. Inverse floating rate
securities tend to exhibit greater price volatility than other floating rate
securities. Because the changes in the coupon are usually negatively correlated
with changes in overall interest rates, interest rate risk and price volatility
on inverse floating rate obligations can be high, especially if leverage is used
in the formula. Index securities pay a fixed rate of interest, but have a
maturity value that varies by formula, so that when the obligation matures, a
gain or loss is realized. The risk of index obligations depends on the
volatility of the underlying index, the coupon payment and the maturity of the
obligation.
LOWER QUALITY DEBT SECURITIES. Lower quality debt securities (commonly
called "junk bonds") often are considered to be speculative and involve greater
risk of default or price change due to changes in the issuer's creditworthiness
or changes in economic conditions. The market prices of these securities will
fluctuate over time, may fluctuate more than higher quality securities and may
decline significantly in periods of general economic difficulty, which may
follow periods of rising interest rates. The market for lower quality securities
may be less liquid than the market for securities of higher quality.
Furthermore, the liquidity of lower quality securities may be affected by the
market's perception of their credit quality. Therefore, judgment may at times
play a greater role in valuing these securities than in the case of higher
quality securities, and it also may be more difficult during certain adverse
market conditions to sell lower quality securities at their fair value to meet
redemption requests or to respond to changes in the market.
Lower quality securities present risks based on payment expectations.
For example, high yield bonds may contain redemption or call provisions. If an
issuer exercises the provisions in a declining interest rate market, the Fund
would have to replace the security with a lower yielding security, resulting in
a decreased return for investors. Conversely, a high yield bond's value will
decrease in a rising interest rate market, as will the value of the Fund's
assets. If the Fund experiences unexpected net redemptions, this may force it to
sell its high yield bonds, without regard to their investment merits, thereby
decreasing the asset base upon which the Fund's expenses can be spread and
possibly reducing the Fund's rate of return.
Since the risk of default is higher for lower quality securities and
sometimes increases with the age of these securities, the Advisor's research and
credit analysis are an integral part of managing any securities of this type
held by the Fund. In considering investments for the Fund, the Advisor attempts
to identify those issuers of high-yielding securities whose financial condition
is adequate to meet future obligations, has improved or is expected to improve
in the future. The Advisor's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earning prospects, and
the experience and managerial strength of the issuer.
MUNICIPAL SECURITIES. Municipal securities are generally issued to
finance public works, such as airports, bridges, highways, housing, hospitals,
mass transportation projects, schools, streets, and water and sewer works. They
are also issued to repay outstanding obligations, to raise funds for general
operating expenses, and to make loans to other public institutions and
facilities.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority.
Municipal securities may carry fixed or floating rates of interest.
Most municipal securities pay interest in arrears on a semiannual or more
frequent basis. However, certain securities, typically known as capital
appreciation bonds or zero coupon bonds, do not provide for any interest
payments prior to maturity. Such securities are normally sold at a discount from
their stated value, or provide for periodic increases in their stated value to
reflect a compounded interest rate. The market value of these securities is also
more sensitive to changes in market interest rates than securities that provide
for current interest payments.
Municipal securities in the form of notes generally are used to provide
for short-term capital needs, in anticipation of an issuer's receipt of other
revenues or financing, and typically have maturities of up to three years. Such
instruments may include Tax Anticipation Notes, Revenue Anticipation Notes, Bond
Anticipation Notes, Tax and Revenue Anticipation Notes and Construction Loan
Notes. The obligations of an issuer of municipal notes are generally secured by
the anticipated revenues from taxes, grants or bond financing. An investment in
such instruments, however, presents a risk that the anticipated revenues will
not be received or that such revenues will be insufficient to satisfy the
issuer's payment obligations under the notes or that refinancing will be
otherwise unavailable.
C. Illiquid Securities. The Fund may invest up to 15% of its net assets
in illiquid securities. Illiquid securities generally include securities which
cannot be disposed of promptly and in the ordinary course of business without
taking a reduced price, and "restricted securities". Securities may be illiquid
due to contractual or legal restrictions on resale or lack of a ready market.
The following securities are considered to be illiquid: repurchase agreements
and reverse repurchase agreements maturing in more than seven days, nonpublicly
offered securities and restricted securities.
D. Restricted Securities. Restricted securities are securities the
resale of which is subject to legal or contractual restrictions. Restricted
securities may be sold only in privately negotiated transactions, in a public
offering with respect to which a registration statement is in effect under the
Securities Act of 1933 or pursuant to Rule 144 or Rule 144A promulgated under
such Act. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense, and a considerable period may elapse
between the time of the decision to sell and the time such security may be sold
under an effective registration statement. If during such a period adverse
market conditions were to develop, the Fund might obtain a less favorable price
than the price it could have obtained when it decided to sell.
With respect to Rule 144A securities, these restricted securities are
treated as exempt from the 15% limit on illiquid securities, provided that a
dealer or institutional trading market in such securities exists. The Fund will
not, however invest more than 5% of its net assets in Rule 144A securities.
Under the supervision of the Board of Trustees of the Fund, the Advisor
determines the liquidity of restricted securities and, through reports from the
Advisor, the Board will monitor trading activity in restricted securities. If
institutional trading in restricted securities were to decline, the liquidity of
the Fund could be adversely affected.
E. Borrowing. The Fund may borrow amounts up to 5% of its net assets to
meet redemption requests. Because the Fund's investment swill fluctuate in
value, whereas the interest obligations on borrowed funds may be fixed, during
times of borrowing, the Fund's net asset value may tend to increase more then
its investments increase in value, and decrease more when its investments
decrease in value. in addition, interest costs on borrowings may fluctuate with
changing market interest rates and may partially offset or exceed the return
earned on the borrowed funds. Also, during times of borrowing under adverse
market conditions, the Fund might have to sell portfolio securities to meet
interest or principal payments at a time when fundamental investment
considerations would not favor such sales.
F. Preferred Stock. Preferred stock has a preference in liquidation
(and, generally dividends) over common stock but is subordinated in liquidation
to debt. As a general rule the market value of preferred stocks with fixed
dividend rates and no conversion rights varies inversely with interest rates and
perceived credit risk, with the price determined by the dividend rate. Some
preferred stocks are convertible into other securities, (for example, common
stock) at a fixed price and ratio or upon the occurrence of certain events. The
market price of convertible preferred stocks generally reflects an element of
conversion value. Because many preferred stocks lack a fixed maturity date,
these securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks. All preferred stocks
are also subject to the same types of credit risks of the issuer as corporate
bonds. In addition, because preferred stock is junior to debt securities and
other obligations of an issuer, deterioration in the credit rating of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar yield characteristics. Preferred stocks may be
rated by S&P and Moody's although there is no minimum rating which a preferred
stock must have (and a preferred stock may not be rated) to be an eligible
investment for the Fund. The Advisor expects, however, that generally the
preferred stocks in which the Fund invests will be rated at least CCC by S&P or
Caa by Moody's or, if unrated, of comparable quality in the opinion of the
Advisor. Preferred stocks rated CCC by S&P are regarded as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations and represent the highest degree of speculation among securities
rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be
in arrears on dividend payments. Moody's rating with respect to preferred stocks
does not purport to indicate the future status of payments of dividends.
G. Convertible Securities. A convertible security is a bond or
preferred stock which may be converted at a stated price within a specific
period of time into a specified number of shares of common stock of the same or
different issuer. Convertible securities are senior to common stock in a
corporation's capital structure, but usually are subordinated to non-convertible
debt securities. While providing a fixed income stream generally higher in yield
than in the income derived from a common stock but lower than that afforded by a
non-convertible debt security, convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible.
In general, the market value of a convertible security is the higher of
its investment value (its value as a fixed income security) or its conversion
value (the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise; however, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.
H. Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short term investment in which the purchaser (i.e., the Fund) acquires ownership
of an obligation issued by the U.S. Government or by an agency of the U.S.
Government ("U.S. Government Obligations") (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 Firstar, N.A. (the Fund's
Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Advisor to be creditworthy. The Advisor
monitors the creditworthiness of the banks and securities dealers with which the
Fund engages in repurchase transactions.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
this Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding.
3. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
4. Short Sales. The Fund will not effect short sales of securities.
5. Options. The Fund will not purchase or sell puts, calls, options or
straddles except as described in the Prospectus or Statement of Additional
Information.
6. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
7. Loans of Portfolio Securities. The Fund will not make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Auxier Asset Management, LLC, 8050 S.
W. Warm Springs, Suite 130, Tualatin, OR 97062. J. Jeffrey Auxier may be deemed
to be a controlling person of the Advisor due to his ownership of a majority of
its shares.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
borrowing costs, fees and expenses of the non-interested person trustees and
extraordinary expenses (including organizational expenses). As compensation for
its management services and agreement to pay the Fund's expenses, the Fund is
obligated to pay the Advisor a fee computed and accrued daily and paid monthly
at an annual rate of 1.35% of the average daily net assets of the Fund. The
Advisor may waive all or part of its fee, at any time, and at its sole
discretion, but such action shall not obligate the Advisor to waive any fees in
the future.
The Advisor retains the right to use the name "Auxier" in connection
with another investment company or business enterprise with which the Advisor is
or may become associated. The Trust's right to use the name "Auxier"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
<PAGE>
TRUSTEES AND OFFICERS
The 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,
1793 Kingswood Drive Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
Suite 200 Inc., the Fund's distributor, since 1994; President and Trustee of
Southlake, Texas 76092 AmeriPrime Advisors Tust and AmeriPrime Insurance Trust; prior to
Year of Birth: 1958 December, 1994, a senior client executive with SEI Financial Services.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
1793 Kingswood Drive Treasurer Financial Service, Inc. and AmeriPrime Financial Securities Inc. since
Suite 200 January 1999; Secretary and Treasurer of AmeriPrime Advisors Trust
Southlake, Texas 76092 and AmeriPrime Insurance Trust; various positions with Fidelity
Year of Birth: 1959 Investments from 1987 to 1998; most recently Fund Reporting Unit
Manager.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
2001 N. Indianwood Avenue services company; various positions with Carbo Ceramics, Inc., oil
Broken Arrow, OK 74012 field manufacturing/supply company, from 1984 to 1997, most recently
Year of Birth: 1957 Vice President of Marketing.
==================================== ---------------- ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
600 Jefferson Street Company since 1992; President and Director of Heritage Trust
Suite 350 Company form 1994-1996; Vice President and Manager of Investments
Houston, Texas 77002 of Kanaly Trust Company from 1988 to 1992.
==================================== ================ ======================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the Fund's
fiscal year ended October 31, 1999 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
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
<S> <C> <C>
Kenneth D. Trumpfheller 0 0
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
Steve L. Cobb $_____ $_____
==================================== ----------------------- ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
Gary E. Hippenstiel $_____ $_____
==================================== ======================= ==================================
</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
Fund's adviser 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 effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection.
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.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Fund's adviser's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Fund's adviser determines
the last bid price does not accurately reflect the current value or when
restricted securities are being valued, such securities are valued as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees
of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Fund's adviser believes such prices accurately reflect the fair
market value of such securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees.
Short term investments in fixed income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity, are
valued by using the amortized cost method of valuation, which the Board has
determined will represent fair value.
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 and that a complete redemption
occurs at the end of the applicable period.
In addition to providing average annual total return, the Fund may also
provide non-standardized quotations of total return for differing periods and
may provide the value of a $10,000 investment (made on the date of the initial
public offering of the Fund's shares) as of the end of a specified period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
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
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Fund with 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 Fund for
the fiscal year ending June 30, 2000. 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. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the distributor. The Distributor is obligated to sell the shares of
the Fund on a best efforts basis only against purchase orders for the shares.
Shares of the Fund are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. [fees.]
<PAGE>
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS SERVICES
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform any audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obliger as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature and provisions of the obligation.
III. Protection afforded by, and relative position of the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC", and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rate "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB" rating.
B - Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.
CC - The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C - The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 - The rating "C1" is reserved for income bonds on which no interest is
being paid.
D - Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which make the long-term risk appear somewhat greater than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements:
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers: 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category, the modifier 2 indicates a mid-range ranking, and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
COLUMBIA PARTNERS EQUITY FUND
STATEMENT OF ADDITIONAL INFORMATION
January __, 2000
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Prospectus of Columbia Partners Equity
Fund dated January __, 1999. A free copy of the Prospectus can be obtained by
writing the Transfer Agent at 431 N. Pennsylvania Street, Indianapolis, IN
46204, or by calling 1-888-696-2733.
TABLE OF CONTENTS
PAGE
Description of The Trust and Fund..............................................1
Additional Information About Fund Investments And Risk Considerations..........1
Investment Limitations.........................................................3
The Investment Adviser.........................................................5
Trustees And Officers..........................................................6
Portfolio Transactions And Brokerage...........................................7
Determination Of Share Price...................................................8
Investment Performance.........................................................8
Custodian......................................................................9
Transfer Agent.................................................................9
Accountants....................................................................9
Distributor....................................................................9
Administrator.................................................................
Financial Statements..........................................................
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
.........Columbia Partners Equity Fund (the "Fund") was organized as a
series of AmeriPrime Funds (the "Trust") on February 2, 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 Fund does not issue share certificates. All shares are
held in non-certificate form registered on the books of the Fund and the Fund's
transfer agent for the account of the Shareholder. Each share of a series
represents an equal proportionate interest in the assets and liabilities
belonging to that series with each other share of that series and is entitled to
such dividends and distributions out of income belonging to the series as are
declared by the Trustees. The shares do not have cumulative voting rights or any
preemptive or conversion rights, and the Trustees have the authority from time
to time to divide or combine the shares of any series into a greater or lesser
number of shares of that series so long as the proportionate beneficial interest
in the assets belonging to that series and the rights of shares of any other
series are in no way affected. In case of any liquidation of a series, the
holders of shares of the series being liquidated will be entitled to receive as
a class a distribution out of the assets, net of the liabilities, belonging to
that series. Expenses attributable to any series are borne by that series. Any
general expenses of the Trust not readily identifiable as belonging to a
particular series are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. No shareholder
is liable to further calls or to assessment by the Trust without his or her
express consent.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely affects the rights of shareholders must be approved by the
shareholders affected. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion that failure to
so redeem may have materially adverse consequences to all or any of the Fund's
shareholders.
[Insert information regarding 5% shareholders.]
[As of _______, 1999, the officers and trustees as a group own less
than one percent of the Fund.]
For information concerning the purchase and redemption of shares of the
Fund, see "How to 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
Fund's Prospectus and this Statement of Additional Information. ADDITIONAL
INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a discussion of some of the investments the Fund
may make and some of the techniques it may use.
A........Option Transactions. An option involves either (a) the right
or the obligation to buy or sell a specific instrument at a specific price until
the expiration date of the option, or (b) the right to receive payments or the
obligation to make payments representing the difference between the closing
price of a market index and the exercise price of the option expressed in
dollars times a specified multiple until the expiration date of the option.
Options are sold (written) on securities 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. Call
options on securities which the Fund sells (writes) will be covered or secured,
which means that it will own the underlying security; 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 call 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 call option on a stock index, it will assume the risk that the
price of the index will rise above the exercise price, in which case the Fund
may be required to enter into a closing transaction at a loss.
B........Convertible Securities. A convertible security is a bond,
debenture, preferred stock or other security that may be converted into or
exchanged for a prescribed amount of common stock. The Fund may invest up to 5%
of its assets in convertible securities rated BBB or higher by Standard & Poor's
Corporation ("S&P") or by Moody's Investors Services, Inc. ("Moody's"), or if
unrated, determined by the Advisor to be of comparable quality. Generally,
investments in securities in the lower rating categories provide higher yields
but involve greater volatility of price and risk of loss of principal and
interest than investments in securities with higher ratings. Securities rated
lower than Baa by Moody's or BBB by S&P are considered speculative. In addition,
lower ratings reflect a greater possibility of an adverse change in the
financial conditions affecting the ability of the issuer to make payments of
principal and interest. The market price of lower rated securities generally
responds to short term corporate and market developments to a greater extent
than higher rated securities which react primarily to fluctuations in the
general level of interest rates. Lower rated securities will also be affected by
the market's perception of their credit quality and the outlook for economic
growth.
In the past, economic downturns or an increase in interest rates have
under certain circumstances caused a higher incidence of default by the issuers
of these securities and may do so in the future, especially in the case of
highly leverages issuers.
The prices for these securities may be affected by legislative and
regulatory developments. For example, new federal rules require that savings and
loan associations gradually reduce their holdings of high-yield securities. An
effect of such legislation may be to significantly depress the prices of
outstanding lower rated securities. The market for lower rated securities may be
less liquid than the market for higher rated securities. Furthermore, the
liquidity of lower rated securities may be affected by the market's perception
of their credit quality. Therefore, judgment may at times play a greater role in
valuing these securities than in the case of higher rated securities, and it
also may be more difficult during certain adverse market conditions to sell
lower rated securities at their fair value to meet redemption requests or to
respond to changes in the market.
If the rating of a security by S&P or Moody's drops below investment
grade, the Advisor will dispose of the security as soon as practicable
(depending on market conditions) unless the Advisor determines based on its own
credit analysis that the security provides the opportunity of meeting the Fund's
objective without presenting excessive risk. The Advisor will consider all
factors which it deems appropriate, including ratings, in making investment
decisions for the Fund and will attempt to minimize investment risk through
conditions and trends. While the Advisor may refer to ratings, it does not rely
exclusively on ratings, but makes its own independent and ongoing review of
credit quality.
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.
<PAGE>
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
i........Pledging. The Fund will not mortgage, pledge, hypothecate or
in any manner transfer, as security for indebtedness, any assets of the Fund
except as may be necessary in connection with borrowings described in limitation
(1) above. Margin deposits, security interests, liens and collateral
arrangements with respect to transactions involving options, futures contracts,
short sales and other permitted investments and techniques are not deemed to be
a mortgage, pledge or hypothecation of assets for purposes of this limitation.
ii.......Borrowing. The Fund will 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 enter into reverse repurchase agreements.
iii......Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv.......Short Sales. The Fund will not effect short sales of
securities.
-----------
v........Options. The Fund will not purchase or sell puts, calls,
options or straddles, except as described in the Prospectus and the Statement of
Additional Information.
vi. Restricted/Illiquid Securities. The Fund will not purchase restricted or
illiquid securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Columbia Partners, L.L.C., Investment
Management, 1775 Pennsylvania Avenue, N.W., Washington, D.C. 20006. Galway
Capital Management, L.L.C., 700 13th Street, N.W., Suite 1169, Washington, D.C.
20005, ("Galway") may be deemed to be a "controlling person" of the Advisor due
to its share of ownership of the Advisor. However, as Galway is a venture
capital firm, the Advisor does not believe itself to be controlled by Galway.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a
fee computed and accrued daily and paid monthly at an annual rate of 1.20% of
the average daily net assets of the Fund. The Advisor may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Advisor to waive any fees in the future.
The Advisor retains the right to use the name "Columbia Partners" 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 "Columbia Partners" or any variation thereof 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,
1793 Kingswood Drive Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
Suite 200 Inc., the Fund's distributor, since 1994; President and Trustee of
Southlake, Texas 76092 AmeriPrime Advisors Tust and AmeriPrime Insurance Trust; prior to
Year of Birth: 1958 December, 1994, a senior client executive with SEI Financial Services.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
1793 Kingswood Drive Treasurer Financial Service, Inc. and AmeriPrime Financial Securities Inc. since
Suite 200 January 1999; Secretary and Treasurer of AmeriPrime Advisors Trust
Southlake, Texas 76092 and AmeriPrime Insurance Trust; various positions with Fidelity
Year of Birth: 1959 Investments from 1987 to 1998; most recently Fund Reporting Unit
Manager.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
2001 N. Indianwood Avenue services company; various positions with Carbo Ceramics, Inc., oil
Broken Arrow, OK 74012 field manufacturing/supply company, from 1984 to 1997, most recently
Year of Birth: 1957 Vice President of Marketing.
==================================== ---------------- ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
600 Jefferson Street Company since 1992; President and Director of Heritage Trust
Suite 350 Company form 1994-1996; Vice President and Manager of Investments
Houston, Texas 77002 of Kanaly Trust Company from 1988 to 1992.
==================================== ================ ======================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1999 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
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
<S> <C> <C>
Kenneth D. Trumpfheller 0 0
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
Steve L. Cobb $____ $____
==================================== ----------------------- ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
Gary E. Hippenstiel $____ $____
==================================== ======================= ==================================
</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
Rules of Fair Practice of the National Association of Securities Dealers, Inc.,
and subject to its obligation of seeking best qualitative execution, the Fund's
adviser 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 effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will be made on a pro rata
basis.
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.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Fund's adviser's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Fund's adviser determines
the last bid price does not accurately reflect the current value or when
restricted securities are being valued, such securities are valued as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees
of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Fund's adviser believes such prices accurately reflect the fair
market value of such securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees.
Short term investments in fixed income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity, are
valued by using the amortized cost method of valuation, which the Board has
determined will represent fair value. 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 and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
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
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Fund with 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 Fund for
the fiscal year ending March 31, 2000. McCurdy & Associates performs an annual
audit of the Funds' financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the Distributor. The Distributor is obligated to sell the shares of
the Fund on a best efforts basis only against purchase orders for the shares.
Shares of the Fund are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. [fees.]
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information will be incorporated
herein by reference to the Fund's Annual Report to Shareholders for the period
ended October 31, 1999 by subsequent amendment. The Trust will provide the
Annual Report without charge by calling the Fund at 1-888-696-2733.
GLOBALT GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
January __, 2000
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Prospectus of GLOBALT Growth Fund
dated January __, 2000. This SAI incorporates by reference to the Trust's Annual
Report to Shareholders for the fiscal year ended __________, 1999 ("Annual
Report"). A free copy of the Prospectus or Annual Report can be obtained by
writing the Transfer Agent at 431 N. Pennsylvania St., Indianapolis, IN 46204,
or by calling 1-877-BUY-GROWX (877-289-4769).
3
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUSTAND FUND..............................................1
ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS...........................................2
INVESTMENT LIMITATIONS........................................................4
THE INVESTMENT ADVISER........................................................6
TRUSTEES AND OFFICERS.........................................................7
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................8
DETERMINATION OF SHARE PRICE..................................................9
INVESTMENT PERFORMANCE........................................................9
CUSTODIAN.....................................................................10
TRANSFER AGENT................................................................10
ACCOUNTANTS...................................................................10
DISTRIBUTOR...................................................................10
ADMINISTRATOR.................................................................10
FINANCIAL STATEMENTS..........................................................11
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DESCRIPTION OF THE TRUST AND FUND
GLOBALT Growth Fund (the "Fund") was organized on October 20, 1995 as a
diversified series of AmeriPrime Funds (the "Trust") on October 20, 1995. The
Trust is an open-end investment company established under the laws of Ohio by an
Agreement and Declaration of Trust dated August 8, 1995 (the "Trust Agreement").
The Trust Agreement permits the Trustees to issue an unlimited number of shares
of beneficial interest of separate series without par value. The Fund is one of
a series of funds currently authorized by the Trustees.
The fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Transfer Agent
for the account of the shareholders. Each share of a series represents an equal
proportionate interest in the assets and liabilities belonging to that series
with each other share of that series and is entitled to such dividends and
distributions out of income belonging to the series as are declared by the
Trustees. The shares do not have cumulative voting rights or any preemptive or
conversion rights, and the Trustees have the authority from time to time to
divide or combine the shares of any series into a greater or lesser number of
shares of that series so long as the proportionate beneficial interest in the
assets belonging to that series and the rights of shares of any other series are
in no way affected. In case of any liquidation of a series, the holders of
shares of the series being liquidated will be entitled to receive as a class a
distribution out of the assets, net of the liabilities, belonging to that
series. Expenses attributable to any series are borne by that series. Any
general expenses of the Trust not readily identifiable as belonging to a
particular series are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. No shareholder
is liable to further calls or to assessment by the Trust without his or her
express consent.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely effects the rights of shareholders must be approved by the
shareholders affected. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion that failure to
so redeem may have materially adverse consequences to all or any of the Fund's
shareholders.
[As of _________, 1999, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund:
____________________________________]
[As of _______________, 1999, the officers and trustees as a group may
be deemed to beneficially own less than one percent (1%) of the Fund.]
For information concerning the purchase and redemption of shares of the
Fund, see "How to 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 Share Price" in the Fund's
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A........Equity Securities. Equity securities include common stock,
preferred stock and common stock equivalents (such as convertible preferred
stock, rights and warrants). Convertible preferred stock is preferred stock that
can be converted into common stock pursuant to its terms. Warrants are options
to purchase equity securities at a specified price valid for a specific time
period. Rights are similar to warrants, but normally have a short duration and
are distributed by the issuer to its shareholders. The Fund may invest up to 5%
of its net assets at the time of purchase in each of the following: rights,
warrants, or convertible preferred stocks.
B........Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Adviser (subject to review by the Board of Trustees) to be creditworthy.
The Adviser monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
C........Other Investment Companies. The Fund is permitted to invest in
other investment companies at any time. The Fund will not purchase more than 3%
of the outstanding voting stock of any investment company. If the Fund acquires
securities of another investment company, the shareholders of the Fund will be
subject to duplicative management fees.
D........Fixed Income Securities. The Fund may temporarily invest in
short term fixed income securities. The Fund will limit its investment in fixed
income securities to corporate debt securities and U.S. government securities.
Fixed income securities are generally considered to be interest rate sensitive,
which means that their value will generally decrease when interest rates rise
and increase when interest rates fall. Securities with shorter maturities, while
offering lower yields, generally provide greater price stability than longer
term securities and are less affected by changes in interest rates.
E........Financial Services Industry Obligations. The Fund may invest
up to 5% of its net assets in each of the following obligations of the financial
services industry:
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
F. Option Transactions. The Fund may engage in option transactions
involving individual securities and market indices. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indices. The
purchaser of an option on a security pays the seller (the writer) a premium for
the right granted but is not obligated to buy or sell the underlying security.
The purchaser of an option on a market index pays the seller a premium for the
right granted, and in return the seller of such an option is obligated to make
the payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the-counter
market. Options on securities which the Fund sells (writes) will be covered or
secured, which means that it will own the underlying security (for a call
option); will segregate with the Custodian high quality liquid debt obligations
equal to the option exercise price (for a put option); or (for an option on a
stock index) will hold a portfolio of securities substantially replicating the
movement of 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.
G. Loans of Portfolio Securities. The Fund may make short and long term
loans of its portfolio securities. Under the lending policy authorized by the
Board of Trustees and implemented by the Adviser in response to requests of
broker-dealers or institutional investors which the Adviser deems qualified, the
borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire securities in time to vote on any
matter which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the Statement
of Additional Information.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or have a significant portion of
their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
i. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding. The Fund will not enter into reverse repurchase
agreements.
iii. Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. Short Sales. The Fund will not effect short sales of securities
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
vi. Repurchase Agreements. The Fund will not invest more than 5% of
its net assets in repurchase --------------------- agreements.
vii. Illiquid Investments. The Fund will not invest in securities for
which there are legal or contractual restrictions on resale and other illiquid
securities.
THE INVESTMENT ADVISER
The Fund's investment adviser is GLOBALT, Inc., 3060 Peachtree Road,
N.W., One Buckhead Plaza, Suite 225, Atlanta, Georgia 30305. [Angela and Samuel
Allen may each be deemed to be a controlling person of the Adviser due to their
ownership of its shares and their respective positions as president and chairman
of the Adviser.]
Under the terms of the management agreement (the "Agreement"), the
Adviser manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund (including organizational
expenses) except brokerage, taxes, interest, fees and expenses of the
non-interested person trustees and extraordinary expenses. As compensation for
its management services and agreement to pay the Fund's expenses, the Fund is
obligated to pay the Adviser a fee computed and accrued daily and paid monthly
at an annual rate of 1.17% of the average daily net assets of the Fund. The
Adviser may waive all or part of its fee, at any time, and at its sole
discretion, but such action shall not obligate the Adviser to waive any fees in
the future. For the fiscal years ended October 31, 1997 and 1998 and 1999 the
Fund paid advisory fees of $62,923, $122,484 and $_________________
respectively.
The Adviser retains the right to use the name "GLOBALT" in connection
with another investment company or business enterprise with which the Adviser is
or may become associated. The Trust's right to use the name "GLOBALT"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
<PAGE>
TRUSTEES AND OFFICERS
The 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,
1793 Kingswood Drive Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
Suite 200 Inc., the Fund's distributor, since 1994; President and Trustee of
Southlake, Texas 76092 AmeriPrime Advisors Tust and AmeriPrime Insurance Trust; prior to
Year of Birth: 1958 December, 1994, a senior client executive with SEI Financial Services.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
1793 Kingswood Drive Treasurer Financial Service, Inc. and AmeriPrime Financial Securities Inc. since
Suite 200 January 1999; Secretary and Treasurer of AmeriPrime Advisors Trust
Southlake, Texas 76092 and AmeriPrime Insurance Trust; various positions with Fidelity
Year of Birth: 1959 Investments from 1987 to 1998; most recently Fund Reporting Unit
Manager.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
2001 N. Indianwood Avenue services company; various positions with Carbo Ceramics, Inc., oil
Broken Arrow, OK 74012 field manufacturing/supply company, from 1984 to 1997, most recently
Year of Birth: 1957 Vice President of Marketing.
==================================== ---------------- ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
600 Jefferson Street Company since 1992; President and Director of Heritage Trust
Suite 350 Company form 1994-1996; Vice President and Manager of Investments
Houston, Texas 77002 of Kanaly Trust Company from 1988 to 1992.
==================================== ================ ======================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the Fund's
fiscal year ended October 31, 1999 is set forth in the following table. Trustee
fees are Trust expenses and each series of the Trust is responsible for a
portion of the Trustee fees. The Adviser voluntarily reimbursed the Fund for the
Fund's share of the Trustee fees paid for the fiscal year ended October 31,
1998.
============================== ------------------ =============================
============================== ------------------ =============================
============================== ------------------ =============================
Kenneth D. Trumpfheller 0 0
============================== ------------------ =============================
============================== ------------------ =============================
============================== ------------------ =============================
============================== ------------------ =============================
Steve L. Cobb $____ $____
============================== ------------------ =============================
============================== ================== =============================
============================== ================== =============================
============================== ================== =============================
Gary E. Hippenstiel $____ $____
============================== ================== =============================
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. 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 Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Fund and another of the Adviser's clients seek
to acquire the same security at about the same time, the Fund may not be able to
acquire as large a position in such security as it desires or it may have to pay
a higher price for the security. Similarly, the Fund may not be able to obtain
as large an execution of an order to sell or as high a price for any particular
portfolio security if the other client desires to sell the same portfolio
security at the same time. 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 Fund. In the event
that more than one client wants to purchase or sell the same security on a given
date, the purchases and sales will normally be made by random client selection.
For the fiscal years ended October 31, 1997, 1998 and 1999, the Fund
paid brokerage commissions of $7,702, $20,472 and $__________ respectively.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Fund 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 Fund 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 Share
Price" in the Prospectus.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Fund's adviser's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Fund's adviser determines
the last bid price does not accurately reflect the current value or when
restricted securities are being valued, such securities are valued as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees
of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Fund's adviser believes such prices accurately reflect the fair
market value of such securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees.
Short term investments in fixed income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity, are
valued by using the amortized cost method of valuation, which the Board has
determined will represent fair value.
INVESTMENT PERFORMANCE
Each 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 and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the fiscal years
ended October 31, 1997, 1998 and 1999, the Fund's average annual total return
was ______%, , _____% and _____%, respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
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
As of July 1, 1998, Unified Fund Services, Inc., 431 N. Pennsylvania
St., Indianapolis, IN 46204 ("Unified"), acts as the Fund's transfer agent and,
in such capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. For the fiscal year
ended October 31, 1999, Unified received $_______, from the Adviser (not the
Fund) for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Fund for
the fiscal year ending October 31, 2000. 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. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the Distributor. The Distributor is obligated to sell the shares of
the Fund on a best efforts basis only against purchase orders for the shares.
Shares of the Fund are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the fiscal years ended October 31, 1997, 1998, and 1999 the
Administrator received $30,000, $30,000, and $_________, respectively, from the
Adviser (not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1999. The Trust will provide the Annual Report without charge
by calling the Fund at 1-877-289-4769.
LEADER CONVERTED MUTUAL BANK FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY __, 2000
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Prospectus of Leader Converted Mutual
Bank Fund dated January ___, 2000. A free copy of the Prospectus can be obtained
by writing the Transfer Agent at 431 N. Pennsylvania Street, Indianapolis, IN
46204, or by calling 1-800-788-9454.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
Description Of The Trust and Fund.............................................2
Additional Information About Fund Investments And Risk Considerations.........3
Investment Limitations........................................................4
The Investment Advisor........................................................6
Distribution Plan.............................................................7
Trustees And Officers.........................................................7
Portfolio Transactions And Brokerage..........................................8
Determination Of Share Price..................................................10
Investment Performance........................................................11
Custodian.....................................................................12
Transfer Agent................................................................12
Accountants...................................................................12
Distributor...................................................................12
Administrator.................................................................12
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
.........Leader Converted Mutual Bank Fund (the "Fund") was organized
as a series of AmeriPrime Funds (the "Trust") and was organized on April 14,
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 Fund does not issue share certificates. All shares are
held in non-certificate form registered on the books of the Fund and the Fund's
transfer agent for the account of the shareholder. Each share of a series
represents an equal proportionate interest in the assets and liabilities
belonging to that series with each other share of that series and is entitled to
such dividends and distributions out of income belonging to the series as are
declared by the Trustees. The shares do not have cumulative voting rights or any
preemptive or conversion rights, and the Trustees have the authority from time
to time to divide or combine the shares of any series into a greater or lesser
number of shares of that series so long as the proportionate beneficial interest
in the assets belonging to that series and the rights of shares of any other
series are in no way affected. In case of any liquidation of a series, the
holders of shares of the series being liquidated will be entitled to receive as
a class a distribution out of the assets, net of the liabilities, belonging to
that series. Expenses attributable to any series are borne by that series. Any
general expenses of the Trust not readily identifiable as belonging to a
particular series are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. No shareholder
is liable to further calls or to assessment by the Trust without his or her
express consent.
.........Any Trustee of the Trust may be removed by vote of the
shareholders holding not less than two-thirds of the outstanding shares of the
Trust. The Trust does not hold an annual meeting of shareholders. When matters
are submitted to shareholders for a vote, each shareholder is entitled to one
vote for each whole share he owns and fractional votes for fractional shares he
owns. All shares of the Fund have equal voting rights and liquidation rights.
The Declaration of Trust can be amended by the Trustees, except that any
amendment that adversely effects the rights of shareholders must be approved by
the shareholders affected. Each share of the Fund is subject to redemption at
any time if the Board of Trustees determines in its sole discretion that failure
to so redeem may have materially adverse consequences to all or any of the
Fund's shareholders.
.........As of ___________, 1999, the following persons may be deemed
to beneficially own five percent (5%) of more of the Fund [___________].
.........[As of ___________, 1999, the officers and trustees as a
group own less than one percent of the Fund.]
.........For information concerning the purchase and redemption of
shares of the Fund, see "How to Invest in the Fund" and "How to Redeem Shares"
in the Fund's Prospectus. For a description of the methods used to determine the
share price and value of the Fund's assets, see "Share Price Calculation" in the
Fund's Prospectus and this
Statement of Additional Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
.........This section contains a 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 consist of
common stock, preferred stock, convertible preferred stock, convertible bonds,
rights and warrants. Common stocks, the most familiar type, represent an equity
(ownership) interest in a corporation. Warrants are options to purchase equity
securities at a specified price for a specific time period. Rights are similar
to warrants, but normally have a short duration and are distributed by the
issuer to its shareholders. Although equity securities have a history of
long-term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market and economic conditions. The
Fund will not invest more than 5% of its net assets in each of the following:
preferred stock, convertible preferred stock and convertible bonds.
.........B........Convertible Securities. A convertible security is a
bond or preferred stock that may be converted at a stated price within a
specific period of time into a specified number of shares of common stock of the
same or different issuer. Convertible securities are senior to common stock in a
corporation's capital structure, but usually are subordinated to non-convertible
debt securities. While providing a fixed income stream generally higher in yield
than in the income derived from a common stock but lower than that afforded by a
non-convertible debt security, a convertible security also affords an investor
the opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible. The Advisor expects
that generally the convertible securities in which the Fund will invest will be
rated at least B by S&P or Moody's or, it unrated, of comparable quality in the
opinion of the Advisor.
.........In general, the market value of a convertible security is the
higher of its investment value (its value as a fixed income security) or its
conversion value (the value of the underlying shares of common stock if the
security is converted). As a fixed income security, the market value of a
convertible security generally increases when interest rates decline and
generally decreases when interest rates rise. However, the price of a
convertible security generally increases as the market value of the underlying
stock increases, and generally decreases as the market value of the underlying
stock declines. Investments in convertible securities generally entail less risk
than investments in the common stock of the same issuer.
.........C........Preferred Stock. Preferred stock has a preference in
liquidation (and, generally dividends) over common stock but is subordinated in
liquidation to debt. As a general rule the market value of preferred stocks with
fixed dividend rates and no conversion rights varies inversely with interest
rates and perceived credit risk, with the price determined by the dividend rate.
Some preferred stocks are convertible into other securities, for example common
stock, at a fixed price and ratio or upon the occurrence of certain events. The
market price of convertible preferred stocks generally reflects an element of
conversion value. Because many preferred stocks lack a fixed maturity date,
these securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks. All preferred stocks
are also subject to the same types of credit risks of the issuer as corporate
bonds. In addition, because preferred stock is junior to debt securities and
other obligations of an issuer, deterioration in the credit rating of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar yield characteristics. Preferred stocks may be
rated by S&P and Moody's although there is no minimum rating which a preferred
stock must have (and a preferred stock may not be rated) to be an eligible
investment for the Fund. The Advisor expects, however, that generally the
preferred stocks in which the Fund invests will be rated at least B by S&P or
Mooy's or, if unrated, of comparable quality in the opinion of the Advisor.
.........
.........D........Repurchase Agreements. The Fund may invest in
repurchase agreements fully collateralized by U.S. Government obligations. A
repurchase agreement is a short-term investment in which the purchaser (i.e.,
the Fund) acquires ownership of a U.S. Government or U.S. Government agency
obligation (which may be of any maturity) and the seller agrees to repurchase
the obligation at a future time at a set price, thereby determining the yield
during the purchaser's holding period (usually not more than seven days from the
date of purchase). Any repurchase transaction in which the Fund engages will
require full collateralization of the seller's obligation during the entire term
of the repurchase 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 Firstar Bank, N.A. (the Fund's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Advisor to be creditworthy. The Advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund
engages in repurchase transactions.
E........Securities Lending. The Fund may lend securities to
broker-dealers and other institutions as a means of earning additional income.
Under the lending policy authorized by the Board of Trustees and implemented by
the Advisor in response to requests of broker-dealers or institutional investors
which the Advisor deems qualified, the borrower must agree to maintain
collateral, in the form of cash or U.S. government obligations, with the Fund at
least equal to 100% of the current market value of the loaned securities. The
Fund will continue to receive dividends or interest on the loaned securities and
may terminate such loans at any time or reacquire such securities in time to
vote on any matter when the Board of Trustees determines voting to be in the
Fund's interest. If the borrower becomes bankrupt or otherwise defaults on its
obligations, the Fund could experience delays in recovering its securities. To
the extent that, in the meantime, the value of securities loaned had increased,
the Fund could experience a loss if the borrower had not maintained sufficient
collateral.
F........Illiquid Securities. The Fund may invest up to 5% of its
assets in illiquid securities. Illiquid securities generally include securities
which cannot be disposed of promptly and in the ordinary course of business
without taking a reduced price. Securities may be illiquid due to contractual or
legal restrictions on resale or lack of a ready market. The following securities
are considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. Restricted
securities are securities the resale of which is subject to legal or contractual
restrictions. Restricted securities may be sold only in privately negotiated
transactions, in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 or pursuant to Rule 144
or Rule 144A promulgated under such Act. Where registration is required, the
Fund may be obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision to sell and the
time such security may be sold under an effective registration statement. If
during such a period adverse market conditions were to develop, the Fund might
obtain a less favorable price than the price it could have obtained when it
decided to sell.
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 other than the thrift 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.
<PAGE>
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
i........Pledging. The Fund will not mortgage, pledge, hypothecate or
in any manner transfer, as security for indebtedness, any assets of the Fund
except as may be necessary in connection with borrowings described in limitation
(1) above. Margin deposits, security interests, liens and collateral
arrangements with respect to transactions involving options, futures contracts,
short sales and other permitted investments and techniques are not deemed to be
a mortgage, pledge or hypothecation of assets for purposes of this limitation.
ii.......Borrowing. The Fund will 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 enter into reverse repurchase agreements.
iii......Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv.......Short Sales. The Fund will not effect short sales of
securities. -----------
v........Options. The Fund will not purchase or sell puts, calls,
options or straddles, except as described in the Prospectus and the Statement of
Additional Information.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Leader Capital Corp., 121 S.W.
Morrison Street, Suite 450, Portland, OR 97204 (the "Advisor"). _____ is the
controlling shareholder of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
borrowing costs, expenses which the Fund is authorized to pay pursuant to the
Distribution Plan, fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a
fee computed and accrued daily and paid monthly at an annual rate of 1.70% of
the average daily net assets of the Fund. The Advisor may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Advisor to waive any fees in the future.
The Advisor retains the right to use the name "Leader" 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 "Leader" or any variation thereof automatically ceases ninety days after
termination of the Agreement and may be withdrawn by the Advisor on ninety days
written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act (the "Plan"). The Plan permits the Fund to compensate the Advisor
for distribution expenses in an amount equal to 0.25% of the average daily net
assets of the Fund. The Trustees expect that the Plan will significantly enhance
the Fund's ability to distribute its shares. For a description of the Plan, see
"Distribution Plan" in the Fund's Prospectus. The Plan has been approved by the
Fund's Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Fund and who have no direct or indirect financial
interest in the Plan or any related agreement, by a vote cast in person.
Continuation of the Plan and the related agreements must be approved by the
Trustees annually, in the same manner, and the Plan or any related agreement may
be terminated at any time without penalty by a majority of such independent
Trustees or by a majority of the outstanding shares of the Fund. Any amendment
increasing the maximum percentage payable under the Plan must be approved by a
majority of the outstanding shares of the Fund, and all other material
amendments to the Plan or any related agreement must be approved by a majority
of the independent Trustees. As an executive officer of the Fund's Distributor,
Kenneth Trumpfheller, a Trustee of the Trust, may benefit indirectly from
payments received by the Fund's Distributor.
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,
1793 Kingswood Drive Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
Suite 200 Inc., the Fund's distributor, since 1994; President and Trustee of
Southlake, Texas 76092 AmeriPrime Advisors Tust and AmeriPrime Insurance Trust; prior to
Year of Birth: 1958 December, 1994, a senior client executive with SEI Financial Services.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
1793 Kingswood Drive Treasurer Financial Service, Inc. and AmeriPrime Financial Securities Inc. since
Suite 200 January 1999; Secretary and Treasurer of AmeriPrime Advisors Trust
Southlake, Texas 76092 and AmeriPrime Insurance Trust; various positions with Fidelity
Year of Birth: 1959 Investments from 1987 to 1998; most recently Fund Reporting Unit
Manager.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
2001 N. Indianwood Avenue services company; various positions with Carbo Ceramics, Inc., oil
Broken Arrow, OK 74012 field manufacturing/supply company, from 1984 to 1997, most recently
Year of Birth: 1957 Vice President of Marketing.
==================================== ---------------- ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
600 Jefferson Street Company since 1992; President and Director of Heritage Trust
Suite 350 Company form 1994-1996; Vice President and Manager of Investments
Houston, Texas 77002 of Kanaly Trust Company from 1988 to 1992.
==================================== ================ ======================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1999 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
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
<S> <C> <C>
Kenneth D. Trumpfheller 0 0
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
Steve L. Cobb $_____ $_____
==================================== ----------------------- ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
Gary E. Hippenstiel $_____ $______
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</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
Fund's adviser 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 effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
The Fund has no obligation to deal with any broker or dealer in the
execution of its transactions. However, it is contemplated that First Allied
Securities, Inc. ("FAS'), in its capacity as a registered broker-dealer, will
effect securities transactions which are executed on a national securities
exchange and over-the-counter transactions conducted on an agency basis. Such
transactions will be executed at competitive commission rates through Bear
Stearns Securities Corp. ("Bear Stearns").
Under the Investment Company Act of 1940, persons affiliated with an
affiliate of the Adviser (such as FAS ) may be prohibited from dealing with the
Fund as a principal in the purchase and sale of securities. Therefore, FAS will
not serve as the Fund's dealer in connection with over-the-counter transactions.
However FAS may serve as the Fund's broker in over-the-counter transactions
conducted on an agency basis and will receive brokerage commissions in
connection with such transactions. Such agency transactions will be executed
through Bear Stearns.
The Fund will not effect any brokerage transactions in its portfolio
securities with FAS if such transactions would be unfair or unreasonable to Fund
shareholders, and the commissions will be paid solely for the execution of
trades and not for any other services. The Agreement provides that affiliates of
affiliates of the Adviser may receive brokerage commissions in connection with
effecting such transactions for the Fund. In determining the commissions to be
paid to FAS, it is the policy of the Fund that such commissions will, in the
judgement of the Trust's Board of Trustees, be (a) at least as favorable to the
Fund as those which would be charged by other qualified brokers having
comparable execution capability and (b) at least as favorable to the Fund as
commissions contemporaneously charged by FAS on comparable transactions for its
most favored unaffiliated customers, except for customers of FAS considered by a
majority of the Trust's disinterested Trustees not to be comparable to the Fund.
The disinterested Trustees from time to time review, among other things,
information relating to the commissions charged by FAS to the Fund and its other
customers, and rates and other information concerning the commissions charged by
other qualified brokers.
While the Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to other
firms. FAS will not receive reciprocal brokerage business as a result of the
brokerage business placed by the Fund with others.
When the Fund and another of the Advisor's clients seek to purchase or
sell the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated in a manner that
the Advisor believes to be equitable, taking into account such factors as the
size of the individual orders and transaction costs.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Fund's adviser's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Fund's adviser determines
the last bid price does not accurately reflect the current value or when
restricted securities are being valued, such securities are valued as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees
of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Fund's adviser believes such prices accurately reflect the fair
market value of such securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees.
Short term investments in fixed income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity, are
valued by using the amortized cost method of valuation, which the Board has
determined will represent fair value.
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 and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
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
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Fund with 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). [For its services as administrator, Unified
receives a monthly fee from the Adviser equal to an annual average rate of 0.10%
of the Fund's average daily net assets subject to an annual minimum fee of
$18,000.]
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Fund for
the fiscal year ending March 31, 2000. McCurdy & Associates performs an annual
audit of the Funds' financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the Distributor. The Distributor is obligated to sell the shares of
the Fund on a best efforts basis only against purchase orders for the shares.
Shares of the Fund are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 760902, (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. [Fees.]
The Martin Capital Opportunity Funds
Martin Capital Austin Opportunity Fund
Martin Capital Texas Opportunity Fund
Martin Capital U.S. Opportunity Fund
STATEMENT OF ADDITIONAL INFORMATION
January __, 2000
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Prospectus of The Martin Capital
Opportunity Funds dated January __, 2000. This SAI incorporates by reference the
Fund's Annual Report to Shareholders for the fiscal year ended October 31, 1999
("Annual Report"). 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 1-888-336-9757.
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST AND FUNDS.............................................
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..................................................................
5513
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DESCRIPTION OF THE TRUST AND FUNDS
The Martin Capital Austin Opportunity Fund, Martin Capital Texas
Opportunity Fund and Martin Capital U.S. Opportunity Fund (each a "Fund" or
collectively, the "Funds" or the "Martin Capital Opportunity Funds") were
organized as series of AmeriPrime Funds (the "Trust") on August 14, 1998. The
Trust is an open-end investment company established under the laws of Ohio by an
Agreement and Declaration of Trust dated August 8, 1995 (the "Trust Agreement").
The Trust Agreement permits the Trustees to issue an unlimited number of shares
of beneficial interest of separate series without par value. Each Fund is one of
a series of funds currently authorized by the Trustees.
The Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Fund's transfer
agent for the account of the Shareholder. 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.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely effects the rights of shareholders must be approved by the
shareholders affected. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion that failure to
so redeem may have materially adverse consequences to all or any of the Fund's
shareholders.
[insert information regarding 5% shareholders.]
[As of _______, 1999, the officers and trustees as a group own less
than one percent of the Fund.]
For information concerning the purchase and redemption of shares of the
Fund, see "How to 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
Fund's Prospectus and this Statement of Additional Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a discussion of some of the investments the Fund
may make and some of the techniques it may use.
A. Equity Securities. Equity securities consist of common stock,
convertible preferred stock, convertible bonds, rights and warrants. Common
stocks, the most familiar type, represent an equity (ownership) interest in a
corporation. Warrants are options to purchase equity securities at a specified
price for a specific time period. Rights are similar to warrants, but normally
have a short duration and are distributed by the issuer to its shareholders.
Although equity securities have a history of long-term growth in value, their
prices fluctuate based on changes in a company's financial condition and on
overall market and economic conditions.
Equity securities include S&P Depositary Receipts ("SPDRs") and other
similar instruments. SPDRs are shares of a publicly traded unit investment trust
which owns the stocks included in the S&P 500 Index, and changes in the price of
SPDRs track the movement of the Index relatively closely.
Equity securities also include common stocks and common stock
equivalents of domestic real estate investment trusts ("REITS") and other
companies which operate as real estate corporations or which have a significant
portion of their assets in real estate. A Fund will not acquire any direct
ownership of real estate.
Each Fund may invest up to 35% of its assets in foreign equity
securities, including American Depository Receipts ("ADRs"). ADRs are
certificates evidencing ownership of shares of a foreign- based issuer held in
trust by a bank or similar financial institution. They are alternatives to the
direct purchase of the underlying securities in their national markets and
currencies. To the extent that the Fund does invest in foreign securities, such
investments may be subject to special risks. Purchases of foreign securities are
usually made in foreign currencies and, as a result, the Fund may incur currency
conversion costs and may be affected favorably or unfavorably by changes in the
value of foreign currencies against the U.S. dollar. In addition, there may be
less information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the advisor. As a result, the return and net asset value
of a Fund will fluctuate. Securities in a Fund's portfolio may not increase as
much as the market as a whole and some undervalued securities may continue to be
undervalued for long periods of time. Although profits in some Fund holdings may
be realized quickly, it is not expected that most investments will appreciate
rapidly.
B. Fixed Income Securities. Each Fund may invest in fixed income
securities. Each Fund will limit its investment in fixed income securities to
corporate debt securities and U.S. government securities. Fixed income
securities are generally considered to be interest rate sensitive, which means
that their value will generally decrease when interest rates rise and increase
when interest rates fall. Securities with shorter maturities, while offering
lower yields, generally provide greater price stability than longer term
securities and are less affected by changes in interest rates.
CORPORATE DEBT SECURITIES - Corporate debt securities are long and
short-term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The advisor considers
corporate debt securities to be of investment grade quality if they are rated A
or higher by Standard & Poor's Corporation, or Moody's Investors Services, Inc.,
or if unrated, determined by the advisor to be of comparable quality. Investment
grade dept 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. Each Fund may invest up to 5% of its assets in
corporate debt rated below investment grade.
U.S. GOVERNMENT OBLIGATIONS - U.S. government obligations may be backed
by the credit of the government as a whole or only by the issuing agency. U.S.
Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
C. When-Issued and Delayed Delivery Securities. Each Fund may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Fund until
settlement takes place. The Fund maintains with the Custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments.
D. Leveraging. Each Fund may borrow up to one-third of the value of its
total assets, from banks or through the use of reverse repurchase agreements, to
increase its holdings of portfolio securities. Under the 1940 Act, each Fund is
required to maintain continuous asset coverage of 300% with respect to such
borrowings and to sell (within three days) sufficient Fund holdings to restore
such coverage if it should decline to less than 300% due to market fluctuations
or otherwise, even if such liquidations of a Fund's holdings may be
disadvantageous from an investment standpoint. Leveraging a Fund creates an
opportunity for increased net income but, at the same time, creates special risk
considerations. For example, leveraging may exaggerate changes in the net asset
value of Fund shares and in the yield on the Fund's portfolio. Although the
principal of such borrowings will be fixed, the Fund's assets may change in
value during the time the borrowing is outstanding. Leveraging will create
interest expenses for the Fund which can exceed the income from the assets
retained. To the extent the income derived from securities purchased with
borrowed funds exceeds the interest the Fund will have to pay, the Fund's net
income will be greater than if leveraging were not used. Conversely, if the
income from the assets retained with borrowed funds is not sufficient to cover
the cost of leveraging, the net income of the Fund will be less than if
leveraging were not used, and therefore the amount available for distribution to
shareholders will be reduced.
E. Short Sales. Each Fund may a sell a security short in anticipation
of a decline in the market value of the security. When a Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security in order to deliver it to the buyer. The Fund
must replace the borrowed security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. The Fund will incur a loss as a result of the short sale if
the price of the security increases between the date of the short sale and the
date on which the Fund replaces the borrowed security. The Fund will realize a
profit if the security declines in price between those dates.
In connection with its short sales, each Fund will be required to
maintain a segregated account with the Custodian of cash or high grade liquid
assets equal to the market value of the securities sold less any collateral
deposited with its broker. Each Fund will limit its short sales so that no more
than 20% 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.
F. Option Transactions. The Funds may engage in option transactions
involving individual stocks and bonds as well as stock and bond indexes. An
option involves either (a) the right or the obligation to buy or sell a specific
instrument at a specific price until the expiration date of the option, or (b)
the right to receive payments or the obligation to make payments representing
the difference between the closing price of a market index and the exercise
price of the option expressed in dollars times a specified multiple until the
expiration date of the option. Options are sold (written) on securities and
market indexes. The purchaser of an option on a security pays the seller (the
writer) a premium for the right granted but is not obligated to buy or sell the
underlying security. The purchaser of an option on a market index pays the
seller a premium for the right granted, and in return the seller of such an
option is obligated to make the payment. A writer of an option may terminate the
obligation prior to expiration of the option by making an offsetting purchase of
an identical option. Options are traded on organized exchanges and in the
over-the-counter market. Call options on securities which the Funds sell (write)
will be covered or secured, which means that the Fund will own the underlying
security in the case of a call option. The Funds will sell (write) put options
only if the Fund is selling an equivalent amount of the same security short.
When the Funds write options, they may be required to maintain a margin account,
to pledge the underlying securities or U.S. government obligations or to deposit
assets in escrow with the Custodian. The Funds may also utilize spreads and
straddle strategies. A spread is the difference in price resulting from a
combination of put and call options within the same class on the same underlying
security. A straddle strategy consists of an equal number of put and call
options on the same underlying stock, stock index, or commodity future at the
same strike price and maturity date.
The purchase and writing of options involves certain risks. The
purchase of options limits a Fund's potential loss to the amount of the premium
paid and can afford a Fund the opportunity to profit from favorable movements in
the price of an underlying security to a greater extent than if transactions
were effected in the security directly. However, the purchase of an option could
result in a Fund losing a greater percentage of its investment than if the
transaction were effected directly. When a Fund writes a covered call option, it
will receive a premium, but it will give up the opportunity to profit from a
price increase in the underlying security above the exercise price as long as
its obligation as a writer continues, and it will retain the risk of loss should
the price of the security decline. When a Fund writes a put option, it will
assume the risk that the price of the underlying security or instrument will
fall below the exercise price, in which case the Fund may be required to
purchase the security or instrument at a higher price than the market price of
the security or instrument. In addition, there can be no assurance that a Fund
can effect a closing transaction on a particular option it has written. Further,
the total premium paid for any option may be lost if the Fund does not exercise
the option or, in the case of over-the-counter options, the writer does not
perform its obligations.
G. Derivatives. Each Fund may invest in various instruments that are
commonly known as derivatives. Generally, a derivative is a financial
arrangement, the value of which is based on, or "derived" from, a traditional
security, asset, or market index. Some "derivatives" such as mortgage-related
and other asset-backed securities are in many respects like any other
investment, although they may be more volatile or less liquid than more
traditional debt securities. There are, in fact, many different types of
derivatives and many different ways to use them. There are a range of risks
associated with those uses. Futures and options are commonly used for
traditional hedging purposes to attempt to protect a fund from exposure to
changing interest rates, securities prices, or currency exchange rates and as a
low cost method of gaining exposure to a particular securities market without
investing directly in those securities. However, some derivatives are used for
leverage, which tends to magnify the effects of an instrument's price changes as
market conditions change. Leverage involves the use of a small amount of money
to control a large amount of financial assets, and can in some circumstances,
lead to significant losses. the Advisor will use derivatives only in
circumstances where they offer the most efficient means of improving the
risk/reward profile of a Fund and when consistent with a Fund's investment
objective and policies. The use of derivatives for non-hedging purposes may be
considered speculative.
H. Futures Contracts on Stock and Bond Indices. Each Fund may enter
into contracts providing for the making and acceptance of a cash settlement
based upon changes in the value of an index of domestic or foreign securities
("Futures Contracts"). This investment technique may be used as a low-cost
method of gaining exposure to a particular securities market without investing
directly in those securities or to hedge against anticipated future changes in
general market prices which otherwise might either adversely affect the value of
securities held by the Fund or adversely affect the prices of securities which
are intended to be purchased at a later date for the Fund. A Futures Contract
may also be entered into to close out or offset an existing futures position.
When used for hedging purposes, each transaction in Futures Contracts
involves the establishment of a position which will move in a direction opposite
to that of the investment being hedged. If these hedging transactions are
successful, the futures position taken for the Fund will rise in value by an
amount which approximately offsets the decline in value of the portion of the
Fund's investments that is being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized.
The risks of Futures Contracts also include a potential lack of
liquidity in the secondary market and incorrect assessments of market. Brokerage
costs will be incurred and "margin" will be required to be posted and maintained
as a good faith deposit against performance of obligations under Futures
Contracts written for a Fund. A Fund may not purchase or sell a Futures Contract
if immediately thereafter its margin deposits on its outstanding Futures
Contracts, other than Futures Contracts used for hedging purposes, would exceed
5% of the market value of the Fund's total assets.
I. Floating Rate, Inverse Floating Rate, and Index Obligations. Each
Fund may invest in debt securities with interest payments or maturity values
that are not fixed, but float in conjunction with (or inversely to) an
underlying index or price. These securities may be backed by U.S. Government or
corporate issuers, or by collateral such as mortgages. The indices and prices
upon which such securities can be based include interest rates, currency rates
and commodities prices. However, the Funds will not invest in any instrument
whose value is computed based on a multiple of the change in price or value of
an asset or an index of or relating to assets in which the Funds cannot or will
not invest.
Floating rate securities pay interest according to a coupon which is
reset periodically. The reset mechanism may be formula based, or reflect the
passing through of floating interest payments on an underlying collateral pool.
Inverse floating rate securities are similar to floating rate securities except
that their coupon payments vary inversely with an underlying index by use of a
formula. Inverse floating rate securities tend to exhibit greater price
volatility than other floating rate securities. No Fund will invest more than 5%
of its total assets in inverse floating rate securities. Floating rate
obligations generally exhibit a low price volatility for a given stated maturity
or average life because their coupons adjust with changes in interest rates.
Interest rate risk and price volatility on inverse floating rate obligations can
be high, especially if leverage is used in the formula. Index securities pay a
fixed rate of interest, but have a maturity value that varies by formula, so
that when the obligation matures a gain or loss may be realized. The risk of
index obligations depends on the volatility of the underlying index, the coupon
payment and the maturity of the obligation.
J. Real Estate Investment Trusts. A real estate investment trust
("REIT") is a corporation or business trust that invests substantially all of
its assets in interests in real estate. Equity REITs are those which purchase or
lease land and buildings and generate income primarily from rental income.
Equity REITs may also realize capital gains (or losses) when selling property
that has appreciated (or depreciated) in value. Mortgage REITs are those which
invest in real estate mortgages and generate income primarily from interest
payments on mortgage loans. Hydrid REITs generally invest in both real property
and mortgages. In addition, REITs are generally subject to risks associated with
direct ownership of real estate, such as decreases in real estate values or
fluctuations in rental income caused by a variety of factors, including
increases in interest rates, increases in property taxes and other operating
costs, casualty or condemnation losses, possible environmental liabilities and
changes in supply and demand for properties. Risks associated with REIT
investments include the fact that equity and mortgage REITs are dependent upon
specialized management skills and are not fully diversified. These
characteristics subject REITs to the risks associated with financing a limited
number of projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, and self-liquidation. Additionally, equity REITs may be
affected by any changes in the value of the underlying property owned by the
trusts, and mortgage REITs may be affected by the quality of any credit
extended.
K. Zero Coupon Treasuries and Municipal Securities. Zero coupon
securities are (i) notes or debentures which do not pay current interest and are
issued at substantial discounts from par value, or (ii) notes or debentures that
pay current interest until a stated date one or more years into the future,
after which the issuer is obligated to pay interest until maturity, usually at a
higher rate than if interest were payable from the date of issuance.
The Federal Reserve creates zero coupon treasuries, also known as
STRIPS (Separate Trading of Registered Interest and Principal of Securities) by
separating the coupon payments and the principal payment from an outstanding
Treasury security and selling them as individual securities. A broker-dealer
creates a derivative zero by depositing a Treasury security with a custodian for
safekeeping and then selling the coupon payments and principal payment that will
be generated by this security separately. Examples are Certificates of Accrual
on Treasury Securities (CATs), Treasury Investment Growth Receipts (TIGRs) and
generic Treasury Receipts (TRs). These derivative zero coupon obligations are
not considered to be government securities unless they are part of the STRIPS
program. Original issue zeros are zero coupon securities issued directly by the
U.S. Government, a government agency, or by a corporation.
Zero coupon municipal securities are long and short term debt
obligations issued by or on behalf of states, territories and possessions of the
United States, the District of Columbia and their political subdivisions,
agencies, instrumentalities and authorities, as well as other qualifying issuers
(including the U.S. Virgin Islands, Puerto Rico and Guam), the income from which
is exempt from regular federal income tax and exempt from state tax in the state
of issuance. Each Fund will accrue income on such securities for tax and
accounting purposes, in accordance with applicable law. This income will be
distributed to shareholders. Because no cash is received at the time such income
is accrued, the Fund may be required to liquidate other portfolio securities to
satisfy its distribution obligations. Because a zero coupon security does not
pay current income, its price can be very volatile when interest rates change.
In calculating its dividend, the Funds take into account as income a portion of
the difference between a zero coupon security's purchase price and its face
value.
Municipal securities are issued to obtain funds to construct, repair or
improve various public facilities such as airports, bridges, highways,
hospitals, housing, schools, streets and water and sewer works, to pay general
operating expenses or to refinance outstanding debts. They also may be issued to
finance various private activities, including the lending of funds to public or
private institutions for construction of housing, educational or medical
facilities or the financing of privately owned or operated facilities. Municipal
securities consist of tax exempt bonds, tax exempt notes and tax exempt
commercial paper. Tax exempt notes generally are used to provide short term
capital needs and generally have maturities of one year or less. Tax exempt
commercial paper typically represents short term, unsecured, negotiable
promissory notes.
The two principal classifications of municipal securities are "general
obligations" and "revenue" bonds. General obligation bonds are backed by the
issuer's full credit and taxing power. Revenue bonds are backed by the revenues
of a specific project, facility or tax. Industrial development revenue bonds are
a specific type of revenue bond backed by the credit of the private issuer of
the facility, and therefore investments in these bonds have more potential risk
that the issuer will not be able to meet scheduled payments of principal and
interest.
L. Mortgage-Backed Securities. Mortgage-backed 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
Funds will only invest in pools of mortgage loans assembled for the sale to
investors by agencies or instrumentalities of the U.S. government and will limit
their investment to 5% of 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 Funds 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). None of the Funds 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 Funds 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 Funds will reduce the share price of each Fund to the extent the market
value of the securities at the time of prepayment exceeds their par value.
Furthermore, the prices of mortgage-backed 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 Funds at lower rates of return.
M. Foreign Currency Exchange Transactions. The Funds may hold foreign
currency deposits from time to time, and may convert dollars and foreign
currencies in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering into
forward contracts to purchase or sell foreign currencies at a future date and
price. Forward contracts generally are traded in an interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. The parties to a forward contract may agree to offset or terminate
the contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.
The Funds may use currency forward contracts to manage currency risks
and to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by any Fund.
In connection with purchases and sales of securities denominated in
foreign currencies, a Fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's settlement
date. This technique is sometimes referred to as a "settlement hedge" or
"transaction hedge." A Fund also could enter into forward contracts to purchase
or sell a foreign currency in anticipation of future purchases or sales of
securities denominated in foreign currency, even if the specific investments
have not yet been selected by the Advisor.
The Funds also may use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For example,
if a Fund owned securities denominated in Deutschemarks, it could enter into a
forward contract to sell Deutschemarks in return for U.S. dollars to hedge
against possible declines in the Deutschemark's value. Such a hedge (sometimes
referred to as a "position hedge") would tend to offset both positive and
negative currency fluctuations, but would not offset changes in security values
caused by other factors. A Fund also could hedge the position by selling another
currency expected to perform similarly to the Deutschemark -- for example, by
entering into a forward contract to sell Deutschemarks or European Currency
Units in return for U.S. dollars. This type of hedge, sometimes referred to as a
"proxy hedge," could offer advantages in terms of cost, yield, or efficiency,
but generally will not hedge currency exposure as effectively as a simple hedge
into U.S. dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedge securities
are denominated.
Under certain conditions, SEC guidelines require mutual funds to
segregate cash and appropriate liquid assets to cover currency forward
contracts. As required by SEC guidelines, the Funds will segregate cash or U.S.
Government securities or other high-grade liquid debt securities to cover
currency forward contracts, if any, whose purpose is essentially speculative.
The Funds will not segregate assets to cover forward contracts entered into for
hedging purposes, including settlement hedges, position hedges, and proxy
hedges. In segregating assets, the Funds' custodian or a designated subcustodian
either places such assets in a segregated account or separately identifies such
assets and renders them unavailable for investment by the Funds.
Successful use of forward currency contracts will depend on the
Advisor's skill in analyzing and predicting currency values. Forward contracts
may change the Funds' currency exchange rates substantially, and could result in
losses to the Funds if currencies do not perform as the Advisor anticipates. For
example, if a currency's value rose at a time when the Advisor had hedged a Fund
by selling currency in exchange for dollars, the Fund would be unable to
participate in the currency's appreciation. If the Advisor hedges currency
exposure through proxy hedges, the Fund could realize currency losses from the
hedge and the security position at the same time if the two currencies do not
move in tandem. Similarly, if the Advisor increases a Fund's exposure to a
foreign currency, and that currency's value declines, the Fund will realize a
loss. There is no assurance that the Advisor's use of forward currency contracts
will be advantageous to any of the Funds or that the Advisor will hedge at an
appropriate time.
N. Options and Futures on Foreign Currencies. Each Fund may write
covered put and call options and purchase put and call options on foreign
currencies for the purpose of protecting against declines in the U.S. dollar
value of Fund securities and against increases in the U.S. dollar cost of
securities to be acquired. A Fund may use options on foreign currency to
cross-hedge, which involves writing or purchasing options on one currency to
hedge against changes in exchange rates for a different, but related currency.
As with other types of options, however, the writing of an option on a foreign
currency will constitute only a partial hedge up to the amount of the premium
received, and a Fund could be required to purchase or sell a foreign currency at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may be used to hedge against fluctuations in exchange
rates although, in the event of exchange rate movements adverse to a Fund's
position, it may forfeit the entire amount of the premium plus related
transaction costs. In addition, a Fund may purchase call options on a foreign
currency when the investment Advisor anticipates that the currency will
appreciate in value.
There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If a Fund is unable to effect a
closing purchase transaction with respect to covered options it has written, the
Fund will not be able to sell the underlying currency or dispose of assets held
in a segregated account until it closes out the options or the options expire or
are exercised. Similarly, if the Fund is unable to close out options it has
purchased, it would have to exercise the options in order to realize any profit
and will incur transaction costs. The Funds pay brokerage commissions or spreads
in connection with options transactions.
As in the case of forward contracts, certain options on foreign
currencies are traded over-the-counter and involve liquidity and credit risks
which may not be present in the case of exchange-traded currency options. The
Funds' ability to terminate over-the-counter options ("OTC" Options") will be
more limited than with exchange-traded options. It is also possible that
broker-dealers participating in OTC Options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position, the
Funds will treat purchased OTC Options and assets used to cover written OTC
Options as illiquid securities. With respect to options written with primary
dealers in U.S. government securities pursuant to an agreement requiring a
closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the repurchase formula.
Currency futures contracts are similar to forward currency exchange
contracts, except that they are traded on exchanges (and have margin
requirements) and are standardized as to contract size and delivery date. Most
currency futures contracts call for payment or delivery in U.S. dollars. Each
Fund may purchase and sell currency futures to increase or decrease its exposure
to different foreign currencies. Currency futures can be expected to correlate
with exchange rates, but may not reflect other factors that affect the value of
a Fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a Fund
against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a Fund's foreign-denominated investments
change in response to many factors other than exchange rates, it may not be
possible to match the amount of currency futures to the value of the Fund's
investments exactly over time.
O. Repurchase Agreements. Each Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, each Fund
intends to enter into repurchase agreements only with Firstar Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the advisor (subject to review by the Board of
Trustees) to be creditworthy. The advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.
P. Reverse Repurchase Agreements. Each Fund may invest in reverse
repurchase agreements. Reverse repurchase agreements involve sales of portfolio
securities by a Fund to member banks of the Federal Reserve System, or
recognized 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 the event of
bankruptcy or other default by the purchaser, the Fund could experience both
delays in repurchasing the portfolio securities and losses.
Q. Illiquid Securities. Illiquid securities generally include
securities which cannot be disposed of promptly and in the ordinary course of
business without taking a reduced price. Securities may be illiquid due to
contractual or legal restrictions on resale or lack of a ready market. The
following securities are considered to be illiquid: repurchase agreements
maturing in more than seven days, nonpublicly offered securities and restricted
securities. Restricted securities are securities the resale of which is subject
to legal or contractual restrictions. Restricted securities may be sold only in
privately negotiated transactions, in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 or pursuant
to Rule 144 or Rule 144A promulgated under such Act. Where registration is
required, the Fund may be obligated to pay all or part of the registration
expense, and a considerable period may elapse between the time of the decision
to sell and the time such security may be sold under an effective registration
statement. If during such a period adverse market conditions were to develop,
the Fund might obtain a less favorable price than the price it could have
obtained when it decided to sell.
R. Futures Contracts. When a Fund purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future date.
When a Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and sale
will take place is fixed when the Fund enters into the contract. Futures can be
held until their delivery dates, or can be closed out before then if a liquid
secondary market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument or precious metal. Therefore,
purchasing futures contracts will tend to increase a Fund's exposure to positive
and negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a Fund sells a futures
contract, by contrast, the value of its futures position will tend to move in a
direction contrary to the market. Selling futures contracts, therefore, will
tend to offset both positive an negative market price changes, much as if the
underlying instrument or precious metal had been sold.
S. Debt Securities. Lower quality corporate debt securities (commonly
called "junk bonds") often are considered to be speculative and involve greater
risk of default or price change due to changes in the issuer's creditworthiness
or changes in economic conditions. The market prices of these securities will
fluctuate over time, may fluctuate more than higher quality securities and may
decline significantly in periods of general economic difficulty, which may
follow periods of rising interest rates. The market for lower quality securities
may be less liquid than the market for securities of higher quality.
Furthermore, the liquidity of lower quality securities may be affected by the
market's perception of their credit quality. Therefore, judgment may at times
play a greater role in valuing these securities than in the case of higher
quality securities, and it also may be more difficult during certain adverse
market conditions to sell lower quality securities at their fair value to meet
redemption requests or to respond to changes in the market. No Fund will invest
more than 5% of the value of its net assets in junk bonds.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of each Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Funds will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. No Fund will invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. Pledging. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. No Fund will purchase any security while borrowings
(including reverse repurchase agreements) representing more than one third of
its total assets are outstanding.
3. Margin Purchases. No Fund will purchase securities or evidences of
interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.
4. Options. No Fund will purchase or sell puts, calls, options or
straddles except as described in the Funds' Prospectus and Statement of
Additional Information.
5. Illiquid Investments. No Fund will invest more than 5% of its net
assets in securities for which there are legal or contractual restrictions on
resale and other illiquid securities.
6. Loans of Portfolio Securities. No Fund will make loans of portfolio
securities.
THE INVESTMENT ADVISOR
The investment advisor to each Fund is Martin Capital Advisors, L.L.P.,
a Texas limited liability partnership formed on January 29, 1999, 816 Congress
Avenue, Suite 1540, Austin, TX 78701 (the "Advisor"). ____________ may be deemed
to control the Adviser due to his/her respective share of ownership of the
Adviser.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages each Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of each Fund except brokerage, taxes,
interest, fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, each Fund is obligated to pay the Advisor
a fee computed and accrued daily and paid monthly at an annual rate of 1.25% of
the average daily net assets of the Fund. The Advisor may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Advisor to waive any fees in the future.
The Advisor retains the right to use the names "Austin Opportunity,"
"Texas Opportunity" and "U.S. Opportunity" 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 names "Austin Opportunity," "Texas
Opportunity" and "U.S. Opportunity" 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.
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NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
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<S> <C> <C>
*Kenneth D. Trumpfheller President and President, Treasurer and Secretary of AmeriPrime Financial Services,
1793 Kingswood Drive Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
Suite 200 Inc., the Fund's distributor, since 1994; President and Trustee of
Southlake, Texas 76092 AmeriPrime Advisors Tust and AmeriPrime Insurance Trust; prior to
Year of Birth: 1958 December, 1994, a senior client executive with SEI Financial Services.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
1793 Kingswood Drive Treasurer Financial Service, Inc. and AmeriPrime Financial Securities Inc. since
Suite 200 January 1999; Secretary and Treasurer of AmeriPrime Advisors Trust
Southlake, Texas 76092 and AmeriPrime Insurance Trust; various positions with Fidelity
Year of Birth: 1959 Investments from 1987 to 1998; most recently Fund Reporting Unit
Manager.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
2001 N. Indianwood Avenue services company; various positions with Carbo Ceramics, Inc., oil
Broken Arrow, OK 74012 field manufacturing/supply company, from 1984 to 1997, most recently
Year of Birth: 1957 Vice President of Marketing.
==================================== ---------------- ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
600 Jefferson Street Company since 1992; President and Director of Heritage Trust
Suite 350 Company form 1994-1996; Vice President and Manager of Investments
Houston, Texas 77002 of Kanaly Trust Company from 1988 to 1992.
==================================== ================ ======================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1999 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
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
<S> <C> <C>
Kenneth D. Trumpfheller 0 0
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
Steve L. Cobb $_____ $_____
==================================== ----------------------- ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
Gary E. Hippenstiel $_____ $_____
==================================== ======================= ==================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for each Fund's portfolio decisions and the placing
of each Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for each Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. 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
Fund's adviser 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 Funds and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Funds effect securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Funds. Although research services and other information are useful to the Funds
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Funds
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection.
DISTRIBUTION PLAN
Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "Plan") under which each Fund is
authorized to incur distribution expenses at an annual rate of 0.25% of the
average daily net assets of the Fund. All distribution expenses incurred by a
Fund under its Plan are Fund expenses, but they are paid by the Advisor pursuant
to the management agreement. The expenses may include payments to securities
dealers and others that are engaged in the sale of shares of the Fund or
advising shareholders regarding the purchase or retention of shares of the Fund;
overhead and telephone expenses; printing and distribution of prospectuses and
reports used in connection with the offering of the Fund's shares to prospective
investors; and preparation, printing and distribution of sales literature and
advertising materials. In addition, each Fund may, under its Plan, make payments
to selected dealers and others which have entered into Service Agreements for
services provided to shareholders of the Fund. The services provided by selected
dealers and others pursuant to each Plan are designed to promote the sale of
shares of the Fund and include the furnishing of office space and equipment,
telephone facilities, personnel and assistance to the Fund in servicing such
shareholders. The services provided pursuant to each Plan also may include
support services to the Fund such as establishing and maintaining shareholders'
accounts and records, processing purchase and redemption transactions, answering
routine client inquiries regarding the Fund, and providing such other services
to the Fund as the Fund may reasonably request. The Advisor may also compensate
such dealers and administrators out of its own assets.
The Plan has been approved by the Fund's Board of Trustees, including a
majority of the Trustees who are not "interested persons" of the Fund and who
have no direct or indirect financial interest in the Plan or any related
agreement, by a vote cast in person. Continuation of the Plan and the related
agreements must be approved by the Trustees annually, in the same manner, and
the Plan or any related agreement may be terminated at any time without penalty
by a majority of such independent Trustees or by a majority of the outstanding
shares of the Fund. Any amendment increasing the maximum percentage payable
under the Plan must be approved by a majority of the outstanding shares of the
Fund, and all other material amendments to the Plan or any related agreement
must be approved by a majority of the independent Trustees. As an executive
officer of the Fund's Distributor, Kenneth Trumpfheller, a Trustee of the Trust,
may benefit indirectly from payments received by the Fund's Distributor.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Determination of Net
Asset Value" in the Prospectus.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Fund's adviser's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Fund's adviser determines
the last bid price does not accurately reflect the current value or when
restricted securities are being valued, such securities are valued as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees
of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Fund's adviser believes such prices accurately reflect the fair
market value of such securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees.
Short term investments in fixed income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity, are
valued by using the amortized cost method of valuation, which the Board has
determined will represent fair value.
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 and that a complete redemption
occurs at the end of the applicable period.
In addition to providing average annual total return, the Funds may
also provide non-standardized quotations of total return for differing periods
and may provide the value of a $10,000 investment (made on the date of the
initial public offering of the Funds' shares) as of the end of a specified
period.
Each Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with each Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of any of the
Funds may be compared to indices of broad groups of unmanaged securities
considered to be representative of or similar to the portfolio holdings of the
Funds or considered to be representative of the stock market in general. The
Funds may use the Standard & Poor's 500 Stock Index, the NASDAQ Composite Index
or the Dow Jones Industrial Average.
In addition, the performance of any of the Funds may be compared to
other groups of mutual funds tracked by any widely used independent research
firm which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of any of the Funds. Performance rankings and
ratings reported periodically in national financial publications such as
Barron's and Fortune also may be used.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc. ("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
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Fund with 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 each 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 Fund for
the fiscal year ending March 31, 2000. McCurdy & Associates performs an annual
audit of the Funds' financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Funds. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the Distributor. The Distributor is obligated to sell the shares of
the Funds on a best efforts basis only against purchase orders for the shares.
Shares of the Funds are offered to the public on a continuous basis.
ADMINISTRATOR
The Funds retain AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage each
Fund's business affairs and provide the Funds with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. [fees.]
SHEPHERD VALUES FUNDS
Shepherd Values Market Neutral Fund
Shepherd Values Growth Fund
Shepherd Values VIF Equity Fund
Shepherd Values Small-Cap Fund
Shepherd Values International Fund
Shepherd Values Fixed Income Fund
STATEMENT OF ADDITIONAL INFORMATION
January __, 2000
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Prospectus of Shepherd Values Funds
dated January __, 2000. 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 1-877-636-2766 .
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST AND FUND..............................................1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS................................................................1
INVESTMENT LIMITATIONS.........................................................5
THE INVESTMENT ADVISORS AND SUB-ADVISORS.......................................8
TRUSTEES AND OFFICERS..........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
DETERMINATION OF SHARE PRICE..................................................10
INVESTMENT PERFORMANCE........................................................11
CUSTODIAN.....................................................................12
TRANSFER AGENT................................................................12
ACCOUNTANTS...................................................................12
DISTRIBUTOR...................................................................12
ADMINISTRATOR.................................................................
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
The Shepherd Values Market Neutral Fund, Growth Fund, VIF Equity Fund,
Small-Cap Fund, Fixed Income Fund and International Fund (each a "Fund" or
collectively, the "Funds") were organized as series of AmeriPrime Funds (the
"Trust"). The Trust is an open-end investment company established under the laws
of Ohio by an Agreement and Declaration of Trust dated August 8, 1995 (the
"Trust Agreement"). The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value. Each Fund is one of a series of funds currently authorized by the
Trustees.
The Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Fund's transfer
agent for the account of the Shareholder. 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.
Any Trustee of the Trust may be removed by vote of the shareholders holding not
less than two-thirds of the outstanding shares of the Trust. The Trust does not
hold an annual meeting of shareholders. When matters are submitted to
shareholders for a vote, each shareholder is entitled to one vote for each whole
share he owns and fractional votes for fractional shares he owns. All shares of
the Fund have equal voting rights and liquidation rights. The Declaration of
Trust can be amended by the Trustees, except that any amendment that adversely
effects the rights of shareholders must be approved by the shareholders
affected. Each share of the Fund is subject to redemption at any time if the
Board of Trustees determines in its sole discretion that failure to so redeem
may have materially adverse consequences to all or any of the Fund's
shareholders.
As of ______, 1999, [disclose 5% shareholders]
[As of _______, 1999, the officers and trustees as a group own less
than one percent of the Fund.]
[Prior to the public offering of the Funds, AmeriPrime Financial
Securities, Inc. (the Fund's Distributor), 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, purchased all of the outstanding shares of each Fund and
may be deemed to control the Funds. After the public offering commences, it is
anticipated that AmeriPrime Financial Securities, Inc. will no longer control
the Funds. As the controlling shareholder, AmeriPrime Financial Securities, Inc.
would control the outcome of any proposal submitted to the shareholders for
approval, including changes to a Fund's fundamental policies or the terms of the
management agreement with the Fund's adviser.]
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
Fund's Prospectus and this Statement of Additional Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a discussion of some of the investments the Fund
may make and some of the techniques it may use.
A. American Depository Receipts (ADRs). ADRs are subject to risks
similar to those associated with direct investment in foreign securities. For
example, there may be less information publicly available about a foreign
company then about a U.S. company, and foreign companies are not generally
subject to accounting, auditing and financial reporting standards and practices
comparable to those in the U.S. Other risks associated with investments in
foreign securities include changes in restrictions on foreign currency
transactions and rates of exchanges, changes in the administrations or economic
and monetary policies of foreign governments, the imposition of exchange control
regulations, the possibility of expropriation decrees and other adverse foreign
governmental action, the imposition of foreign taxes, less liquid markets, less
government supervision of exchanges, brokers and issuers, difficulty in
enforcing contractual obligations, delays in settlement of securities
transactions and greater price volatility. In addition, investing in foreign
securities will generally result in higher commissions than investing in similar
domestic securities. The Funds have no present intention to invest in
unsponsored ADRs.
B. Option Transactions. The Funds may engage in option transactions
involving individual stocks as well as stock indexes. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indexes. The
purchaser of an option on a security pays the seller (the writer) a premium for
the right granted but is not obligated to buy or sell the underlying security.
The purchaser of an option on a market index pays the seller a premium for the
right granted, and in return the seller of such an option is obligated to make
the payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the-counter
market. Call options on securities which the Funds sell (write) will be covered
or secured, which means that the Fund will own the underlying security in the
case of a call option. When the Funds write options, they may be required to
maintain a margin account, to pledge the underlying securities or U.S.
government obligations or to deposit assets in escrow with the Custodian. The
Funds may also utilize spreads and straddle strategies. A spread is the
difference in price resulting from a combination of put and call options within
the same class on the same underlying security. A straddle strategy consists of
an equal number of put and call options on the same underlying stock, stock
index, or commodity future at the same strike price and maturity date.
The purchase and writing of options involves certain risks. The
purchase of options limits a Fund's potential loss to the amount of the premium
paid and can afford a Fund the opportunity to profit from favorable movements in
the price of an underlying security to a greater extent than if transactions
were effected in the security directly. However, the purchase of an option could
result in a Fund losing a greater percentage of its investment than if the
transaction were effected directly. When a Fund writes a covered call option, it
will receive a premium, but it will give up the opportunity to profit from a
price increase in the underlying security above the exercise price as long as
its obligation as a writer continues, and it will retain the risk of loss should
the price of the security decline. In addition, there can be no assurance that a
Fund can effect a closing transaction on a particular option it has written.
Further, the total premium paid for any option may be lost if the Fund does not
exercise the option or, in the case of over-the-counter options, the writer does
not perform its obligations.
C. Real Estate Investment Trusts. A real estate investment trust
("REIT") is a corporation or business trust that invests substantially all of
its assets in interests in real estate. Equity REITs are those which purchase or
lease land and buildings and generate income primarily from rental income.
Equity REITs may also realize capital gains (or losses) when selling property
that has appreciated (or depreciated) in value. Mortgage REITs are those which
invest in real estate mortgages and generate income primarily from interest
payments on mortgage loans. Hydrid REITs generally invest in both real property
and mortgages. In addition, REITs are generally subject to risks associated with
direct ownership of real estate, such as decreases in real estate values or
fluctuations in rental income caused by a variety of factors, including
increases in interest rates, increases in property taxes and other operating
costs, casualty or condemnation losses, possible environmental liabilities and
changes in supply and demand for properties. Risks associated with REIT
investments include the fact that equity and mortgage REITs are dependent upon
specialized management skills and are not fully diversified. These
characteristics subject REITs to the risks associated with financing a limited
number of projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, and self-liquidation. Additionally, equity REITs may be
affected by any changes in the value of the underlying property owned by the
trusts, and mortgage REITs may be affected by the quality of any credit
extended.
D. Foreign Securities. Foreign government obligations generally consist
of debt securities supported by national, state or provincial governments or
similar political units or governmental agencies. Such obligations may or may
not be backed by the national government's full faith and credit and general
taxing powers. Investments in foreign securities also include obligations issued
by international organizations. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank. In
addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.
Purchases of foreign securities are usually made in foreign currencies
and, as a result, a Fund may incur currency conversion costs and may be affected
favorably or unfavorably by changes in the value of foreign currencies against
the U.S. dollar. In addition, there may be less information publicly available
about a foreign company then about a U.S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. Other risks associated with
investments in foreign securities include changes in restrictions on foreign
currency transactions and rates of exchanges, changes in the administrations or
economic and monetary policies of foreign governments, the imposition of
exchange control regulations, the possibility of expropriation decrees and other
adverse foreign governmental action, the imposition of foreign taxes, less
liquid markets, less government supervision of exchanges, brokers and issuers,
difficulty in enforcing contractual obligations, delays in settlement of
securities transactions and greater price volatility. In addition, investing in
foreign securities will generally result in higher commissions than investing in
similar domestic securities.
E. Financial Services Industry Obligations.
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
F. Zero Coupon Securities. Zero coupon securities are debt securities
issued or sold at a discount from their face value which do not entitle the
holder to any periodic payment of interest prior to maturity or a specified
redemption date (or cash payment date). These involve risks that are similar to
those of other debt securities, although they may be more volatile, and certain
zero coupon securities move in the same direction as interest rates. The amount
of the discount varies depending on the time remaining until maturity or cash
payment date, prevailing interest rates, liquidity of the security and perceived
credit quality of the issuer. Zero coupon securities also may take the form of
debt securities that have been stripped of their unmatured interest coupons, the
coupons themselves and receipts or certificates representing interests in such
stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of
interest-bearing securities and are likely to respond to a greater degree to
changes in interest rates than interest-bearing securities having similar
maturities and credit qualities.
G. Strips. The Federal Reserve creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the coupon
payments and the principal payment from an outstanding Treasury security and
selling them as individual securities. To the extent a Fund purchases the
principal portion of the STRIP, the Fund will not receive regular interest
payments. Instead they are sold at a deep discount from their face value. A Fund
will accrue income on such STRIPS for tax and accounting purposes, in accordance
with applicable law, which income is distributable to shareholders. Because no
cash is received at the time such income is accrued, a Fund may be required to
liquidate other Fund securities to satisfy its distribution obligations. Because
the principal portion of the STRIP does not pay current income, its price can be
very volatile when interest rates change. In calculating its dividend, a Fund
takes into account as income a portion of the difference between the principal
portion of the STRIP's purchase price and its face value.
H. Floating Rate, Inverse Floating Rate, and Index Obligations. The
Fixed Income Fund and the Growth Fund may invest in debt securities with
interest payments or maturity values that are not fixed, but float in
conjunction with (or inversely to) an underlying index or price. These
securities may be backed by U.S. Government or corporate issuers, or by
collateral such as mortgages. The indices and prices upon which such securities
can be based include interest rates, currency rates and commodities prices.
However, the Funds will not invest in any instrument whose value is computed
based on a multiple of the change in price or value of an asset or an index of
or relating to assets in which the Fund cannot or will not invest.
Floating rate securities pay interest according to a coupon which is
reset periodically. The reset mechanism may be formula based, or reflect the
passing through of floating interest payments on an underlying collateral pool.
The coupon is usually reset daily, weekly, monthly, quarterly or semi-annually,
but other schedules are possible. Floating rate obligations generally exhibit a
low price volatility for a given stated maturity or average life because their
coupons adjust with changes in interest rates. If their underlying index is not
an interest rate, or the reset mechanism lags the movement of rates in the
current market, greater price volatility may be experienced.
Inverse floating rate securities are similar to floating rate
securities except that their coupon payments vary inversely with an underlying
index by use of a formula. Inverse floating rate securities tend to exhibit
greater price volatility than other floating rate securities. Because the
changes in the coupon are usually negatively correlated with changes in overall
interest rates, interest rate risk and price volatility on inverse floating rate
obligations can be high, especially if leverage is used in the formula. Index
securities pay a fixed rate of interest, but have a maturity value that varies
by formula, so that when the obligation matures, a gain or loss is realized. The
risk of index obligations depends on the volatility of the underlying index, the
coupon payment and the maturity of the obligation.
I. Mortgage-Backed Securities. Mortgage-backed securities represent
participation interests in pools of one-to-four family residential mortgage
loans originated by private mortgage originators. Traditionally, residential
mortgage-backed securities have been issued by governmental agencies such as
Fannie Mae, Freddie Mac and Ginnie Mae. The Fund intends to invest only in those
securities guaranteed by governmental agencies. The Fund does not intend to
invest in commercial mortgage-backed securities. Non-governmental entities that
have issued or sponsored residential mortgage-backed securities offerings
include savings and loan associations, mortgage banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing.
While residential loans do not typically have prepayment penalties or
restrictions, they are often structured so that subordinated classes may be
locked out of prepayments for a period of time. However, in a period of
extremely rapid prepayments, during which senior classes may be retired faster
than expected, the subordinated classes may receive unscheduled payments of
principal and would have average lives that, while longer than the average lives
of the senior classes, would be shorter than originally expected. The types of
residential mortgage-backed securities which the Fund may invest in may include
the following:
J. Repurchase Agreements. A repurchase agreement is a short term
investment in which the purchaser (i.e., a Fund) acquires ownership of an
obligation issued by the U.S. Government or by an agency of the U.S. Government
("U.S. Government Obligations") (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
a Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, a Fund could experience both delays in
liquidating the underlying security and losses in value. However, each Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Fund's advisor to be creditworthy. The Fund's advisor monitors the
creditworthiness of the banks and securities dealers with which a Fund engages
in repurchase transactions.
K. Illiquid Securities. Illiquid securities generally include
securities which cannot be disposed of promptly and in the ordinary course of
business without taking a reduced price. Securities may be illiquid due to
contractual or legal restrictions on resale or lack of a ready market. The
following securities are considered to be illiquid: repurchase agreements
maturing in more than seven days, nonpublicly offered securities and restricted
securities. Restricted securities are securities the resale of which is subject
to legal or contractual restrictions. Restricted securities may be sold only in
privately negotiated transactions, in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 or pursuant
to Rule 144 or Rule 144A promulgated under such Act. Where registration is
required, the Fund may be obligated to pay all or part of the registration
expense, and a considerable period may elapse between the time of the decision
to sell and the time such security may be sold under an effective registration
statement. If during such a period adverse market conditions were to develop,
the Fund might obtain a less favorable price than the price it could have
obtained when it decided to sell. None of the Funds will invest more than 15% of
its net assets in illiquid securities.
L. Borrowing. Each Fund may borrow amounts up to 5% of its net assets
to meet redemption requests. Because each Fund's investments will fluctuate in
value, whereas the interest obligations on borrowed funds may be fixed, during
times of borrowing, a Fund's net asset value may tend to increase more then its
investments increase in value, and decrease more when its investments decrease
in value. In addition, interest costs on borrowings may fluctuate with changing
market interest rates and may partially offset or exceed the return earned on
the borrowed funds. Also, during times of borrowing under adverse market
conditions, a Fund might have to sell portfolio securities to meet interest or
principal payments at a time when fundamental investment considerations would
not favor such sales.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of each Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Funds will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. No Fund will invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. Pledging. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. Neither Fund will purchase any security while borrowings
(including reverse repurchase agreements) representing more than one third of
its total assets are outstanding.
3. Margin Purchases. Neither Fund will purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.
4. Options. Neither Fund will purchase or sell puts, calls, options or
straddles except as described in the Funds' Prospectus and Statement of
Additional Information.
5. Illiquid Investments. Neither Fund will invest more than 15% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
6. Loans of Portfolio Securities. Neither Fund will make loans of
portfolio securities.
THE INVESTMENT ADVISOR AND SUB-ADVISORS
The Advisor.
The investment advisor to the Shepherd Values Funds is Shepherd
Advisory Services, Inc., 102 South Tajon, Suite 430,Colorado Springs, CO 80903
("Shepherd"). [insert who controls the advisor here]
Under the terms of the management agreements (the "Agreement"),
Shepherd manages each Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of each Fund except brokerage, taxes,
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, each Fund is obligated to pay Shepherd a
fee (based on average daily net assets) computed and accrued daily and paid
monthly at the following annual rates: 1.75%; VIF Equity Fund, 1.00%; Small-Cap
Fund, 1.80%; Fixed Income Fund, 1.35%; International Fund, 1.95%; Market Neutral
Fund, 2.25%; Growth Fund, 1.75%.
The Shepherd retains the right to use the name "Shepherd Values" in
connection with another investment company or business enterprise with which
Shepherd is or may become associated. The Trust's right to use the name
"Shepherd Values" automatically ceases ninety days after termination of the
Agreement and may be withdrawn by Shepherd 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.
The Sub-Advisors. Templeton Portfolio Advisory, a division of
Templeton/Franklin Investment Services, Inc. ("TFIS"), is the sub-advisor to the
International Fund. Under the terms of the sub-advisory agreement, Templeton
Portfolio Advisory receives a fee from the Fund's advisor computed and accrued
daily and paid monthly at an annual rate of 0.75% of the average daily net
assets of the International Fund.
Nicholas-Applegate Capital Management ("Nicholas-Applegate") is the
sub-advisor to the Small-Cap Fund. Under the sub-advisory agreement,
Nicholas-Applegate receives a fee from the Fund's advisor computed and accrued
daily and paid monthly at an annual rate of 0.65% of the average daily net
assets of the Small-Cap Fund
Potomac Asset Management Company, Inc. ("Potomac") is the sub-advisor
to the Fixed Income Fund. Under the terms of the sub-advisory agreement, Potomac
receives a fee from the Fund's advisor computed and accrued daily and paid
monthly at an annual rate of 0.35% of the average daily net assets of the Fixed
Income Fund.
Cornerstone Capital Management, Inc,102 South Tajon, Suite 430,
Colorado Springs, CO 80903 ("Cornerstone") is the Sub-Advisor to the Market
Neutral Fund and the Growth Fund. [insert who controls the advisor here]. Under
the terms of the sub-advisory agreements, Cornerstone receives a fee from the
Fund's advisor computed and accrued daily and paid monthly at an annual rate of
____% of the average daily net assets of the Market Neutral Fund and ___% of the
average daily net assets of the Growth Fund.
Subject always to the control of the Board of Trustees, each
sub-advisor, at its expense, furnishes continuously an investment program for
the Fund. or Funds for which it acts as sub-advisor Each sub-advisor must use
its best judgement to make investment decisions, place all orders for the
purchase and sale of portfolio securities and execute all agreements related
thereto. Each sub-advisor makes its officers and employees available to the
Fund's advisor from time to time at reasonable times to review investment
policies and to consult with the Advisor regarding the investment affairs of the
applicable Fund. Each sub-advisor maintains books and records with respect to
the securities transactions and renders to the Fund's advisor such periodic and
special reports as the advisor or the Trustees may request. Each sub-advisor
pays all expenses incurred by it in connection with its activities under the
sub-advisory agreement other than the cost (including taxes and brokerage
commissions, if any) of securities and investments purchased for a Fund.
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,
1793 Kingswood Drive Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
Suite 200 Inc., the Fund's distributor, since 1994; President and Trustee of
Southlake, Texas 76092 AmeriPrime Advisors Tust and AmeriPrime Insurance Trust; prior to
Year of Birth: 1958 December, 1994, a senior client executive with SEI Financial Services.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
1793 Kingswood Drive Treasurer Financial Service, Inc. and AmeriPrime Financial Securities Inc. since
Suite 200 January 1999; Secretary and Treasurer of AmeriPrime Advisors Trust
Southlake, Texas 76092 and AmeriPrime Insurance Trust; various positions with Fidelity
Year of Birth: 1959 Investments from 1987 to 1998; most recently Fund Reporting Unit
Manager.
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
2001 N. Indianwood Avenue services company; various positions with Carbo Ceramics, Inc., oil
Broken Arrow, OK 74012 field manufacturing/supply company, from 1984 to 1997, most recently
Year of Birth: 1957 Vice President of Marketing.
==================================== ---------------- ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
600 Jefferson Street Company since 1992; President and Director of Heritage Trust
Suite 350 Company form 1994-1996; Vice President and Manager of Investments
Houston, Texas 77002 of Kanaly Trust Company from 1988 to 1992.
==================================== ================ ======================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1999 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
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
<S> <C> <C>
Kenneth D. Trumpfheller 0 0
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
Steve L. Cobb $______ $______
==================================== ----------------------- ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
==================================== ======================= ==================================
Gary E. Hippenstiel $______ $______
==================================== ======================= ==================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
each Fund's sub-advisor is responsible for each Fund's portfolio decisions and
the placing of each Fund's portfolio transactions. In placing portfolio
transactions, each Fund's sub-advisor seeks the best qualitative execution for
each Fund, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), the execution capability, financial
responsibility and responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer. The Fund's sub-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 Fund's sub-adviser may
give consideration to sales of shares of the Trust as a factor in the selection
of brokers and dealers to execute portfolio transactions.
Each Fund's sub-advisor is specifically authorized to select brokers or
dealers who also provide brokerage and research services to the Funds and/or the
other accounts over which the Fund's sub-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 Fund's sub-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 Fund's sub-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 Funds effect securities
transactions may also be used by the Fund's sub-advisor in servicing all of its
accounts. Similarly, research and information provided by brokers or dealers
serving other clients may be useful to the Fund's sub-advisor in connection with
its services to the Funds. Although research services and other information are
useful to the Funds and the Fund's sub-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 Fund's sub-advisor that the review and study of
the research and other information will not reduce the overall cost to the
Fund's sub-advisor of performing its duties to the Funds under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
When a Portfolio and another of the sub-advisor's clients seek to
purchase or sell the same security at or about the same time, the sub-advisor
may execute the transaction on a combined ("blocked") basis. Blocked
transactions can produce better execution for the Portfolios because of the
increased volume of the transaction. If the entire blocked order is not filled,
the Portfolio 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
Portfolio may not be able to obtain as large an execution of an order to sell or
as high a price for any particular portfolio security if the other client
desires to sell the same portfolio security at the same time. In the event that
the entire blocked order is not filled, the purchase or sale will normally be
allocated on a pro rata basis. The allocation may be adjusted by the Fund's
sub-advisor, taking into account such factors as the size of the individual
orders and transaction costs, when the Fund's sub-advisor believes an adjustment
is reasonable.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Determination of Net
Asset Value" in the Prospectus.
Securities which are traded on any exchange or on the NASDAQ over-the-counter
market are valued at the last quoted sale price. Lacking a last sale price, a
security is valued at its last bid price except when, in the Fund's adviser's
opinion, the last bid price does not accurately reflect the current value of the
security. All other securities for which over-the-counter market quotations are
readily available are valued at their last bid price. When market quotations are
not readily available, when the Fund's adviser determines the last bid price
does not accurately reflect the current value or when restricted securities are
being valued, such securities are valued as determined in good faith by the
Fund's adviser, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Fund's adviser believes such prices accurately reflect the fair
market value of such securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees.
Short term investments in fixed income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity, are
valued by using the amortized cost method of valuation, which the Board has
determined will represent fair value.
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 and that a complete redemption
occurs at the end of the applicable period.
A Fund's "yield" is determined in accordance with the method defined by
the Securities and Exchange Commission. A yield quotation is based on a 30 day
(or one month) period and is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
Yield = 2[(a-b/cd+1)6-1]
Where:
a = dividends and interest earned during the period b = expenses
accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends d = the maximum offering price
per share on the last day of the period
Solely for the purpose of computing yield, dividend income recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day prior
to the start of the 30-day (or one month) period for which yield is being
calculated, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest). With respect to the treatment of
discount and premium on mortgage or other receivable-backed obligations which
are expected to be subject to monthly paydowns of principal and interest, gain
or loss attributable to actual monthly paydowns is accounted for as an increase
or decrease to interest income during the period and discount or premium on the
remaining security is not amortized.
Each Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from average
annual total return. A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for average annual total return. In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. 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.
Each Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with each Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of any of the
Funds may be compared to indices of broad groups of unmanaged securities
considered to be representative of or similar to the portfolio holdings of the
Funds or considered to be representative of the stock market in general. The
Funds may use the Standard & Poor's 500 Stock Index, the NASDAQ Composite Index,
the VIF 400 Values Index or the Dow Jones Industrial Average.
In addition, the performance of any of the Funds may be compared to
other groups of mutual funds tracked by any widely used independent research
firm which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of any of the Funds. Performance rankings and
ratings reported periodically in national financial publications such as
Barron's and Fortune also may be used.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Funds' transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Funds' shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Funds 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 Fund's advisor equal to 0.0275% of the Funds' 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 Fund for
the fiscal year ending March 31, 2000. McCurdy & Associates performs an annual
audit of the Funds' financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Funds. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the Distributor. The Distributor is obligated to sell the shares of
the Funds on a best efforts basis only against purchase orders for the shares.
Shares of the Funds are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood Drive,
Suite 200, Southlake, TX 76092, (the "Administrator") to manage the Fund's
business affairs and provide the Fund with administrative services, including
all regulatory reporting and necessary office equipment, personnel and
facilities. [fees.]
<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.
(xvi) Copy of Amendments No. 18-19 to Registrant's Declaration of Trust which
were filed as Exhibits to Registrant's Post-Effective Amendment No. 30, 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 Management Agreement with Martin Capital Advisors
L.L.P., Advisor to the U.S. Opportunity Fund, which was filed as an Exhibit to
Registrants Post-Effective Amendment No. 29, 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 Management Agreement with Cornerstone Investment
Management, Advisor to the Cornerstone MVP Fund, which was filed as an Exhibit
to Registrants Post-Effective Amendment No. 29, 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 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. 31, 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 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.
31, is hereby incorporated by reference.
(xxiv) Copy of Registrant's Management Agreement with Cash Management Systems ,
Inc. ("CMS"), Adviser to The Cash Fund, which was filed as an exhibit to
Registrant's Post-Effective Amendment No. 31, is hereby incorporated by
reference.
(xxv) Copy of Sub-Advisory Agreement between Cash Management Systems, Inc. and
Milestone Capital Management, L.P., Sub-Advisor to The Cash Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 30, is
hereby incorporated by reference.
(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 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. 29, is hereby
incorporated by reference.
(xxviii) Copy of Registrant's Management Agreement with Shepherd Advisory
Services, Inc., Advisor to the Shepherd Values VIF Equity Fund, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No.
31, is hereby incorporated by reference.
(xxix) Copy of Registrant's Management Agreement with Shepherd Advisory
Services, Inc., Advisor to the Shepherd Values Small-Cap Fund, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No.
31, is hereby incorporated by reference.
(xxx) Copy of Registrant's Management Agreement with Shepherd Advisory
Services, Inc., Advisor to the Shepherd Values International Fund,
which was filed as an Exhibit to Registrant's Post-Effective Amendment
No. 31, is hereby incorporated by reference.
(xxxi) Copy of Registrant's Management Agreement with Shepherd Advisory
Services, Inc., Advisor to the Shepherd Values Fixed Income Fund, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No.
31, is hereby incorporated by reference.
(xxxii) Sub-Advisory Agreement between Shepherd Advisory Services, Inc. and
Cornerstone Capital Management, Inc., Sub-Advisor to the Shepherd
Values VIF Equity Fund, is filed herewith.
(xxxiii) Sub-Advisory Agreement between Shepherd Advisory Services, Inc. and
Templeton Portfolio Advisory, Sub-Advisor to the Shepherd Values
International Fund, is filed herewith.
(xxxiv) Sub-Advisory Agreement between Shepherd Advisory Services, Inc. and
Nicholas-Applegate Capital Management, Sub-Advisor to the Shepherd
Values Small-Cap Fund, is filed herewith.
(xxxv) Sub-Advisory Agreement between Shepherd Advisory Services, Inc. and
Potomac Asset Management Company, Inc., Sub-Advisor to the Shepherd
Values Fixed Income Fund, is filed herewith.
(xxxvi) 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.
(xxxvii) Copy of Registrant's Proposed Management Agreement with Aegis Asset
Management, Inc., Advisor to the Westcott Large-Cap Fund, which was
filed as an Exhibit to Registrant's Post Effective-Amendment No. 27, is
hereby incorporated by reference.
(xxxviii)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.
(xxxix) Copy of Registrant's Proposed Management Agreement with Jenswold, King
& Associates, Adviser to the Fountainhead Kaleidoscope Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 28, is
hereby incorporated by reference.
(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, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 28, is hereby incorporated by reference.
(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) Opinion of Brown, Cummins & Brown Co., L.P.A., which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 29, is hereby
incorporated by reference.
(iii) 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 Rule 12b-1 Distribution Plan for the Westcott Nothing
But Net Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 28, is hereby incorporated by reference.
(x) Copy of Registrant's Rule 12b-1 Distribution Plan for the Westcott Large-Cap
Fund, which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
28, is hereby incorporated by reference.
(xi) Copy of Registrant's Rule 12b-1 Distribution Plan for the Westcott Fixed
Income Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 28, is hereby incorporated by reference.
(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) Rule 18f-3 Plan for the Westcott Funds, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 28, is hereby incorporated by
reference.
(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 October 25, 1999)
(a) 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 (68.98%). 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.
(b) Charles L. Dobson, may be deemed to control the Dobson Covered Call Fund as
a result of his beneficial ownership of the Fund (63.23%). 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.
(c) J. Jeffrey Auxier may be deemed to control the Auxier Focus Fund as a
result of his beneficial ownership of the Fund (99.37%). J. Jeffrey Auxier
controls Auxier Asset Management, LLC (an Oregon limited liability company)
because he owns a majority of its shares. As a result, Auxier Asset
Management, LLC and the Fund may be deemed to be under the common control
of J. Jeffrey Auxier.
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.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the provisions of Ohio law and the Agreement and
Declaration of the Registrant or the By-Laws of the Registrant, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Trust in the successful defense of any action, suit or proceeding)
is asserted by such trustee, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 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) Darrel Uselton, Director of CCM, is the Chairman of The National Capital
Companies, an investment banking firm.
b) Joseph Cerbone, Director of CCM, is the President of The National Capital
Companies, an investment banking firm.
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) Colleen Helm, Director of CCM, was a portfolio manager with Angell Financial,
an investment adviser, from January 1998 to November 1999. Prior to that, she
was a portfolio manager with Pinnacle Financial Advisory Group, an investment
adviser.
e) Donald Ellsworth, Director of CCM, was the President of Ellsworth Advisory
Group, Inc., an investment counseling firm, from June 1987 until June 1999.
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 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:
(a) Thomas Layng Guerriero, President of Aegis, has been the
President of Westcott Securities, L.L.C., a broker/dealer,
from April 1998 to the present.
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 and the TANAKA Funds, Inc.
B. Information with respect to each director and officer of AmeriPrime
Financial Securities, Inc. is incorporated by reference to Schedule A
of Form BD filed by it under the Securities Exchange Act of 1934 (File
No. 8-48143).
C. Not applicable.
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 Custodians, Firstar Bank,
N.A., 425 Walnut Street, Cincinnati, Ohio 45202, and Bank of New York, 1 Wall
Street, New York, NY 10286, and United Missouri Bank, N.A., Securities
Administration Dept., 928 Grand Blvd., 10th Floor, Att: Ralph Santoro, Kansas
City, MO 64106, 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 30th day of November, 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 November 30, 1999
Paul S. Bellany, Treasurer
EXHIBIT INDEX
1. Sub-Advisory Agreement for the Shepherd Values
VIF Equity Fund................................................EX-99.23.d.1
2. Sub-Advisory Agreement for the Shepherd Values
International Fund.............................................EX-99.23.d.2
3. Sub-Advisory Agreement for the Shepherd Values
Small-Cap Fund.................................................EX-99.23.d.3
4. Sub-Advisory Agreement for the Shepherd Values
Fixed Income Fund..............................................EX-99.23.d.4
5. Consent of Counsel...............................................EX-99.23.i
6. Consent of Accountant................. ..........................EX-99.23.j
AMERIPRIME FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of September __, 1999,
between Shepherd Advisory Services, Inc. a Tennessee corporation (the
"Adviser"), Cornerstone Capital Management, Inc., a Colorado corporation (the
"Sub-Advisor").
W I T N E S E T H:
WHEREAS, the Adviser acts as the investment adviser to AmeriPrime
Funds, an Ohio business trust (the "Trust"), pursuant to an Investment Advisory
Agreement, dated as of September __, 1999 (the "Advisory Agreement");
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to render
investment sub-advisory services to the funds of the Trust set forth on the
Exhibits to this Agreement (the "Funds"), and the Sub-Adviser is willing to
render such services.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT AND STATUS OF SUB-ADVISER. The Adviser hereby
appoints the Sub-Adviser to act as its agent to provide investment advisory
service to each class of shares of beneficial interest of the Trust set forth on
an executed Exhibit to this Agreement (each a "Fund"), for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. Although the Sub-Adviser shall be an agent of the Adviser, the
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor of the Adviser and the Trust and shall, unless otherwise expressly
provided herein or authorized by the Adviser or the Board of Trustees of the
Trust from time to time, have no authority to act for or represent the Adviser
or the Trust in any way or otherwise be deemed an agent of the Trust.
SECTION 2. SUB-ADVISER'S DUTIES. Subject to the general supervision of
the Trust's Board of Trustees (the "Board") and the Adviser, the Sub-Adviser
shall, employing its discretion, manage the investment operations of each Fund
and the composition of the portfolio of securities and investments (including
cash) belonging to each Fund, including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the Trust's
then-current Prospectus and Statement of Additional Information (together, the
"Prospectus") and subject to the following understandings:
(a)......The Sub-Adviser shall furnish a continuous investment program
for each Fund and determine from time to time what investments or securities
will be purchased, retained or sold by each Fund and what portion of the assets
belonging to each Fund will be invested or held uninvested as cash;
(b)......The Sub-Adviser shall use its best judgment in the
performance of its duties under this Agreement;
(c)......The Sub-Adviser, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the Trust's
Declaration of Trust, its By-Laws and its Prospectus and with the instructions
and directions of the Trust's Board of Trustees and the Adviser and will conform
to and comply with the requirements of the 1940 Act and all other applicable
federal and state laws and regulations;
(d)......The Sub-Adviser shall determine the securities to be purchased
or sold by each Fund and as agent for the Trust will effect portfolio
transactions pursuant to its determinations either directly with the issuer or
with any broker and/or dealer in such securities, subject to Section 3 below;
(e)......The Sub-Adviser shall maintain books and records with respect
to the securities transactions of each Fund and shall render to the Adviser and
the Trust's Board of Trustees such periodic and special reports as the Adviser
or the Board may request; and
(f)......The Sub-Adviser shall provide the Trust's custodian with such
information relating to the Trust as may be required under the terms of the
then-current custody agreement between the Trust and the custodian.
SECTION 3. BROKERAGE. In placing orders with brokers and/or dealers,
the Sub-Adviser is directed at all times to seek best price and execution for
purchases and sales on behalf of each Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Sub-Adviser should generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received. Subject to such
conditions as may be imposed by the Trust's Board of Trustees, the Sub-Adviser
may pay commissions to brokers and/or dealers that are higher than might be
charged by another qualified broker to obtain brokerage and/or research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) considered by the Sub-Adviser to be
useful or desirable in the performance of the Sub-Adviser's duties hereunder, if
the Sub-Adviser determines 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 Sub-Adviser's overall
responsibilities with respect to the Funds and to accounts over which
Sub-Adviser exercises investment discretion. The Funds and the Sub-Adviser
understands and acknowledges that, although the information may be useful to the
Funds and the Sub-Adviser, it is not possible to place a dollar value on such
information. The Board shall periodically review the commissions paid by the
Funds to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Funds.
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, the Sub-Adviser may give consideration to sales of shares of
the Funds as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the foregoing and to such conditions as may be imposed by
the Adviser or the Trust's Board of Trustees and the provisions of the 1940 Act,
Exchange Act, and other applicable law, nothing herein shall prohibit the
Sub-Adviser from selecting brokers and/or dealers who are "affiliated persons"
of the Sub-Adviser, the Adviser or the Trust. On occasions when the Sub-Adviser
deems the purchase or sale of a security to be in the best interest of the Trust
as well as other customers, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Sub-Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Trust and, if applicable,
to such other customers.
If any occasion should arise in which the Sub-Adviser gives any advice
to clients of Sub-Adviser concerning the shares of any Fund, Sub-Adviser will
act solely as investment counsel for such client and not in any way on behalf of
the Fund. Sub-Adviser's services to the Funds pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that Sub-Adviser may render
investment advice, management and other services to others, including other
registered investment companies.
SECTION 4. BOOKS AND RECORDS. The Sub-Adviser shall keep the Trust's
books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Sub-Adviser agrees that all records which it maintains for
the Trust are the property of the Trust and it will promptly surrender any of
such records to the Trust upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Sub-Adviser with
respect to the Trust by Rule 31a-1 under the 1940 Act.
SECTION 5. EXPENSES OF THE SUB-ADVISER. During the term of this
Agreement, the Sub-Adviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust who are "interested
persons" of the Sub-Adviser, as defined in the 1940 Act) incurred by it in
connection with its activities under this Agreement other than the cost of
securities and investments purchased for each Fund (including taxes and
brokerage commissions, if any).
SECTION 6. COMPENSATION OF THE SUB-ADVISER. For the services provided
and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Sub-Adviser as full compensation therefor a fee with respect to each Fund at an
annual rate as set forth on the Exhibit executed with respect to such Fund and
attached hereto. This fee for each month will be paid to the Sub-Adviser during
the succeeding month. For purposes of determining the fee payable hereunder, the
net asset value of each Fund shall be calculated in the manner specified in the
Trust's Prospectus.
SECTION 7. USE OF NAME. The Trust, Adviser and Sub-Adviser acknowledge
that all rights to the name "Shepherd Values" belong to the Adviser, 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 the Adviser ceases to be the Adviser, the
Trust's right to the use of the name "Shepherd Values" shall automatically cease
on the ninetieth day following the termination of this Agreement. The right to
the name may also be withdrawn by the Adviser during the term of the Management
Agreement upon ninety (90) days' written notice by the Adviser to the Trust.
Nothing contained herein shall impair or diminish in any respect the Adviser's
right to use the name "Shepherd Values" in the name of, or in connection with,
any other business enterprises with which the Adviser is or may become
associated. There is no charge to the Trust for the right to use these names.
SECTION 8. LIABILITY OF THE SUB-ADVISER. Neither Sub-Adviser nor its
shareholders, members, officers, directors, employees, agents, control persons
or affiliates of any thereof, shall be liable for any error of judgment or
mistake of law or for any loss suffered by any Fund in connection with the
matters to which this Agreement relates except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
Any person, even though also a director, officer, employee,
shareholder, member or agent of Sub-Adviser, 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 Sub-Adviser's duties hereunder), to
be rendering such services to or acting solely for the Trust and not as a
director, officer, employee, shareholder, member or agent of Sub-Adviser, or one
under Sub-Adviser's control or direction, even though paid by Sub-Adviser.
SECTION 9. DURATION AND TERMINATION. The term of this Agreement shall
begin on the date of this Agreement for each Fund that has executed an Exhibit
hereto on the date of this Agreement and shall continue in effect with respect
to each such Fund (and any subsequent Funds added pursuant to an Exhibit
executed during the initial two-year term of this Agreement) for a period of two
years from the date of its execution. This Agreement shall continue in effect
from year to year thereafter, subject to termination as hereinafter provided, if
such continuance is approved at least annually by (a) a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund or by
vote of the Trust's Board of Trustees, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval. If a Fund
is added pursuant to an Exhibit executed after the date of this Agreement as
described above, this Agreement shall become effective with respect to that Fund
upon execution of the applicable Exhibit and shall continue in effect until the
next annual continuance of this Agreement and from year to year thereafter,
subject to approval as described above. This Agreement may be terminated by the
Adviser or the Trust with respect to any Fund at any time, without the payment
of any penalty, by the Adviser with the consent of the Trust's Board of
Trustees, by the Trust's Board of Trustees, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund, in any
such case on 30 days' written notice to the Sub-Adviser, or by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written notice to
the Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment (as defined in the 1940 Act).
SECTION 10. AMENDMENT. This Agreement may be amended by mutual consent
of the Adviser, the Sub-Adviser and the Trust, but the consent of the Trust must
be approved (a) by vote of a majority of those Trustees of the Trustee who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
voting on such amendment, and (b) if required under then current interpretations
of the 1940 Act by the Securities and Exchange Commission, by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of each Fund
affected by such amendment.
SECTION 11. NOTICES. Notices of any kind to be given in writing and
shall be duly given if mailed or delivered to the Sub-Adviser at 102 South
Tajon, Suite 430, Colorado Springs, CO 80903, and to the Adviser at 102 South
Tajon, Suite 430, Colorado Springs, CO 80903, or at such other address or to
such other individual as shall be specified by the party to be given notice.
SECTION 12. GOVERNING LAW. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without regard to
the conflicts of laws principles thereof, and (b) any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 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 rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is revised
by rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
SECTION 13. 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.
SECTION 14. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shallbe deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 15. 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.
SECTION 16. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereto for otherwise affect their construction or effect.
SECTION 17. CHANGE OF CONTROL. Sub-Adviser undertakes to notify Adviser
and the Trust in writing sufficiently in advance of any change of control; as
defined in Section 2(a)(9) of the 1940 Act, as will enable the Trust to consider
whether an assignment, as defined in Section 2(a)(4) of the 1940 Act, would
occur.
SECTION 18. OTHER BUSINESS. Except as set forth above, nothing in this
Agreement shall limit or restrict the right of any of the Sub-Adviser's
partners, officers or employees who may also be a trustee, officer, partner or
employee of the Trust to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any business,
whether of a similar or a dissimilar nature, nor limit or restrict the
Sub-Adviser's right to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date and year first above
written.
Shepherd Advisory Services, Inc. Cornerstone Capital Management, Inc.
By /s/...... By /s/
----------------------------- ---------------------------------
Name Shepherd Advisory Services, Inc. Name Jason D. Huntley
Title President and C.E.O. Title Managing Director
<PAGE>
EXHIBIT A
TO
INVESTMENT SUB-ADVISORY AGREEMENT
AMERIPRIME FUNDS
For all services rendered by the Sub-Adviser hereunder with respect to
the above-named Funds, the Adviser shall pay to the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all services rendered
hereunder, an annual fee with respect to each Fund equal to the percentage of
the average daily net assets of the Fund set forth opposite its name below:
========================================= =====================================
Name of Fund Fee Percentage
========================================= =====================================
========================================= =====================================
Shepherd Values VIF Equity Fund 0.20%
========================================= =====================================
========================================= =====================================
========================================= =====================================
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed by their officers designated below as of the date set forth below.
Shepherd Advisory Services, Inc. Cornerstone Capital Management, Inc.
By /s/...... By /s/
------------------------------ ----------------------------
Name Shepherd Advisory Services, Inc. Name Jason D. Huntley
Title President and C.E.O. Title Managing Director
<PAGE>
AMERIPRIME FUNDS
INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of September __, 1999,
between Shepherd Advisory Services, Inc., a Tennessee corporation (the
"Adviser"), and Templeton Portfolio Advisory (the "Subadviser"), a division of
Templeton/Franklin Investment Services, Inc., a Delaware corporation.
W I T N E S E T H:
WHEREAS, the Adviser acts as the investment adviser to AmeriPrime
Funds, an Ohio business trust (the "Trust"), pursuant to an Investment Advisory
Agreement, dated as of September __, 1999 (the "Advisory Agreement");
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Adviser desires to retain the Subadviser to render
investment sub-advisory services to the funds of the Trust set forth on the
Exhibits to this Agreement (each a "Fund"), and the Subadviser is willing to
render such services.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT AND STATUS OF SUBADVISER. The Adviser hereby
appoints the Subadviser to provide investment advisory service to each class of
shares of beneficial interest of the Trust set forth on an executed Exhibit to
this Agreement (each a "Fund"), for the period and on the terms set forth in
this Agreement. Each Fund shall be managed subject to certain non-financial
screening criteria in order to maintain a portfolio consistent with the
Adviser's values as stated in the Trust's Prospectus (the "Shepherd Values").
Adviser shall be responsible for providing Subadviser with such non-financial
screening criteria and for notifying Subadviser of any changes to such criteria
in a timely manner. Subject to any other written instructions of the Adviser or
the Trust, the Subadviser is also hereby appointed the Adviser's and the Trust's
agent and attorney-in-fact for the limited purposes of executing account
documentation, agreements, contracts and other documents as the Subadviser shall
be requested by brokers, dealers, counterparties and other persons in connection
with its management of the Fund. The Subadviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. The Subadviser shall for all purposes herein be deemed to be an
independent contractor of the Adviser and the Trust and shall, unless otherwise
expressly provided herein or authorized by the Adviser or the Board of Trustees
of the Trust from time to time, have no authority to act for or represent the
Adviser or the Trust in any way or otherwise be deemed an agent of the Trust.
Prior to the effectiveness of this Agreement, Adviser shall provide Subadviser
with a copy of the Funds' current Prospectus and Statement of Additional
Information, the Trust's Declaration of Trust and By-Laws and a list of any
broker-dealers that are affiliated persons of the Adviser or the Trust.
Thereafter, Adviser shall promptly deliver to Subadviser any amendments or
supplements to the above materials. The Adviser will also provide the Subadviser
with reasonable advance notice of any change in a Fund's investment objectives,
policies and restrictions as stated in the Prospectus, and the Subadviser shall,
in the performance of its duties and obligations under this Agreement, manage
the Fund consistent with such changes, provided the Subadviser has received
prompt notice of the effectiveness of such changes from the Trust or the
Adviser. The Adviser acknowledges and agrees that the Prospectus will at all
times be in compliance with all disclosure requirements under all applicable
federal and state laws and regulations relating to the Trust or the Funds,
including, without limitation, the 1940 Act, and the rules and regulations
thereunder, and that the Subadviser shall have no liability in connection
therewith, except as to the accuracy of material information furnished by the
Subadviser to the Trust or to the Adviser specifically for inclusion in the
Prospectus.
SECTION 2. SUBADVISER'S DUTIES. Subject to the general supervision of
the Trust's Board of Trustees (the "Board") and the Adviser, the Subadviser
shall, employing its discretion, manage the investment operations of each Fund
and the composition of the portfolio of securities and investments (excluding
cash) belonging to each Fund, including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the Trust's
then-current Prospectus and Statement of Additional Information (together, the
"Prospectus") and subject to the following understandings:
(a) The Subadviser shall furnish a continuous investment program for
each Fund and determine from time to time what investments or securities will be
purchased, retained or sold by each Fund and what portion of the assets
belonging to each Fund will be invested or held uninvested as cash, and shall,
when it deems appropriate and without prior consultation with Adviser, (i) buy,
sell, exchange, convert and otherwise trade in any stocks, bond and other
securities including money market instruments, whether the issuer is organized
in the United States or outside the United States, (ii) place orders for the
execution of such securities transactions with or through such brokers, dealers
or issuers as the Subadviser may select and (iii) purchase, sell, exchange or
convert foreign currency in the spot or forward markets as necessary to
facilitate transactions in international securities for the Fund;
(b) The Subadviser shall use its best judgment in the performance of
its duties under this Agreement and will use reasonable efforts to work with the
Adviser or its agent to maintain a portfolio for each Fund that is consistent
with the Shepherd Values as set forth in the Trust's Prospectus;
(c) The Subadviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Trust's Declaration of
Trust, its By-Laws and its Prospectus and with the instructions and directions
of the Trust's Board of Trustees and the Adviser and will conform to and comply
with the requirements of the 1940 Act and all other applicable federal and state
laws and regulations, except that the Subadviser shall not be responsible for
compliance with, or for monitoring compliance with, the requirements of the
Internal Revenue Code, specifically Subchapter M;
(d) The Subadviser shall determine the securities to be purchased or
sold by each Fund and as agent for the Trust will effect portfolio transactions
pursuant to its determinations either directly with the issuer or with any
broker and/or dealer in such securities, subject to Section 3 below;
(e) The Subadviser shall maintain books and records with respect to the
securities transactions of each Fund and shall render to the Adviser and the
Trust's Board of Trustees such periodic and special reports as the Adviser or
the Board may reasonably request;
(f) The Subadviser shall provide the Trust's custodian with such
information relating to the Trust as is customarily provided by a subadviser to
a custodian; and
(g) Subadviser shall have the power to vote, either in person or by
proxy, all securities in which the Fund may be invested from time to time, and
shall not be required to seek or take instructions from the Adviser, a Fund or
the Trust or take any action with respect thereto. Subadviser shall receive
reimbursement from the Fund for the Fund's portion of the cost of any proxy
voting service that Subadviser may subscribe to and use in the performance of
its duties hereunder. Subadviser shall not be expected or required to take any
action other than the rendering of investment-related advice with respect to
lawsuits involving securities held by the Fund, or the issuers thereof,
including actions involving bankruptcy. Should the Subadviser undertake
litigation against an issuer on behalf of the Fund, the Fund agrees to pay its
portion of any applicable legal fees associated with the action or to forfeit
any claim to any assets the Subadviser may recover and, in such case, agrees to
hold Subadviser harmless for excluding the Fund from such action.
(h) Notwithstanding the above, the Subadviser shall not be responsible
for calculating Fund performance or pricing Fund securities.
SECTION 3. BROKERAGE. In placing orders with brokers and/or dealers,
the Subadviser is directed at all times to seek best price and execution for
purchases and sales on behalf of each Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Subadviser should generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received. Subject to such
conditions as may be imposed by the Trust's Board of Trustees, the Subadviser
may pay commissions to brokers and/or dealers that are higher than might be
charged by another qualified broker to obtain brokerage and/or research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) considered by the Subadviser to be useful
or desirable in the performance of the Subadviser's duties, if the Subadviser
determines 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 Subadviser's overall responsibilities with respect to
the Funds and to accounts over which Subadviser exercises investment discretion.
The Funds and the Subadviser understand and acknowledge that, although the
information may be useful to the Funds and the Subadviser, it is not possible to
place a dollar value on such information. The Board shall periodically review
the commissions paid by the Funds to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Funds.
Subject to the foregoing and to such conditions as may be imposed by
the Adviser or the Trust's Board of Trustees and the provisions of the 1940 Act,
Exchange Act, and other applicable law, nothing herein shall prohibit the
Subadviser from selecting brokers and/or dealers who are "affiliated persons" of
the Subadviser, the Adviser or the Trust. On occasions when the Subadviser deems
the purchase or sale of a security to be in the best interest of the Trust as
well as other customers, the Subadviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Subadviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Trust and, if applicable,
to such other customers. Subadviser or its affiliates may, based upon their
trading strategies or their accounts' investment objectives or investment
restrictions, restrict to certain accounts purchases and sales of securities for
which supply may be limited.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Subadviser represents and
warrants to the Adviser as follows:
(a) The Subadviser is registered as an investment adviser under the
Advisers Act;
(b) The Subadviser is a corporation duly organized and validly existing
under the laws of the State of Delaware with the power to own and
possess its assets and carry on its business as it is now being
conducted;
(c) The execution, delivery and performance by the Subadviser of this
Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action and no action by or in respect of,
or filing with, any governmental body, agency or official is required
on the part of the Subadviser for the execution, delivery and
performance by the Subadviser of this Agreement, and the execution,
delivery and performance by the Subadviser of this Agreement do not
contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) the Subadviser's governing
instruments, or (iii) any agreement, judgment, injunction, order,
decree or other instrument binding upon the Subadviser;
(d) The Form ADV of the Subadviser previously provided to the Adviser is a
true and complete copy of the form as currently filed with the SEC and
the information contained therein is accurate and complete in all
material respects and does not omit to state any material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading;
The Adviser represents and warrants to the Subadviser as follows:
(a) The adviser is registered as an investment adviser under the
Advisers Act;
(b) The adviser is a corporation duly organized and validly existing under
the laws of Tennessee with the power to own and possess its assets and
carry on its business as it is now being conducted;
(c) The execution, delivery and performance by the Adviser of this
Agreement are within the Adviser's powers and have been duly authorized
by all necessary action on the part of its shareholders or directors,
and no action by or in respect of, or filing with any governmental
body, agency or official is required on the part of the Adviser for the
execution, delivery and performance by the Adviser of this Agreement,
and the execution, delivery and performance by the Adviser of this
Agreement do not contravene or constitute a default under (i) any
provision of applicable law, rule or regulation, (ii) the Adviser's
governing instruments, or (iii) any agreement, judgment, injunction,
order, decree or other instrument binding upon the Adviser;
(d) The Form ADV of the Adviser previously provided to the Subadviser is a
true and complete copy of the form filed with the SEC and the
information contained therein is accurate and complete in all material
respects and does not omit to state any material fact necessary in
order to make the statements made, in light of the circumstances under
which they were made, not misleading;
(e) The Adviser acknowledges that it received a copy of the Subadviser's Form
ADV prior to the execution of this Agreement; and
(f) The Adviser and the Trust have duly entered into the Advisory Agreement
pursuant to which the Trust authorized the Adviser to enter into this
Agreement.
SECTION 5. BOOKS AND RECORDS. The Subadviser shall keep the Trust's
books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Subadviser agrees that it will make such records available
to the Trust for review or copying upon the Trust's reasonable request. The
Subadviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records as are required to be maintained by the
Subadviser with respect to the Trust by Rule 31a-1 under the 1940 Act.
SECTION 6. EXPENSES OF THE SUBADVISER. During the term of this
Agreement, the Subadviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust who are "interested
persons" of the Subadviser, as defined in the 1940 Act) incurred by it in
connection with its activities under this Agreement other than (a) the cost of
securities and investments purchased for each Fund (including taxes and
brokerage commissions, if any), and (b) expenses relating to Shepherd Values
screening services.
It is understood that the Fund will pay all of its own expenses, including,
without limitation, governmental fees; interest charges; loan commitment fees,
taxes; fees and expenses of independent auditors, legal counsel and any transfer
agent or registrar; expenses of issuing or redeeming shares; expenses of
preparing, typesetting, printing and mailing notices and reports to governmental
officers and commissions and to shareholders; expenses connected with the
execution, recording and settlement of security transactions; insurance
premiums; fees and expenses of the custodian for all services to the account
including safekeeping of securities and maintaining required books and accounts;
expenses of calculating the net asset value of the Fund including but not
limited to the fees of independent pricing services; expenses related to proxy
voting and such non-recurring or extraordinary expenses as may arise including
those relating to actions, suits or proceedings to which the Fund or Trust may
be a party.
SECTION 7. COMPENSATION OF THE SUBADVISER. For the services provided
and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Subadviser as full compensation therefor a fee with respect to each Fund at an
annual rate as set forth on the Exhibit executed with respect to such Fund and
attached hereto. This fee for each month will be paid to the Subadviser during
the succeeding month. For purposes of determining the fee payable hereunder, the
net asset value of each Fund shall be calculated in the manner specified in the
Trust's Prospectus.
SECTION 8. USE OF NAME. The Trust, Adviser and Subadviser acknowledge
that all rights to the name "Shepherd Values" belong to the Adviser, 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 the Adviser ceases to be the Adviser, the
Trust's right to the use of the name "Shepherd Values" shall automatically cease
on the ninetieth day following the termination of this Agreement. The right to
the name may also be withdrawn by the Adviser during the term of the Management
Agreement upon ninety (90) days' written notice by the Adviser to the Trust.
Nothing contained herein shall impair or diminish in any respect the Adviser's
right to use the name "Shepherd Values" in the name of, or in connection with,
any other business enterprises with which the Adviser is or may become
associated. There is no charge to the Trust for the right to use these names.
Neither the Adviser nor any affiliate or agent of the Adviser shall make
reference to or use the "Templeton" name, the name of the Subadviser or any of
its affiliates, or any of their clients, except references concerning the
identity of and services provided by the Subadviser to the Fund, which
references shall not differ in substance from those included in the Prospectus
and this Agreement, in any advertising or promotional materials without the
prior approval of Subadviser, which approval shall not be unreasonable withheld.
The Adviser hereby agrees to use its best efforts to cause the Fund, the Fund's
distributor and any affiliate thereof to satisfy the foregoing obligation.
SECTION 9. LIABILITY. Neither Subadviser nor its shareholders, members,
officers, directors, employees, agents, control persons or affiliates of any
thereof, shall be liable for any error of judgment or mistake of law or for any
loss suffered by the Adviser or a Fund in connection with the matters to which
this Agreement relates except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services (in which case any
award of damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 1940 Act) or a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
The Subadviser has not made and is not making any guarantees, including without
limitation a guarantee as to any specific level of performance of the Fund. As
used in this section, the term "Subadviser" shall include directors, officers,
and employees of the Subadviser as well as the Subadviser itself.
The Adviser agrees to indemnify and hold harmless the Subadviser against any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees) arising out of (a) the failure to provide Subadviser timely and
accurate notice of the investment objectives, restrictions and screening
criteria applicable to the Fund and any changes or amendments thereto; (b) any
material misstatement or omission to state a material fact by Adviser, its
employees or agents; and (c) any material misstatement or omission to state a
material fact in the Trust's Prospectus, provided the material misstatement or
omission was not caused by Subadviser. Such indemnification shall include the
payment of any reasonable legal fees incurred in connection with investigating
or defending such claims or actions.
SECTION 10. EXCLUSIVITY. The services of the Subadviser to the Adviser
and the Fund are not to be deemed to be exclusive, the Subadviser being free to
render investment advisory and/or other services to others, including accounts
or investment management companies with similar or identical objectives to the
Fund. The Subadviser may give advice and take action with respect to any of its
other clients or for its own account which may differ from the timing or nature
of action taken by the Subadviser with respect to the Fund. Nothing in this
Agreement shall impose upon the Subadviser any obligation to purchase or sell or
to recommend for purchase or sale, with respect to the Fund, any security which
the Subadviser, or its shareholders, directors, officers, employees or
affiliates may purchase or sell for its or their own account(s) or for the
account of any other client. Nothing in this Agreement shall be deemed to limit
or restrict the Subadviser's right, or the right of any of its officers,
directors or employees, to engage in any other business or to devote time and
attention to the management or other aspects of any business, whether of a
similar or dissimilar nature, or to render investment advisory services or
services of any kind to any other corporation, firm, association or individual.
SECTION 11. DURATION AND TERMINATION. The term of this Agreement shall
begin on the date of this Agreement for each Fund that has executed an Exhibit
hereto on the date of this Agreement and shall continue in effect with respect
to each such Fund (and any subsequent Funds added pursuant to an Exhibit
executed during the initial two-year term of this Agreement) for a period of two
years from the date of its execution. This Agreement shall continue in effect
from year to year thereafter, subject to termination as hereinafter provided, if
such continuance is approved at least annually by (a) a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund or by
vote of the Trust's Board of Trustees, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval. If a Fund
is added pursuant to an Exhibit executed after the date of this Agreement as
described above, this Agreement shall become effective with respect to that Fund
upon execution of the applicable Exhibit and shall continue in effect until the
next annual continuance of this Agreement and from year to year thereafter,
subject to approval as described above. This Agreement may be terminated by the
Adviser or the Trust with respect to any Fund at any time, without the payment
of any penalty, by the Adviser with the consent of the Trust's Board of
Trustees, by the Trust's Board of Trustees, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund, in any
such case on 30 days' written notice to the Subadviser, or by the Subadviser at
any time, without the payment of any penalty, on 30 days' written notice to the
Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment (as defined in the 1940 Act).
SECTION 12. AMENDMENT. This Agreement may be amended by mutual consent
of the Adviser, the Subadviser and the Trust, but the consent of the Trust must
be approved (a) by vote of a majority of those Trustees of the Trustee who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
voting on such amendment, and (b) if required under then current interpretations
of the 1940 Act by the Securities and Exchange Commission, by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of each Fund
affected by such amendment.
SECTION 13. NOTICES. Notices of any kind to be given in writing and
shall be duly given if mailed or delivered to the Subadviser at 26515 Carmel
Rancho Boulevard, Carmel, California 93923, and to the Adviser at 6760 Corporate
Drive, Suite 230, Colorado Springs, CO 80919, or at such other address or to
such other individual as shall be specified by the party to be given notice.
SECTION 14. GOVERNING LAW. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to the conflicts of laws principles thereof, and (b) any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 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 rules, regulations or orders of
the Securities and Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
SECTION 15. 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.
SECTION 16. 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.
SECTION 17. 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.
SECTION 18. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereto for otherwise affect their construction or effect.
SECTION 19. OTHER BUSINESS. Except as set forth above, nothing in this
Agreement shall limit or restrict the right of any of the Subadviser's partners,
officers or employees who may also be a trustee, officer, partner or employee of
the Trust to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any business, whether of
a similar or a dissimilar nature, nor limit or restrict the Subadviser's right
to engage in any other business or to render services of any kind to any other
corporation, firm, individual or association.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date and year first above
written.
Shepherd Advisory Services, Inc. Templeton/Franklin Investment
Services, Inc.
(on behalf of Templeton Portfolio
Advisory)
By /s/ By /s/
Name Shepherd Advisory Services, Inc. Name Kevin D. Freeman
Title President and C.E.O. Title Vice President, TFIS
<PAGE>
EXHIBIT A
TO
INVESTMENT SUB-ADVISORY AGREEMENT
AMERIPRIME FUNDS
For all services rendered by the Subadviser hereunder with respect to
the above-named Funds, the Adviser shall pay to the Subadviser, and the
Subadviser agrees to accept as full compensation for all services rendered
hereunder, an annual fee with respect to each Fund equal to the percentage of
the average daily net assets of the Fund set forth opposite its name below:
======================================== ======================================
Name of Fund Fee Percentage
======================================== ======================================
======================================== ======================================
Shepherd Values International Fund 0.75%
======================================== ======================================
======================================== ======================================
======================================== ======================================
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed by their officers designated below as of the date set forth below.
Shepherd Advisory Services, Inc. Templeton/Franklin Investment
Services, Inc.
(on behalf of Templeton Portfolio
Advisory)
By /s/ By /s/
Name Shepherd Advisory Services, Inc. Name Kevin D. Freeman
Title President and C.E.O. Title Vice President, TFIS
<PAGE>
AMERIPRIME FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of September __, 1999,
between Shepherd Advisory Services, Inc., a Tennessee corporation (the
"Adviser"), and Nicholas-Applegate Capital Management, a California Limited
Partnership (the "Sub-Adviser").
W I T N E S E T H:
WHEREAS, the Adviser acts as the investment adviser to AmeriPrime
Funds, an Ohio business trust (the "Trust"), pursuant to an Investment Advisory
Agreement, dated as of September __, 1999 (the "Advisory Agreement");
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to render
investment sub-advisory services to the funds of the Trust set forth on the
Exhibits to this Agreement (the "Funds"), and the Sub-Adviser is willing to
render such services.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT AND STATUS OF SUB-ADVISER. The Adviser hereby
appoints the Sub-Adviser to act as its agent to provide investment advisory
service to each class of shares of beneficial interest of the Trust set forth on
an executed Exhibit to this Agreement (each a "Fund"), for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. Although the Sub-Adviser shall be an agent of the Adviser, the
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor of the Adviser and the Trust and shall, unless otherwise expressly
provided herein or authorized by the Adviser or the Board of Trustees of the
Trust from time to time, have no authority to act for or represent the Adviser
or the Trust in any way or otherwise be deemed an agent of the Trust.
SECTION 2. SUB-ADVISER'S DUTIES. Subject to the general supervision of
the Trust's Board of Trustees (the "Board") and the Adviser, the Sub-Adviser
shall, employing its discretion, manage the investment operations of each Fund
and the composition of the portfolio of securities and investments (including
cash) belonging to each Fund, including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the Trust's
then-current Prospectus and Statement of Additional Information (together, the
"Prospectus") and subject to the following understandings:
(a) The Sub-Adviser shall furnish a continuous investment program for
each Fund and determine from time to time what investments or securities will be
purchased, retained or sold by each Fund and what portion of the assets
belonging to each Fund will be invested or held uninvested as cash;
(b) The Sub-Adviser shall use its best judgment in the performance of
its duties under this Agreement;
(c) The Sub-Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Trust's Declaration of
Trust, its By-Laws and its Prospectus and with the instructions and directions
of the Trust's Board of Trustees and the Adviser and will conform to and comply
with the requirements of the 1940 Act and all other applicable federal and state
laws and regulations;
(d) The Sub-Adviser shall determine the securities to be purchased or
sold by each Fund and as agent for the Trust will effect portfolio transactions
pursuant to its determinations either directly with the issuer or with any
broker and/or dealer in such securities, subject to Section 3 below;
(e) The Sub-Adviser shall maintain books and records with respect to
the securities transactions of each Fund and shall render to the Adviser and the
Trust's Board of Trustees such periodic and special reports as the Adviser or
the Board may request; and
(f) The Sub-Adviser shall provide the Trust's custodian with such
information relating to the Trust as may be required under the terms of the
then-current custody agreement between the Trust and the custodian.
SECTION 3. BROKERAGE. In placing orders with brokers and/or dealers,
the Sub-Adviser is directed at all times to seek best price and execution for
purchases and sales on behalf of each Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Sub-Adviser should generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received. Subject to such
conditions as may be imposed by the Trust's Board of Trustees, the Sub-Adviser
may pay commissions to brokers and/or dealers that are higher than might be
charged by another qualified broker to obtain brokerage and/or research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) considered by the Sub-Adviser to be
useful or desirable in the performance of the Sub-Adviser's duties hereunder, if
the Sub-Adviser determines 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 Sub-Adviser's overall
responsibilities with respect to the Funds and to accounts over which
Sub-Adviser exercises investment discretion. The Funds and the Sub-Adviser
understands and acknowledges that, although the information may be useful to the
Funds and the Sub-Adviser, it is not possible to place a dollar value on such
information. The Board shall periodically review the commissions paid by the
Funds to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Funds.
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, the Sub-Adviser may give consideration to sales of shares of
the Funds as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the foregoing and to such conditions as may be imposed by
the Adviser or the Trust's Board of Trustees and the provisions of the 1940 Act,
Exchange Act, and other applicable law, nothing herein shall prohibit the
Sub-Adviser from selecting brokers and/or dealers who are "affiliated persons"
of the Sub-Adviser, the Adviser or the Trust. On occasions when the Sub-Adviser
deems the purchase or sale of a security to be in the best interest of the Trust
as well as other customers, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Sub-Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Trust and, if applicable,
to such other customers.
If any occasion should arise in which the Sub-Adviser gives any advice
to clients of Sub-Adviser concerning the shares of any Fund, Sub-Adviser will
act solely as investment counsel for such client and not in any way on behalf of
the Fund. Sub-Adviser's services to the Funds pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that Sub-Adviser may render
investment advice, management and other services to others, including other
registered investment companies.
SECTION 4. BOOKS AND RECORDS. The Sub-Adviser shall keep the Trust's
books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Sub-Adviser agrees that all records which it maintains for
the Trust are the property of the Trust and it will promptly surrender any of
such records to the Trust upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Sub-Adviser with
respect to the Trust by Rule 31a-1 under the 1940 Act.
SECTION 5. EXPENSES OF THE SUB-ADVISER. During the term of this
Agreement, the Sub-Adviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust who are "interested
persons" of the Sub-Adviser, as defined in the 1940 Act) incurred by it in
connection with its activities under this Agreement other than the cost of
securities and investments purchased for each Fund (including taxes and
brokerage commissions, if any).
SECTION 6. COMPENSATION OF THE SUB-ADVISER. For the services provided
and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Sub-Adviser as full compensation therefor a fee with respect to each Fund at an
annual rate as set forth on the Exhibit executed with respect to such Fund and
attached hereto. This fee for each month will be paid to the Sub-Adviser during
the succeeding month. For purposes of determining the fee payable hereunder, the
net asset value of each Fund shall be calculated in the manner specified in the
Trust's Prospectus.
SECTION 7. USE OF NAME. The Trust, Adviser and Sub-Adviser acknowledge
that all rights to the name "Shepherd Values" belong to the Adviser, 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 the Adviser ceases to be the Adviser, the
Trust's right to the use of the name "Shepherd Values" shall automatically cease
on the ninetieth day following the termination of this Agreement. The right to
the name may also be withdrawn by the Adviser during the term of the Management
Agreement upon ninety (90) days' written notice by the Adviser to the Trust.
Nothing contained herein shall impair or diminish in any respect the Adviser's
right to use the name "Shepherd Values" in the name of, or in connection with,
any other business enterprises with which the Adviser is or may become
associated. There is no charge to the Trust for the right to use these names.
The Trust, Adviser and Sub-Adviser acknowledge that all rights to the
name "Nicholas-Applegate" belong to the Sub-Adviser, 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 the Sub-Adviser ceases to be the Sub-Adviser, the Trust's
right to the use of the name "Nicholas-Applegate" shall automatically cease on
the ninetieth day following the termination of this Agreement. The right to the
name may also be withdrawn by the Sub-Adviser during the term of the Management
Agreement upon ninety (90) days' written notice by the Adviser to the Trust.
Nothing contained herein shall impair or diminish in any respect the
Sub-Adviser's right to use the name "Nicholas-Applegate" in the name of, or in
connection with, any other business enterprises with which the Sub-Adviser is or
may become associated. There is no charge to the Trust for the right to use
these names.
SECTION 8. LIABILITY OF THE SUB-ADVISER. Neither Sub-Adviser nor its
shareholders, members, officers, directors, employees, agents, control persons
or affiliates of any thereof, shall be liable for any error of judgment or
mistake of law or for any loss suffered by any Fund in connection with the
matters to which this Agreement relates except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
Any person, even though also a director, officer, employee,
shareholder, member or agent of Sub-Adviser, 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 Sub-Adviser's duties hereunder), to
be rendering such services to or acting solely for the Trust and not as a
director, officer, employee, shareholder, member or agent of Sub-Adviser, or one
under Sub-Adviser's control or direction, even though paid by Sub-Adviser.
SECTION 9. DURATION AND TERMINATION. The term of this Agreement shall
begin on the date of this Agreement for each Fund that has executed an Exhibit
hereto on the date of this Agreement and shall continue in effect with respect
to each such Fund (and any subsequent Funds added pursuant to an Exhibit
executed during the initial two-year term of this Agreement) for a period of two
years from the date of its execution. This Agreement shall continue in effect
from year to year thereafter, subject to termination as hereinafter provided, if
such continuance is approved at least annually by (a) a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund or by
vote of the Trust's Board of Trustees, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval. If a Fund
is added pursuant to an Exhibit executed after the date of this Agreement as
described above, this Agreement shall become effective with respect to that Fund
upon execution of the applicable Exhibit and shall continue in effect until the
next annual continuance of this Agreement and from year to year thereafter,
subject to approval as described above. This Agreement may be terminated by the
Adviser or the Trust with respect to any Fund at any time, without the payment
of any penalty, by the Adviser with the consent of the Trust's Board of
Trustees, by the Trust's Board of Trustees, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund, in any
such case on 30 days' written notice to the Sub-Adviser, or by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written notice to
the Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment (as defined in the 1940 Act).
SECTION 10. AMENDMENT. This Agreement may be amended by mutual consent
of the Adviser, the Sub-Adviser and the Trust, but the consent of the Trust must
be approved (a) by vote of a majority of those Trustees of the Trustee who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
voting on such amendment, and (b) if required under then current interpretations
of the 1940 Act by the Securities and Exchange Commission, by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of each Fund
affected by such amendment.
SECTION 11. NOTICES. Notices of any kind to be given in writing and
shall be duly given if mailed or delivered to the Sub-Adviser at 600 W.
Broadway, 29th Floor, San Diego, CA 92101, Attention: General Counsel, and to
the Adviser at 102 South Tajon, Suite 430, Colorado Springs, CO 80903, or at
such other address or to such other individual as shall be specified by the
party to be given notice.
SECTION 12. GOVERNING LAW. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without regard to
the conflicts of laws principles thereof, and (b) any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 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 rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is revised
by rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
SECTION 13. 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.
SECTION 14. 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.
SECTION 15. 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.
SECTION 16. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereto for otherwise affect their construction or effect.
SECTION 17. CHANGE IN CONTROL. Sub-Adviser undertakes to notify Adviser
and the Trust in writing sufficiently in advance of any proposed change of
control, as defined in Section 2(a)(9) of the 1940 Act, as will enable the Trust
to consider whether an assignment, as defined in Section 2(a)(4) of the 1940
Act, would occur.
SECTION 18. OTHER BUSINESS. Except as set forth above, nothing in this
Agreement shall limit or restrict the right of any of the Sub-Adviser's
partners, officers or employees who may also be a trustee, officer, partner or
employee of the Trust to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any business,
whether of a similar or a dissimilar nature, nor limit or restrict the
Sub-Adviser's right to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date and year first above
written.
Shepherd Advisory Services, Inc. Nicholas-Applegate Capital Management
By /s/ By /s/
Name Shepherd Advisory Services, Inc. Name E. Blake Moore, Jr.
Title President and C.E.O. Title General Counsel
<PAGE>
EXHIBIT A
TO
INVESTMENT SUB-ADVISORY AGREEMENT
AMERIPRIME FUNDS
For all services rendered by the Sub-Adviser hereunder with respect to
the above-named Funds, the Adviser shall pay to the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all services rendered
hereunder, an annual fee with respect to each Fund equal to the percentage of
the average daily net assets of the Fund set forth opposite its name below:
===================================== =========================================
Name of Fund Fee Percentage
===================================== =========================================
===================================== =========================================
Shepherd Values Small-Cap Fund 0.65%
===================================== =========================================
===================================== =========================================
===================================== =========================================
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed by their officers designated below as of the date set forth below.
Shepherd Advisory Services, Inc. Nicholas-Applegate Capital Management
By /s/ By /s/
Name Shepherd Advisory Services, Inc. Name E. Blake Moore, Jr.
Title President and C.E.O. Title General Counsel
<PAGE>
AMERIPRIME FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of September __, 1999,
between Shepherd Advisory Services, Inc. a Tennessee corporation (the
"Adviser"), and Potomac Asset Management Company, Inc., a Maryland corporation
(the "Sub-Advisor").
W I T N E S E T H:
WHEREAS, the Adviser acts as the investment adviser to AmeriPrime
Funds, an Ohio business trust (the "Trust"), pursuant to an Investment Advisory
Agreement, dated as of September __, 1999 (the "Advisory Agreement");
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to render
investment sub-advisory services to the funds of the Trust set forth on the
Exhibits to this Agreement (the "Funds"), and the Sub-Adviser is willing to
render such services.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT AND STATUS OF SUB-ADVISER. The Adviser hereby
appoints the Sub-Adviser to act as its agent to provide investment advisory
service to each class of shares of beneficial interest of the Trust set forth on
an executed Exhibit to this Agreement (each a "Fund"), for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. Although the Sub-Adviser shall be an agent of the Adviser, the
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor of the Adviser and the Trust and shall, unless otherwise expressly
provided herein or authorized by the Adviser or the Board of Trustees of the
Trust from time to time, have no authority to act for or represent the Adviser
or the Trust in any way or otherwise be deemed an agent of the Trust.
SECTION 2. SUB-ADVISER'S DUTIES. Subject to the general supervision of
the Trust's Board of Trustees (the "Board") and the Adviser, the Sub-Adviser
shall, employing its discretion, manage the investment operations of each Fund
and the composition of the portfolio of securities and investments (including
cash) belonging to each Fund, including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the Trust's
then-current Prospectus and Statement of Additional Information (together, the
"Prospectus") and subject to the following understandings:
(a) The Sub-Adviser shall furnish a continuous investment program for
each Fund and determine from time to time what investments or securities will be
purchased, retained or sold by each Fund and what portion of the assets
belonging to each Fund will be invested or held uninvested as cash;
(b) The Sub-Adviser shall use its best judgment in the performance of
its duties under this Agreement;
(c) The Sub-Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Trust's Declaration of
Trust, its By-Laws and its Prospectus and with the instructions and directions
of the Trust's Board of Trustees and the Adviser and will conform to and comply
with the requirements of the 1940 Act and all other applicable federal and state
laws and regulations;
(d) The Sub-Adviser shall determine the securities to be purchased or
sold by each Fund and as agent for the Trust will effect portfolio transactions
pursuant to its determinations either directly with the issuer or with any
broker and/or dealer in such securities, subject to Section 3 below;
(e) The Sub-Adviser shall maintain books and records with respect to
the securities transactions of each Fund and shall render to the Adviser and the
Trust's Board of Trustees such periodic and special reports as the Adviser or
the Board may request; and
(f) The Sub-Adviser shall provide the Trust's custodian with such
information relating to the Trust as may be required under the terms of the
then-current custody agreement between the Trust and the custodian.
SECTION 3. BROKERAGE. In placing orders with brokers and/or dealers,
the Sub-Adviser is directed at all times to seek best price and execution for
purchases and sales on behalf of each Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Sub-Adviser should generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received. Subject to such
conditions as may be imposed by the Trust's Board of Trustees, the Sub-Adviser
may pay commissions to brokers and/or dealers that are higher than might be
charged by another qualified broker to obtain brokerage and/or research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) considered by the Sub-Adviser to be
useful or desirable in the performance of the Sub-Adviser's duties hereunder, if
the Sub-Adviser determines 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 Sub-Adviser's overall
responsibilities with respect to the Funds and to accounts over which
Sub-Adviser exercises investment discretion. The Funds and the Sub-Adviser
understands and acknowledges that, although the information may be useful to the
Funds and the Sub-Adviser, it is not possible to place a dollar value on such
information. The Board shall periodically review the commissions paid by the
Funds to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Funds.
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, the Sub-Adviser may give consideration to sales of shares of
the Funds as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the foregoing and to such conditions as may be imposed by
the Adviser or the Trust's Board of Trustees and the provisions of the 1940 Act,
Exchange Act, and other applicable law, nothing herein shall prohibit the
Sub-Adviser from selecting brokers and/or dealers who are "affiliated persons"
of the Sub-Adviser, the Adviser or the Trust. On occasions when the Sub-Adviser
deems the purchase or sale of a security to be in the best interest of the Trust
as well as other customers, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Sub-Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Trust and, if applicable,
to such other customers.
If any occasion should arise in which the Sub-Adviser gives any advice
to clients of Sub-Adviser concerning the shares of any Fund, Sub-Adviser will
act solely as investment counsel for such client and not in any way on behalf of
the Fund. Sub-Adviser's services to the Funds pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that Sub-Adviser may render
investment advice, management and other services to others, including other
registered investment companies.
SECTION 4. BOOKS AND RECORDS. The Sub-Adviser shall keep the Trust's
books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Sub-Adviser agrees that all records which it maintains for
the Trust are the property of the Trust and it will promptly surrender any of
such records to the Trust upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Sub-Adviser with
respect to the Trust by Rule 31a-1 under the 1940 Act.
SECTION 5. EXPENSES OF THE SUB-ADVISER. During the term of this
Agreement, the Sub-Adviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust who are "interested
persons" of the Sub-Adviser, as defined in the 1940 Act) incurred by it in
connection with its activities under this Agreement other than the cost of
securities and investments purchased for each Fund (including taxes and
brokerage commissions, if any).
SECTION 6. COMPENSATION OF THE SUB-ADVISER. For the services provided
and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Sub-Adviser as full compensation therefor a fee with respect to each Fund at an
annual rate as set forth on the Exhibit executed with respect to such Fund and
attached hereto. This fee for each month will be paid to the Sub-Adviser during
the succeeding month. For purposes of determining the fee payable hereunder, the
net asset value of each Fund shall be calculated in the manner specified in the
Trust's Prospectus.
SECTION 7. USE OF NAME. The Trust, Adviser and Sub-Adviser acknowledge
that all rights to the name "Shepherd Values" belong to the Adviser, 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 the Adviser ceases to be the Adviser, the
Trust's right to the use of the name "Shepherd Values" shall automatically cease
on the ninetieth day following the termination of this Agreement. The right to
the name may also be withdrawn by the Adviser during the term of the Management
Agreement upon ninety (90) days' written notice by the Adviser to the Trust.
Nothing contained herein shall impair or diminish in any respect the Adviser's
right to use the name "Shepherd Values" in the name of, or in connection with,
any other business enterprises with which the Adviser is or may become
associated. There is no charge to the Trust for the right to use these names.
SECTION 8. LIABILITY OF THE SUB-ADVISER. Neither Sub-Adviser nor its
shareholders, members, officers, directors, employees, agents, control persons
or affiliates of any thereof, shall be liable for any error of judgment or
mistake of law or for any loss suffered by any Fund in connection with the
matters to which this Agreement relates except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
Any person, even though also a director, officer, employee,
shareholder, member or agent of Sub-Adviser, 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 Sub-Adviser's duties hereunder), to
be rendering such services to or acting solely for the Trust and not as a
director, officer, employee, shareholder, member or agent of Sub-Adviser, or one
under Sub-Adviser's control or direction, even though paid by Sub-Adviser.
SECTION 9. DURATION AND TERMINATION. The term of this Agreement shall
begin on the date of this Agreement for each Fund that has executed an Exhibit
hereto on the date of this Agreement and shall continue in effect with respect
to each such Fund (and any subsequent Funds added pursuant to an Exhibit
executed during the initial two-year term of this Agreement) for a period of two
years from the date of its execution. This Agreement shall continue in effect
from year to year thereafter, subject to termination as hereinafter provided, if
such continuance is approved at least annually by (a) a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund or by
vote of the Trust's Board of Trustees, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval. If a Fund
is added pursuant to an Exhibit executed after the date of this Agreement as
described above, this Agreement shall become effective with respect to that Fund
upon execution of the applicable Exhibit and shall continue in effect until the
next annual continuance of this Agreement and from year to year thereafter,
subject to approval as described above. This Agreement may be terminated by the
Adviser or the Trust with respect to any Fund at any time, without the payment
of any penalty, by the Adviser with the consent of the Trust's Board of
Trustees, by the Trust's Board of Trustees, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund, in any
such case on 30 days' written notice to the Sub-Adviser, or by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written notice to
the Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment (as defined in the 1940 Act).
SECTION 10. AMENDMENT. This Agreement may be amended by mutual consent
of the Adviser, the Sub-Adviser and the Trust, but the consent of the Trust must
be approved (a) by vote of a majority of those Trustees of the Trustee who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
voting on such amendment, and (b) if required under then current interpretations
of the 1940 Act by the Securities and Exchange Commission, by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of each Fund
affected by such amendment.
SECTION 11. NOTICES. Notices of any kind to be given in writing and
shall be duly given if mailed or delivered to the Sub-Adviser at 3 Bethesda
Metro Center, Suite 530, Bethesda, MD 28014, and to the Adviser at 102 South
Tajon, Suite 430, Colorado Springs, CO 80903, or at such other address or to
such other individual as shall be specified by the party to be given notice.
SECTION 12. GOVERNING LAW. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without regard to
the conflicts of laws principles thereof, and (b) any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 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 rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is revised
by rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
SECTION 13. 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.
SECTION 14. 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.
SECTION 15. 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.
SECTION 16. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereto for otherwise affect their construction or effect.
SECTION 17. CHANGE OF CONTROL. Sub-Adviser undertakes to notify Adviser
and the Trust in writing sufficiently in advance of any change of control; as
defined in Section 2(a)(9) of the 1940 Act, as will enable the Trust to consider
whether an assignment, as defined in Section 2(a)(4) of the 1940 Act, would
occur.
SECTION 18. OTHER BUSINESS. Except as set forth above, nothing in this
Agreement shall limit or restrict the right of any of the Sub-Adviser's
partners, officers or employees who may also be a trustee, officer, partner or
employee of the Trust to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any business,
whether of a similar or a dissimilar nature, nor limit or restrict the
Sub-Adviser's right to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date and year first above
written.
Shepherd Advisory Services, Inc. Potomac Asset Management Company, Inc.
By /s/ By /s/
Name Shepherd Advisory Services, Inc. Name Goodloe E. Byron Sr.
Title President and C.E.O. Title President
<PAGE>
EXHIBIT A
TO
INVESTMENT SUB-ADVISORY AGREEMENT
AMERIPRIME FUNDS
For all services rendered by the Sub-Adviser hereunder with respect to
the above-named Funds, the Adviser shall pay to the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all services rendered
hereunder, an annual fee with respect to each Fund equal to the percentage of
the average daily net assets of the Fund set forth opposite its name below:
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Name of Fund Fee Percentage
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Shepherd Values Fixed Income Fund 0.35%
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IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed by their officers designated below as of the date set forth below.
Shepherd Advisory Services, Inc. Potomac Asset Management Company, Inc.
By /s/ By /s/
Name Shepherd Advisory Services, Inc. Name Goodloe E. Byron Sr.
Title President and C.E.O. Title President
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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
November 30, 1999
AmeriPrime Funds
1793 Kingswood Drive
Southlake, Texas 76092
RE: AMERIPRIME FUNDS, FILE NOS. 33-96826 AND 811-9096
Gentlemen:
Legal opinions that we prepared were filed with Post-Effective
Amendment No. 9 and Post-Effective Amendment No. 29 (the "Legal Opinions") to
the Registration Statement. We hereby give you our consent to incorporate by
reference the Legal Opinions into Post-Effective Amendment No. 34 to your
Registration Statement (the "Amendment"), and consent to all references to us in
the Amendment.
Very truly yours,
____/s/________________________
Brown, Cummins & Brown Co., L.P.A.
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to all references to our
firm included in or made a part of this Post-Effective Amendment No. 34 to
AmeriPrime Fund's Registration Statement on Form N-1A (file No. 33-96826),
including the references to our firm under the heading "Financial Highlights" in
each Prospectus (when applicable)and the heading "Accountants" in each Statement
of Additional Information.
/s/
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
November 29, 1999
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