SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
--
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 23 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 24 /X /
(Check appropriate box or boxes.)
AmeriPrime Funds - File Nos. 33-96826 and 811-9096
1793 Kingswood Drive, Suite 200, Southlake, Texas 76092
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code: (817) 431-2197
Kenneth Trumpfheller, 1793 Kingswood Dr., Suite 200, Southlake, TX 76092
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b) /X/ on February
13, 1999 pursuant to paragraph (b) / / 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.
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PROSPECTUS February 14, 1999
AAM EQUITY FUND
1018 Kanawha Blvd., East, Suite 309
Charleston, West Virginia 25301
For Information, Shareholder Services and Requests:
(888) 905-2283
The investment objective of the AAM Equity Fund (the "Fund") is to provide long
term capital appreciation. The Fund seeks to achieve its objective by investing
primarily in a diversified portfolio of common stocks that the Advisor,
Appalachian Asset Management, Inc., believes offer growth opportunities at a
reasonable price. The Advisor selects stocks on the basis of several criteria,
including price-earnings ratio, rate of earnings growth, depth of management,
past financial stability, present and projected position in its industry and the
dividend record. As the Fund will primarily invest in dividend-paying common
stocks, it is expected that the Fund will generate some current income in
addition to long term capital appreciation.
The Fund is "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, distributed by AmeriPrime Financial
Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information dated February 14, 1999 has been filed with
the Securities and Exchange Commission (the "SEC"), is incorporated herein by
reference, and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on estimated amounts for the current
fiscal year. The expenses are expressed as a percentage of average net assets.
The Example should not be considered a representation of future Fund performance
or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. In addition, the Fund does not
charge a 12b-1 fee. Unlike most other mutual funds, the Fund does not pay
directly for transfer agency, pricing, custodial, auditing or legal services,
nor does it pay directly any general administrative or other significant
operating expenses. The Advisor pays all of the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses (including organizational expenses).
Shareholder Transaction Expenses
Sales Load Imposed on Purchases....................................NONE
Sales Load Imposed on Reinvested Dividends.........................NONE
Deferred Sales Load................................................NONE
Redemption Fees....................................................NONE
Exchange Fees......................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)1
Management Fees...................................................1.15%
12b-1 Fees.........................................................NONE
Other Expenses (after reimbursement)2.............................0.00%
Total Fund Operating Expenses (after reimbursement)2..............1.15%
1 The Fund's total operating expenses are equal to the management fee
paid to the Advisor because the Advisor pays all of the Fund's
operating expenses (except as described above).
2 The Advisor has voluntarily agreed to reimburse other expenses for
the fiscal year ended October 31, 1999 to the extent necessary to
maintain total operating expenses as indicated.
The tables above are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
$12 $37 $64 $140
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FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period June 30, 1998 (commencement of operations) through October 31, 1998 is
derived from the audited financial statements of the Fund. The financial
statements of the Fund have been audited by McCurdy & Associates CPA's Inc.,
independent public accountants and are included in the Fund's Annual Report. The
Annual Report contains additional performance information and is available upon
request and without charge.
Period ended
October 31, 1998 (b)
Selected Per Share Data
Net asset value, beginning of period $10.00
--------------
Income from investment operations
Net investment income (loss) 0.03
Net realized and unrealized gain (loss) (0.60)
--------------
Total from investment operations (0.57)
--------------
Net asset value, end of period $9.43
==============
Total Return (5.70)%
Ratios and Supplemental Data
Net assets, end of period (000) $2,852
Ratio of expenses to average net assets
before reimbursement 1.40% (a)
Ratio of expenses to average net assets
after reimbursement 1.14% (a)
Ratio of net investment income to
average net assets before reimbursement 0.64% (a)
Ratio of net investment income to
average net assets after reimbursement 0.90% (a)
Portfolio turnover rate 14.41%
(a) Annualized
(b) June 30, 1998 (commencement of operations) to October 31, 1998.
THE FUND
The AAM Equity Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust") on April 8, 1998, and
commended operations on June 30, 1998 This prospectus offers shares of the Fund
and each share represents an undivided, proportionate interest in the Fund. The
investment advisor to the Fund is Appalachian Asset Management, Inc. (the
"Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
a diversified portfolio of common stocks of companies with market
capitalizations of $500 million or more, that the Advisor believes offer growth
opportunities at a reasonable price. Under normal circumstances, at least 65% of
the total assets of the Fund will be invested in equity securities. The Advisor
selects stocks on the basis of several criteria, including price-earnings ratio,
rate of earnings growth, depth of management, past financial stability, present
and projected position in its industry and the dividend record. As the Fund will
primarily invest in dividend-paying common stocks, it is expected that the Fund
will generate some current income in addition to long term capital appreciation.
The Advisor generally plans to stay fully invested (subject to
liquidity requirements) in common stocks of established companies whose
securities, in the opinion of the Advisor, enjoy a fair degree of marketability.
Most equity securities in the Fund's portfolio will be listed on a national
exchange. For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments (including money market funds) or U.S. government repurchase
agreements. The Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
If the Fund acquires securities of a money market fund, the shareholders of the
Fund will be subject to additional management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund and that the Fund has no
operating history. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis, subject to a minimum initial investment of
$2,500 and minimum subsequent investments of $50. These minimums may be waived
by the Advisor for accounts participating in an automatic investment program.
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to Mutual Fund, and sent to the P.O. Box listed below. If you
prefer overnight delivery, use the overnight address listed below.
U.S. Mail: AAM Equity Fund Overnight: AAM Equity Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
Your purchase of shares of the Fund will be effected at the next share
price calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 888-905-2283 to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Mutual Fund
D.D.A. # 488920927
Account Name _________________ (write in shareholder name) For
the Account # ______________ (write in account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Fund. Any delays which may
occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Fund or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Fund.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to Mutual Fund and should be sent to the address listed above. A
bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment plans (for employees of
public school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Transfer Agent for the
procedure to open an IRA or SEP plan, as well as more specific information
regarding these retirement plan options. Consultation with an attorney or tax
advisor regarding these plans is advisable. Custodial fees for an IRA will be
paid by the shareholder by redemption of sufficient shares of the Fund from the
IRA unless the fees are paid directly to the IRA custodian. You can obtain
information about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
AAM Equity Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or Unified Fund Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (888) 905-2283. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (888) 905-2283. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at anytime if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is calculated
by dividing the total value of the Fund's investments and other assets
(including accrued income), less any liabilities (including estimated accrued
expenses), by the number of shares outstanding, rounded to the nearest cent. Net
asset value per share is determined as of the close of the New York Stock
Exchange (4:00 p.m., Eastern time) on each day that the exchange is open for
business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services. The Fund retains Appalachian Asset Management, Inc., 1018
Kanawha Blvd., East, Suite 309, Charleston, West Virginia 25301 ("the Advisor")
to manage the assets of the Fund. The Advisor, a West Virginia corporation, is a
private investment management company founded in 1992, and controlled by Knox H.
Fuqua. The Advisor currently manages over $20 million in assets, and provides
equity, balanced account, and fixed income portfolios for individual, pension
and profit sharing plans, endowments, foundations, municipalities, trusts and
corporations.
Knox Fuqua is President and Chief Investment Officer of the Advisor. He has over
twelve years of investment experience. Mr. Fuqua is a graduate of Tennessee
Technological University, and began his investment career with 1st American Bank
(Lee, Robinson & Steine) in Nashville, Tennessee. Mr. Fuqua founded Appalachian
Asset Management in 1992 and has served as President and Chief Investment
Officer of the Advisor since that time. Mr. Fuqua has been responsible for all
investment decisions and the day-to-day management of the Fund since its
inception. Mr. Fuqua has extensive money management experience and continues to
expand his education through various continuing education programs.
The Advisor determines the securities to be held or sold by the Fund,
and the portion of the Fund's assets to be held uninvested. The Advisor always
follows the Fund's investment objectives, policies and restrictions and any
policies and instructions of the Board of Trustees. The Fund is authorized to
pay the Advisor a fee equal to an annual average rate of 1.15% of its average
daily net assets. The Advisor pays all of the operating expenses of the Fund
except brokerage, taxes, interest, fees and expenses of non-interested person
trustees and extraordinary expenses (including organizational expenses). In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Advisor.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Advisor equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). The Fund retains Unified Fund Services, Inc., 431
North Pennsylvania Street, Indianapolis, Indiana 46204 (the "Transfer Agent") to
serve as transfer agent, dividend paying agent and shareholder service agent.
The Trust retains AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive,
Suite 200, Southlake, Texas 76092 (the "Distributor") to act as the principal
distributor of the Fund's shares. The services of the Administrator, Transfer
Agent and Distributor are operating expenses paid by the Advisor.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a 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.
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INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ. The
Statement of Additional Information provides more information.
Equity Securities. Equity securities consist of common stock,
convertible preferred stock, convertible bonds, rights and warrants. Common
stocks, the most familiar type, represent an equity (ownership) interest in a
corporation. Warrants are options to purchase equity securities at a specified
price for a specific time period. Rights are similar to warrants, but normally
have a short duration and are distributed by the issuer to its shareholders.
Although equity securities have a history of long-term growth in value, their
prices fluctuate based on changes in a company's financial condition and on
overall market and economic conditions. The Fund may not invest more than 5% of
its net assets in either convertible preferred stocks or convertible bonds. The
Advisor will limit the Fund's investment in convertible securities to those
rated A or better by Moody's Investors Service, Inc. or Standard & Poor's Rating
Group or, if unrated, of comparable quality in the opinion of the Advisor.
The Fund may invest in foreign equity securities by purchasing American
Depository Receipts ("ADRs"). ADRs are certificates evidencing ownership of
shares of a foreign- based issuer held in trust by a bank or similar financial
institution. They are alternatives to the direct purchase of the underlying
securities in their national markets and currencies. To the extent that the Fund
does invest ADRs, such investments may be subject to special risks, such as
changes in restrictions on foreign currency transactions and rates of exchange,
and changes in the administrations or economic and monetary policies of foreign
governments. The Fund will not invest more than 10% of its net assets in ADRs.
Equity securities also include common stocks and common stock
equivalents of domestic real estate investment trusts ("REITS") and other
companies which operate as real estate corporations or which have a significant
portion of their assets in real estate. The Fund may invest up to 5% of its net
assets in REITs. The Fund will not acquire any direct ownership of real estate.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of the Fund will fluctuate. Securities in the Fund's portfolio may not increase
as much as the market as a whole and some undervalued securities may continue to
be undervalued for long periods of time. Although profits in some Fund holdings
may be realized quickly, it is not expected that most investments will
appreciate rapidly.
Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with Star Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Advisor (subject to review by the Board of
Trustees) to be creditworthy. The Advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.
General. The Fund may invest up to 5% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven days.
The Fund may also invest up to 5% of its net assets in securities sold under
Rule 144A (unregistered securities that can be resold to institutions only under
SEC Rule 144A). The Fund may borrow amounts up to 5% of its net assets to meet
redemption requests.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. However, if the objectives of the
Fund would be better served, short-term profits or losses may be realized from
time to time.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of the Fund have equal voting rights and liquidation
rights.
Shareholder inquiries should be made by telephone to 888-905-2283, or
by mail, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Advisor, Administrator or other
service providers to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Issue." The Advisor and Administrator have taken steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that are used and to obtain reasonable assurances that
comparable steps are being taken by the Fund's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund. In addition, the Advisor cannot make any
assurances that the Year 2000 Issue will not affect the companies in which the
Fund invests or worldwide markets and economies.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index and the Dow Jones Industrial Average.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Advisor Administrator
Appalachian Asset Management, Inc. AmeriPrime Financial Services, Inc.
1018 Kanawha Blvd., East, Suite 309 1793 Kingswood Drive, Suite 200
Charleston, WV 25301 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 North Pennsylvania Street Westlake, Ohio 44145
Indianapolis, Indiana 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF FUND EXPENSES
Shareholder Transaction Expenses
Annual Fund Operating Expenses
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES
HOW TO INVEST IN THE FUND
Initial Purchase
Additional Investments
Automatic Investment Plan
Tax Sheltered Retirement Plans
Other Purchase Information
HOW TO REDEEM SHARES
By Mail
By Telephone
Additional Information
SHARE PRICE CALCULATION
DIVIDENDS AND DISTRIBUTIONS
TAXES
OPERATION OF THE FUND
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
Equity Securities
Repurchase Agreements
General
GENERAL INFORMATION
Fundamental Policies
Portfolio Turnover
Shareholder Rights
Year 2000 Issue
<PAGE>
AIT VISION U.S. EQUITY PORTFOLIO
PROSPECTUS February 14, 1999
311 Park Place Blvd., Suite 250
Clearwater, Florida 34619
For Information, Shareholder Services and Requests:
(800) 507-9922
AIT Vision U.S. Equity Portfolio (the "Fund") is a mutual fund whose
investment objective is to provide long term growth of capital. The Fund's
Adviser, Advanced Investment Technology, Inc., intends the Fund to be a core
equity investment vehicle. Characteristics of individual companies considered by
the Adviser in the securities selection process will include traditional growth
as well as fundamental value measures, among others. The process of evaluating
securities is quantitatively rigorous, using state of the art advanced
computational techniques developed by the Adviser.
The Fund is one of the mutual funds comprising AmeriPrime Funds, an
open-end management investment company, and is distributed by AmeriPrime
Financial Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information has been filed with the Securities and
Exchange Commission (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on operating expenses incurred during
the most recent fiscal year. The expenses are expressed as a percentage of
average net assets. The Example should not be considered a representation of
future Fund performance or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. In addition, the Fund does not
have a 12b-1 Plan. Unlike most other mutual funds, the Fund does not pay
directly for transfer agency, pricing, custodial, auditing or legal services,
nor does it pay directly any general administrative or other significant
operating expenses. The Adviser pays all of the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).NONE
Sales Load Imposed on Reinvested Dividends..................................NONE
Deferred Sales Load.........................................................NONE
Redemption Fees.............................................................NONE
Exchange Fees...............................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)1
Management Fees............................................................0.70%
12b-1 Charges..............................................................NONE
Other Expenses2 (after reimbursement)......................................0.00%
Total Fund Operating Expenses2 (after reimbursement).......................0.70%
1........The Fund's total operating expenses are equal to the management fee
paid to the Adviser because the Adviser pays all of the Fund's general
administrative and significant operating expenses (except as described above).
2........The Adviser has agreed to reimburse other expenses for the fiscal year
ending October 31, 1999 to the extent necessary to maintain total operating
expenses as indicated. For the fiscal year ended October 31, 1998, other
expenses (fees and expenses of the trustees who are not "interested persons" as
defined in the Investment Company Act) were 0.04% of average net assets and
total fund operating expenses were 0.74% of average net assets, absent
reimbursement by the Adviser.
The tables above are provided to assist an investor in understanding the direct
and indirect expenses that an investor may incur as a shareholder in the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
........ 1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
........ $7 $22 $38 $86
<PAGE>
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period November 6, 1995 (commencement of operations) to October 31, 1996 and the
fiscal years ended October 31, 1997 and October 31, 1998 is derived from the
audited financial statements of the Fund. The financial statements of the Fund
have been audited by McCurdy & Associates CPA's, Inc., independent public
accountants, and are included in the Fund's Annual Report. The Annual Report
contains additional performance information and is available upon request and
without charge.
<TABLE>
<S> <C> <C> <C>
For the year For the year For the period
ended ended ended
October 31, 1998 October 31, 1997 October 31, 1996 (b)
Selected Per Share Data
Net asset value, beginning of period $13.79 $12.62 $10.00
-------------- --------------- ---------------
Income from investment operations
Net investment income (loss) 0.09 0.06 (0.07)
Net realized and unrealized gain (loss) 1.54 2.71 2.69
-------------- --------------- ---------------
Total from investment operations 1.63 2.77 2.62
-------------- --------------- ---------------
Less Distributions
From net investment income (0.06) (1.60)
From net realized gain (1.11) 0.00 0.00
-------------- --------------- ---------------
Total Distributions (1.17) (1.60)
-------------- ---------------
Net asset value, end of period $14.25 $13.79 $12.62
============== =============== ===============
Total Return 12.87% 24.65% 26.63% (a)
Ratios and Supplemental Data
Net assets, end of period (000) $4,636 $4,989 $627
Ratio of expenses to average net assets 0.70% 0.70% 1.87% (a)
Ratio of expenses to
average net assets before reimbursement 0.74% 0.74% -
Ratio of net investment income to
average net assets 0.66% 0.50% (0.70)%(a)
Ratio of net investment income to
average net assets before reimbursement 0.62% 0.46% -
Portfolio turnover rate 147.89% 253.52% 238.63% (a)
<FN>
(a) Annualized
(b) November 6, 1995 (commencement of operations) to October 31, 1996. </FN>
</TABLE>
THE FUND
AIT Vision U.S. Equity Portfolio (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust") on August 8, 1995, and
commenced operations on November 6, 1995. This prospectus offers shares of the
Fund and each share represents an undivided, proportionate interest in the Fund.
The investment adviser to the Fund is Advanced Investment Technology, Inc. (the
"Adviser").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term growth of
capital. The Adviser will utilize computer technology and financial databases to
assist in the stock selection process. Characteristics of individual companies
considered in the securities selection process will include traditional growth
as well as fundamental value measures, among others. The process of evaluating
securities is quantitatively rigorous, using state of the art advanced
computational techniques developed by the Adviser. The Fund is designed by its
Adviser to be a core equity investment vehicle.
Under normal circumstances, at least 65% of the total assets of the Fund will
be invested in U.S. equity securities. The Adviser generally intends to stay
fully invested (subject to liquidity requirements and defensive purposes) in
common stock and seeks to limit investment risk and diversify the Fund's
portfolio by investing in companies in all capitalization ranges. Most equity
securities in the Fund's portfolio are listed on a major stock exchange or
traded over-the-counter. The Fund may also invest in fixed income securities
(including repurchase agreements); may write covered call options on common
stocks in the Fund's portfolio; may purchase call options; and may engage in
short sales (if the Fund owns or has the right to obtain an equal amount of the
security being sold). See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
For temporary defensive purposes under abnormal market or economic conditions,
the Fund may invest all or a portion of its assets in money market instruments
(including U.S. Treasury bills), securities of no-load registered investment
companies and repurchase agreements fully collateralized by U.S. government
obligations. The Fund may also invest in such instruments at any time to
maintain liquidity or pending selection of investments in accordance with its
policies. If the Fund acquires securities of another investment company, the
shareholders of the Fund will be subject to additional management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
<PAGE>
HOW TO INVEST IN THE FUND
Shares of the Fund are sold on a continuous basis, and you may invest any
amount you choose, as often as you wish, subject to a minimum initial investment
of $5,000 ($2,000 for retirement accounts). Investors choosing to purchase or
redeem their shares through a broker/dealer or other institution may be charged
a fee by that institution. Investors choosing to purchase or redeem shares
directly from the Fund will not incur charges on purchases or redemptions. To
the extent investments of individual investors are aggregated into an omnibus
account established by an investment adviser, broker or other intermediary, the
account minimums apply to the omnibus account, not to the account of the
individual investor.
Initial Purchase
- You may purchase shares of the Fund by completing and signing the investment
application form which accompanies this Prospectus and mailing it, in proper
form, together with a check (subject to the above minimum amounts) made payable
to AIT Vision U.S. Equity Portfolio, and sent to the P.O. Box listed below. If
you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
AIT Vision U.S. Equity Portfolio AIT Vision U.S. Equity Portfolio
c/o American Data Services, Inc. c/o American Data Services, Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, New York 11788
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at (800) 507-9922 to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: AIT Vision U.S. Equity Portfolio
D.D.A. # 483889770
Account Name _________________ (write in shareholder
name) For the Account # ______________ (write in
account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund and the Custodian and Transfer Agent
are open for business. A wire purchase will not be considered made until the
wired money is received and the purchase is accepted by the Fund. Any delays
which may occur in wiring money, including delays which may occur in processing
by the banks, are not the responsibility of the Fund or the Transfer Agent.
There is presently no fee for the receipt of wired funds, but the right to
charge shareholders for this service is reserved by the Fund.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to AIT Vision U.S. Equity Portfolio and should be sent to the
address listed above. A bank wire should be sent as outlined above.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the Transfer Agent for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax adviser regarding
these plans is advisable. Custodial fees for an IRA will be paid by the
shareholder by redemption of sufficient shares of the Fund from the IRA unless
the fees are paid directly to the IRA custodian. You can obtain information
about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. A broker may charge a transaction fee
for the redemption. Presently, there is no charge for wire redemptions; however,
the Fund reserves the right to charge for this service. Any charges for wire
redemptions will be deducted from the shareholder's Fund account by redemption
of shares. Investors choosing to purchase or redeem their shares through a
broker/dealer or other institution may be charged a fee by that institution.
By Mail - You may redeem any part of your account in the Fund at no charge
by mail. Your request should be addressed to:
AIT Vision U.S. Equity Portfolio
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or American Data Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (800) 507-9922. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) 507-9922. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $5,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax adviser concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Adviser determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Adviser, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short-term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
<PAGE>
The Fund retains Advanced Investment Technology, Inc., 311 Park Place
Blvd., Clearwater, Florida 34619 (the "Adviser") to manage the Fund's
investments. The Adviser is controlled by its majority shareholder, State Street
Global Advisors, a division of State Street Bank and Trust Company. The Adviser
develops and uses advanced computational quantitative techniques for money
management. In addition to offering tactical overlay services to private
individuals and institutions, the Adviser manages private investor and
institutional funds in global asset allocation and individually managed accounts
(equity). Douglas W. Case, CFA, Chief Investment Officer, Susan L. Reigel,
Portfolio Manager, and Dean S. Barr, Chairman and Chief Executive Officer, have
been primarily responsible for the day-to-day management of the Fund's portfolio
since 1996. Prior to that time, Mr. Case and Mr. Barr were the Fund's portfolio
managers. Mr. Case joined the firm in 1996 and is the portfolio manager for the
Adviser's managed U.S. equity accounts. From 1994 to 1996, he was the Director
of Equity Portfolio Management of LBS Capital Management, Inc. ("LBS"). From
1988 to 1994, he worked with the Florida Retirement System, where he oversaw all
internal quantitatively driven portfolios and assisted in the risk analysis of
the aggregate domestic equity fund. Ms. Reigel joined LBS as a portfolio manager
in early 1996 and joined AIT in late 1996. She assists in the management of all
equity accounts. From 1994 to 1996, Ms. Reigel worked with the Florida
Retirement System where she managed quantitatively driven portfolios. Mr. Barr
founded the Adviser in 1996 and oversees research development of all of the
Adviser's programs. From 1989 to 1996, he was the Managing Director and Chief
Investment Officer of LBS. He is an authority and expert in the development of
artificial intelligence systems for market and security analysis. Additionally,
he is the author of several technical papers on Artificial Intelligence. The
Fund is authorized to pay the Adviser a fee equal to an annual average rate of
0.70% of its average daily net assets. The Adviser pays all of the operating
expenses of the Fund except brokerage, taxes, interest, fees and expenses on
non-interested person trustees and extraordinary expenses. It should be noted
that most investment companies pay their own operating expenses directly, while
the Fund's expenses, except those specified above, are paid by the Adviser.
The Adviser determines the securities to be held or sold by the Fund,
and the portion of the Fund's assets to be held uninvested. The Adviser always
follows the Fund's investment objectives, policies and restrictions and any
policies and instructions of the Board of Trustees.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Adviser equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). In addition, the Adviser will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains American Data Services, Inc., P.O. Box 5536, Hauppauge, New York
11788-0132 (the "Transfer Agent") to serve as transfer agent, dividend paying
agent and shareholder service agent. The Trust retains AmeriPrime Financial
Securities, Inc., 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092 (the
"Distributor") to act as the principal distributor of the Fund's shares. The
services of the Administrator, Transfer Agent and Distributor are operating
expenses paid by the Adviser.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. Investment Technology Group, Inc., a registered
broker-dealer and an affiliate of the Adviser, may receive brokerage commissions
from the Fund. The Adviser (not the Fund) may pay certain financial institutions
(which may include banks, brokers, securities dealers and other industry
professionals) a 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.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
The Fund may invest in common stock, preferred stock, common stock
equivalents (such as convertible preferred stock and convertible debentures) and
closed-end investment companies which invest primarily in common stocks.
Convertible preferred stock is preferred stock that can be converted into common
stock pursuant to its terms. Convertible debentures are debt instruments that
can be converted into common stock pursuant to their terms. The Adviser intends
to invest only in convertible debentures rated A or higher by Standard & Poor's
Corporation ("S&P") or by Moody's Investors Services, Inc. ("Moody's") and will
limit the Fund's investment in such debentures to 10% of net assets. The Fund
may hold warrants and rights issued in conjunction with common stock, but in
general will sell any such warrants or rights as soon as practicable after they
are received. Warrants are options to purchase equity securities at a specified
price valid for a specific time period. Rights are similar to warrants, but
normally have a short duration and are distributed by the issuer to its
shareholders.
The Fund may invest a significant portion of its portfolio in smaller
companies when the Adviser believes it to be consistent with the Fund's
objective. Some characteristics of smaller companies, such as limited product
diversity, a lack of managerial or financial resources, and thinly traded
securities may result in increased stock price volatility.
Equity securities include common stocks of domestic real estate
investment trusts and other companies which operate as real estate corporations
or which have a significant portion of their assets in real estate. The Fund
will not acquire any direct ownership of real estate.
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.
The Fund may invest in foreign equity securities through the purchase
of American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
In addition, the Fund may invest in S&P Depositary Receipts ("SPDRs") and
other similar instruments. SPDRs are shares of a publicly traded unit investment
trust which owns the stocks included in the S&P 500 Index, and changes in the
price of SPDRs track the movement of the Index relatively closely.
Fixed Income Securities
The Fund may invest in U.S. Treasury bills and repurchase agreements,
both of which are fixed income securities. Fixed income securities are generally
considered to be interest rate sensitive, which means that their value will
generally decrease when interest rates rise and increase when interest rates
fall. Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer term securities and are less
affected by changes in interest rates. U.S. Treasury bills are backed by the
full faith and credit of the U.S. Government as to payment of principal and
interest and are among the highest quality government securities.
A repurchase agreement is a short-term investment in which the
purchaser (i.e., the Fund) acquires ownership of a U.S. Government obligation
(which may be of any maturity) and the seller agrees to repurchase the
obligation at a future time at a set price, thereby determining the yield during
the purchaser's holding period (usually not more than seven days from the date
of purchase). Any repurchase transaction in which the Fund engages will require
full collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with Star Bank, N.A. (the Fund's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Adviser (subject to review by the Board of Trustees) to be creditworthy. The
Adviser monitors the creditworthiness of the banks and securities dealers with
which the Fund engages in repurchase transactions.
Options Transactions
The Fund may write (sell) covered call options on common stocks in the
Fund's portfolio. A covered call option on a security is an agreement to sell a
particular portfolio security if the option is exercised at a specified price,
or before a set date. The Fund profits from the sale of the option, but gives up
the opportunity to profit from any increase in the price of the stock above the
option price, and may incur a loss if the stock price falls. Risks associated
with writing covered call options include the possible inability to effect
closing transactions at favorable prices and an appreciation limit on the
securities set aside for settlement. The Fund may also purchase call options.
The Fund will only engage in exchange-traded options transactions.
General
The Fund may engage in short sales if, at the time of the short sale,
the Fund owns or has the right to obtain an equal amount of the security being
sold, at no additional cost, and the Fund's investment does not exceed 5% of its
net assets. See "Additional Information About Fund Investments and Risk
Considerations" in the Statement of Additional Information.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Adviser believes that market conditions, creditworthiness factors or general
economic conditions warrant such action. It is anticipated that the Fund will
have a portfolio turnover rate of less than 200%. The brokerage commissions
incurred by the Fund will generally be higher than those incurred by a fund with
a lower portfolio turnover rate. The Fund does not anticipate any adverse tax
consequences as a result of its portfolio turnover rate, although substantial
net capital gains could be realized, and any distributions derived from such
gains may be ordinary income for federal tax purposes.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an 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. As of January 31, 1999, U.S. Trust Company of Florida, as Trustee of the
Killian Charitable Remainder Unitrust, owns a majority of the outstanding shares
of the Fund and may be deemed to control the Fund. Raymond Killian, as a
beneficiary of the Unitrust, may also be deemed to control the Fund.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser, Administrator or other
service providers to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Issue." The Adviser and Administrator have taken steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that are used and to obtain reasonable assurances that
comparable steps are being taken by the Fund's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund. In addition, the Adviser cannot make any
assurances that the Year 2000 Issue will not affect the companies in which the
Fund invests or worldwide markets and economies.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index, the Dow Jones Industrial Average or the Russell 3000
Index.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Adviser Administrator
Advanced Investment Technology, Inc. AmeriPrime Financial Services, Inc.
311 Park Place Blvd., Suite 250 1793 Kingswood Drive, Suite 200
Clearwater Florida 34619 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent Auditors
(all purchase and redemption requests) McCurdy & Associates CPA's, Inc.
American Data Services, Inc. 27955 Clemens Road
P.O. Box 5536 Westlake, Ohio 44145
Hauppauge, New York 11788-0132
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY OF FUND EXPENSES..................................................... 2
Shareholder Transaction Expenses.................................... 2
Annual Fund Operating Expenses...................................... 2
FINANCIAL HIGHLIGHTS....................................... ................ 3
THE FUND.................................................................... 4
INVESTMENT OBJECTIVE AND STRATEGIES.......................................... 4
HOW TO INVEST IN THE FUND.................................................... 5
Initial Purchase.................................................... 5
By Mail.................................................. 5
By Wire ................................................. 5
Additional Investments.............................................. 6
Tax Sheltered Retirement Plans...................................... 6
Other Purchase Information.......................................... 6
HOW TO REDEEM SHARES......................................................... 6
By Mail ..........................................................6
By Telephone........................................................ 7
Additional Information.............................................. 7
SHARE PRICE CALCULATION...................................................... 8
DIVIDENDS AND DISTRIBUTIONS.................................................. 8
TAXES.................................................................... 9
OPERATION OF THE FUND........................................................ 9
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS...................11
Equity Securities...................................................11
Fixed Income Securities.............................................11
Options Transactions................................................12
General 12
GENERAL INFORMATION.........................................................12
Fundamental Policies................................................12
Portfolio Turnover..................................................12
Shareholder Rights..................................................13
Year 2000 Issue.....................................................13
PERFORMANCE INFORMATION ................................................. 13
<PAGE>
CARL DOMINO EQUITY INCOME FUND
INVESTOR CLASS SHARES
PROSPECTUS February 14, 1999
580 Village Blvd., Suite 225
West Palm Beach, Florida 33409
For Information, Shareholder Services and Requests:
(800) 506-9922
Carl Domino Equity Income Fund (the "Fund") is a mutual fund whose
investment objective is to provide long term growth of capital together with
current income. The Fund's portfolio is comprised primarily of dividend-paying
common stocks of large, established companies believed by the Adviser, Carl
Domino Associates, L.P., to possess less downside risk and volatility than the
S&P 500 Index.
This Prospectus offers shares of the Fund on a "no-load" basis, which
means there are no sales charges or commissions. In addition, there are no 12b-1
fees, distribution expenses or deferred sales charges which are borne by the
shareholders. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, and is distributed by AmeriPrime
Financial Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information has been filed with the Securities and
Exchange Commission (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
-18-
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on operating expenses incurred during
the most recent fiscal year. The expenses are expressed as a percentage of
average net assets. The Example should not be considered a representation of
future Fund performance or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. In addition, the Fund does not
have a 12b-1 Plan. Unlike most other mutual funds, the Fund does not pay
directly for transfer agency, pricing, custodial, auditing or legal services,
nor does it pay directly any general administrative or other significant
operating expenses. The Adviser pays all of the expenses (including
organizational expenses) of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases.............................................NONE
Sales Load Imposed on Reinvested Dividends..................................NONE
Deferred Sales Load.........................................................NONE
Redemption Fees.............................................................NONE
Exchange Fees...............................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)1
Management Fees........................................................... 1.50%
12b-1 Charges...............................................................NONE
Other Expenses2 (after reimbursement)......................................0.00%
Total Fund Operating Expenses2 (after reimbursement).......................1.50%
1........The Fund's total operating expenses are equal to the management fee
paid to the Adviser because the Adviser pays all of the Fund's operating
expenses (except as described above).
2........The Adviser has agreed to reimburse other expenses for the fiscal year
ending October 31, 1999 to the extent necessary to maintain total operating
expenses as indicated. For the fiscal year ended October 31, 1998, other
expenses (fees and expenses of the trustees who are not "interested persons" as
defined in the Investment Company Act) were 0.03% of average net assets and
total fund operating expenses were 1.53% of average net assets, absent any
waiver or reimbursement.
The tables above are provided to assist an investor in understanding the direct
and indirect expenses that an investor may incur as a shareholder in the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
........ 1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
........ $15 $47 $82 $179
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period November 6, 1995 (commencement of operations) to October 31, 1996 and for
the fiscal years ended October 31, 1997 and 1998 is derived from the audited
financial statements of the Fund. The financial statements of the Fund have been
audited by McCurdy & Associates CPA's, Inc., independent public accountants, and
are included in the Fund's Annual Report. The Annual Report contains additional
performance information and is available upon request and without charge.
<TABLE>
<S> <C> <C> <C>
For the periods ended October 31 1998 1997 1996 (b)
Selected Per Share Data
Net asset value, end of period $16.15 $12.03 $10.00
--------------- --------------- ---------------
Income from investment operations
Net investment income 0.21 0.19 0.16
Net realized and unrealized gain (loss) (0.60) 4.15 1.87
--------------- --------------- ---------------
Total from investment operations (0.39) 4.34 2.03
--------------- --------------- ---------------
Less Distributions
From net investment income (0.14) (0.22) -
From net realized gain (0.94) - -
--------------- --------------- ---------------
Total distributions (1.08) (0.22) -
--------------- --------------- ---------------
Net asset value, end of period $14.68 $16.15 $12.03
=============== =============== ===============
Total Return (3.%7) 36.58% 20.64% (a)
Ratios and Supplemental Data
Net assets, end of period (000) $7,338 $3,750 $1,122
Ratio of expenses to average
net assets before expense reductions 1.53% 1.55% 1.73% (a)
Ratio of expenses to average net assets 1.50% 1.50% 1.51% (a)
Ratio of net investment income to average
net assets before expense reductions 1.33% 1.22% 1.35% (a)
Ratio of net investment income to average net assets 1.37% 1.28% 1.57% (a)
Portfolio turnover rate 75.95% 52.49% 62.51% (a)
<FN>
(a) Annualized
(b) For the period November 6, 1995 (commencement of operations) to October
31, 1996
</FN>
</TABLE>
THE FUND
Carl Domino Equity Income Fund (the "Fund") was organized as a series
of AmeriPrime Funds, an Ohio business trust (the "Trust"), on August 8, 1995,
and commenced operations on November 6, 1995. This prospectus offers shares of
the Fund on a no-load basis and each share represents an undivided,
proportionate interest in the Fund. The investment adviser to the Fund is Carl
Domino Associates, L.P. (the "Adviser").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term growth of
capital together with current income. The Fund seeks to achieve its objective by
investing primarily in equity securities which the Adviser believes offer less
downside risk and volatility than the S&P 500 Index. In making investments for
the Fund, the Adviser uses a disciplined, conservative, value and yield
strategy, consistent with capital preservation. The Adviser will particularly
seek to purchase stocks of companies which, in its estimation, are undervalued
due to special circumstances which the Adviser believes are temporary. As the
Fund will primarily invest in dividend-paying common stocks, it is expected that
the Fund will generate a combination of current income and long term capital
appreciation.
The Adviser generally will select stocks with above average dividend
yield, which the Adviser believes will enhance the Fund's stability and reduce
market risk. The Adviser seeks to further limit investment risk by diversifying
the Fund's investments across a broad range of industries and companies, and by
investing primarily in larger, more established companies, with a market
capitaization of $1 billion or more.
The Adviser has been managing equity income accounts for its
institutional clients since 1987. The performance of the accounts with
investment objectives, policies and strategies substantially similar to those of
the Fund appears below. The data is provided to illustrate past performance of
the Adviser in managing such accounts, as compared to the S&P 500 Index. The
persons responsible for the performance of the accounts are the same as those
responsible for the investment management of the Fund. As of December 31, 1998,
the assets in those accounts totaled approximately $912 million.
Summary of Annual Investment Returns of
the Fund and Carl Domino Associates, L.P. Managed Accounts
Managed
Period Fund Accounts* S&P 500
------ ---- -------- -------
1987** -11.30% -17.43%
1988 21.68% 16.57%
1989 25.25% 31.65%
1990 -6.91% - 3.14%
1991 25.47% 30.45%
1992 8.55% 7.62%
1993 13.16% 10.06%
1994 4.36% 1.30%
1995 3.00%*** 35.40% 37.54%
1996 24.35% 22.95% 22.99%
1997 35.34% 31.25% 33.36%
1998 -2.66% 10.31% 28.57%
* The Carl Domino Associates, L.P. managed account performance is the
time-weighted average total return associated with a composite of equity income
accounts having objectives similar to the Fund, and is unaudited. The composite
does not include non-institutional accounts (those with assets less than
$5,000,000) and non-discretionary accounts because the nature of those accounts
make them inappropriate for purposes of comparison. Results after June 30, 1988
include the reinvestment of income on an accrual basis, while prior period
results include the reinvestment of income on a cash basis. Performance figures
reflected are net of management fees and all expenses of the accounts, including
transaction costs and commissions. Results include the reinvestment of dividends
and capital gains.
The S&P 500 Index is a widely recognized, unmanaged index of market
activity based upon the aggregate performance of a selected portfolio
of publicly traded common stocks, including monthly adjustments to
reflect the reinvestment of dividends and other distributions. The S&P
500 Index reflects the total return of securities comprising the Index,
including changes in market prices as well as accrued investment
income, which is presumed to be reinvested. Performance figures for the
S&P 500 Index do not reflect deduction of transaction costs or
expenses, including management fees.
The performance of the accounts managed by the Adviser does not
represent the historical performance of the Fund and should not be
considered indicative of future performance of the Fund. Results may
differ because of, among other things, differences in brokerage
commissions, account expenses, including management fees, the size of
positions taken in relation to account size and diversification of
securities, timing of purchases and sales, availability of cash for new
investments and the private character of accounts compared with the
public character of the Fund. In addition, the managed accounts are not
subject to certain investment limitations, diversification
requirements, and other restrictions imposed by the Investment Company
Act and the Internal Revenue Code which, if applicable, may have
adversely affected the performance results of the managed accounts
composite. The results for different periods may vary.
** From June 30, 1987 inception.
*** For the period December 4, 1995 (commencement of operations in
accordance with the Fund's investment objective) through December 31,
1995, not annualized.
Under normal circumstances, at least 65% of the total assets of the
Fund will be invested in income producing equity securities. The Adviser
generally intends to stay fully invested (subject to liquidity requirements and
defensive purposes) in common stock and common stock equivalents (such as
rights, warrants and securities convertible into common stocks) regardless of
the movement of stock prices. However, the Fund may invest in preferred stocks,
bonds, corporate debt and U.S. government obligations to maintain liquidity or
pending investment in equity securities. Most equity securities in the Fund's
portfolio are listed on a major stock exchange or traded over-the-counter. While
the Fund ordinarily will invest in common stocks of U.S.
companies, it may invest in foreign companies.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments (including money market funds), cash equivalents or U.S. government
repurchase agreements. The Fund may also invest in such instruments at any time
to maintain liquidity or pending selection of investments in accordance with its
policies. If the Fund acquires securities of a money market fund, the
shareholders of the Fund will be subject to duplicative management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
Shares of the Fund are sold on a continuous basis, and you may invest
any amount you choose, as often as you wish, subject to a minimum initial
investment of $2,000 and minimum subsequent investments of $100 ($50 for IRAs).
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment adviser, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to Carl Domino Equity Income Fund, and sent to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below:
U.S. Mail: Overnight:
Carl Domino Equity Income Fund Carl Domino Equity Income Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 800-506-9922 to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Carl Domino Equity Income Fund
D.D.A. # 483889747
Account Name _________________ (write in shareholder
name) For the Account # ______________ (write in
account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund and the Custodian and Transfer Agent
are open for business. A wire purchase will not be considered made until the
wired money is received and the purchase is accepted by the Fund. Any delays
which may occur in wiring money, including delays which may occur in processing
by the banks, are not the responsibility of the Fund or the Transfer Agent.
There is presently no fee for the receipt of wired funds, but the right to
charge shareholders for this service is reserved by the Fund.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to Carl Domino Equity Income Fund and should be sent to the address
listed above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the Transfer Agent for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax adviser regarding
these plans is advisable. Custodial fees for an IRA will be paid by the
shareholder by redemption of sufficient shares of the Fund from the IRA unless
the fees are paid directly to the IRA custodian. You can obtain information
about the IRA custodial fees from the Transfer Agent. Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. There is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
U.S. Mail: Overnight:
Carl Domino Equity Income Fund Carl Domino Equity Income Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or Unified Fund Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at 800-506-9922. You must first complete the Optional
Telephone Redemption and Exchange section of the investment application to
institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) 506-9922. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax adviser concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Adviser determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Adviser, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
In the absence of written instructions otherwise, income dividends and
capital gain distributions are automatically reinvested in additional shares at
the net asset value per share on the distribution date. An election to receive a
cash payment of dividends and/or capital gain distributions may be made in the
application to purchase shares or by separate written notice to the Transfer
Agent. Shareholders will receive a confirmation statement reflecting the payment
and reinvestment of dividends and summarizing all other transactions. If cash
payment is requested, a check normally will be mailed within five business days
after the payable date. If you withdraw your entire account, all dividends
accrued to the time of withdrawal, including the day of withdrawal, will be paid
at that time. You may elect to have distributions on shares held in IRAs and
403(b) plans paid in cash only if you are 59 1/2 years old or permanently and
totally disabled or if you otherwise qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short-term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains Carl Domino Associates, L.P., 580 Village Blvd., Suite
225, West Palm Beach, Florida 33409 (the "Adviser") to manage the Fund's
investments. The Adviser provides equity, balanced and fixed income portfolio
management services to a select group of corporations, institutions,
foundations, trusts and high net worth individuals. The Adviser is a limited
partnership organized in Delaware and its general partner is Carl Domino, Inc.
The controlling shareholder of Carl Domino, Inc. is Carl J. Domino. Mr. Domino
has been primarily responsible for the day-to-day management of the Fund's
portfolio since the Fund's inception. A graduate of Florida State University in
1966 with a B.S. degree in accounting (Cum Laude) he received an MBA from
Harvard Business School in 1972 and joined a national money management firm.
During his 12 year association with Delaware Investment Advisers he was Chairman
of the Investment Strategy Committee for seven years and personally managed over
$1 billion. Mr. Domino has been the managing partner of the Adviser since its
founding in 1987. Mr. Domino, a portfolio analyst for over 20 years, has been
quoted in the press, is regularly interviewed by the Wall Street Journal and
appears frequently on the Public Education Channel's Inside Money program.
The Adviser determines the securities to be held or sold by the Fund,
and the portion of the Fund's assets to be held uninvested. The Adviser always
follows the Fund's investment objectives, policies and restrictions and any
policies and instructions of the Board of Trustees. The Fund is authorized to
pay the Adviser a fee equal to an annual average rate of 1.50% of its average
daily net assets. The Adviser pays all of the operating expenses of the Fund
(including organizational expenses) except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Adviser.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Adviser equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). In addition, the Adviser will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains Unified Fund Services, Inc., 431 N. Pennsylvania St., Indianapolis,
IN 46204 (the "Transfer Agent") to serve as transfer agent, dividend paying
agent and shareholder service agent. The Trust retains AmeriPrime Financial
Securities, Inc., 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092 (the
"Distributor") to act as the principal distributor of the Fund's shares. The
services of the Administrator, Transfer Agent and Distributor are operating
expenses paid by the Adviser.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a 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.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
Equity securities consist of common stock, preferred stock and common
stock equivalents (such as convertible preferred stock, rights and warrants).
Equity securities also include common stocks and common stock equivalents of
domestic real estate investment trusts and other companies which operate as real
estate corporations or which have a significant portion of their assets in real
estate. The Fund will not acquire any direct ownership of real estate.
The Fund may invest in foreign equity securities, including, but not
limited to, the purchase of American Depository Receipts. American Depository
Receipts are dollar-denominated receipts that are generally issued in registered
form by domestic banks, and represent the deposit with the bank of a security of
a foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
The Fund will not invest more than 5% of its net assets at the time of purchase
in foreign securities which are not American Depository Receipts.
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.
Fixed Income Securities
The Fund may invest in fixed income securities. Fixed income securities
include corporate debt securities, U.S. government securities, mortgage-related
securities and participation interests in such securities. Fixed income
securities are generally considered to be interest rate sensitive, which means
that their value will generally decrease when interest rates rise and increase
when interest rates fall. Securities with shorter maturities, while offering
lower yields, generally provide greater price stability than longer term
securities and are less affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are long
and short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Fund will only invest
in corporate debt securities rated A or higher by Standard & Poor's Corporation
or Moody's Investors Services, Inc.
U.S. Government Obligations - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the agency that issued them, and not by the U.S. government.
Securities issued by the Federal Farm Credit System, the Federal Land Banks, and
the Federal National Mortgage Association (FNMA) are supported by the agency's
right to borrow money from the U.S. Treasury under certain circumstances, but
are not backed by the full faith and credit of the U.S. government.
Mortgage-Related Securities - Mortgage-related securities include
securities representing interests in a pool of mortgages. These securities,
including securities issued by FNMA and GNMA, provide investors with payments
consisting of both interest and principal as the mortgages in the underlying
mortgage pools are repaid. Pools of mortgage loans are assembled for sale to
investors (such as the Fund) by various governmental, government-related and
private organizations, such as dealers. Unscheduled or early payments on the
underlying mortgages may shorten the securities' effective maturities.
Other types of securities representing interests in a pool of
mortgage loans are known as collateralized mortgage obligations (CMOs) and real
estate mortgage investment conduits (REMICs). CMOs and REMICs are debt
instruments collateralized by pools of mortgage loans or other mortgage-backed
securities. The average life of securities representing interests in pools of
mortgage loans is likely to be substantially less than the original maturity of
the mortgage pools as a result of prepayments or foreclosures of such mortgages.
Prepayments are passed through to the registered holder with the regular monthly
payments of principal and interest, and have the effect of reducing future
payments. To the extent the mortgages underlying a security representing an
interest in a pool of mortgages are prepaid, a Fund may experience a loss (if
the price at which the respective security was acquired by the Fund was at a
premium over par, which represents the price at which the security will be
redeemed upon prepayment). In addition, prepayments of such securities held by a
Fund will reduce the share price of the Fund to the extent the market value of
the securities at the time of prepayment exceeds their par value. Furthermore,
the prices of mortgage-related securities can be significantly affected by
changes in interest rates. Prepayments may occur with greater frequency in
periods of declining mortgage rates because, among other reasons, it may be
possible for mortgagors to refinance their outstanding mortgages at lower
interest rates. In such periods, it is likely that any prepayment proceeds would
be reinvested by a Fund at lower rates of return.
Investment Techniques
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government obligations. The Fund may buy and sell
securities on a when-issued or delayed delivery basis, with payment and delivery
taking place at a future date, but investment in such securities may not exceed
5% of the Fund's net assets. Also limited to 5% of the Fund's net assets is the
Fund's investment in STRIPs (Separate Trading of Registered Interest and
Principal of Securities). The Federal Reserve creates STRIPs by separating the
coupon payments and the principal payments from the outstanding Treasury
security and selling them as individual securities.
Loans of Portfolio Securities - The Fund may make short and
long term loans of its portfolio securities. Under the lending policy authorized
by the Board of Trustees and implemented by the Adviser in response to requests
of broker-dealers or institutional investors which the Adviser deems qualified,
the borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time to vote on
any matter which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral.
General
The Fund may invest in other investment companies, time deposits,
certificates of deposit or banker's acceptances, and may buy and write put and
call options, provided the Fund's investment in each does not exceed 5% of its
net assets. The Fund will not invest more than 5% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven days.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Adviser believes that market conditions, creditworthiness factors or general
economic conditions warrant such action.
Shareholder Rights. This Prospectus offers Investor Class shares of the
Fund on a no-load basis. The Fund also offers "Class A" shares. The classes
differ as follows: 1) no sales charge is imposed on Investor Class shares, 2)
Class A shares are subject to a front-end sales load, and 3) each class may bear
differing amounts of certain class-specific expenses.
The differing sales charges and other expenses applicable to the
different classes of the Fund's shares may affect the performance of those
classes. Broker/dealers and others entitled to receive compensation for selling
or servicing Fund shares may receive more with respect to one class than
another. The Board of Trustees of the Trust does not anticipate that there will
be any conflicts among the interests of the holders of the different classes of
Fund shares. On an ongoing basis, the Board will consider whether any such
conflict exists and, if so, take appropriate action. More information concerning
the classes of shares of the Fund may be obtained by calling the Fund at
800-506-9922.
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.
Shareholder inquiries should be made by telephone to 800-506-9922, or
by mail, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser, Administrator or other
service providers to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Issue." The Adviser and Administrator have taken steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that are used and to obtain reasonable assurances that
comparable steps are being taken by the Fund's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund. In addition, the Adviser cannot make any
assurances that the Year 2000 Issue will not affect the companies in which the
Fund invests or worldwide markets and economies.
<PAGE>
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index or the Dow Jones Industrial Average.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Adviser Administrator
Carl Domino Associates, L.P. AmeriPrime Financial Services, Inc.
580 Village Blvd., Suite 225 1793 Kingswood Drive, Suite 200
West Palm Beach, Florida 33409 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase Auditors
and redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania St. Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
-20-
TABLE OF CONTENTS PAGE
SUMMARY OF FUND EXPENSES.......................................................
Shareholder Transaction Expenses......................................
Annual Fund Operating Expenses........................................
FINANCIAL HIGHLIGHTS...........................................................
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES............................................
HOW TO INVEST IN THE FUND.......................................................
Initial Purchase.......................................................
By Mail
By Wire
Additional Investments................................................
Tax Sheltered Retirement Plans.........................................
Other Purchase Information......................................................
HOW TO REDEEM SHARES...........................................................
By Mail
By Telephone...........................................................
Additional Information.................................................
SHARE PRICE CALCULATION.........................................................
DIVIDENDS AND DISTRIBUTIONS....................................................
TAXES
OPERATION OF THE FUND...........................................................
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS.....................
Equity Securities.....................................................
Fixed Income Securities...............................................
Corporate Debt Securities.....................................
U.S. Government Obligations...................................
Mortgage-Related Securities...................................
Investment Techniques.................................................
Loans of Portfolio Securities.........................................
General
GENERAL INFORMATION.............................................................
Fundamental Policies..................................................
Portfolio Turnover....................................................
Shareholder Rights....................................................
Year 2000 Issue.......................................................
PERFORMANCE INFORMATION........................................................
<PAGE>
CARL DOMINO EQUITY INCOME FUND
CLASS A SHARES
PROSPECTUS February 14 , 1999
580 Village Blvd., Suite 225
West Palm Beach, Florida 33409
For Information, Shareholder Services and Requests:
(800) 506-9922
Carl Domino Equity Income Fund (the "Fund") is a mutual fund whose
investment objective is to provide long term growth of capital together with
current income. The Fund's portfolio is comprised primarily of dividend-paying
common stocks of large, established companies believed by the Adviser, Carl
Domino Associates, L.P., to possess less downside risk and volatility than the
S&P 500 Index.
The Fund is one of the mutual funds comprising AmeriPrime Funds, an
open-end management investment company, and is distributed by AmeriPrime
Financial Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information has been filed with the Securities and
Exchange Commission (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor in Class A shares of the Fund
may incur as a shareholder. The expense information is based on estimated
amounts for the current fiscal year. The expenses are expressed as a percentage
of average net assets. The Example should not be considered a representation of
future Fund performance or expenses, both of which may vary.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)1..................4.75%
Sales Load Imposed on Reinvested Dividends..................................NONE
Deferred Sales Load.........................................................NONE
Redemption Fees............................................................NONE
Exchange Fees...............................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)2
Management Fees........................................................... 1.50%
12b-1 Fees......................................................... .......NONE
Other Expenses3 (after reimbursement)......................................0.00%
Total Fund Operating Expenses3 (after reimbursement).......................1.50%
1........The sales load is 4.75% for purchases less than $100,000, declining to
0% for purchases of $1 million or more. 2........The Fund's total operating
expenses are equal to the management fee paid to the Adviser because the Adviser
pays all of the Fund's operating expenses (except as described above).
3........The Adviser has agreed to reimburse other expenses for the fiscal year
ending October 31, 1999 to the extent necessary to maintain total operating
expenses as indicated. For the fiscal year ended October 31, 1998, other
expenses (fees and expenses of the trustees who are not "interested persons" as
defined in the Investment Company Act) were 0.03% of average net assets and
total fund operating expenses were 1.53% of average net assets, absent any
waiver or reimbursement. The tables above are provided to assist an
investor in understanding the direct and indirect expenses that an investor may
incur as a shareholder in the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$ $ $ $
THE FUND
Carl Domino Equity Income Fund (the "Fund") was organized as a series
of AmeriPrime Funds, an Ohio business trust (the "Trust"), on August 8, 1995,
and commenced operations on November 6, 1995. This prospectus offers Class A
shares, which were established on ____________________, 1998 and were first
offered to shareholders on ______________________, 1998. The investment adviser
to the Fund is Carl Domino Associates, L.P. (the "Adviser").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term growth of
capital together with current income. The Fund seeks to achieve its objective by
investing primarily in equity securities which the Adviser believes offer less
downside risk and volatility than the S&P 500 Index. In making investments for
the Fund, the Adviser uses a disciplined, conservative, value and yield
strategy, consistent with capital preservation. The Adviser will particularly
seek to purchase stocks of companies which, in its estimation, are undervalued
due to special circumstances which the Adviser believes are temporary. As the
Fund will primarily invest in dividend-paying common stocks, it is expected that
the Fund will generate a combination of current income and long term capital
appreciation.
The Adviser generally will select stocks with above average dividend
yield, which the Adviser believes will enhance the Fund's stability and reduce
market risk. The Adviser seeks to further limit investment risk by diversifying
the Fund's investments across a broad range of industries and companies, and by
investing primarily in larger, more established companies.
The Adviser has been managing equity income accounts for its
institutional clients since 1987. The performance of the accounts with
investment objectives, policies and strategies substantially similar to those of
the Fund appears below. The data is provided to illustrate past performance of
the Adviser in managing such accounts, as compared to the S&P 500 Index. The
persons responsible for the performance of the accounts are the same as those
responsible for the investment management of the Fund. As of December 31, 1998,
the assets in those accounts totaled approximately $____ million.
Summary of Annual Investment Returns of
the Fund and Carl Domino Associates, L.P. Managed Accounts
Managed
Period Fund Accounts* S&P 500
------ ---- --------- -------
1987** -11.30% -17.43%
1988 21.68% 16.57%
1989 25.25% 31.65%
1990 - 6.91% - 3.14%
1991 25.47% 30.45%
1992 8.55% 7.62%
1993 13.16% 10.06%
1994 4.36% 1.30%
1995 3.00%*** 35.40% 37.54%
1996 24.35% 22.95% 22.99%
1997 35.34% 31.25% 33.36%
1998 ____% _____% _____%
* The Carl Domino Associates, L.P. managed account performance is the
time-weighted average total return associated with a composite of equity income
accounts having objectives similar to the Fund, and is unaudited. The composite
does not include non-institutional accounts (those with assets less than
$5,000,000) and non-discretionary accounts because the nature of those accounts
make them inappropriate for purposes of comparison. Results after June 30, 1988
include the reinvestment of income on an accrual basis, while prior period
results include the reinvestment of income on a cash basis. Performance figures
reflected are net of management fees and all expenses of the accounts, including
transaction costs and commissions. Results include the reinvestment of dividends
and capital gains.
The S&P 500 Index is a widely recognized, unmanaged index of market
activity based upon the aggregate performance of a selected portfolio
of publicly traded common stocks, including monthly adjustments to
reflect the reinvestment of dividends and other distributions. The S&P
500 Index reflects the total return of securities comprising the Index,
including changes in market prices as well as accrued investment
income, which is presumed to be reinvested. Performance figures for the
S&P 500 Index do not reflect deduction of transaction costs or
expenses, including management fees.
The performance of the accounts managed by the Adviser does not
represent the historical performance of the Fund and should not be
considered indicative of future performance of the Fund. Results may
differ because of, among other things, differences in brokerage
commissions, account expenses, including management fees, the size of
positions taken in relation to account size and diversification of
securities, timing of purchases and sales, and availability of cash for
new investments. In addition, the managed accounts are not subject to
certain investment limitations, diversification requirements, and other
restrictions imposed by the Investment Company Act and the Internal
Revenue Code which, if applicable, may have adversely affected the
performance results of the managed accounts composite. The results for
different periods may vary.
** From June 30, 1987 inception.
*** For the period December 4, 1995 (commencement of operations in
accordance with the Fund's investment objective) through December 31,
1995, not annualized.
Under normal circumstances, at least 65% of the total assets of the
Fund will be invested in income producing equity securities. The Adviser
generally intends to stay fully invested (subject to liquidity requirements and
defensive purposes) in common stock and common stock equivalents (such as
rights, warrants and securities convertible into common stocks) regardless of
the movement of stock prices. However, the Fund may invest in preferred stocks,
bonds, corporate debt and U.S. government obligations to maintain liquidity or
pending investment in equity securities. Most equity securities in the Fund's
portfolio are listed on a major stock exchange or traded over-the-counter. While
the Fund ordinarily will invest in common stocks of U.S. companies, it may
invest in foreign companies.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments (including money market funds), cash equivalents or U.S. government
repurchase agreements. The Fund may also invest in such instruments at any time
to maintain liquidity or pending selection of investments in accordance with its
policies. If the Fund acquires securities of a money market fund, the
shareholders of the Fund will be subject to duplicative management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
Shares of the Fund are sold on a continuous basis, and you may invest
any amount you choose, as often as you wish, subject to a minimum initial
investment of $2,000 and minimum subsequent investments of $100 ($50 for IRAs).
You may purchase additional shares through the Open Account Program described
below. You may open an account and make an initial investment through securities
dealers having a sales agreement with the Distributor.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to Carl Domino Equity Income Fund - Class A, and sent to the P.O.
Box listed below. If you prefer overnight delivery, use the overnight address
listed below:
U.S. Mail: Overnight:
Carl Domino Equity Income Fund-Class A Carl Domino Equity Income Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania Street
Indianapolis, IN 46204-6110 Indianapolis, IN 46204
Shares of the Fund are purchased at the public offering price. The
public offering price is the next determined net asset value per share plus a
sales load as shown in the following table. <TABLE> <CAPTION>
================================================= ------------------------------------ =====================================
Sales Load as of % of:
Public Net
Offering Amount Dealer Reallowance as %
Amount of Investment Price Invested of Public Offering Price
<S> <C> <C>
================================================= ------------------------------------ =====================================
Less Than $100,000 4.75% 4.99% 4.75%
================================================= ------------------------------------ =====================================
$100,000 but less than $250,000 3.50% 3.63% 3.50%
================================================= ------------------------------------ =====================================
$250,000 but less than $500,000 2.50% 2.56% 2.50%
================================================= ------------------------------------ =====================================
$500,000 but less than $1,000,000 2.00% 2.04% 2.00%
================================================= ==================================== =====================================
$1,000,000 or more None None None
================================================= ==================================== =====================================
</TABLE>
Under certain circumstances, the Distributor may change the reallowance
to Dealers. Dealers engaged in the sale of shares of the Fund may be deemed to
be underwriters under the Securities Act of 1933. The Distributor retains the
entire sales load on all direct initial investments in the Fund and on all
investments in accounts with no designated dealer of record.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Distributor by 5:00 p.m., Eastern time, that
day are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Distributor by 5:00 p.m., Eastern time. Dealers may
charge a fee for effecting purchase orders. Direct purchase orders received by
4:00 p.m., Eastern time, are confirmed at that day's public offering price.
Direct investments received after 4:00 p.m. and others received from dealers
after 5:00 p.m. are confirmed at the public offering price next determined on
the following business day.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 800-506-9922 to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Carl Domino Equity Income Fund
D.D.A. #
Account Name _________________ (write in shareholder
name) For the Account # ______________ (write in
account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund and the Custodian and Transfer Agent
are open for business. A wire purchase will not be considered made until the
wired money is received and the purchase is accepted by the Fund. Any delays
which may occur in wiring money, including delays which may occur in processing
by the banks, are not the responsibility of the Fund or the Transfer Agent.
There is presently no fee for the receipt of wired funds, but the right to
charge shareholders for this service is reserved by the Fund.
[Open Account Program
After an initial investment, all investors are considered participants in the
Open Account Program. The Open Account Program helps investors make additional
purchases of the Fund over a period of years and permits automatic reinvestment
of dividends and distributions of the Fund without a sales load.]
[Reduced Sales Load
You may use the Right of Accumulation to combine the cost or current
net asset value (whichever is higher) of your shares of the Fund with the amount
of your current purchases in order to take advance of the reduced sales load set
forth in the table above. Purchases made pursuant to a Letter of Intent may also
be eligible for the reduced sales loads. The minimum initial investment under a
Letter of Intent is $10,000. Shareholders should contact the Transfer Agent for
information about the Right of Accumulation and Letter of Intent.]
Purchases at Net Asset Value
You may purchase shares of the Fund at net asset value when the payment
for your investment represents the proceeds from the redemption of shares of any
other mutual fund which has a front-end sales load. Your investment will qualify
for this provision if the purchase price of the shares of the other fund
included a sales load and the redemption occurred within one year of the
purchase of such shares and no more than sixty days prior to your purchase of
shares of the Fund. To make a purchase at net asset value pursuant to this
provision, you must submit photocopies of the confirmations (or similar
evidence) showing the purchase and redemption of shares of the other fund. Your
payment may be made with the redemption check representing the proceeds of the
shares redeemed, endorsed to the order of the Fund. The redemption of shares of
the other fund is, for federal income tax purposes, a sale on which you may
realize a gain or loss. These provisions may be modified or terminated at any
time. Contact your securities dealer or the Fund for further information.
Banks, bank trust departments and savings and loan associations, in
their fiduciary capacity or for their own accounts, may also purchase shares of
the Fund at net asset value. To the extent permitted by regulatory authorities,
a bank trust department may charge fees to clients for whose account it
purchases shares at net asset value. Federal and state credit unions may also
purchase shares at net asset value.
Purchases may be effected at net asset value for the benefit of the
clients of brokers-dealers and registered investment advisers affiliated with a
broker-dealer, if such broker-dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase of Class
A Shares in connection with special investment products, such as wrap accounts
or similar fee based programs. In addition, shares of the Fund may be purchased
at net asset value by broker-dealers who have a sales agreement with the
Distributor, and their registered personnel and employees, including members of
the immediate families of such registered personnel and employees.
Trustees, directors, officers and employees of the Trust, the Adviser
or the Distributor, including members of the immediate family of such
individuals and employee benefit plans established by such entities, may also
purchase shares of the Fund at net asset value.
Additional Information
For purposes of determining the applicable sales load, a purchaser
includes an individual, his spouse and their children under the age of 21,
purchasing shares for his or their own account; or a trustee or other fiduciary
purchasing shares for a single fiduciary account although more than one
beneficiary is involved; or employees of a common employer, provided that
economies of scale are realized through remittances from a single source and
quarterly confirmation of such purchases; or an organized group, provided that
the purchases are made through a central administration, or a single dealer, or
by other means which result in economy of sales effort or expense.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the Transfer Agent for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax adviser regarding
these plans is advisable. Custodial fees for an IRA will be paid by the
shareholder by redemption of sufficient shares of the Fund from the IRA unless
the fees are paid directly to the IRA custodian. You can obtain information
about the IRA custodial fees from the Transfer Agent. Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. There is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no charge
by mail. Your request should be addressed to:
Carl Domino Equity Income Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, IN 46204-6110
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or American Data Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at 800-506-9922. You must first complete the Optional
Telephone Redemption and Exchange section of the investment application to
institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) 506-9922. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax adviser concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Adviser determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Adviser, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
In the absence of written instructions otherwise, income dividends and
capital gain distributions are automatically reinvested in additional shares at
the net asset value per share on the distribution date. An election to receive a
cash payment of dividends and/or capital gain distributions may be made in the
application to purchase shares or by separate written notice to the Transfer
Agent. Shareholders will receive a confirmation statement reflecting the payment
and reinvestment of dividends and summarizing all other transactions. If cash
payment is requested, a check normally will be mailed within five business days
after the payable date. If you withdraw your entire account, all dividends
accrued to the time of withdrawal, including the day of withdrawal, will be paid
at that time. You may elect to have distributions on shares held in IRAs and
403(b) plans paid in cash only if you are 59 1/2 years old or permanently and
totally disabled or if you otherwise qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short-term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains Carl Domino Associates, L.P., 580 Village Blvd., Suite
225, West Palm Beach, Florida 33409 (the "Adviser") to manage the Fund's
investments. The Adviser provides equity, balanced and fixed income portfolio
management services to a select group of corporations, institutions,
foundations, trusts and high net worth individuals. The Adviser is a limited
partnership organized in Delaware and its general partner is Carl Domino, Inc.
The controlling shareholder of Carl Domino, Inc. is Carl J. Domino. Mr. Domino
has been primarily responsible for the day-to-day management of the Fund's
portfolio since the Fund's inception. A graduate of Florida State University in
1966 with a B.S. degree in accounting (Cum Laude) he received an MBA from
Harvard Business School in 1972 and joined a national money management firm.
During his 12 year association with Delaware Investment Advisers he was Chairman
of the Investment Strategy Committee for seven years and personally managed over
$1 billion. Mr. Domino has been the managing partner of the Adviser since its
founding in 1987. Mr. Domino, a portfolio analyst for over 20 years, has been
quoted in the press, is regularly interviewed by the Wall Street Journal and
appears frequently on the Public Education Channel's Inside Money program.
The Advisor determines the securities to be held or sold by the Fund,
and the portion of the Fund's assets to be held uninvested. The Advisor always
follows the Fund's investment objectives, policies and restrictions and any
policies and instructions of the Board of Trustees. The Fund is authorized to
pay the Adviser a fee equal to an annual average rate of 1.50% of its average
daily net assets. The Adviser pays all of the operating expenses of the Fund
(including organizational expenses) except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Adviser.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Adviser equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). In addition, the Adviser will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains Unified Fund Services, Inc., 431 N. Pennsylvania Street,
Indianapolis, IN 46204 (the "Transfer Agent") to serve as transfer agent,
dividend paying agent and shareholder service agent. The Trust retains
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092 (the "Distributor") to act as the principal distributor
of the Fund's shares. The services of the Administrator, Transfer Agent and
Distributor are operating expenses paid by the Adviser.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a 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.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
Equity securities consist of common stock, preferred stock and common
stock equivalents (such as convertible preferred stock, rights and warrants).
Equity securities also include common stocks and common stock equivalents of
domestic real estate investment trusts and other companies which operate as real
estate corporations or which have a significant portion of their assets in real
estate. The Fund will not acquire any direct ownership of real estate.
The Fund may invest in foreign equity securities, including, but not
limited to, the purchase of American Depository Receipts. American Depository
Receipts are dollar-denominated receipts that are generally issued in registered
form by domestic banks, and represent the deposit with the bank of a security of
a foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
The Fund will not invest more than 5% of its net assets at the time of purchase
in foreign securities which are not American Depository Receipts.
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. Fixed Income Securities
The Fund may invest in fixed income securities. Fixed income securities
include corporate debt securities, U.S. government securities, mortgage-related
securities and participation interests in such securities. Fixed income
securities are generally considered to be interest rate sensitive, which means
that their value will generally decrease when interest rates rise and increase
when interest rates fall. Securities with shorter maturities, while offering
lower yields, generally provide greater price stability than longer term
securities and are less affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are long
and short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Fund will only invest
in corporate debt securities rated A or higher by Standard & Poor's Corporation
or Moody's Investors Services, Inc.
U.S. Government Obligations - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the agency that issued them, and not by the U.S. government.
Securities issued by the Federal Farm Credit System, the Federal Land Banks, and
the Federal National Mortgage Association (FNMA) are supported by the agency's
right to borrow money from the U.S. Treasury under certain circumstances, but
are not backed by the full faith and credit of the U.S. government.
Mortgage-Related Securities - Mortgage-related securities
include securities representing interests in a pool of mortgages. These
securities, including securities issued by FNMA and GNMA, provide investors with
payments consisting of both interest and principal as the mortgages in the
underlying mortgage pools are repaid. Pools of mortgage loans are assembled for
sale to investors (such as the Fund) by various governmental, government-related
and private organizations, such as dealers. Unscheduled or early payments on the
underlying mortgages may shorten the securities' effective maturities.
Other types of securities representing interests in a pool of
mortgage loans are known as collateralized mortgage obligations (CMOs) and real
estate mortgage investment conduits (REMICs). CMOs and REMICs are debt
instruments collateralized by pools of mortgage loans or other mortgage-backed
securities. The average life of securities representing interests in pools of
mortgage loans is likely to be substantially less than the original maturity of
the mortgage pools as a result of prepayments or foreclosures of such mortgages.
Prepayments are passed through to the registered holder with the regular monthly
payments of principal and interest, and have the effect of reducing future
payments. To the extent the mortgages underlying a security representing an
interest in a pool of mortgages are prepaid, a Fund may experience a loss (if
the price at which the respective security was acquired by the Fund was at a
premium over par, which represents the price at which the security will be
redeemed upon prepayment). In addition, prepayments of such securities held by a
Fund will reduce the share price of the Fund to the extent the market value of
the securities at the time of prepayment exceeds their par value. Furthermore,
the prices of mortgage-related securities can be significantly affected by
changes in interest rates. Prepayments may occur with greater frequency in
periods of declining mortgage rates because, among other reasons, it may be
possible for mortgagors to refinance their outstanding mortgages at lower
interest rates. In such periods, it is likely that any prepayment proceeds would
be reinvested by a Fund at lower rates of return.
Investment Techniques
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government obligations. The Fund may buy and sell
securities on a when-issued or delayed delivery basis, with payment and delivery
taking place at a future date, but investment in such securities may not exceed
5% of the Fund's net assets. Also limited to 5% of the Fund's net assets is the
Fund's investment in STRIPs (Separate Trading of Registered Interest and
Principal of Securities). The Federal Reserve creates STRIPs by separating the
coupon payments and the principal payments from the outstanding Treasury
security and selling them as individual securities.
Loans of Portfolio Securities - The Fund may make short and
long term loans of its portfolio securities. Under the lending policy authorized
by the Board of Trustees and implemented by the Adviser in response to requests
of broker-dealers or institutional investors which the Adviser deems qualified,
the borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time to vote on
any matter which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral.
General
The Fund may invest in other investment companies, time deposits,
certificates of deposit or banker's acceptances, and may buy and write put and
call options, provided the Fund's investment in each does not exceed 5% of its
net assets. The Fund will not invest more than 5% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven days.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Adviser believes that market conditions, creditworthiness factors or general
economic conditions warrant such action. It is anticipated that the Fund will
have a portfolio turnover rate of less than 100%.
Shareholder Rights. The shares of beneficial interest of the Fund are
divided into two classes, designated "Investor Class" and "Class A." The classes
differ as follows: 1) no sales charge is imposed on Investor Class shares, 2)
Class A shares are subject to a front-end sales load, and 3) each class may bear
differing amounts of certain class-specific expenses.
The differing sales charges and other expenses applicable to the
different classes of the Fund's shares may affect the performance of those
classes. Broker/dealers and others entitled to receive compensation for selling
or servicing Fund shares may receive more with respect to one class than
another. The Board of Trustees of the Trust does not anticipate that there will
be any conflicts among the interests of the holders of the different classes of
Fund shares. On an ongoing basis, the Board will consider whether any such
conflict exists and, if so, take appropriate action. More information concerning
the classes of shares of the Fund may be obtained by calling the Fund at
800-506-9922.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights.
Shareholder inquiries should be made by telephone to 800-506-9922, or
by mail, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46204-6110.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Advisor, Administrator or other
service providers to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Issue." The Advisor and Administrator have taken steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that are used and to obtain reasonable assurances that
comparable steps are being taken by the Fund's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund. In addition, the Advisor cannot make any
assurances that the Year 2000 Issue will not affect the companies in which the
Fund invests or worldwide markets and economies.
<PAGE>
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. These non-standardized quotations do not include the effect of
the applicable sales load which, if included, would reduce the quoted
performance. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index or the Dow Jones Industrial Average.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Adviser Administrator
Carl Domino Associates, L.P. AmeriPrime Financial Services, Inc.
580 Village Blvd., Suite 225 1793 Kingswood Drive, Suite 200
West Palm Beach, Florida 33409 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase Auditors
and redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania Street Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
-18-
TABLE OF CONTENTS PAGE
SUMMARY OF FUND EXPENSES.....................................................-2-
Shareholder Transaction Expenses...................................-2-
Annual Fund Operating Expenses......................................-2-
THE FUND -3-
INVESTMENT OBJECTIVE AND STRATEGIES..........................................-3-
HOW TO INVEST IN THE FUND....................................................-5-
Initial Purchase....................................................-5-
By Mail -5-
By Wire -6-
-8-
Tax Sheltered Retirement Plans.....................................-8-
Other Purchase Information...................................................-8-
HOW TO REDEEM SHARES.........................................................-8-
By Mail -8-
By Telephone........................................................-9-
Additional Information.............................................-9-
SHARE PRICE CALCULATION.....................................................-10-
DIVIDENDS AND DISTRIBUTIONS.................................................-10-
TAXES -11-
OPERATION OF THE FUND.......................................................-11-
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS..................-12-
Equity Securities..................................................-12-
Fixed Income Securities............................................-13-
Corporate Debt Securities.................................-13-
U.S. Government Obligations...............................-13-
Mortgage-Related Securities...............................-13-
Investment Techniques..............................................-14-
Loans of Portfolio Securities.............................-14-
General -14-
GENERAL INFORMATION.........................................................-14-
Fundamental Policies...............................................-14-
Portfolio Turnover................................................-15-
Shareholder Rights.................................................-15-
Year 2000 Issue
PERFORMANCE INFORMATION.....................................................-15-
<PAGE>
PROSPECTUS February 14, 1999
CORBIN SMALL-CAP VALUE FUND
6300 Ridglea Place
Suite 1111
Fort Worth, Texas 76116
For Information, Shareholder Services and Requests:
(800) 924-6848
The investment objective of the Corbin Small-Cap Value Fund (the
"Fund") is to provide long term capital appreciation to its shareholders. The
Fund's advisor, Corbin & Company (the "Advisor"), seeks to achieve this
objective by investing primarily in small capitalization stocks (those with
market capitalizations of $2 billion or less) selling at attractive valuations
versus the market. The Advisor believes its value-oriented approach will
mitigate risk while enhancing potential returns.
The Fund is "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, distributed by AmeriPrime Financial
Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information dated February 14, 1999 has been filed with
the Securities and Exchange Commission (the "SEC"), is incorporated herein by
reference, and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
3
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on operating expenses incurred during
the most recent fiscal year. The expenses are expressed as a percentage of
average net assets. The Example should not be considered a representation of
future Fund performance or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. In addition, the Fund does not
charge a 12b-1 fee. Unlike most other mutual funds, the Fund does not pay
directly for transfer agency, pricing, custodial, auditing or legal services,
nor does it pay directly any general administrative or other significant
operating expenses. The Advisor pays all of the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases.......................................NONE
Sales Load Imposed on Reinvested Dividends............................NONE
Deferred Sales Load...................................................NONE
Redemption Fees.......................................................NONE
Exchange Fees.........................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)1
Management Fees...................................................... 1.25%
12b-1 Charges.........................................................NONE
Other Expenses (after reimbursement)2.................................0.00%
Total Fund Operating Expenses (after reimbursement)2..................1.25%
1 The Fund's total operating expenses are equal to the management fee paid
to the Advisor, because the Advisor pays all of the Fund's operating
expenses (except as described above).
2 The Advisor has voluntarily agreed to reimburse other expenses for the
fiscal year ended October 31, 1999 to the extent necessary to maintain
total operating expenses as indicated. For the fiscal year ended October
31, 1998, other expenses were 0.05% of average net assets and total
operating expenses were 1.30% of average net assets, absent any
reimbursement.
The tables above are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Year 10 Years
------ ------- ------ --------
$13 $40 $69 $151
<PAGE>
S FINANCIAL HIGHLIGHT
The following condensed supplementary financial information for the
period June 30, 1997 (commencement of operations) through October 31, 1997 and
the fiscal year ended October 31, 1998 is derived from the audited financial
statements of the Fund. The financial statements of the Fund have been audited
by McCurdy & Associates CPA's, Inc., independent public accountants, and are
included in the Fund's Annual Report. The Annual Report contains additional
performance information and is available upon request and without charge.
<TABLE>
<S> <C> <C>
For the periods ended October 31 1998 1997 (b)
Selected Per Share Data
Net asset value, beginning of period $ 11.03 $ 10.00
------------ -------------
Income from investment operations
Net investment income (0.01) -
Net realized and unrealized gain (loss) (3.76) 1.03
------------ -------------
Total from investment operations (3.77) 1.03
------------ -------------
Less Distributions
From net interest income (0.01) -
From net realized gain (loss) (0.63) -
------------ -------------
Total Distributions (0.64) -
------------ -------------
Net asset value, end of period $ 6.62 $ 11.03
============ =============
Total Return -36.07% 30.32% (a)
Ratios and Supplemental Data
Net assets, end of period (000) $2,289 $1,334
Ratio of expenses to average net assets 1.25% (a) 1.23% (a)
Ratio of expenses to average net assets
before reimbursement 1.30% (a) 1.23% (a)
Ratio of net investment income to average net assets (0.15)% (a) 0.00%
before reimbursement (0.20)% (a) 0.00%
Portfolio turnover rate 86.42% 20.41% (a)
<FN>
(a) Annualized
(b) June 30, 1997 (Commencement of Operations) to October 31, 1997 </FN>
</TABLE>
THE FUND
Corbin Small-Cap Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on June 10, 1997, and
commenced operations on June 30, 1997. This prospectus offers shares of the
Fund, and each share represents an undivided, proportionate interest in the
Fund. The investment advisor to the Fund is Corbin & Company (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
The investment objective of the Corbin Small-Cap Value Fund (the
"Fund") is to provide long term capital appreciation to its shareholders. The
Advisor seeks to achieve this objective by investing primarily in small
capitalization stocks (those with market capitalizations of $2 billion or less)
selling at attractive valuations versus the market. The Advisor believes its
value-oriented approach will mitigate risk while enhancing potential returns.
The Advisor selects securities using a model known as the value score.
A security's value score is determined by a formula that consists of three
variables: the security's five-year estimated earnings growth rate, its dividend
yield, and its price/earnings ratio based on the current year's estimated
earnings. Securities with value scores 50% greater than the market are
considered candidates for purchase. They are then analyzed based on five
additional factors: management, financial position, long-term industry
fundamentals, contrarianism, and complexity of business. The Advisor selects
securities with the intention of holding them for 3 to 5 years, during which
time the Advisor believes they will reach their full value.
Under normal circumstances, the Fund will invest at least 65% of its
total assets in small capitalization stocks. The Advisor generally plans to stay
fully invested (subject to liquidity requirements) in common stocks, preferred
stocks, and common stock equivalents (such as securities convertible into common
stocks), regardless of price movements. The Fund may also invest up to 5% of its
assets in foreign companies meeting its investment criteria. For temporary
defensive purposes under abnormal market or economic conditions, the Fund may
hold all or a portion of its assets in money market instruments, securities of
other no-load registered investment companies or U.S. government repurchase
agreements. The Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
If the Fund acquires securities of another investment company, the shareholders
of the Fund will be subject to additional management fees.
By investing primarily in small capitalization companies, the Fund will
be subject to the risks associated with such companies. Smaller capitalization
companies may experience higher growth rates and higher failure rates than do
larger capitalization companies. Companies in which the Fund is likely to invest
may have limited product lines, markets or financial resources and may lack
management depth. The trading volume of securities of smaller capitalization
companies is normally less than that of larger capitalization companies, and,
therefore, may disproportionately affect their market price, tending to make
them rise more in response to buying demand and fall more in response to selling
pressure than is the case with larger capitalization companies. The Advisor
seeks to reduce risk by having at least twenty different securities in the
portfolio; however, substantial concentrations in economic sectors might occur,
and some issues may have liquidity concerns.
<PAGE>
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques" for a more
detailed discussion of the Fund's investment practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load," and shares of the Fund are sold directly to
investors on a continuous basis, subject to a minimum initial investment of
$2,000 and minimum subsequent investments of $50. These minimums may be waived
by the Advisor for accounts participating in an automatic investment program.
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form that accompanies this Prospectus and mailing it,
in proper form, together with a check (subject to the above minimum amounts)
made payable to Corbin Small-Cap Value Fund, and sent to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
Corbin Small-Cap Value Fund Corbin Small-Cap Value Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania Street
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
Your purchase of shares of the Fund will be effected at the next share
price calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 800-924-6848 to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Corbin Small-Cap Value Fund
D.D.A. # 486479645
Account Name _________________ (write in shareholder name) For
the Account # ______________ (write in account number)
<PAGE>
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Fund. Any delays which may
occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Fund or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Fund.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to Corbin Small-Cap Value Fund and should be sent to the address
listed above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment plans (for employees of
public school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Transfer Agent for the
procedure to open an IRA or SEP plan, as well as more specific information
regarding these retirement plan options. Consultation with an attorney or tax
advisor regarding these plans is advisable. Custodial fees for an IRA will be
paid by the shareholder by redemption of sufficient shares of the Fund from the
IRA unless the fees are paid directly to the IRA custodian. You can obtain
information about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
<PAGE>
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
Corbin Small-Cap Value Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, IN 46206-6110
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or Unified Fund Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (800) 924-6848. You must first complete the
Redemption by Telephone section of the investment application to institute this
option. The Fund, the Transfer Agent and the Custodian are not liable for
following redemption or exchange instructions communicated by telephone that
they reasonably believe to be genuine. However, if they do not employ reasonable
procedures to confirm that telephone instructions are genuine, they may be
liable for any losses due to unauthorized or fraudulent instructions. Procedures
employed may include recording telephone instructions and requiring a form of
personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity, it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption, please call the Transfer Agent at (800) 924-6848. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
<PAGE>
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities that are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled, or if you
otherwise qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services. The Fund retains Corbin & Company, 6300 Ridglea Place,
Suite 1111, Fort Worth, Texas 76116 (the "Advisor") to manage the assets of the
Fund. The Advisor, a Texas corporation, is a Fort Worth based independent
investment advisor founded in 1992 and controlled by David A. Corbin, CFA. The
Advisor currently manages over $100 million in assets and specializes in the
management of assets for clients seeking a value-oriented, contrarian investment
style, including individual investors, personal trusts, all types of tax-exempt
organizations and ERISA plans, such as foundations, endowments, defined benefit
plans, defined contribution plans and union plans. David A. Corbin has been
President and Chief Investment Officer of the Advisor since 1992, and has been
primarily responsible for the day-to-day management of the Fund's portfolio
since the Fund's inception. Prior to founding Corbin & Company, Mr. Corbin was a
trust investment portfolio manager with Ameritrust/MTrust, where his
responsibilities included investment analysis and investment oversight for
personal trust accounts, employee benefit plans, and endowments. He was also the
Portfolio Manager of the William C. Conner Foundation at Texas Christian
University, where he received his Bachelor of Science degree in Economics. Mr.
Corbin has been published and quoted on a variety of investment management
topics in such publications as The Wall Street Journal and The Wall Street
Transcript, and is a Chartered Financial Analyst (CFA).
The Advisor determines the securities to be held or sold by
the Fund, and the portion of the Fund's assets to be held uninvested. The
Advisor always follows the Fund's investment objectives, policies and
restrictions and any policies and instructions of the Board of Trustees.
The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 1.25% of its average daily net assets. The Advisor pays all of
the operating expenses of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Advisor.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Fund equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars, and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). In addition, the Advisor will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains Unified Fund Services, Inc., 431 N. Pennsylvania Street,
Indianapolis, IN 46204 (the "Transfer Agent") to serve as transfer agent,
dividend paying agent and shareholder service agent. The Trust retains
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092 (the "Distributor") to act as the principal distributor
of the Fund's shares. The services of the Administrator, Transfer Agent and
Distributor are operating expenses paid by the Advisor.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a 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.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities. Equity securities consist of common stock, preferred
stock and common stock equivalents (such as convertible preferred stock, rights
and warrants). Common stocks, the most familiar type, represent an equity
(ownership) interest in a corporation. Warrants are options to purchase equity
securities at a specified price for a specific time period. Rights are similar
to warrants, but normally have a short duration and are distributed by the
issuer to its shareholders. Although equity securities have a history of
long-term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market and economic conditions.
Equity securities also include common stocks and common stock equivalents of
domestic real estate investment trusts and other companies that operate as real
estate corporations or that have a significant portion of their assets in real
estate. The Fund will not acquire any direct ownership of real estate.
The Fund may invest in foreign equity securities, including, but not
limited to, the purchase of American Depository Receipts. American Depository
Receipts are dollar-denominated receipts that are generally issued in registered
form by domestic banks, and represent the deposit with the bank of a security of
a foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
The Fund will not invest more than 5% of its net assets at the time of purchase
in foreign securities.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of the Fund will fluctuate. Securities in the Fund's portfolio may not increase
as much as the market as a whole, and some undervalued securities may continue
to be undervalued for long periods of time. Although profits in some Fund
holdings may be realized quickly, it is not expected that most investments will
appreciate rapidly.
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.
Preferred Stock. Preferred stock has a preference in liquidation (and,
generally, dividends) over common stock but is subordinated in liquidation to
debt. As a general rule the market value of preferred stocks with fixed dividend
rates and no conversion rights varies inversely with interest rates and
perceived credit risk, with the price determined by the dividend rate. Some
preferred stocks are convertible into other securities, for example common
stock, at a fixed price and ratio or upon the occurrence of certain events. The
market price of convertible preferred stocks generally reflects an element of
conversion value. Because many preferred stocks lack a fixed maturity date,
these securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks. All preferred stocks
are also subject to the same types of credit risks of the issuer as corporate
bonds. In addition, because preferred stock is junior to debt securities and
other obligations of an issuer, deterioration in the credit rating of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar yield characteristics. Preferred stocks may be
rated by S&P and Moody's although there is no minimum rating which a preferred
stock must have (and a preferred stock may not be rated) to be an eligible
investment for the Fund. The Advisor expects, however, that generally the
preferred stocks in which the Fund invests will be rated at least CCC by S&P or
Caa by Moody's or, if unrated, of comparable quality in the opinion of the
Advisor. Preferred stocks rated CCC by S&P are regarded as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations and represent the highest degree of speculation among securities
rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be
in arrears on dividend payments. Moody's rating with respect to preferred stocks
does not purport to indicate the future status of payments of dividends.
Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity), and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with Star Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Advisor (subject to review by the Board of
Trustees) to be creditworthy. The Advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.
General. The Fund may invest up to 5% of its net assets at the time of
purchase in each of the following financial services industry obligations:
certificates of deposit, time deposits and banker's acceptances. The Statement
of Additional Information provides information about these securities. The Fund
may also invest up to 5% of its net assets in illiquid securities, including
repurchase agreements maturing in more than seven days.
<PAGE>
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the Statement
of Additional Information as fundamental policies may not be changed without the
affirmative vote of the majority of the outstanding shares of the Fund. The
investment objective of the Fund may be changed without the affirmative vote of
a majority of the outstanding shares of the Fund. Any such change may result in
the Fund having an investment objective different from the objective which the
shareholders considered appropriate at the time of investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell securities
for short term trading purposes. However, if the objectives of the Fund would be
better served, short-term profits or losses may be realized from time to time.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of the
shareholders holding not less than two-thirds of the outstanding shares of the
Trust. The Trust does not hold an annual meeting of shareholders. When matters
are submitted to shareholders for a vote, each shareholder is entitled to one
vote for each whole share he owns and fractional votes for fractional shares he
owns. All shares of the Fund have equal voting rights and liquidation rights.
Shareholder inquiries should be made by telephone to 800-924-6848, or
by mail, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Advisor, Administrator or other
service providers to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Issue." The Advisor and Administrator have taken steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that are used and to obtain reasonable assurances that
comparable steps are being taken by the Fund's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund. In addition, the Advisor cannot make any
assurances that the Year 2000 Issue will not affect the companies in which the
Fund invests, or worldwide markets and economies.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
<PAGE>
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Russell 2000
Index and the Standard & Poor's (S&P) 600 Small-Cap Index.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Advisor Administrator
Corbin & Company AmeriPrime Financial Services, Inc.
6300 Ridglea Place, Suite 1111 1793 Kingswood Drive, Suite 200
Fort Worth, Texas 76116 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests)
McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania Street Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF FUND EXPENSES.................................................... 1
Shareholder Transaction Expenses................................... 1
Annual Fund Operating Expenses..................................... 1
FINANCIAL HIGHLIGHTS........................................................ 2
THE FUND 2
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS................. 2
HOW TO INVEST IN THE FUND................................................... 3
Initial Purchase................................................... 3
Additional Investments............................................. 4
Automatic Investment Plan.......................................... 4
Tax Sheltered Retirement Plans..................................... 5
Other Purchase Information......................................... 5
HOW TO REDEEM SHARES........................................................ 5
By Mail 5
By Telephone....................................................... 6
Additional Information............................................. 6
SHARE PRICE CALCULATION..................................................... 7
DIVIDENDS AND DISTRIBUTIONS................................................. 7
TAXES 8
OPERATION OF THE FUND....................................................... 8
INVESTMENT POLICIES AND TECHNIQUES ........................................ 10
Equity Securities.................................................. 10
Convertible Securities................................... ........ 10
Preferred Stock.................................................... 11
Repurchase Agreements.............................................. 11
General 12
GENERAL INFORMATION......................................................... 12
Fundamental Policies............................................... 12
Portfolio Turnover................................................. 12
Shareholder Rights................................................. 12
Year 2000 Issue.....................................................12
PERFORMANCE INFORMATION..................................................... 12
<PAGE>
FLORIDA STREET FUNDS
PROSPECTUS February 14, 1999
247 Florida Street
Baton Rouge, LA 70801
For Information, Shareholder Services and Requests:
(800) 890-5344
Florida Street Bond Fund. The investment objective of the Florida
Street Bond Fund is to provide total return to its shareholders over the long
term. The Fund's investment advisor, CommonWealth Advisors, Inc. (the
"Advisor"), seeks to achieve this objective by investing primarily in a
portfolio of high yield, non-investment grade securities issued in many of the
world's securities markets. Under normal circumstances, the Fund will invest at
least 65% of its total assets in bonds and other debt securities, and thus it is
expected that the Fund will generate a high level of current income. However,
the Advisor will also consider the potential for capital appreciation in making
investments for the Fund's portfolio, and may invest in preferred stock,
convertible bonds and other securities (including equity securities) without
regard to yield characteristics.
Florida Street Growth Fund. The investment objective of the Florida
Street Growth Fund is to provide total return to its shareholders over the long
term. The Advisor seeks to achieve this objective by investment primarily in a
portfolio of equity securities that the Advisor believes are undervalued by the
market place. However, the Fund may also invest in bonds and other fixed income
securities that the Advisor believes are consistent with the Fund's objective.
The Funds are "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. Each Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, distributed by AmeriPrime Financial
Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information has been filed with the Securities and
Exchange Commission dated February 14, 1999, which is incorporated herein by
reference and can be obtained without charge by calling the Funds at the phone
number listed above.
The Florida Street Bond Fund may invest up to 100% of its assets in
non-investment grade securities, commonly known as "junk bonds," that entail
greater risks, including default risks, than those found in investment grade
securities. The Florida Street Growth Fund may also invest in junk bonds.
Investors should carefully consider these risks before investing. See
"Investment Objective and Strategies," page ____; "Risk Considerations, page
______; and "Investment Policies and Techniques," page _______.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
each Fund. The expense information is based on operating expenses incurred
during the most recent fiscal year. The expenses are expressed as a percentage
of average net assets. The Example should not be considered a representation of
future Fund performance or expenses, both of which may vary.
Shareholders should be aware that each Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Funds. In addition, the Funds do not
have a 12b-1 Plan. Unlike most other mutual funds, neither Fund pays directly
for transfer agency, pricing, custodial, auditing or legal services, nor does
either Fund pay directly any general administrative or other significant
operating expenses. The Advisor pays all of the expenses of each Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses. <TABLE> <CAPTION>
Shareholder Transaction Expenses
Florida Street Florida Street
Bond Fund Growth Fund
<S> <C> <C>
Sales Load Imposed on Purchases NONE NONE
Sales Load Imposed on Reinvested Dividends NONE NONE
Deferred Sales Load NONE NONE
Redemption Fees NONE NONE
Exchange Fees NONE NONE
Annual Fund Operating Expenses1
(as a percentage of average net assets)
Management Fees (after fee waiver with respect to the
Bond Fund) 0.75% 1.35%
12b-1 Charges NONE NONE
Other Expenses 0.00% 0.00%
Total Fund Operating Expenses (after fee waiver with
respect to the Bond Fund)) 2 0.75% 1.35%
</TABLE>
1 Each Fund's total operating expenses are equal to the management fee paid to
the Advisor because the Advisor pays all of the Fund's operating expenses
(except as described above). 2 The Adviser has voluntarily agreed to waive fees
for the Bond Fund for the fiscal year ending October 31, 1999 to the extent
necessary to maintain total operating expenses as indicated. For the fiscal year
ended October 31, 1998, management fees and total fund operating expenses,
respectively, were 1.10% of average net assets, absent any reimbursement. The
expense information for the Growth Fund has been restated to reflect current
fees.
The tables above are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
each Fund.
Example
You would pay the following expenses on a $1,000 investment,
assuming(1) 5% annual return and (2)redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
------ --------- ------- --------
Florida Street Bond Fund $08 $24 $42 $93
Florida Street Growth Fund $14 $43 $74 $162
FINANCIAL HIGHLIGHT
The following condensed supplementary financial information for the
period August 4, 1997 (commencement of operations) through October 31, 1997 and
the fiscal year ended October 31, 1998, for the Florida Street Bond Fund and for
the period August 6, 1997 (commencement of operations) to October 31, 1997 and
the fiscal year ended October 31, 1998, for the Florida Street Growth Fund, 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.
<TABLE>
Florida Street Bond Fund
Financial Highlights
<S> <C> <C>
For the year For the period
Selected Per Share Data ended ended
October 31, 1998 October 31, 1997 (b)
Net asset value, beginning of period $9.95 $10.00
---------------- -------------
Income from investment operations
Net investment income 0.85 0.21
Net realized and unrealized gain(loss) (0.79) (0.12)
---------------- -------------
Total from investment operations 0.06 0.09
---------------- -------------
Less Distributions
From net investment income (0.85) (0.02)
From net realized gain(loss) --- (0.12)
---------------- -------------
Total distributions (0.85) (0.14)
---------------- -------------
Net asset value, end of period $9.16 $9.95
================ =============
Total Return 0.33% 3.69% (a)
Ratios and Supplemental Data
Net assets, end of period (000) $19,929 $7,289
Ratio of expenses to average net assets 0.75% 0.53% (a)
Ratio of expenses to average net assets
before reimbursement 1.10% 1.10% (a)
Ratio of net investment income to average net assets 8.73% 3.95% (a)
Ratio of net investment income to average net assets
before reimbursement 8.38% 3.38% (a)
Portfolio turnover rate 10.45% 60.55% (a)
<FN>
(a) Annualized
(b) For the period August 4, 1997 (commencement of operations) to October 31,
1997
</FN>
</TABLE>
<TABLE>
<CAPTION>
Florida Street Growth Fund
Financial Highlights
<S> <C> <C>
For the year For the period
Selected Per Share Data ended ended
October 31, 1998 October 31, 1997 (b)
Net asset value, beginning of period $ 10.19 $ 10.00
------------ -------------
Income from investment operations
Net investment income 0.02 0.03
Net realized and unrealized gain (loss) (1.01) 0.16
------------ -------------
Total from investment operations (0.99) 0.19
------------ -------------
Less Distributions
From net investment income (0.01) -
From net realized gain (loss) (0.03) -
------------ -------------
Total Distributions (0.04) -
------------ -------------
Net asset value, end of period $ 9.16 $ 10.19
============ =============
Total Return (9.73)% 7.97% (a)
Ratios and Supplemental Data
Net assets, end of period (000) $3,320 $2,117
Ratio of expenses to average net assets 1.25% 1.35% (a)
Ratio of expenses to average net assets
before reimbursement 1.35% 1.35% (a)
Ratio of net investment income to average net assets 0.21% 1.14% (a)
Ratio of net investment income to average net assets
before reimbursement 0.12% 1.14% (a)
Portfolio turnover rate 63.10% 0.87% (a)
<FN>
(a) Annualized
(b) August 6, 1997 (commencement of operations) to October 31, 1997 </FN>
</TABLE>
THE FUNDS
Florida Street Bond Fund and Florida Street Growth Fund (each a "Fund"
or collectively the "Funds") were organized as non-diversified series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on June 10, 1997.
Florida Street Bond Fund commenced operations on August 4, 1997 and Florida
Street Growth Fund commenced operations on August 6, 1997. This prospectus
offers shares of each Fund and each share represents an undivided, proportionate
interest in a Fund. The investment advisor to each Fund is CommonWealth
Advisors, Inc. (the "Advisor"). The Funds are referred to, and may conduct
business as, the "Florida Street Funds."
INVESTMENT OBJECTIVE AND STRATEGIES
Florida Street Bond Fund
The investment objective of the Florida Street Bond Fund is to provide
total return to its shareholders over the long term. The Advisor seeks to
achieve this objective by investing primarily in a portfolio of high yield,
non-investment grade securities issued in many of the world's securities
markets. Under normal circumstances, the Fund will invest at least 65% of its
total assets in bonds and other debt securities, and thus it is expected that
the Fund will generate a high level of current income. However, the Advisor will
also consider the potential for capital appreciation in making investments for
the Fund's portfolio, and may invest in preferred stock, convertible bonds and
other securities (including equity securities) without regard to yield
characteristics.
The Fund intends to invest in Brady bonds and other sovereign debt and
in high risk, lower quality debt securities commonly referred to as "junk
bonds", as well as in the debt securities of issuers located in emerging
markets. Junk bonds are regarded as predominantly speculative with respect to
the issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation. It is anticipated that the Fund's assets will primarily
be invested in high yield, non-investment grade debt securities of both
governmental and corporate issuers in both the major industrialized markets and
the so-called "emerging markets." The use of junk bonds, foreign securities
(particularly from emerging markets) and certain other investments and
investment techniques will subject the Fund to greater risk than is typical for
most bond funds. There also is additional risk because the Fund is
non-diversified. See "Investment Policies and Techniques" and "Risk
Considerations".
The Fund generally invests in securities which are rated BB or lower by
S&P or Baa or lower by Moody's or, if unrated, of comparable quality in the
opinion of the Advisor. Securities which are rated BB by S&P or Baa by Moody's
possess some speculative characteristics. A description of the rating categories
is contained in the Appendix herein. There is no lower limit with respect to the
rating categories for securities in which the Fund may invest. See "Risk
Factors: Risks of Investing In High Yield Securities ("Junk Bonds")" herein.
The Fund is not required to dispose of debt securities whose credit
quality declines at some point after the security is purchased; however, no more
than 25% of the Fund's assets will be invested at any time in securities rated
less than CCC by S&P or Caa by Moody's or, if unrated, of comparable quality in
the opinion of the Advisor. S&P's lowest rating for bonds is CI, which is
reserved for income bonds on which no interest is being paid, and D, which is
reserved for debt in default and in respect of which payment of interest or
repayment of principal is in arrears. Moody's lowest rating is C, which is
applied to bonds which have extremely poor prospects for ever attaining any real
investment standing. The Fund may, from time to time, purchase defaulted debt
securities if, in the opinion of the Advisor, the issuer may resume interest
payments in the near future. The Fund will not invest more than 15% of its total
assets (at the time of purchase) in defaulted debt securities, which may be
illiquid. Other than as set forth above, there is no restriction on the
percentage of the Fund's assets which may be invested in bonds of a particular
rating.
The Fund invests in debt obligations allocated among diverse markets
and denominated in various currencies, including multi-currency units such as
European Currency Units. The Fund may purchase securities that are issued by the
government or a company or financial institution of one country but denominated
in the currency (or multi-currency unit) of another country.
Florida Street Growth Fund
The investment objective of the Florida Street Growth Fund is to
provide total return to its shareholders over the long term. The Advisor seeks
to achieve this objective by investment primarily in a portfolio of equity
securities that the Advisor believes are undervalued by the market place.
However, the Fund may also invest in bonds and other debt securities that the
Advisor believes are consistent with the Fund's objective. Certain investments
eligible for purchase by the Fund entail risks. There also is additional risk
because the Fund is non-diversified. See "Investment Policies and Techniques"
and "Risk Considerations".
In searching for investments for the Fund, the Advisor employs a "value
style" that focuses on a low current price relative to the Advisor's view
regarding long-term future value. The Advisor gauges the ability of a company to
build long-term value while minimizing long-term investment risk, assesses the
quality and quantity of a company's resources, and estimates how those resources
might be converted into earnings over time.
General
For temporary defensive purposes under abnormal market or economic
conditions, either Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load registered investment companies or U.S.
government repurchase agreements. Either Fund may also invest in such
instruments at any time to maintain liquidity or pending selection of
investments in accordance with its policies. If a Fund acquires securities of
another investment company, the shareholders of the Fund will be subject to
additional management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, neither Fund can give any assurance that its investment objective
will be achieved. In addition, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund, and the Funds have no
operating history. Rates of total return quoted by a Fund may be higher or lower
than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques" and "Risk
Considerations" for a more detailed discussion of each Fund's investment
practices and the risks involved in such practices.
HOW TO INVEST IN THE FUND
Each Fund is "no-load" and shares of each Fund are sold directly to
investors on a continuous basis, subject to the following minimums: minimum
initial investment of $1,000 and minimum subsequent investments of $100. These
minimums may be waived by the Advisor for accounts participating in an automatic
investment program. Investors choosing to purchase or redeem their shares
through a broker/dealer or other institution may be charged a fee by that
institution. Investors choosing to purchase or redeem shares directly from the
Funds will not incur charges on purchases or redemptions. To the extent
investments of individual investors are aggregated into an omnibus account
established by an investment advisor, broker or other intermediary, the account
minimums apply to the omnibus account, not to the account of the individual
investor.
Initial Purchase
By Mail - You may purchase shares of each Fund by completing and
signing the investment application form which accompanies this Prospectus and
mailing it, in proper form, together with a check (subject to the above minimum
amounts) made payable to Florida Street Funds, and sent to the to the P.O. Box
listed below. If you prefer overnight delivery, use the overnight address listed
below.
U.S Mail Overnight:
Florida Street Funds Florida Street Funds
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
Please identify the Fund(s) in which you wish to invest. Your purchase of shares
of a Fund will be effected at the next share price calculated after receipt of
your investment.
By Wire - You may also purchase shares of a Fund by wiring federal funds from
your bank, which may charge you a fee for doing so. If money is to be wired, you
must call the Transfer Agent at 800-890-5344 to set up your account and obtain
an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
for Florida Street Funds D.D.A. # 486447600
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Funds, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Funds. Any delays which
may occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Funds or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Funds.
Additional Investments
You may purchase additional shares of either Fund at any time (subject
to minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to Florida Street Funds and should be sent to the above listed
address. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
Since the Funds are oriented to longer term investments, shares of the
Funds may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); 401(k) plans; qualified corporate pension and profit sharing
plans (for employees); tax deferred investment plans (for employees of public
school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Transfer Agent for the
procedure to open an IRA or SEP plan, as well as more specific information
regarding these retirement plan options. Consultation with an attorney or tax
advisor regarding these plans is advisable. Custodial fees for an IRA will be
paid by the shareholder by redemption of sufficient shares of the Funds from the
IRA unless the fees are paid directly to the IRA custodian. You can obtain
information about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Funds do
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Funds and the Funds' Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Funds. If your check or wire
does not clear, you will be responsible for any loss incurred by the Funds. If
you are already a shareholder, the Funds can redeem shares from any identically
registered account in the Funds as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Funds.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value next determined
after the redemption request has been received by the Transfer Agent in proper
order. Shareholders may receive redemption payments in the form of a check or
federal wire transfer. The proceeds of the redemption may be more or less than
the purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Funds reserve the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in a Fund at no charge by
mail. Your request should be addressed to:
Florida Street Funds
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, IN 46206-6110
"Proper order" means your request for a redemption must include your letter of
instruction, including the Fund name, account number, account name(s), the
address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the
Funds require that signatures be guaranteed by a bank or member firm of a
national securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of a Fund or Unified Fund Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in a Fund by
calling the Transfer Agent at (800) 890-5344. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Funds, the Transfer Agent and the Custodian are
not liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Funds or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Funds, although neither the Funds nor the Transfer Agent has
ever experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Funds by telephone, you may request a redemption or exchange by mail.
By Systematic Withdrawal Plan - As another convenience, the Funds offer
a Systematic Withdrawal Program whereby shareholders may request that a check
drawn in a predetermined amount be sent to them each month or calendar quarter.
A shareholders account must have Fund shares with a value of at least $10,000 in
order to start a systematic Withdrawal Program, and the minimum amount that may
be withdrawn each month or quarter under the Systematic Withdrawal program is
$100. This Program may be terminated by a shareholder or the Funds at any time
without charge or penalty and will become effective five business days following
receipt of your instructions. Shares will be sold within three business days
before month-end. A withdrawal under the Systematic Withdrawal Program involves
a redemption of shares, and may result in a gain or loss for federal income tax
purposes. In addition, if the amount withdrawn exceeds the dividends credited to
the shareholder's account, the account ultimately may be depleted.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) 890-5344. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Funds may suspend
redemptions or postpone payment dates.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund reserves the right to require any shareholder to redeem all
of his or her shares in a Fund on 30 days' written notice if the value of his or
her shares in the Fund is less than $1,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in each Fund to the minimum amount within the 30 day
period. Each share of each Fund is subject to redemption at any time if the
Board of Trustees determines in its sole discretion that failure to so redeem
may have materially adverse consequences to all or any of the shareholders of
the Funds.
SHARE PRICE CALCULATION
The value of an individual share in a Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Florida Street Growth Fund intends to distribute substantially all
of its net investment income as dividends to its shareholders on an annual
basis. The Florida Street Bond Fund intends to declare substantially all of its
net investment income as dividends to its shareholders on a daily basis and to
pay such dividends monthly. Each Fund intends to distribute its net long term
capital gains and its net short term capital gains at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
Each Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). By so
qualifying, a Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
For federal income tax purposes, dividends paid by each Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
Each Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from a Fund.
On the application or other appropriate form, the Funds will request
the shareholder's certified taxpayer identification number (social security
number for individuals) and a certification that the shareholder is not subject
to backup withholding. Unless the shareholder provides this information, each
Fund will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, a Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the applicable
Fund may make a corresponding charge against the account.
OPERATION OF THE FUNDS
Each Fund is a non-diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Funds.
Like other mutual funds, the Funds retain various organizations to perform
specialized services. The Funds retain CommonWealth Advisors, Inc., 247 Florida
Street, Baton Rouge, LA 70801 (the "Advisor") to manage the assets of each Fund.
The Florida Street Bond Fund is authorized to pay the Advisor a fee equal to an
annual average rate of 1.10% of the Fund's average daily net assets, and the
Florida Street Growth Fund is authorized to pay the Advisor a fee equal to an
annual average rate of 1.35% of the Fund's average daily net assets. Effective
November 1, 1997, and until further notice, the Advisor intends to waive a
portion of its management fee in order to reduce total operating expenses of the
Florida Street Bond Fund from 1.10% to .75%. The Advisor pays all of the
operating expenses of the Funds except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Funds' expenses, except those specified
above, are paid by the Advisor.
The Advisor, a Louisiana corporation, is an independent investment advisory
firm that has provided investment supervisory services and financial planning to
individuals, financial institutions, corporations, trusts, estates, charitable
organizations, and retirement plans since 1991. Walter A. Morales has been
responsible for the day-to-day management of the Florida Street Bond Fund since
its inception. Mr. Morales began privately managing individual common stocks in
1984, and has served as the Advisor's president and chief investment manager
since its founding in 1991. Mr. Morales has a Masters in Business Administration
and a B.S. degree in Chemistry from Louisiana State University and previously
worked as a Vice President and Senior Trust Investment Officer for Baton Rouge
Bank and Trust, and as an Investment Broker for A.G. Edwards and Sons, Inc.
Richard L. Chauvin, Jr. has been responsible for the day-to-day management of
the Florida Street Growth Fund since its inception. Mr. Chauvin is Senior Vice
President and Fund Manager of the Advisor. Prior to joining the Advisor in 1997,
he served for one year as Regional Director of Portfolio Management at Bank One
Investment Advisors ("BOIA"). From 1986 to 1996, he served as a Vice President,
portfolio manager and fund manager for Premier Investment Advisors which merged
into BOIA in 1996. His duties included managing a $100 million equity mutual
fund and numerous accounts for individuals and foundations. Mr. Chauvin received
a B.S. and M.S. in Finance from Louisiana State University in 1976 and 1978,
respectively.
The Advisor determines the securities to be held or sold by the Fund,
and the portion of the Fund's assets to be held uninvested. The Advisor always
follows the Fund's investment objectives, policies and restrictions and any
policies and instructions of the Board of Trustees.
The services of the Administrator, Transfer Agent and Distributor are
operating expenses paid by the Advisor (not the Fund). The Funds retain
AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Funds'
business affairs and provide each Fund with administrative services, including
all regulatory reporting and necessary office equipment, personnel and
facilities. For the Florida Street Bond Fund, the Administrator receives a
monthly fee from the Fund equal to an annual average rate of 0.050% of the
Fund's average daily net assets (subject to a minimum annual payment of
$25,000). For the Florida Street Growth Fund, the Administrator receives a
monthly fee from the Fund equal to an annual average rate of 0.10% of the Fund's
average daily net assets up to fifty million dollars, 0.075% of the Fund's
average daily net assets from fifty to one hundred million dollars and 0.050% of
the Fund's average daily net assets over one hundred million dollars (subject to
a minimum annual payment of $25,000). The Funds retain Unified Fund Services,
Inc., 431 N. Pennsylvania Street, Indianapolis, IN 46204(the "Transfer Agent")
to serve as transfer agent, dividend paying agent and shareholder service agent.
The Trust retains AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive,
Suite 200, Southlake, Texas 76092 (the "Distributor") to act as the principal
distributor of each Fund's shares.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
a Fund as a factor in the selection of brokers and dealers to execute Fund
transactions. The Advisor banks, bankers, 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.
RISK CONSIDERATIONS
Risks of Investing in High Yield Securities ("Junk Bonds"). Lower-rated
long-term securities, including securities rated from BB to D by S&P or Ba to C
by Moody's or, if unrated, of comparable quality in the opinion of the Advisor,
will usually offer higher yields than higher-rated securities. However, there is
more risk associated with these investments. This is because of the reduced
creditworthiness and increased risk of default that these securities carry.
Lower-rated long-term securities generally tend to reflect short-term corporate
and market developments to a greater extent than higher-rated securities which
react primarily to fluctuations in the general level of interest rates. Lower
rated long-term securities also involve greater sensitivity to significant
increases in interest rates. Short-term corporate and market developments
affecting the prices and liquidity of lower-rated long-term securities could
include adverse news impacting major issues or underwriters or dealers in
lower-rated long-term or unrated securities. In addition, since there are fewer
investors in lower-rated long-term securities, it may be harder to sell
securities at an optimum time.
An economic downturn may adversely affect the value of some lower-rated
long-term bonds. Such a downturn may especially affect highly leveraged
companies or companies in cyclically sensitive industries, where deterioration
in a company's cash flow may impair its ability to meet its obligation to pay
principal and interest to bondholders in a timely fashion. From time to time, as
a result of changing conditions, issuers of lower-rated long-term bonds may seek
or may be required to restructure the terms and conditions of the securities
they have issued. As a result of these restructurings, holders of lower-rated
long-term securities may receive less principal and interest than originally
expected at the time such bonds were purchased. In the event of a restructuring,
the Funds may bear additional legal or administrative expenses in order to
maximize recovery from an issuer. The secondary trading market for lower-rated
long-term bonds is generally less liquid than the secondary trading market for
higher-rated bonds.
The risk of loss due to default by the issuer is significantly greater
for the holders of high yield securities because such securities are generally
unsecured and are often subordinated to other obligations of the issuer. During
an economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress and
may not have sufficient revenues to meet their interest payment obligations. An
issuer's ability to service its debt obligations may also be adversely affected
by specific corporate developments, its inability to meet specific projected
business forecasts, or the unavailability of additional financing.
Factors adversely affecting the market value of high yield and other
Fund securities will adversely affect the corresponding Fund's net asset value.
In addition, a Fund may incur additional expenses to the extent it is required
to seek recovery upon a default in the payment of principal or interest on its
Fund holdings.
Risks of Investing in Foreign Securities. Investors should realize that
investing in securities of foreign issuers involves considerations not typically
associated with investing in securities of companies organized and operated in
the United States. Investments may be adversely affected by changes in political
or social conditions, diplomatic relations, confiscatory taxation,
expropriation, nationalization, limitation on the removal of funds or assets, or
imposition of (or change in) exchange control or tax regulations in foreign
countries. In addition, changes in government administrations or economic or
monetary policies in the United States or abroad could result in appreciation or
depreciation of Fund securities and could favorably or unfavorably affect a
Fund's operations. Furthermore, the economies of individual foreign nations may
differ from the U.S. economy, whether favorably or unfavorably, in areas such as
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. It may also be more
difficult to obtain and enforce a judgment against a foreign issuer. In general,
less information is publicly available with respect to foreign issuers than is
available with respect to U.S. companies. Most foreign companies are also not
subject to the uniform accounting and financial reporting requirements
applicable to issuers in the United States. Any foreign investments made by a
Fund must be made in compliance with U.S. and foreign currency restrictions and
tax laws restricting the amounts and types of foreign investments.
Because foreign securities generally are denominated and pay dividends
or interest in foreign currencies, the value of the net assets of a Fund as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates. In order to protect against uncertainty in the level of future
foreign currency exchange rates, each Fund is also authorized to enter into
certain foreign currency exchange transactions. Furthermore, a Fund's foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of U.S. companies. The settlement periods
for foreign securities, which are often longer than those for securities of U.S.
issuers, may affect Fund liquidity. Finally, there may be less government
supervision and regulation of securities exchanges, brokers and issuers in
foreign countries than in the United States.
Risks of Investing in Emerging Markets. The world's industrialized
markets generally include but are not limited to the following: Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland,
Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Singapore,
Spain, Sweden, Switzerland, the United Kingdom, and the United States. The
world's emerging markets generally include but are not limited to the following:
Argentina, Bolivia, Brazil, Bulgaria, Chile, China, Colombia, Costa Rica, the
Czech Republic, Ecuador, Egypt, Greece, Hungary, India, Indonesia, Israel, the
Ivory Coast, Jordan, Malaysia, Mexico, Morocco, Nicaragua, Nigeria, Pakistan,
Peru, the Philippines, Poland, Portugal, Romania, Russia, Slovakia, Slovenia,
South Africa, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Uruguay,
Venezuela, Vietnam and Zimbabwe.
Investment in securities of issuers based in underdeveloped emerging
markets entails all of the risks of investing in securities of foreign issuers
outlined in this section to a heightened degree. These heightened risks include:
(i) greater risks of expropriation, confiscatory taxation, nationalization, and
less social, political and economic stability; (ii) the smaller size of the
market for such securities and a low or nonexistent volume of trading, resulting
in lack of liquidity and in price volatility; (iii) certain national policies
which may restrict a Fund's investment opportunities including restrictions on
investing in issuers or industries deemed sensitive to relevant national
interests; and (iv) in the case of Eastern Europe and in China and other Asian
countries, the absence of developed capital markets and legal structures
governing private or foreign investment and private property and the possibility
that recent favorable economic and political developments could be slowed or
reversed by unanticipated events. So long as the Communist Party continues to
exercise a significant or, in some countries, dominant role in Eastern European
countries or in China and other Asian countries, investments in such countries
will involve risks of nationalization, expropriation and confiscatory taxation.
The Communist governments of a number of Eastern European countries expropriated
large amounts of private property in the past, in many cases without adequate
compensation. There may be no assurance that such expropriation will not occur
in the future in either the Eastern European countries or other countries. In
the event of such expropriation, a Fund could lose a substantial portion of any
investments it has made in the affected countries. Further, no accounting
standards exist in Eastern European countries. Finally, even though certain
Eastern European currencies may be convertible into U.S. dollars, the conversion
rates may be artificial to the actual market values and may be adverse to Fund
shareholders.
In addition to brokerage commissions, custodial services and other
costs relating to investment in emerging markets are generally more expensive
than in the United States. Such markets have been unable to keep pace with the
volume of securities transactions, making it difficult to conduct such
transactions. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a security due to settlement problems
could result either in losses to the Fund due to subsequent declines in the
value of the security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
Risks of Investings in Options and Futures Contracts. Options and
futures contracts ("Futures") can be volatile investments, and involve certain
risks. Options and Futures may fail as hedging techniques in cases where the
price movements of the securities underlying the options and Futures do not
follow the price movements of the portfolio securities subject to the hedge.
Successful use by a Fund of options and Futures will be subject to the Advisor's
ability to correctly predict movement in the direction of interest rates, the
security market generally or of a particular industry, and other economic
factors. This requires different skills and techniques than predicting changes
in the price of individual securities. A Fund could experience losses if it can
not close out its positions because of an illiquid secondary market. In
addition, losses from certain Futures transactions are potentially unlimited.
See the sections describing options and futures under "Investment Policies and
Techniques" (page ____) for additional risk information.
Non-Diversified Investment Company. Each Fund is classified as a
"non-diversified" investment company and, as such, each may invest a greater
proportion of its assets in the securities of a smaller number of issuers and
therefore may be subject to greater market and credit risk than a more broadly
diversified fund. As each Fund intends to comply with Subchapter M of the Code,
each Fund may invest up to 50% of its assets at the end of each quarter of its
fiscal year in as few as two issuers, provided that no more than 25% of the
assets are invested in one issuer. With respect to the remaining 50% of its
assets at the end of each quarter, it may invest no more than 5% in one issuer.
Additional Investment Information. Neither Fund will have more than 25% of
the current value of its total assets invested in any single industry. This
restriction does not apply to debt securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
The Advisor (not the Funds) may pay certain financial institutions
(which may include banks, brokers, securities dealers and other industry
professionals) a "servicing fee" for performing certain administrative functions
for Fund shareholders to the extent these institutions are allowed to do so by
applicable statute, rule or regulation.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that each Fund may purchase or employ.
Equity Securities. As used herein, "equity securities" are defined as
common stock, preferred stock, trust or limited partnership interests, rights
and warrants to subscribe to or purchase such securities, sponsored or
unsponsored American Depository Receipts ("ADRs"), European Depository Receipts
("EDR"), Global Depository Receipts ("GDRs"), and convertible securities
consisting of debt securities or preferred stock that may be converted into
common stock or that carry the right to purchase common stock. Common stocks,
the most familiar type, represent an equity (ownership) interest in a
corporation.
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. Smaller companies are especially sensitive to these factors.
In addition to investing directly in common stocks, each Fund may
invest in S&P Depositary Receipts ("SPDRs") and similar instruments. SPDRs are
shares of a publicly traded unit investment trust which owns the stocks included
in the applicable S&P Index such as the S&P 500 Index or the S&P Mid Cap 400
Index. Changes in the price of SPDRs track the movement of the associated Index
relatively closely.
Each Fund stresses four criteria in selecting equity investments:
(1) A strong financial position, as measured not only by balance sheet data
but also measured by off-balance sheet liabilities and contingencies (as
disclosed in footnotes to financial statements and as determined through
research of public information)
(2) Responsible management and control groups, as gauged by managerial
competence as operators and investors as well as by an apparent absence of
intent to profit at the expense of stockholders.
(3) Availability of comprehensive and meaningful financial and related
information. The availability of financial statements and information which
provide the Advisor with reliable benchmarks to aid in understanding the
business, its values and its dynamics.
(4) Availability of the security at a market price which the Advisor
believes is at a substantial discount to the Advisor's estimate of what the
issuer is worth as a private company or as a takeover or merger and acquisition
candidate, or based on other measures the Advisor believes reflect the
security's value such as price to earnings, price to sales, price to cash flow,
price to book value.
Debt Securities. Each Fund may buy debt securities of all types and
qualities issued by both domestic and foreign issuers. Bonds and other debt
instruments are used by issuers to borrow money from investors. The issuer pays
the investor a fixed or variable rate of interest, and must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.
Debt securities, loans, and other direct debt have varying degrees of quality
and varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.
Lower-quality foreign government securities are often considered to be
speculative and involve greater risk of default or price changes, or they may
already be in default. These risks are in addition to the general risks
associated with foreign securities.
Each Fund intends to invest for the most part in debt securities which
the Advisor believes will provide above-average current yields or yields to
maturity. When selecting debt instruments, the Advisor stresses:
(1) Strong investor protection in the form of covenants contained in loan
agreements and other contracts that establish the terms of the debt instrument;
and
(2) Appraisals of the business' financial position and operating outlook,
as well as the Advisor's appraisal of values that might be realized in a
reorganization or upon the sale of assets or the liquidation of the issuer.
The Advisor will also use its best judgment as to the most favorable
range of maturities. In general, a Fund will acquire debt issues which have a
senior position in an issuer's capitalization.
Preferred Stock. Preferred stock has a preference in liquidation (and,
generally dividends) over common stock but is subordinated in liquidation to
debt. As a general rule the market value of preferred stocks with fixed dividend
rates and no conversion rights varies inversely with interest rates and
perceived credit risk, with the price determined by the dividend rate. Some
preferred stocks are convertible into other securities, (for example, common
stock) at a fixed price and ratio or upon the occurrence of certain events. The
market price of convertible preferred stocks generally reflects an element of
conversion value. Because many preferred stocks lack a fixed maturity date,
these securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks. All preferred stocks
are also subject to the same types of credit risks of the issuer as corporate
bonds. In addition, because preferred stock is junior to debt securities and
other obligations of an issuer, deterioration in the credit rating of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar yield characteristics. Preferred stocks may be
rated by S&P and Moody's although there is no minimum rating which a preferred
stock must have (and a preferred stock may not be rated) to be an eligible
investment for a Fund. The Advisor expects, however, that generally the
preferred stocks in which a Fund invests will be rated at least CCC by S&P or
Caa by Moody's or, if unrated, of comparable quality in the opinion of the
Advisor. Preferred stocks rated CCC by S&P are regarded as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations and represent the highest degree of speculation among securities
rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be
in arrears on dividend payments. Moody's rating with respect to preferred stocks
does not purport to indicate the future status of payments of dividends.
Convertible Securities. A convertible security is a bond or preferred
stock which may be converted at a stated price within a specific period of time
into a specified number of shares of common stock of the same or different
issuer. Convertible securities are senior to common stock in a corporation's
capital structure, but usually are subordinated to non-convertible debt
securities. While providing a fixed income stream generally higher in yield than
in the income derived from a common stock but lower than that afforded by a
non-convertible debt security, convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible.
In general, the market value of a convertible security is the higher of
its investment value (its value as a fixed income security) or its conversion
value (the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise; however, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.
Warrants. Warrants are instruments which entitle the holder to buy
underlying equity securities at a specific price for a specific period of time.
A warrant tends to be more volatile than its underlying securities and ceases to
have value if it is not exercised prior to its expiration date. In addition,
changes in the value of a warrant do not necessarily correspond to changes in
the value of its underlying securities.
Mortgage-Backed Securities. Each Fund may invest in mortgage-backed
securities and derivative mortgage-backed securities, including "principal only"
and "interest only" components. Mortgage-backed securities are securities that
directly or indirectly represent a participation in, or are secured by and
payable from, mortgage loans on real property. These securities have special
risk characteristics. The Advisor intends to invest in these securities only
when it believes, after analysis, that there is unlikely to ever be a default by
either the issuer or the guarantor of these securities. These securities do,
nonetheless, entail considerable market risk (i.e., fluctuations in quoted
prices for the instruments), interest rate risk, prepayment risk and inflation
risk.
The Funds may invest in residential mortgage-backed securities
representing participation interests in pools of one-to-four family residential
mortgage loans originated by private mortgage originators including stripped
mortgage-backed securities ("SMBS") of the U.S. Government and certain of its
agencies and instrumentalities. An SMBS is described as "stripped" because some
of the equity or interest components of the security is removed from the
package. The Fund will not invest in non-investment grade subordinated classes
of residential mortgage-backed securities and may invest in commercial
mortgage-backed securities.
SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool of
mortgage assets. A common type of SMBS will have at least one class receiving
none or only a small portion of the interest and all or a larger portion of the
principal from the mortgage assets, while the other classes will receive
primarily or entirely interest and none or only a small portion of the
principal.
Prepayments of principal generally may be made at any time without
penalty on residential mortgage-backed securities. Prepayment rates are
influenced by changes in current interest rates and a variety of economic,
geographic, social and other factors. Changes in prepayment rates may change the
yield to maturity of the security and amounts available for reinvestment from
such securities by the Fund are likely to be greater during periods of
relatively low or declining interest rates and therefore are likely to be
reinvested at lower rates than during a period of relatively high interest
rates. As a result, the high credit quality of many of these securities may
provide little or no protection against loss in market value. Due to the
unprecedented volatility of prepayment and interest rates during the past two
years, many mortgage-backed securities have experienced substantial losses in
market value. The Fund's Advisor believes that many of these securities are
currently trading at prices below their inherent value on a risk-adjusted basis
and believes that selective purchases by the Fund could provide high yield and
total return in comparison to risk levels.
Current federal income tax law requires that companies such as the
Funds which seek to qualify for pass-through federal income tax treatment as
regulated investment companies distribute substantially all of their net
investment income each year, including non-cash income such as income from
principal only mortgage-backed securities. Accordingly, the Fund may be required
to distribute to its shareholders each year the interest it is deemed to earn on
principal only mortgage-backed securities even though it receives no cash
interest payments.
Asset-Backed Securities. Each Fund may invest in asset-backed
securities that, through the use of trusts and special purpose vehicles, are
securitized with various types of assets, such as automobile receivables, credit
card receivables and home-equity loans in pass-through structures similar to the
mortgage-related securities described above. In general, the collateral
supporting asset-backed securities is of shorter maturity than the collateral
supporting mortgage loans and is less likely to experience substantial
prepayments. However, asset-backed securities are not backed by any governmental
agency.
U.S. Government Securities are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S.
government. Not all U.S. government securities are backed by the full faith and
credit of the United States. For example, securities issued by the Farm Credit
Banks or by the Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under certain
circumstances. However, securities issued by other agencies or instrumentalities
are supported only by the credit of the entity that issued them.
ADRs, GDRs and EDRs are certificates evidencing ownership of shares of
a foreign-based issuer held in trust by a bank or similar financial institution.
Designed for use in U.S. and European securities markets, respectively, ADRs,
GDRs and EDRs are alternatives to the purchase of the underlying securities in
their national markets and currencies. ADRs, GDRs and EDRs are subject to the
same risks as the foreign securities to which they relate. See "Risks of
Investing in Foreign Securities" herein.
Puts. Each Fund may purchase bonds or notes together with the right to
resell them at an agreed price or yield within a specified period prior to
maturity. This right to resell is known as a put. The aggregate price paid for
securities with puts may be higher than the price which otherwise would be paid.
Consistent with the investment objectives of the Fund and subject to the
supervision of the Trustees of the Fund, the purpose of this practice is to
permit a Fund to be fully invested in securities while maintaining the necessary
liquidity to purchase securities on a when-issued basis, to meet unusually large
redemptions, to purchase at a later date securities other than those subject to
the put and to facilitate the Advisor's ability to manage the Fund actively. The
principal risk of puts is that the put writer may default on its obligation to
repurchase. The Advisor will monitor each writer's ability to meet its
obligations under puts. The amortized cost method is used by the Funds to value
securities with maturities of less than 60 days; when these securities are
subject to puts separate from the underlying securities, no value is assigned to
the puts. The cost of any such put is carried as an unrealized loss from the
time of purchase until it is exercised or expires.
Zero Coupon Securities. Each Fund may invest in zero coupon securities
which are debt securities issued or sold at a discount from their face value
which do not entitle the holder to any periodic payment of interest prior to
maturity or a specified redemption date (or cash payment date). These involve
risks that are similar to those of other debt securities, although they may be
more volatile, and certain zero coupon securities move in the same direction as
interest rates. The amount of the discount varies depending on the time
remaining until maturity or cash payment date, prevailing interest rates,
liquidity of the security and perceived credit quality of the issuer. Zero
coupon securities also may take the form of debt securities that have been
stripped of their unmatured interest coupons, the coupons themselves and
receipts or certificates representing interests in such stripped debt
obligations and coupons. The market prices of zero coupon securities generally
are more volatile than the market prices of interest-bearing securities and are
likely to respond to a greater degree to changes in interest rates than
interest-bearing securities having similar maturities and credit qualities.
STRIPS. The Federal Reserve creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the coupon
payments and the principal payment from an outstanding Treasury security and
selling them as individual securities. To the extent a Fund purchases the
principal portion of the STRIP, the Fund will not receive regular interest
payments. Instead they are sold at a deep discount from their face value. A Fund
will accrue income on such STRIPS for tax and accounting purposes, in accordance
with applicable law, which income is distributable to shareholders. Because no
cash is received at the time such income is accrued, a Fund may be required to
liquidate other Fund securities to satisfy its distribution obligations. Because
the principal portion of the STRIP does not pay current income, its price can be
very volatile when interest rates change. In calculating its dividend, a Fund
takes into account as income a portion of the difference between the principal
portion of the STRIP's purchase price and its face value.
Floating Rate Bonds may have interest rates that move in tandem with a
benchmark, helping to stabilize their prices.
Sovereign and Supranational Debt Obligations. Each Fund may invest
without limitation in debt instruments issued or guaranteed by foreign
governments, agencies, and supranational organizations ("sovereign debt
obligations"). These securities, especially sovereign debt obligations of
developing countries, may involve a high degree of risk, and may be in default
or present the risk of default. The issuer of the obligation or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors.
Brady Bonds. "Brady bonds" are bonds issued as a result of a
restructuring of a country's debt obligations to commercial banks under the
"Brady plan." Brady bonds have been issued by the governments of Argentina,
Costa Rica, Mexico, Nigeria, Uruguay, Venezuela, Brazil and the Philippines, as
well as other emerging market countries. Most Brady bonds are currently rated
below BBB by S&P or Baa by Moody's. While the Advisor is not aware of the
occurrence of any payment defaults on Brady bonds, investors should recognize
that these debt securities have been issued only recently and, accordingly, do
not have a long payment history. Brady bonds may be collateralized or
uncollateralized, are issued in various currencies (primarily the U.S. dollar)
and are actively traded in the secondary market for Latin American debt.
Rule 144A Securities are securities in the United States that are not
registered for sale under Federal securities laws but which can be resold to
institutions under SEC Rule 144A. Provided that a dealer or institutional
trading market in such securities exists, these restricted securities are
treated as exempt from the 15% limit on illiquid securities. Under the
supervision of the Board of Trustees of each Fund, the Advisor determines the
liquidity of restricted securities and, through reports from the Advisor, the
Board will monitor trading activity in restricted securities. If institutional
trading in restricted securities were to decline, the liquidity of a Fund could
be adversely affected.
When-Issued and Delayed Delivery Securities. Each Fund may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Fund until
settlement takes place. The Fund maintains with the Custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments.
Repurchase Agreements. In a repurchase agreement, a Fund buys a
security at one price and simultaneously agrees to sell it back at a higher
price at a future date. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
Reverse Repurchase Agreements. In a reverse repurchase agreement, a
Fund temporarily transfers possession of a Fund instrument to another party in
return for cash. This could increase the risk of fluctuation in the Fund's yield
or in the market value of its assets. A reverse repurchase agreement is a form
of borrowing and will be counted towards each Fund's borrowing restrictions. See
"Leverage" below.
Investment Companies. The Funds may invest without limitation in other
registered investment companies. With respect to certain countries in which
capital markets are either less developed or not easily accessed, investments by
each Fund may be made through investment in other registered investment
companies that in turn are authorized to invest in the securities of such
countries. Investment in other investment companies is limited in amount by the
Investment Company Act of 1940, as amended (the "1940 Act"), will involve the
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies and may result in a duplication of fees and expenses.
Securities Lending. Each Fund may lend securities to parties such as
broker-dealers, banks, or institutional investors. Securities lending allows the
Fund to retain ownership of the securities loaned and, at the same time, to earn
additional income. Since there may be delays in the recovery of loaned
securities, or even a loss of rights in collateral supplied, should the borrower
fail financially, loans will be made only to parties whose creditworthiness has
been reviewed and deemed satisfactory by the Advisor. Furthermore, they will
only be made if, in the judgment of the Advisor, the consideration to be earned
from such loans would justify the risk.
The Advisor understands that it is the current view of the staff of the
Securities and Exchange Commission ("SEC") that a Fund may engage in loan
transactions only under the following conditions: (1) a Fund must receive 100%
collateral in the form of cash, cash equivalents (e.g., U.S. Treasury bills or
notes) or other high grade liquid debt instruments from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, the Fund must be able to terminate the loan
at any time; (4) the Fund must receive reasonable interest on the loan or a flat
fee from the borrower, as well as amounts equivalent to any dividends, interest,
or other distributions on the securities loaned and to any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) the Board of Trustees must be able to vote proxies on the
securities loaned, either by terminating the loan or by entering into an
alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security
in which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
Leverage. Each Fund may borrow up to one-third of the value of its
total assets, from banks or through the use of reverse repurchase agreements, to
increase its holdings of Fund securities. Under the 1940 Act, each Fund is
required to maintain continuous asset coverage of 300% with respect to such
borrowings and to sell (within three days) sufficient Fund holdings to restore
such coverage if it should decline to less than 300% due to market fluctuations
or otherwise, even if such liquidations of a Fund's holdings may be
disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of each Fund's securities and the
corresponding Fund's net asset value and money borrowed by a Fund will be
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances) which may or may not exceed
the income received from the securities purchased with borrowed funds.
Floating Rate, Inverse Floating Rate and Index Obligations. Each Fund
may invest without limitation in debt securities with interest payments or
maturity values that are not fixed, but float in conjunction with (or inversely
to) an underlying index or price. These floating rate, inverse floating rate and
index obligations are considered to be instruments which are commonly known as
derivatives. They may be backed by U.S. Government or corporate issuers, or by
collateral such as mortgages. In certain cases, a change in the underlying index
or price may have a leveraging effect on the periodic coupon payments, creating
larger possible swings in the prices of such securities than would be expected
when taking into account their maturities alone. The indices and prices upon
which such securities can be based include interest rates, currency rates and
commodities prices. The Fund may invest in instruments whose value is computed
based on a multiple of the change in price or value of an asset (or of an index
of or relating to assets), provided the relevant asset or assets are eligible
for investment by the Fund. To the extent a Fund invests in instruments whose
value is computed based on such a multiple, a leverage factor is involved, which
can result in high volatility and significant losses. See "Derivatives" on pages
of the Prospectus.
Floating rate securities pay interest according to a coupon which is
reset periodically. The reset mechanism may be formula based, or reflect the
passing through of floating interest payments on an underlying collateral pool.
The coupon is usually reset daily, weekly, monthly, quarterly or semi-annually,
but other schedules are possible. Floating rate obligations generally exhibit a
low price volatility for a given stated maturity or average life because their
coupons adjust with changes in interest rates. If their underlying index is not
an interest rate, or the reset mechanism lags the movement of rates in the
current market, greater price volatility may be experienced.
Inverse floating rate securities are similar to floating rate
securities except that their coupon payments vary inversely with an underlying
index by use of a formula. Inverse floating rate securities tend to exhibit
greater price volatility than other floating rate securities. Because the
changes in the coupon are usually negatively correlated with changes in overall
interest rates, interest rate risk and price volatility on inverse floating rate
obligations can be high, especially if leverage is used in the formula. Index
securities pay a fixed rate of interest, but have a maturity value that varies
by formula, so that when the obligation matures, a gain or loss is realized. The
risk of index obligations depends on the volatility of the underlying index, the
coupon payment and the maturity of the obligation.
Trade Claims. Each Fund may invest in trade claims and options on trade
claims. Trade claims are interests in amounts owed to suppliers of goods or
services and are purchased from creditors of companies in financial difficulty.
For purchasers such as the Fund, trade claims offer the potential for profits
since they are often purchased at a significant discount from face value and,
consequently, may generate capital appreciation in the event that the market
value of the claim increases as the debtor's financial position improves or the
claim is paid. See "Options on Stocks, Bonds and Stock and Bond Indices," page
___, for additional information on option transactions.
An investment in trade claims is speculative and carries a high degree
of risk. Trade claims are illiquid securities which generally do not pay
interest and there can be no guarantee that the debtor will ever be able to
satisfy the obligation on the trade claim. The markets in trade claims are not
regulated by federal securities laws or the SEC. Because trade claims are
unsecured, holders of trade claims may have a lower priority in terms of payment
than certain other creditors in a bankruptcy proceeding.
Investment In Relatively New Issues. Each Fund may invest in the common
stock and debt securities of selected new issuers (i.e., those having continuous
operating histories of less than three years). If a Fund invests in debt
securities of new issuers, it will only be in those issues where the Advisor
believes there are strong contractual protections for the holder. If issuers
meet the investment criteria discussed above, the Funds may invest in securities
without respect to the age of the issuer. Investments in new issuers may carry
special risks and may be more speculative because such companies are relatively
unseasoned. Such companies may also lack sufficient resources, may be unable to
generate internally the funds necessary for growth and may find external
financing to be unavailable on favorable terms or even totally unavailable.
Those companies will often be involved in the development or marketing of a new
product with no established market, which could lead to significant losses.
Loan Participations and Assignments. Each Fund may invest in fixed and
floating rate loans arranged through private negotiations between a borrower and
one or more lending institutions. The majority of the Funds' investments in
loans in emerging markets is expected to be in the form of participations in
loans ("Participations") and assignments of portions of loans from third parties
("Assignments"). The Funds may also invest in loans, Participations or
Assignments of loans to borrowers located in the industrialized world.
Participations typically will result in a Fund having a contractual relationship
only with the lender, not the borrower. The Fund will have the right to receive
payments of principal, interest and any fees to which it is entitled only from
the lender selling the Participation and only upon receipt by the lender of the
payments from the borrower. In connection with purchasing Participations, the
Fund generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan, nor any rights of set-off
against the borrower, and the Fund may not directly benefit from any collateral
supporting the loan in which it has purchased the Participation. As a result,
the Fund will assume the credit risk of both the borrower and the lender that is
selling the Participation. In the event of the insolvency of the lender selling
the Participation, the Fund may be treated as a general creditor of the lender
and may not benefit from any set-off between the lender and the borrower. The
Funds will acquire Participations only if the lender interpositioned between the
Fund and the borrower is determined by the Advisor to be creditworthy. When a
Fund purchases Assignments from lenders, the Fund will acquire direct rights
against the borrower on the loan; however, since Assignments are arranged
through private negotiations between the potential assignees and assignors, the
rights and obligations acquired by the Fund as the purchaser of an Assignment
may differ from, and be more limited than, those held by the assigning lender.
A Fund may have difficulty disposing of Assignments and Participations.
The liquidity of such securities is limited and the Funds anticipate that such
securities could only be sold to a limited number of institutional investors.
The lack of a liquid secondary market could have an adverse impact on the value
of such securities and on the Funds' ability to dispose of particular
Assignments or Participations when necessary to meet liquidity needs or in
response to a specific economic event, such as a deterioration in the
creditworthiness of the borrower. The lack of a liquid secondary market for
Assignments and Participations also may make it more difficult in valuing the
Funds and, therefore, calculating the net asset value per share of the Funds.
All Assignments and Participations shall be considered to be illiquid securities
by the Funds. The investment by a Fund in illiquid securities, including
Assignments and Participations, is limited to a total of 15% of its net assets.
Derivatives. Each Fund may invest in various instruments that are
commonly known as derivatives. Generally, a derivative is a financial
arrangement, the value of which is based on, or "derived" from, a traditional
security, asset, or market index. Some "derivatives" such as mortgage-related
and other asset-backed securities are in many respects like any other
investment, although they may be more volatile or less liquid than more
traditional debt securities. There are, in fact, many different types of
derivatives and many different ways to use them. There are a range of risks
associated with those uses. Futures and options are commonly used for
traditional hedging purposes to attempt to protect a fund from exposure to
changing interest rates, securities prices, or currency exchange rates and as a
low cost method of gaining exposure to a particular securities market without
investing directly in those securities. However, some derivatives are used for
leverage, which tends to magnify the effects of an instrument's price changes as
market conditions change. Leverage involves the use of a small amount of money
to control a large amount of financial assets, and can in some circumstances,
lead to significant losses. The Advisor will use derivatives only in
circumstances where they offer the most efficient means of improving the
risk/reward profile of a Fund and when consistent with a Fund's investment
objective and policies. The use of derivatives for non-hedging purposes may be
considered speculative.
Foreign Currency Exchange Transactions. Each Fund may enter into
foreign currency exchange transactions to convert to and from different foreign
currencies and to convert foreign currencies to and from the U.S. dollar. A Fund
either enters into these transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or uses forward
contracts to purchase or sell foreign currencies. A forward foreign currency
exchange contract is an obligation by a Fund to purchase or to sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract. Forward foreign currency exchange contracts establish an
exchange rate at a future date. These contracts are transferable in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward foreign currency exchange
contract generally has no deposit requirement and is traded at a net price
without commission. Neither spot transactions nor forward foreign currency
exchange contracts eliminate fluctuations in the prices of a Fund's securities
or in foreign exchange rates, or prevent loss if the prices of these securities
should decline.
A Fund may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a Fund position or
an anticipated investment position. Although these transactions tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time they tend to limit any potential gain that might be realized should
the value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
Options on Foreign Currencies. Each Fund may write covered put and call
options and purchase put and call options on foreign currencies for the purpose
of protecting against declines in the U.S. dollar value of Fund securities and
against increases in the U.S. dollar cost of securities to be acquired. A Fund
may use options on foreign currency to cross-hedge, which involves writing or
purchasing options on one currency to hedge against changes in exchange rates
for a different, but related currency. As with other types of options, however,
the writing of an option on a foreign currency will constitute only a partial
hedge up to the amount of the premium received, and a Fund could be required to
purchase or sell a foreign currency at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may be used to
hedge against fluctuations in exchange rates although, in the event of exchange
rate movements adverse to a Fund's position, it may forfeit the entire amount of
the premium plus related transaction costs. In addition, a Fund may purchase
call options on a foreign currency when the investment Advisor anticipates that
the currency will appreciate in value.
There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If a Fund is unable to effect a
closing purchase transaction with respect to covered options it has written, the
Fund will not be able to sell the underlying currency or dispose of assets held
in a segregated account until it closes out the options or the options expire or
are exercised. Similarly, if the Fund is unable to close out options it has
purchased, it would have to exercise the options in order to realize any profit
and will incur transaction costs. The Funds pay brokerage commissions or spreads
in connection with options transactions.
As in the case of forward contracts, certain options on foreign
currencies are traded over-the-counter and involve liquidity and credit risks
which may not be present in the case of exchange-traded currency options. The
Funds' ability to terminate over-the-counter options ("OTC Options") will be
more limited than with exchange-traded options. It is also possible that
broker-dealers participating in OTC Options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position, the
Funds will treat purchased OTC Options and assets used to cover written OTC
Options as illiquid securities. With respect to options written with primary
dealers in U.S. government securities pursuant to an agreement requiring a
closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the repurchase formula.
Options on Stocks, Bonds and Stock and Bond Indices. Each Fund may
write and purchase covered and uncovered options on stocks or bonds. Each Fund
may also invest in options on trade claims, including the sale of put options on
trade claims. A call option gives the purchaser of the option the right to buy,
and obligates the writer to sell, the underlying security at the exercise price
at any time during the option period. Similarly, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy the
underlying security at the exercise price at any time during the option period.
A covered call option with respect to which a Fund owns the underlying security
sold by the Fund exposes the Fund during the term of the option to possible loss
of opportunity to realize appreciation in the market price of the underlying
security or to possible continued holding of a security which might otherwise
have been sold to protect against depreciation in the market price of the
security. A covered put option sold by a Fund exposes the Fund during the term
of the option to a decline in price of the underlying security. When a Fund
sells a put option on a trade claim, the Fund is required to purchase the trade
claim if the holder of the option exercises his right to sell the claim to the
Fund. Therefore, the Fund will segregate with the Custodian liquid securities in
an amount at all times equal to or exceeding the Fund's commitment with respect
to these instruments.
Each Fund may purchase and write put and call options on stock or bond
indices listed on domestic and foreign stock exchanges, in lieu of direct
investment in the underlying securities or for hedging purposes. A stock or bond
index fluctuates with changes in the market values of the securities included in
the index. Options on securities indices are generally similar to options on
stocks except that the delivery requirements are different. Instead of giving
the right to take or make delivery of securities at a specified price, an option
on a stock or bond index gives the holders the right to receive a cash "exercise
settlement amount" equal to (a) the amount, if any, by which the fixed exercise
price of the option exceeds (in the case of a put) or is less than (in the case
of a call) the closing value of the underlying index on the date of the
exercise, multiplied by (b) a fixed "index multiplier."
Futures Contracts on Stock and Bond Indices. Each Fund may enter into
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of domestic or foreign securities
("Futures Contracts"). This investment technique may be used as a low cost
method of gaining exposure to a particular securities market without investing
directly in those securities or to hedge against anticipated future changes in
general market prices which otherwise might either adversely affect the value of
securities held by the Fund or adversely affect the prices of securities which
are intended to be purchased at a later date for the Fund. A Futures Contract
may also be entered into to close out or offset an existing futures position.
When used for hedging purposes, each transaction in Futures Contracts
involves the establishment of a position which will move in a direction opposite
to that of the investment being hedged. If these hedging transactions are
successful, the futures position taken for the Fund will rise in value by an
amount which approximately offsets the decline in value of the portion of the
Fund's investments that is being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized. The risks of Futures Contracts also include
a potential lack of liquidity in the secondary market and incorrect assessments
of market. The loss from investing in Futures Contracts is potentially
unlimited. Brokerage costs will be incurred and "margin" will be required to be
posted and maintained as a good faith deposit against performance of obligations
under Futures Contracts written for a Fund. A Fund may not purchase or sell a
Futures Contract, or purchase an option on a Futures Contract, for non-hedging
purposes if immediately thereafter its aggregate outstanding margin deposits and
premiums on such contracts and options would exceed 5% of the market value of
the Fund's total assets.
Options on Futures Contracts. Each Fund may invest in options on
futures contracts for hedging purposes. There can be no assurance that the use
of these Fund strategies will be successful. The risks associated with options
on futures contracts are similar to those risks associated with futures
contracts and options on stocks, bonds and indices.
Asset Coverage. To assure that a Fund's use of futures and related
options, as well as when-issued and delayed-delivery securities and foreign
currency exchange transactions, are not used to achieve investment leverage, a
Fund will cover such transactions, as required by the SEC, either by owning the
underlying securities, entering into an offsetting transaction, or by
segregating with the Fund's custodian liquid securities in an amount at all
times equal to or exceeding the Fund's commitment with respect to these
instruments or contracts.
Short Sales. Each Fund may sell a security short in anticipation of a
decline in the market value of the security. When a Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security in order to deliver it to the buyer. The Fund
must replace the borrowed security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. The Fund will incur a loss as a result of the short sale if
the price of the security increases between the date of the short sale and the
date on which the Fund replaces the borrowed security. The Fund will realize a
profit if the security declines in price between those dates.
In connection with its short sales, a Fund will be required to maintain
a segregated account with its Custodian of cash or high grade liquid debt assets
equal to the market value of the securities sold less any collateral deposited
with its broker. However, the segregated account and deposits will not
necessarily limit the Fund's potential loss on a short sale, which is unlimited.
Illiquid Securities. Each Fund may contain illiquid securities.
Illiquid securities generally include securities which cannot be disposed of
promptly and in the ordinary course of business without taking a reduced price.
Securities may be illiquid due to contractual or legal restrictions on resale or
lack of a ready market. The following securities are considered to be illiquid:
repurchase agreements maturing in more than seven days, nonpublicly offered
securities and restricted securities. Neither Fund will invest more than 15% of
its net assets in illiquid securities.
General. Each Fund may invest up to 5% of its net assets in each of the
following: municipal bonds, certificates of deposit, time deposits and banker's
acceptances.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
applicable Fund. The investment objective of each Fund may be changed without
the affirmative vote of a majority of the outstanding shares of the Fund. Any
such change may result in the Fund having an investment objective different from
the objective which the shareholders considered appropriate at the time of
investment in the Fund.
Fund Turnover. Neither Fund intends to purchase or sell securities for
short term trading purposes. However, if the objectives of a Fund would be
better served, short-term profits or losses may be realized from time to time.
To the extent either Fund has high portfolio turnover, it will generally incur
higher brokerage commissions than those incurred by a fund with a lower
portfolio turnover rate, and the higher turnover rate may result in the
realization for federal tax purposes of more net capital gains, which may be
ordinary income.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of a Fund have equal voting rights and liquidation
rights.
Shareholder inquiries should be made by telephone to 800-890-5344, or
by mail, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Funds could be adversely
affected if the computer systems used by the Advisor, Administrator or other
service providers to the Funds do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Issue." The Advisor and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by the Funds' major service
providers. At this time, however, there can be no assurance that these steps
will be sufficient to avoid any adverse impact on the Funds. In addition, the
Advisor cannot make any assurances that the Year 2000 Issue will not affect the
companies in which the Funds invest or worldwide markets and economies.
PERFORMANCE INFORMATION
Each Fund may periodically advertise "average annual total return." The
"average annual total return" of a Fund refers to the average annual compounded
rate of return over the stated period that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of "average annual total return" assumes the
reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
Each Fund may also include in advertisements data comparing
performance with other mutual funds as reported in non-related investment media,
published editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index, the S&P 1500 Index, the Dow Jones Industrial Average,
the Merrill Lynch High Yield Index and the Russell 2000 Index.
The advertised performance data of each Fund is based on historical performance
and is not intended to indicate future performance. Rates of total return quoted
by a Fund may be higher or lower than past quotations, and there can be no
assurance that any rate of total return will be maintained. The principal value
of an investment in each Fund will fluctuate so that a shareholder's shares,
when redeemed, may be worth more or less than the shareholder's original
investment.
Each Fund acknowledges that it is solely responsible for the
information or any lack of information about it in this joint Prospectus and in
the joint Statement of Additional Information, and no other Fund is responsible
therefore. There is a possibility that one Fund might be deemed liable for
misstatements or omissions regarding another Fund in this Prospectus or in the
joint Statement of Additional Information; however, the Funds deem this
possibility slight.
<PAGE>
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS SERVICES
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform any audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obliger as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature and provisions of the obligation.
III. Protection afforded by, and relative position of the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC", and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rate "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB" rating.
B - Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.
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.
Investment Advisor Administrator
CommonWealth Advisors, Inc. AmeriPrime Financial Services, Inc.
247 Florida Street 1793 Kingswood Drive, Suite 200
Baton Rouge, LA 70801 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests)
McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania Street Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
each Fund. This Prospectus does not constitute an offer by the Funds to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF FUND EXPENSES.......................................................
Shareholder Transaction Expenses..........................................
Annual Fund Operating Expenses............................................
FINANCIAL HIGHLIGHTS............................................................
THE FUNDS.....................................................................
INVESTMENT OBJECTIVE AND STRATEGIES............................................
General
HOW TO INVEST IN THE FUND.......................................................
Initial Purchase...........................................................
Additional Investments.....................................................
Automatic Investment Plan..................................................
Tax Sheltered Retirement Plans.............................................
Other Purchase Information................................................
HOW TO REDEEM SHARES...........................................................
By Mail
By Telephone..............................................................
By Systematic Withdrawal Plan.............................................
Additional Information.....................................................
SHARE PRICE CALCULATION.........................................................
DIVIDENDS AND DISTRIBUTIONS....................................................
TAXES.........................................................................
OPERATION OF THE FUNDS.........................................................
RISK CONSIDERATIONS...........................................................
INVESTMENT POLICIES AND TECHNIQUES ............................................
GENERAL INFORMATION............................................................
Fundamental Policies.......................................................
Fund Turnover..............................................................
Shareholder Rights........................................................
Year 2000 Issue...........................................................
PERFORMANCE INFORMATION.......................................................
<PAGE>
FOUNTAINHEAD SPECIAL VALUE FUND
PROSPECTUS February 14, 1999
King Investment Advisors, Inc.
c/o Unified Fund Services, Inc.
431 N. Pennsylvania Street
Indianapolis, IN 46204
For Information, Shareholder Services and Requests:
(800) 868-9535
Fountainhead Special Value Fund (the "Fund") is a mutual fund whose
investment objective is to provide long term capital growth. The Fund's Advisor,
King Investment Advisors, Inc., seeks to achieve the objective by investing
primarily in a broad range of equity securities believed by the Advisor to be
selling at attractive prices relative to their intrinsic value.
The Fund is "no-load," which means there are no sales charges or
commissions. In addition, there are no 12b-1 fees, distribution expenses or
deferred sales charges which are borne by the shareholders. The Fund is one of
the mutual funds comprising AmeriPrime Funds, an open-end management investment
company, and is distributed by AmeriPrime Financial Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information has been filed with the Securities and
Exchange Commission (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Website (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
The expense information provided below is based on operating expenses
incurred during the most recent fiscal year. The expenses are expressed as a
percentage of average net assets. The Example should not be considered a
representation of future Fund performance or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. In addition, the Fund does not
have a 12b-1 Plan.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases.............................................NONE
Sales Load Imposed on Reinvested Dividends..................................NONE
Deferred Sales Load.........................................................NONE
Redemption Fees.............................................................NONE
Exchange Fees...............................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees (after fee waiver)........................................ 1.25%
12b-1 Charges...............................................................NONE
Other Expenses1 (after reimbursement)......................................0.00%
Total Fund Operating Expenses1 (after fee waiver and reimbursement)........1.25%
.........1The Advisor has voluntarily agreed to waive fees and reimburse
other expenses to the extent necessary to maintain total operating expenses as
indicated through 1999. The expenses have been restated to reflect
current fees.
The tables above are provided to assist an investor in understanding the direct
and indirect expenses that an investor may incur as a shareholder in the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
........ 1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
........
$13 $40 $69 $151
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period December 31, 1996 (commencement of operations) through October 31, 1997
and the fiscal year ended October 31, 1998, is derived from the audited
financial statements of the Fund. The financial statements of the Fund have been
audited by McCurdy & Associates CPA's, Inc., independent public accountants and
are included in the Fund's Annual Report. The Annual Report contains additional
performance information and is available on request and without charge.
<TABLE>
<S> <C> <C>
For periods ended October 31 1998 1997 (c)
Selected Per Share Data
Net asset value, beginning of period $ 13.35 $ 10.00
------------ -------------
Income from investment operations
Net investment income (0.09) (0.02)
Net realized and unrealized gain (loss) (0.51) 3.37
------------ -------------
Total from investment operations (0.60) 3.35
------------ -------------
Less Distributions
From net interest income - -
From net realized gain (0.14) -
------------ -------------
Total distributions (0.14) -
------------ -------------
Net asset value, end of period $ 12.61 $ 13.35
============ =============
Total Return (4.67)% 40.09% (a)
Ratios and Supplemental Data
Net assets, end of period (000) $6,637 $2,629
Ratio of expenses to average net assets 1.20% (a)(b) 0.97% (a)
Ratio of expenses to average net assets
before reimbursement 2.76% (a)(b) 8.25% (a)
Ratio of net investment income to
average net assets after reimbursement (0.67)% (a) (0.16)% (a)
Ratio of net investment income to average
net assets before reimbursement (2.22)% (a) (7.45)% (a)
Portfolio turnover rate 108.31% (a) 130.63% (a)
<FN>
(a) Annualized
(b) For the period November 1, 1997 to October 31, 1998 the fund's advisor
agreed to reimburse expenses. (c) December 31, 1996 (commencement of
operations)to October 31, 1997
</FN>
</TABLE>
THE FUND
Fountainhead Special Value Fund (the "Fund") was organized as a series
of AmeriPrime Funds, an Ohio business trust (the "Trust"), on October 20, 1995,
and commenced operations on December 31, 1996. This prospectus offers shares of
the Fund and each share represents an undivided, proportionate interest in the
Fund. The investment advisor to the Fund is King Investment Advisors, Inc. (the
"Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term capital
growth. The Fund seeks to achieve the objective by investing primarily in a
broad range of equity securities which the Advisor believes to be selling at
attractive prices relative to their intrinsic value. It is anticipated that an
emphasis will be placed on domestic small-cap and mid-cap equity securities
(those with a market capitalization between $50 million and $5 billion).
The Advisor is a bottom-up value manager selecting securities based on
a method the Advisor calls the "Business Valuation Approach". This
highly-disciplined Approach seeks to identify attractive investment
opportunities using a broad definition of value, uncovering securities often
overlooked by other investors. The Advisor believes value can be found in
different types of securities at different points in the economic cycle. The
Advisor's buy criteria consist of three elements. The Advisor will buy a stock
trading at a discount to: 1) its private-market value (based on its projected
level of cash flows, balance sheet characteristics, future earnings, and
payments made for similar companies in mergers and acquisitions), 2) its
five-year projected earnings growth rate (unlike many typical value managers who
buy only low P/E or price/book stocks), or 3) its seven-year historical
valuation based on its price/earnings, price/book, price/cash flow, or
price/sales ratios. While it is anticipated that the Fund will diversify its
investments across a range of industries/sectors, certain industries are likely
to be overweighed compared to others because the Advisor seeks the best
investment values regardless of industry. The Advisor retains the flexibility to
invest in securities of various market capitalizations.
The Advisor generally intends to stay fully invested (subject to
liquidity requirements and defensive purposes) in common stock and common stock
equivalents (such as securities convertible into common stocks) regardless of
the movement of stock prices. However, the Fund may invest in preferred stocks,
bonds, corporate debt and U.S. government obligations when the Advisor believes
these securities offer opportunities to further the Fund's investment objective.
While the Fund ordinarily will invest in common stocks of U.S. companies, it may
invest in foreign companies through the purchase of American Depository
Receipts.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments (including money market funds) or U.S. government repurchase
agreements. The Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
If the Fund acquires securities of a money market fund, the shareholders of the
Fund will be subject to duplicative management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions, and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
Shares of the Fund are sold on a continuous basis, and you may invest
any amount you choose, as often as you wish, subject to a minimum initial
investment of $5,000 ($2,000 for IRAs) and minimum subsequent investments of
$1,000. For corporate retirement plans, however, there is no minimum for
separate employee accounts. Investors choosing to purchase or redeem their
shares through a broker/dealer or another institution may be charged a fee by
that institution. Investors choosing to purchase or redeem shares directly from
the Fund will not incur charges on purchases or redemptions. To the extent
investments of individual investors are aggregated into an omnibus account
established by an investment advisor, broker, or other intermediary, the account
minimums apply to the omnibus account, not to the account of the individual
investor.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to Fountainhead Special Value Fund, and sent to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
Fountainhead Special Value Fund Fountainhead Special Value Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 800-868-9535 to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Fountainhead Special Value Fund
D.D.A. #483885570
Account Name _________________ (write in shareholder
name) For the Account # ______________ (write in
account number)
You are required to mail a signed application to the Custodian at the
above address 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 in processing by the banks, are not the
responsibility of the Fund or the Transfer Agent. There is presently no fee for
the receipt of wired funds, but the right to charge shareholders for this
service is reserved by the Fund.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail-purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to Fountainhead Special Value Fund and should be sent to the
address listed above. A bank wire should be sent as outlined above.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer-term investments, shares of the
Fund may be an appropriate investment medium for tax-sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit-sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the Transfer Agent for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax adviser regarding
these plans is advisable. Custodial fees for an IRA will be paid by the
shareholder by redemption of sufficient shares of the Fund from the IRA unless
the fees are paid directly to the IRA custodian. You can obtain information
about IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments by check or federal wire transfer.
The proceeds may be more or less than the purchase price of your shares,
depending on the market value of the Fund's securities at the time of your
redemption. Presently there is no charge for wire redemptions; however, the Fund
reserves the right to charge for this service. Any charges for wire redemptions
will be deducted from the shareholder's Fund account by redemption of shares.
Investors choosing to purchase or redeem their shares through a broker/dealer or
another institution may be charged a fee by that institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
U.S. Mail: Overnight:
Fountainhead Special Value Fund Fountainhead Special Value Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address, and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or Unified Fund Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (800) 868-9535. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent, and the Custodian are
not liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity, it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you cannot reach the Fund by
telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) 868-9535. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
may take up to fifteen calendar days. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing, or under any emergency circumstances (as determined
by the Securities and Exchange Commission) the Fund may suspend redemptions or
postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30-day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the Exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate in price.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.
Fixed income securities are generally valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service uses electronic data-processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees.
Short-term investments in fixed-income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity, are
valued by using the amortized cost method of valuation, which the Board has
determined will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital-gains distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital-gains distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled, or if you
otherwise qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 ("Tax Reform Act"), all distributions of net
short-term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long-term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital-gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisors regarding specific questions as to federal, state, or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (Social Security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions, and redemption proceeds payable to the shareholder.
Under regulations promulgated by the Internal Revenue Service, the Fund may be
fined $50 annually for each account for which a certified taxpayer
identification number is not provided. If such a fine is imposed with respect to
a specific account in any year, the Fund may make a corresponding charge against
the account.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains King Investment Advisors, Inc., 1980 Post Oak
Boulevard, Suite 2400, Houston, Texas 77056-3898 (the "Advisor") to manage the
Fund's investments. The Advisor is a Houston-based independent investment
advisor providing value-oriented equity and balanced management for both taxable
and tax-exempt clients, and currently manages approximately $700 million in
assets. The Advisor is a Texas corporation controlled by Roger E. King, the
Chairman, President, and majority shareholder of the Advisor. Mr. King has been
primarily responsible for the day-to-day management of the Fund's portfolio
since its inception. Mr. King co-founded the firm in 1981 and has served as its
president since 1986 and as chairman since 1993. The Fund is authorized to pay
the Advisor a fee equal to an annual average rate of 1.43% of its average daily
net assets. The Advisor has agreed to waive management fees and reimburse
expenses to limit total net operating expenses for the Fund to not more than
1.25% of its average daily net assets for at least the next year (through 1999).
The Advisor determines the securities to be held or sold by the Fund,
and the portion of the Fund's assets to be held uninvested. The Advisor always
follows the Fund's investment objectives, policies and restrictions and any
policies and instructions of the Board of Trustees.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and to provide the Fund
with administrative services, including all regulatory reporting and necessary
office equipment, personnel, and facilities. The Administrator receives a
monthly fee from the Advisor equal to an annual average rate of 0.10% of the
Fund's average daily net assets up to fifty million dollars, 0.075% of the
Fund's average daily net assets from fifty to one hundred million dollars and
0.050% of the Fund's average daily net assets over one hundred million dollars
(subject to a minimum annual payment of $30,000). In addition, the Advisor will
reimburse the Administrator for organizational expenses advanced by the
Administrator. The Fund retains Unified Fund Services, Inc., 431 N. Pennsylvania
St., Indianapolis, IN 46204 (the "Transfer Agent") to serve as transfer agent,
dividend paying agent and shareholder service agent. The Trust retains
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092 (the "Distributor") to act as the principal distributor
of the Fund's shares. The services of the Administrator, Transfer Agent and
Distributor are operating expenses paid by the Advisor.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a 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.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of securities
and investment techniques that the Fund may purchase or employ.
Equity Securities
Equity securities consist of common stock, preferred stock, and common
stock equivalents (such as convertible preferred stock and convertible
debentures, rights, and warrants) and investment companies which invest
primarily in the above. Convertible preferred stock is preferred stock that can
be converted into common stock pursuant to its terms. Convertible debentures are
debt instruments that can be converted into common stock pursuant to their
terms. The Fund will not invest more than 5% of its net assets at the time of
purchase in either rights or warrants. Equity securities also include common
stocks and common stock equivalents of domestic real estate investment trusts
and other companies which operate as real estate corporations or which have a
significant portion of their assets in real estate. The Fund will not acquire
any direct ownership of real estate.
The Fund may invest in foreign equity securities through the purchase
of American Depository Receipts (ADRs). ADRs are dollar-denominated receipts
generally issued in registered form by domestic banks, and represent the deposit
with the bank of a security of a foreign issuer. To the extent that the Fund
does invest in foreign securities, such investments may be subject to special
risks, such as changes in restrictions on foreign currency transactions and
rates of exchange, and changes in the administrations or economic and monetary
policies of foreign governments.
Investments in small capitalization companies may subject the Fund to
risks associated with such companies. Smaller capitalization companies may
experience higher growth rates and higher failure rates than do larger
capitalization companies. Smaller capitalization companies may have limited
product lines, markets or financial resources and may lack management depth. The
trading volume of securities of smaller capitalization companies is normally
less than that of larger capitalization companies, and, therefore, may
disproportionately affect their market price, tending to make them rise more in
response to buying demand and fall more in response to selling pressure than is
the case with larger capitalization companies.
Fixed Income Securities
The Fund may invest in fixed income securities. Fixed income securities
include corporate debt securities, U.S. government securities, and participation
interests in such securities. Fixed income securities are generally considered
to be interest rate sensitive, which means that their value will generally
decrease when interest rates rise and increase when interest rates fall.
Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer-term securities and are less
affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are
long- and short-term debt obligations issued by companies (such as publicly
issued and privately placed bonds, notes, and commercial paper). The Advisor
considers corporate debt securities to be of investment grade quality if they
are rated BBB or higher by Standard & Poor's Corporation ("S&P"), or Baa or
higher by Moody's Investors Services, Inc. ("Moody's"), or if unrated,
determined by the Advisor to be of comparable quality. Investment grade debt
securities generally have adequate to strong protection of principal and
interest payments. In the lower end of this category, credit quality may be more
susceptible to potential future changes in circumstances, and the securities
have speculative elements. The Fund will not invest more than 5% of the value of
its net assets in securities that are below investment grade, and will not
purchase debt securities below B by S&P or Moody's (or unrated securities
determined by the Advisor to be of inferior quality to securities so rated).
U.S. Government Obligations - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills, and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the issuing agency, and not by the U.S. government. Securities
issued by the Federal Farm Credit System, the Federal Land Banks, and the
Federal National Mortgage Association (FNMA) are supported by the agency's right
to borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
Investment Techniques
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government obligations, as well as reverse
repurchase agreements. The Fund may engage in short sales, but the percentage of
the Fund's net assets that may be used as collateral or segregated for short
sales is limited to 5%.
When-Issued Securities and Forward Commitments - The Fund may
buy and sell securities on a when-issued or delayed-delivery basis, with payment
and delivery taking place at a future date. The price and interest rate that
will be received on the securities are each fixed at the time the buyer enters
into the commitment. The Fund may enter into such forward commitments if they
hold, and maintain until the settlement date in a separate account at the Fund's
Custodian, cash, or U.S. government securities in an amount sufficient to meet
the purchase price. The Fund will not invest more than 25% of its total assets
in forward commitments. Forward commitments involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date. Any
change in value could increase fluctuations in the Fund's share price and yield.
Although the Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio, the Fund may dispose of a
commitment prior to the settlement if the Advisor deems it appropriate.
Loans of Portfolio Securities - The Fund may make short- and
long-term loans of its portfolio securities. Under the lending policy authorized
by the Board of Trustees and implemented by the Advisor in response to requests
of broker-dealers or institutional investors which the Advisor deems qualified,
the borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 102% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities, and it
may terminate such loans at any time or reacquire such securities in time to
vote on any matter which the Board of Trustees determines to be serious. With
respect to loans of securities, there is the risk that the borrower may fail to
return the loaned securities or that the borrower may not be able to provide
additional collateral.
General
The Fund may invest in mortgage-related securities, invest in foreign
securities other than ADR's, and may buy and write put and call options and
futures on stock indices, provided the Fund's investment in each does not exceed
5% of its net assets. The Fund may also invest in Rule 144A Securities. Rule
144A Securities are securities in the United States not registered for sale
under Federal securities laws but which can be resold to institutions under SEC
Rule 144A. Provided that a dealer or institutional trading market in such
securities exists, these restricted securities are treated as exempt from the
Fund's limitation that it will not invest more than 5% of its net assets in
illiquid securities (those which cannot be disposed of promptly and in the
ordinary course of business without taking a reduced price). Under the
supervision of the Board of Trustees, the Advisor determines the liquidity of
restricted securities and, through reports from the Advisor, the Board will
monitor trading activity in restricted securities. If institutional trading in
restricted securities were to decline, the liquidity of a Fund could be
adversely affected.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short-term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Advisor believes that changes in its price or underlying value, or general
economic or market conditions, warrant such action. The Fund's portfolio
turnover rate may exceed 100%. To the extent it does, the brokerage commissions
incurred by the Fund will generally be higher than those incurred by a fund with
a lower portfolio turnover rate. The Fund's higher turnover rate may result in
the realization, for federal tax purposes, of more net capital gains, and any
distributions derived from such gains may be ordinary income.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding at least two-thirds of the outstanding shares of the
Trust. The Trust does not hold an annual meeting of shareholders. When matters
are submitted to shareholders for a vote, each shareholder is entitled to one
vote for each whole share he owns and fractional votes for fractional shares he
owns. All shares of the Fund have equal voting rights and liquidation rights.
Shareholder inquiries should be made by telephone to 800-868-9535, or
by mail, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Advisor, Administrator or other
service providers to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Issue." The Advisor and Administrator have taken steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that are used and to obtain reasonable assurances that
comparable steps are being taken by the Fund's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund. In addition, the Advisor cannot make any
assurances that the Year 2000 Issue will not affect the companies in which the
Fund invests or worldwide markets and economies.
<PAGE>
-19-
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) MidCap Index, the Russell MidCap Index, or the S&P 500 Index.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
The Advisor has been managing equity accounts since 1982. The
performance of the accounts with investment objectives, policies, and strategies
substantially similar to those of the Fund appears below. The data is provided
to illustrate past performance of the Advisor in managing such accounts, as
compared to the Russell MidCap Index. Roger E. King is responsible for the
performance of the accounts and is also responsible for the investment
management of the Fund. As of December 31, 1998, the assets in those accounts
totaled approximately $700 million.
The performance of the accounts managed by the Advisor does not
represent the historical performance of the Fund and should not be considered
indicative of future performance of the Fund. Results may differ because of,
among other things, differences in brokerage commissions, account expenses
(including management fees), the size of positions taken in relation to account
size and diversification of securities, timing of purchases and sales,
availability of cash for new investments and the private character of accounts
compared with the public character of the Fund. In addition, 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. The results for different periods may vary. For
the period December 31, 1996 (commencement of operations) through December 31,
1998, the total return of the Fund was 31.80% (14.78% annualized), and the total
return of the equity accounts was 24.32% (11.50% annualized). For the year ended
December 31, 1998, the total return of the Fund was -3.59%, and the total return
of the equity accounts was -12.18%.
[chart showing growth of $10,000 investment from January 1, 1982 through
December 31, 1998, compared to the Russell MidCap Index with the following
information:
<TABLE>
<CAPTION>
King Investment Advisors Russell MidCap Index
<S> <C> <C> <C> <C> <C>
1982 40.67% $14,067.00 23.26% $12,326.00
1983 22.95% $17,295.38 23.82% $15,262.05
1984 12.43% $19,445.19 1.43% $15,480.30
1985 28.60% $25,006.52 32.01% $20,435.54
1986 13.82% $28,462.42 18.20% $24,154.81
1987 -6.61% $26,581.05 0.23% $24,210.37
1988 29.14% $34,326.77 19.80% $29,004.02
1989 25.20% $42,977.12 26.27% $36,623.38
1990 -1.04% $42,530.15 -11.50% $32,411.69
1991 36.86% $58,206.77 41.51% $45,865.78
1992 11.40% $64,842.34 16.34% $53,360.25
1993 6.50% $69,057.09 14.30% $60,990.77
1994 -8.35% $63,290.83 -2.09% $59,716.06
1995 55.00% $98,100.78 34.45% $80,288.25
1996 12.49% $110,353.57 19.00% $95,543.01
1997 36.50% $150,632.62 29.00% $123,250.49
1998 -12.18% $132,300.63 -2.55% $120,107.60
</TABLE>
* The Advisor's total returns by year were as follows: 1982 40.67%, 1983
22.95%, 1984 12.43%, 1985 28.60%, 1986 13.82%, 1987 -6.61%, 1988 29.14%, 1989
25.20%, 1990 -1.04%, 1991 36.86%, 1992 11.40%, 1993 6.50%, 1994 -8.35%, 1995
55.00%, 1996 12.49%, 1997 36.50%, 1998 -12.18%. The King Investment Advisors,
Inc. performance is the dollar-weighted average total return associated with a
composite of equity income accounts managed by Roger E. King, having objectives
similar to the Fund, and is unaudited. The composite does not include accounts
with less than $1,000,000 in assets or accounts under the Advisor's management
for less than one quarter, because the nature of those accounts make them
inappropriate for purposes of comparison. Performance figures of the accounts
are net of management fees and all expenses of the accounts, including
transaction costs and commissions. Results include the reinvestment of dividends
and capital gains.
The Russell MidCap Index is a widely recognized, unmanaged index of
market activity based on the aggregate performance of a selected portfolio of
publicly traded common stocks, including monthly adjustments to reflect the
reinvestment of dividends and other distributions. The Russell MidCap Index
reflects the total return of securities comprising the Index with market
capitalizations ranging from $1 billion to $6 billion, including changes in
market prices as well as accrued investment income, which is presumed to be
reinvested. Performance figures for the Russell MidCap Index do not reflect
deduction of transaction costs or expenses, including management fees.
Investment Advisor Administrator
King Investment Advisors, Inc. AmeriPrime Financial Services, Inc.
1980 Post Oak Blvd., Suite 2400 1793 Kingswood Drive, Suite 200
Houston, Texas 77056-3898 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase and Auditors
redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania St. Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
-20-
TABLE OF CONTENTS PAGE
SUMMARY OF FUND EXPENSES......................................................
Shareholder Transaction Expenses.....................................
Annual Fund Operating Expenses.......................................
FINANCIAL HIGHLIGHTS..........................................................
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES..........................................
HOW TO INVEST IN THE FUND....................................................
Initial Purchase....................................................
By Mail
By Wire
Additional Investments..............................................
Tax Sheltered Retirement Plans......................................
Other Purchase Information..........................................
HOW TO REDEEM SHARES.........................................................
By Mail
By Telephone........................................................
Additional Information..............................................
SHARE PRICE CALCULATION......................................................
DIVIDENDS AND DISTRIBUTIONS..................................................
TAXES
OPERATION OF THE FUND........................................................
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS...................
Equity Securities............................................................
Fixed Income Securities..............................................
Investment Techniques................................................
General
GENERAL INFORMATION...........................................................
Fundamental Policies.................................................
Portfolio Turnover..................................................
Shareholder Rights..................................................
Year 2000 Issue...................................................
PERFORMANCE INFORMATION......................................................
<PAGE>
GLOBALT GROWTH FUND
NASDAQ Symbol: GROWX
PROSPECTUS February 14, 1999
3060 Peachtree Road, N.W.
One Buckhead Plaza, Suite 225
Atlanta, Georgia 30305
http://www.globalt.com
For Information, Shareholder Services and Requests:
877-BUY-GROWX (877-289-4769)
GLOBALT Growth Fund (the "Fund") is a mutual fund whose investment
objective is to provide long term growth of capital. The Fund seeks to achieve
its objective by investing in a broad range of equity securities of U.S.
companies believed by its Adviser, GLOBALT, Inc., to offer superior growth
potential. As the Adviser believes exposure to rapidly growing foreign markets
enhances growth potential, all stocks in the Fund's portfolio will be of
companies which compete in both U.S. and foreign economies and thus, in the
Adviser's opinion, are globally positioned for success.
The Fund is "no-load," which means there are no sales charges or
commissions. In addition, there are no 12b-1 fees, distribution expenses or
deferred sales charges which are borne by the shareholders. The Fund is one of
the mutual funds comprising AmeriPrime Funds, an open-end management investment
company, and is distributed by AmeriPrime Financial Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information has been filed with the Securities and
Exchange Commission (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on operating expenses incurred during
the most recent fiscal year. The expenses are expressed as a percentage of
average net assets. The Example should not be considered a representation of
future Fund performance or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. In addition, the Fund does not
have a 12b-1 Plan. Unlike most other mutual funds, the Fund does not pay
directly for transfer agency, pricing, custodial, auditing or legal services,
nor does it pay directly any general administrative or other significant
operating expenses. The Adviser pays all of the expenses of the Fund (including
organizational expenses) except brokerage, taxes, interest, fees and expenses of
non-interested person trustees and extraordinary expenses.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases.............................................NONE
Sales Load Imposed on Reinvested Dividends..................................NONE
Deferred Sales Load.........................................................NONE
Redemption Fees.............................................................NONE
Exchange Fees...............................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)1
Management Fees............................................................1.17%
12b-1 Charges..............................................................NONE
Other Expenses2 (after reimbursement)......................................0.00%
Total Fund Operating Expenses2 (after reimbursement).......................1.17%
1........The Fund's total operating expenses are equal to the management fee
paid to the Adviser because the Adviser pays all of the Fund's operating
expenses (except as described above).
2........The Adviser has voluntarily agreed, as in 1998, to reimburse other
expenses for the fiscal year ending October 31, 1999 to the extent necessary to
maintain total operating expenses as indicated. For the fiscal year ended
October 31, 1998, other expenses (fees and expenses of the trustees who are not
"interested persons" as defined in the Investment Company Act) were 0.02% of
average net assets and total fund operating expenses were 1.19% of average net
assets, absent any reimbursement.
The tables above are provided to assist an investor in understanding the direct
and indirect expenses that an investor may incur as a shareholder in the Fund.
<PAGE>
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
........ 1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
........ $12 $37 $64 $142
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period December 5, 1995 (commencement of operations) to October 1, 1996, and for
the fiscal years ended October 31, 1997 and October 31, 1998 is derived from the
audited financial statements of the Fund. The financial statements of the Fund
have been audited by McCurdy & Associates CPA's, Inc., independent public
accountants, and are included in the Fund's Annual Report. The Annual Report
contains additional performance information and is available upon request and
without charge.
<TABLE>
<S> <C> <C> <C>
For the year For the year For the period
ended ended ended
October 31, 1998 October 31, 1997 October 31, 1996 (b)
Selected Per Share Data
Net asset value, beginning of period $15.66 $12.48 $10.00
-------------- --------------- ---------------
Income from investment operations:
Net investment income (loss) 0.02 0.01 0.01
Net realized and unrealized gain (loss) 1.86 3.34 2.47
-------------- --------------- ---------------
Total from investment operations 1.88 3.35 2.48
-------------- --------------- ---------------
Less Distributions
From net investment income (0.01) - -
From net realized gain (1.39) (0.17) -
-------------- --------------- ---------------
Total Distributions (1.40) (0.17) -
-------------- --------------- ---------------
Net asset value, end of period $16.14 $15.66 $12.48
============== =============== ===============
Total Return 13.28% 27.15% 27.01% (a)
Ratios and Supplemental Data
Net assets, end of period (000) $11,709 $8,003 $3,443
Ratio of expenses to average net assets 1.17% 1.17% 1.16% (a)
Ratio of expenses to
average net assets before reimbursement 1.19% 1.19% 1.25% (a)
Ratio of net investment income to
average net assets 0.14% 0.06% 0.11% (a)
Ratio of net investment income to
average net assets before reimbursement 0.12% 0.04% 0.02% (a)
Portfolio turnover rate 83.78% 110.01% 66.42% (a)
<FN>
(a) Annualized
(b) December 1, 1995 (commencement of operations) to October 31, 1996
</FN>
</TABLE>
THE FUND
GLOBALT Growth Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on October 20, 1995 and
commenced operations on December 1, 1995. This prospectus offers shares of the
Fund and each share represents an undivided, proportionate interest in the Fund.
The investment adviser to the Fund is GLOBALT, Inc. (the "Adviser"). Visit
GLOBALT on the Internet at http://www.globalt.com.
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term growth of
capital. The Fund seeks to achieve its objective by investing primarily in a
broad range of equity securities of U.S. companies with market capitalizations
of $1 billion or more, which the Adviser believes offer superior growth
potential, based on certain fundamental and technical standards of selection. As
the Adviser believes exposure to rapidly growing foreign markets enhances growth
potential, all stocks in the Fund's portfolio will be of companies which compete
in both U.S. and foreign economies and thus, in the Adviser's opinion, are
globally positioned for success. The Adviser will only purchase stocks of
companies that are expected to derive at least 20% of their revenues outside of
the U.S. It is anticipated that, in the aggregate, the stocks in the Fund's
portfolio will derive at least 50% of their revenues outside of the U.S. and as
a result will provide higher relative growth than the S&P 500 Index.
The Fund is designed for investors with a long term wealthbuilding
horizon and is particularly suitable for retirement and educational funds. The
Adviser seeks to limit investment risk by diversifying the Fund's investments
across a broad range of industries and companies. After screening for securities
with exposure to foreign markets, the Adviser uses a disciplined selection
process to assemble a portfolio which it anticipates will have at least a 50%
exposure to foreign markets and will be highly diversified across economic
sectors. As the Fund will primarily invest in growth-oriented stocks, it is
expected that the Fund will generate a total return that is predominantly
derived from long term capital appreciation, although current income is also
expected.
The Adviser has been managing income accounts for its clients since
1991. The performance of all accounts with investment objectives, policies and
strategies substantially similar to those of the Fund appears below. The data is
provided to illustrate past performance of the Adviser in managing such
accounts, as compared to the S&P 500 Index. The persons responsible for the
performance of the accounts are the same as those responsible for the investment
management of the Fund. As of December 31, 1998, the assets in those accounts
totaled approximately $1,127 million. The Adviser's total assets under
management were approximately $1,620 million as of December 31, 1998.
Summary of Annual Investment Returns of the Fund and GLOBALT, Inc. Managed
Accounts *
<TABLE>
<CAPTION>
Period Fund Managed Accounts S&P 500
--------- ---- ---------------- -------
<S> <C> <C> <C> <C>
1991 35.4% 30.5%
1992 7.8% 7.6%
1993 18.9% 10.1%
1994 -0.7% 1.3%
1995 6.4%** 36.5% 37.6%
1996 20.0% 21.8% 22.9%
1997 28.7% 30.1% 33.4%
1998 25.8% 26.3% 28.6%
Average Annual Total Return
Since Fund Inception
(12/1/95) 26.5% 26.2% 28.2%
Average Annual Total Return
Since Managed Accounts
Inception (1/1/91) N/A 21.4% 20.8%
</TABLE>
* The GLOBALT, Inc. managed account performance is associated with a
composite of equity accounts having objectives similar to the Fund, and
is unaudited. Composite results are dollar-weighted and performance
results are time-weighed. The composite does not include
non-discretionary or otherwise restricted accounts because the nature
of those accounts make them inappropriate for purposes of comparison.
Performance figures of the accounts are net of management fees and all
expenses of the accounts, including transaction costs and commissions.
Results include the reinvestment of dividends and capital gains.
The S&P 500 Index is a widely recognized, unmanaged index of market
activity, based upon the aggregate performance of a selected portfolio
of publicly traded common stocks, including monthly adjustments to
reflect the reinvestment of dividends and other distributions. The S&P
500 Index reflects the total return of securities comprising the Index,
including changes in market prices as well as accrued investment
income, which is presumed to be reinvested. Performance figures for the
S&P 500 Index do not reflect deduction of transaction costs or
expenses, including management fees.
The performance of the accounts managed by the Adviser does not
represent the historical performance of the Fund, and should not be
considered indicative of future performance of the Fund. Results may
differ because of, among other things, differences in brokerage
commissions, account expenses, including management fees, the size of
positions taken in relation to account size and diversification of
securities, timing of purchases and sales, availability of cash for new
investments and the private character of accounts compared with the
public character of the Fund. In addition, the managed accounts are not
subject to certain investment limitation, diversification requirements,
and other restrictions imposed by the Investment Company Act and the
Internal Revenue Code which, if applicable, may have adversely affected
the performance results of the managed accounts composite. The results
for different periods may vary.
** For the period December 1, 1995 (commencement of operations) through December
31, 1995, not annualized.
The Adviser generally intends to stay fully invested (subject to
liquidity requirements and defensive purposes) in common stock and common stock
equivalents (such as rights, warrants and securities convertible into common
stocks) of U.S. companies, regardless of the movement of stock prices. However,
the Fund may invest in preferred stocks, bonds, corporate debt and U.S.
government obligations to maintain liquidity or pending investment in equity
securities. Substantially all equity securities in the Fund's portfolio are
listed on a major stock exchange or traded over-the-counter. The Fund will not
invest in foreign securities.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load registered investment companies or U.S.
government repurchase agreements. The Fund may also invest in such instruments
at any time to maintain liquidity or pending selection of investments in
accordance with its policies. If the Fund acquires securities of another
investment company, the shareholders of the Fund will be subject to additional
management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
Shares of the Fund are sold on a continuous basis, and you may invest
any amount you choose as often as you wish, subject to a minimum initial
investment of $25,000 and minimum subsequent investments of $5,000. Investors
choosing to purchase or redeem their shares through a broker/dealer or other
institution may be charged a fee by that institution. Investors choosing to
purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment adviser, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing it
in proper form, together with a check (subject to the above minimum amounts)
made payable to GLOBALT Growth Fund, and sent to the P.O. Box listed below. If
you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
GLOBALT Growth Fund GLOBALT Growth Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If the money is
to be wired, you must call the Transfer Agent at (877) 289-4769 to set up your
account and obtain an account number. You should be prepared to provide the
information on the application to the Transfer Agent. Then, you should provide
your bank with the following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA # 0420-0001-3
Attn: GLOBALT Growth Fund
D.D.A. # 483889739
Account Name ________________ (write in shareholder name) For
the Account # ________________ (write in account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund and the Custodian and Transfer Agent
are open for business. A wire purchase will not be considered made until the
wired money is received and the purchase is accepted by the Fund. Any delays
which may occur in wiring money, including delays which may occur in processing
by the banks, are not the responsibility of the Fund or the Transfer Agent.
There is presently no fee for the receipt of wired funds, but the right to
charge shareholders for this service is reserved by the Fund.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to GLOBALT Growth Fund and should be sent to the address listed
above. A bank wire should be sent as outlined above.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the Transfer Agent for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax adviser regarding
these plans is advisable. Custodial fees for an IRA will be paid by the
shareholder by redemption of sufficient shares of the Fund from the IRA unless
the fees are paid directly to the IRA custodian. You can obtain information
about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. A broker may charge a transaction fee
for the redemption. There is no charge for wire redemptions; however, the Fund
reserves the right to charge for this service. Any charges for wire redemptions
will be deducted from the shareholder's Fund account by redemption of shares.
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution.
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 N. Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or Unified Fund Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (877) 289-4769. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (877) 289-4769. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $25,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax adviser concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Adviser determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Adviser, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short-term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions designated as being made from net realized long term
capital gains are taxable to shareholders as long term capital gains regardless
of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a member of the AmeriPrime Funds, an open-end management
investment company organized as an Ohio business trust on August 8, 1995. The
Board of Trustees supervises the business activities of the Fund. Like other
mutual funds, the Fund retains various organizations to perform specialized
services.
The Fund retains GLOBALT, Inc., 3060 Peachtree Road, N.W., One Buckhead
Plaza, Suite 225, Atlanta, Georgia 30305 (the "Adviser") to manage the Fund's
investments. The Adviser was organized as a Georgia corporation in 1990. The
Adviser manages larger capitalization equity, medium capitalization equity,
balanced and fixed income portfolios for a variety of tax-exempt and taxable
clients. Angela Allen, President of the Adviser, and Samuel Allen, Chairman of
the Adviser, are the controlling shareholders of GLOBALT, Inc. The investment
decisions for the Fund are made by a committee of the Adviser, which is
primarily responsible for the day-to-day management of the Fund's portfolio.
The Adviser determines the securities to be held or sold by the Fund,
and the portion of the Fund's assets to be held uninvested. The Adviser always
follows the Fund's investment objectives, policies and restrictions and any
policies and instructions of the Board of Trustees. The Fund is authorized to
pay the Adviser a fee equal to an annual average rate of 1.17% of its average
daily net assets. The Adviser pays all of the operating expenses (including
organizational expenses) of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. It should
be noted that most investment companies pay their own operating expenses
directly, while the Fund's expenses, except those specified above, are paid by
the Adviser.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Adviser equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). In addition, the Adviser will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains Unified Fund Services, Inc., 431 N. Pennsylvania St., Indianapolis,
IN 46204 (the "Transfer Agent") to serve as transfer agent, dividend paying
agent and shareholder service agent. The Trust retains AmeriPrime Financial
Securities, Inc., 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092 (the
"Distributor") to act as the principal distributor of the Fund's shares. The
services of the Administrator, Transfer Agent and Distributor are operating
expenses paid by the Adviser.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a 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.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
Equity securities consist of common stock, preferred stock and common
stock equivalents (such as convertible preferred stock, convertible debentures,
rights and warrants) and investment companies which invest primarily in the
above. Equity securities also include common stocks and common stock equivalents
of domestic real estate investment trusts and other companies which operate as
real estate corporations or which have a significant portion of their assets in
real estate.
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.
Fixed Income Securities
The Fund may temporarily invest in short term fixed income securities.
The Fund will limit its investment in fixed income securities to corporate debt
securities and U.S. government securities. Fixed income securities are generally
considered to be interest rate sensitive, which means that their value will
generally decrease when interest rates rise and increase when interest rates
fall. Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer term securities and are less
affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are long
and short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Fund will only invest
in corporate debt securities rated A or higher by Standard & Poor's Corporation
or Moody's Investors Services, Inc.
U.S. Government Obligations - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the agency that issued them, and not by the U.S. government.
Securities issued by the Federal Farm Credit System, the Federal Land Banks, and
the Federal National Mortgage Association (FNMA) are supported by the agency's
right to borrow money from the U.S. Treasury under certain circumstances, but
are not backed by the full faith and credit of the U.S. government.
Loans of Portfolio Securities
The Fund may make short and long term loans of its portfolio
securities. Under the lending policy authorized by the Board of Trustees and
implemented by the Adviser in response to requests of broker-dealers or
institutional investors which the Adviser deems qualified, the borrower must
agree to maintain collateral, in the form of cash or U.S. government
obligations, with the Fund on a daily mark-to-market basis in an amount at least
equal to 100% of the value of the loaned securities. The Fund will continue to
receive dividends or interest on the loaned securities and may terminate such
loans at any time or reacquire securities in time to vote on any matter which
the Board of Trustees determines to be serious. With respect to loans of
securities, there is the risk that the borrower may fail to return the loaned
securities or that the borrower may not be able to provide additional
collateral.
General
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government obligations. The Fund may invest in time
deposits, certificates of deposit or banker's acceptances, and may buy and write
put and call options, provided the Fund's investment in each does not exceed 5%
of its net assets.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Adviser believes that market conditions, creditworthiness factors or general
economic conditions warrant such action. The Fund's portfolio turnover rate may
exceed 100%. To the extent it does, the brokerage commissions incurred by the
Fund will generally be higher than those incurred by a fund with a lower
portfolio turnover rate. The Fund's higher turnover rate may result in the
realization, for federal tax purposes, of more net capital gains, and any
distributions derived from such gains may be ordinary income.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of the Fund have equal voting rights and liquidation
rights.
Shareholder inquiries should be made by telephone to 877-289-4769, or
by mail, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser, Administrator or other
service providers to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Issue." The Adviser and Administrator have taken steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that are used and to obtain reasonable assurances that
comparable steps are being taken by the Fund's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund. In addition, the Adviser cannot make any
assurances that the Year 2000 Issue will not affect the companies in which the
Fund invests or worldwide markets and economies.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index or the Dow Jones Industrial Average.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Adviser Administrator
GLOBALT, Inc. AmeriPrime Financial Services, Inc.
3060 Peachtree Road, N.W. 1793 Kingswood Drive, Suite 200
One Buckhead Plaza, Suite 225 Southlake, Texas 76092
Atlanta, Georgia 30305
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase and Auditors
redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania St. Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF FUND EXPENSES.......................................................
Shareholder Transaction Expenses......................................
Annual Fund Operating Expenses........................................
FINANCIAL HIGHLIGHTS...........................................................
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES............................................
HOW TO INVEST IN THE FUND......................................................
Initial Purchase......................................................
By Mail
By Wire
Additional Investments................................................
Tax Sheltered Retirement Plans........................................
Other Purchase Information............................................
HOW TO REDEEM SHARES...........................................................
By Mail
By Telephone.................................................
Additional Information.......................................
SHARE PRICE CALCULATION........................................................
DIVIDENDS AND DISTRIBUTIONS....................................................
TAXES
OPERATION OF THE FUND.........................................................
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS....................
Equity Securities....................................................
Fixed Income Securities..............................................
Corporate Debt Securities...................................
U.S. Government Obligations..................................
Loans of Portfolio Securities .......................................
General
GENERAL INFORMATION............................................................
Fundamental Policies.........................................
Portfolio Turnover...........................................
Shareholder Rights...........................................
Year 2000 Issue...............................................
PERFORMANCE INFORMATION........................................................
<PAGE>
PROSPECTUS February 14, 1999
IMS CAPITAL VALUE FUND
10159 S.E. Sunnyside Road
Suite 330
Portland, Oregon 97015
For Information, Shareholder Services and Requests:
(800) 934-5550
The investment objective of the IMS Capital Value Fund (the "Fund") is long term
growth. IMS Capital Management, Inc. (the "Advisor") applies a value-oriented
investment philosophy designed to reduce risk and enhance potential returns. The
Advisor seeks to reduce risk through diversification and by focusing on large,
high quality, dividend-paying U.S. companies. The Advisor strives to maximize
potential returns by purchasing companies at historically low prices, when they
are temporarily out of favor and showing signs of positive business momentum.
The Fund is "no-load," which means that investors incur no sales charges,
commissions or deferred sales charges on the purchase or redemption of their
shares. The Fund is one of the mutual funds comprising AmeriPrime Funds, an
open-end management investment company, distributed by AmeriPrime Financial
Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information has been filed with the Securities and
Exchange Commission dated February 14, 1999, which is incorporated herein by
reference and can be obtained without charge by calling the Fund at the phone
number listed above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on operating expenses incurred during
the most recent fiscal year. The expenses are expressed as a percentage of
average net assets. The Example should not be considered a representation of
future Fund performance or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases.............................................NONE
Sales Load Imposed on Reinvested Dividends..................................NONE
Deferred Sales Load.........................................................NONE
Redemption Fees.............................................................NONE
Exchange Fees...............................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees (after fee waiver).........................................1.26%
12b-1 Charges...............................................................NONE
Other Expenses (after reimbursement).......................................0.33%
Total Fund Operating Expenses (after fee waiver and reimbursement).........1.59%
1 Through October 31, 1999 the Advisor has agreed to waive fees and
reimburse other expenses to the extent necessary to maintain total
operating expenses as indicated. The expenses have been restated to
reflect current fees.
The tables above are provided to assist an investor in
understanding the direct and indirect expenses that an investor may
incur as a shareholder in the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
--------- ------- ------- --------
$17 $53 $92 $200
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period August 5, 1996 (commencement of operations) to October 31, 1996 and for
the fiscal years ended October 31, 1997 and 1998 is derived from the audited
financial statements of the Fund. The financial statements of the Fund have been
audited by McCurdy & Associates CPA's, Inc., independent public accountants, and
are included in the Fund's Annual Report. The Annual Report contains additional
performance information and is available upon request and without charge.
<TABLE>
<S> <C> <C> <C>
For the periods ended October 31
Selected Per Share Data 1998 1997 1996 (b)
Net asset value, beginning of period $12.06 $10.76 $10.00
----------------- ---------------- ----------------
Income from investment operations
Net investment income (loss) (0.06) (0.08) (0.01)
Net realized and unrealized gain (loss) 0.12 1.38 0.77
----------------- ---------------- ----------------
Total from investment operations 0.06 1.30 0.76
----------------- ---------------- ----------------
Less Distributions
Return of capital (0.03) - -
From net capital gain (0.81) - -
----------------- ---------------- ----------------
Total distributions (0.84) - -
----------------- ---------------- ----------------
Net asset value, end of period $11.28 $12.06 $10.76
================= ================ ================
Total Return 2.27% 12.08% 30.23% (a)
Ratios and Supplemental Data
Net assets, end of period (000) $11,524 $9,932 $4,741
Ratio of expenses to
average net assets 1.73% 1.97% 1.84% (a)
Ratio of expenses to average net
assets before reimbursement 2.34% 2.54% 3.92% (a)
Ratio of net investment income to
average net assets (0.53)% (0.64)% (0.25)% (a)
Ratio of net investment income to average
net assets before reimbursement (1.14)% (1.20)% (2.32)% (a)
Portfolio turnover rate 81.74% 34.76% 3.56% (a)
<FN>
(a) Annualized
(b) August 5, 1996 (commencement of operations) to October 31, 1996 </FN>
</TABLE>
THE FUND
IMS Capital Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on July 30, 1996, and
commenced operations on August 5, 1996. This prospectus offers shares of the
Fund and each share represents an undivided, proportionate interest in the Fund.
The investment advisor to the Fund is IMS Capital Management, Inc. (the
"Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the IMS Capital Value Fund (the "Fund") is
long term growth. IMS Capital Management, Inc. (the "Advisor") applies a
value-oriented investment philosophy designed to reduce risk and enhance
potential returns. The Advisor seeks to reduce risk through diversification and
by focusing on large, high quality, dividend-paying U.S. companies. The Advisor
strives to maximize potential returns by purchasing companies at historically
low prices, when they are temporarily out of favor and showing signs of positive
business momentum.
The Advisor will purchase stocks of companies which, in its estimation,
are unfairly valued due to special and temporary circumstances. The Advisor
selects stocks which it believes possess limited downside risk, yet have the
potential to produce significant gains. The Advisor will select either growth or
value stocks that are trading significantly below their previous highs, if such
securities are also determined by the Advisor to be trading at substantial
discounts from their intrinsic values. The companies selected generally will be
highly visible, household names that trade on the New York Stock Exchange and
that historically have had market capitalizations of at least five billion
dollars. These well-capitalized, globally-diversified companies generally have
the resources to weather negative business conditions successfully and provide
both growth and stability. The Advisor seeks to further limit investment risk by
diversifying across a broad range of industries and companies. Because of its
diversified, large company focus, the Fund is designed to be a "core holding"
within a typical investor's asset mix.
The Advisor believes that investors tend to overreact to short-term
negative events, which can in turn create undervalued security prices. For this
reason, the Advisor applies a patient approach to stock selection. Through a
careful process of company research and analysis, the Advisor selects companies
for potential purchase based on various criteria. Companies are monitored until
a combination of events or market conditions cause the stock to decline to the
Advisor's target buy price. A company is purchased only after the Advisor has
determined that investing in the security is timely given the nature of the
decline. When analyzing companies, particular emphasis is given to securities
with improving business momentum, securities with a high potential for gain upon
return to historical levels, securities trading at a discount to the Advisor's
estimation of the company's fair market value (based on projected future cash
flow, balance sheet characteristics, and future earnings), and securities
trading at the low end of their historical fundamental valuation ranges based on
current financial ratios such as price-to-cash flow, price-to-book value and
price-to-earnings.
By owning a diversified collection of large U.S. companies that, as a
group, have already experienced a "correction" (i.e., as a group are generally
trading at 30% or more below historical levels), the Advisor believes that the
Fund, by design, may weather "bear" (down) markets more favorably than other
funds with similar investment objectives. The Advisor can, however, provide no
assurances to that effect. The Advisor typically holds companies for three to
five years at a time, and therefore believes that the Fund may not be
appropriate for those with shorter time horizons.
<PAGE>
The Advisor has been managing equity accounts for its clients since
1988. The performance of the accounts with investment objectives, policies and
strategies substantially similar to those of the Fund appears below. The data is
provided to illustrate past performance of the Advisor in managing such
accounts, as compared to the ValueLine Index. The persons responsible for the
performance below are the same as those responsible for the investment
management of the Fund.
The performance of the accounts managed by the Advisor does not
represent the historical performance of the Fund and should not be considered
indicative of future performance of the Fund. Results may differ because of,
among other things, differences in brokerage commissions, account expenses,
including management fees, the size of positions taken in relation to account
size and diversification of securities, timing of purchases and sales,
availability of cash for new investments and the private character of accounts
compared with the public character of the Fund. In addition, the managed
accounts are not subject to certain investment limitations, 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. The results for different periods
may vary. For the year ended December 31, 1998, the total return of the Fund was
13.24%, and the total return of the managed accounts was 14.33%. For the period
August 5, 1996 (inception) through December 31, 1998, the total return of the
Fund was 34.61%, and for the period July 1, 1996 through December 31, 1998, the
total return of the managed accounts was 37.98%.
IMS CAPITAL MANAGEMENT PERFORMANCE SUMMARY
IMS CAPITAL MANAGEMENT VALUELINE INDEX
1991 41.03% 38.83%
1992 32.03% 15.15%
1993 24.79% 18.08%
1994 0.48% -0.73%
1995 14.02% 25.94%
1996 26.30% 19.78%
1997 7.05% 28.45%
1998 14.33% 5.82%
* The Advisor's performance figures reflect the use of time-weighted cash
flows and dollar-weighted average annualized total returns for the Advisor's
equity accounts having objectives similar to the Fund. The composite includes
all fee-paying, discretionary, individual stock portfolios above $10,000. Other
accounts of the Advisor are excluded from the composite because the nature of
those accounts make them inappropriate for purposes of comparison. In addition,
performance of accounts prior to 1991 is excluded for the same reason. In 1988,
no account satisfied the Advisor's criteria for inclusion in the composite. In
1989 and 1990, the aggregate assets in the qualifying accounts were too small to
provide diversification comparable to that of a diversified mutual fund, and
therefore the Advisor believes inclusion of performance for those years would be
misleading. Performance figures reflected are net of all expenses, including
transaction costs, commissions and management fees. Results do not include the
reinvestment of dividends and capital gains. Complete performance presentation
notes are available on request.
The ValueLine Index is a widely recognized, unmanaged index of market
activity based upon the aggregate, equally weighted performance of
approximately 1,600 publicly traded common stocks. The ValueLine Index
returns reflect changes in market prices adjusted for dividends,
distributions and stock splits. Returns for the ValueLine Index do not
assume the reinvestment of dividends and capital gains and do not
reflect the deduction of transaction costs or expenses, including
management fees.
The Advisor generally intends to stay fully invested (subject to
liquidity requirements) in common stock, preferred stock and common stock
equivalents (such as securities convertible into common stocks) regardless of
the movement of stock prices. However, the Fund may invest in fixed income
securities, such as corporate debt securities and U.S. government obligations,
when the Advisor believes that these securities offer opportunities to further
the Fund's investment objective. While the Fund ordinarily will invest in common
stocks of U.S. companies, it may invest in foreign companies through the
purchase of American Depository Receipts.
For temporary defensive purposes under adverse market conditions, the
Fund may hold a substantial portion of its assets in cash equivalents, money
market funds or U.S. government repurchase agreements. The Fund may also invest
in such instruments at any time to maintain liquidity or pending selection of
investments in accordance with its policies. To the extent the Fund acquires the
securities of a money market fund, the shareholders of the Fund will be subject
to duplicative management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund and the Fund has no
operating history. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis, subject to the following minimums: minimum
initial investment of $5,000 ($2,000 for IRAs and other retirement plans) and
minimum subsequent investments of $100. These minimums may be waived by the
Advisor for accounts participating in an automatic investment program. Investors
choosing to purchase or redeem their shares through a broker/dealer or other
institution may be charged a fee by that institution. Investors choosing to
purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to IMS Capital Value Fund, and sent to the P.O. Box listed below.
If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
IMS Capital Value Fund IMS Capital Value Fund
c/o American Data Services, Inc. c/o American Data Services, Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, New York 11788
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 800-934-5550 to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: IMS Capital Value Fund
D.D.A. # 485777197
Account Name _________________ (write in shareholder
name) For the Account # ______________ (write in
account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Fund. Any delays which may
occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Fund or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Fund.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to IMS Capital Value Fund and should be sent to the address listed
above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the Transfer Agent for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax advisor regarding
these plans is advisable. Custodial fees for an IRA will be paid by the
shareholder by redemption of sufficient shares of the Fund from the IRA unless
the fees are paid directly to the IRA custodian. You can obtain information
about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
IMS Capital Value Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or American Data Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (800) 934-5550. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) 934-5550. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $5,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services. The Fund retains IMS Capital Management, Inc., 10159 S.E.
Sunnyside Road, Suite 330, Portland, Oregon 97015 (the "Advisor") to manage the
assets of the Fund and is authorized to pay the Advisor a fee equal to an annual
average rate of 1.59% of the Fund's average daily net assets. The Advisor, an
Oregon corporation, is an independent investment advisory firm that has
practiced a large company, value-oriented, contrarian style of management for a
select group of clients since 1988. The Advisor currently manages accounts for
institutional clients, retirement plans, families, trusts and small businesses,
both taxable and non-taxable. Carl W. Marker has been primarily responsible for
the day-to-day management of the Fund's portfolio since its inception. Mr.
Marker has served as the Advisor's chairman, president and primary portfolio
manager since its founding in 1988, and began privately managing individual
common stocks in 1981. Mr. Marker, who graduated from the University of Oregon,
previously worked for divisions of both General Motors and Mercedes-Benz as a
financial systems analyst before founding IMS Capital Management, Inc. Mr.
Marker is regularly quoted by the press and has appeared in Smart Money
magazine, the Wall Street Transcript, and several other publications, and has
been a repeated guest on the PBS television program, Serious Money.
The Advisor determines the securities to be held or sold by the Fund,
and the portion of the Fund's assets to be held uninvested. The Advisor always
follows the Fund's investment objectives, policies and restrictions and any
policies and instructions of the Board of Trustees.
The Fund is responsible for the payment of all organizational and
operating expenses of the Fund, including brokerage fees and commissions; taxes
or governmental fees; interest; fees and expenses of the non-interested person
trustees; clerical and shareholder service staff salaries; office space and
other office expenses; fees and expenses incurred by the Fund in connection with
membership in investment company organizations; legal, auditing and accounting
expenses; expenses of registering shares under federal and state securities
laws; insurance expenses; fees and expenses of the custodian, transfer agent,
dividend disbursing agent, shareholder service agent, administrator, accounting
and pricing services agent and underwriter of the Fund; expenses, including
clerical expenses, of issue, sale, redemption or repurchase of shares of the
Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's shareholders; the cost of
printing or preparing statements, reports or other documents to shareholders;
expenses of shareholders' meetings and proxy solicitations; and such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Fund may be a party and indemnification of the Trust's trustees and
officers with respect thereto. The Fund will only be liable for organizational
expenses when the Fund reaches $10,000,000 in assets or when the Fund has been
in existence for at least one year.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Fund equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). In addition, the Advisor will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains American Data Services, Inc., P.O. Box 5536, Hauppauge, New York
11788-0132 (the "Transfer Agent") to serve as transfer agent, dividend paying
agent and shareholder service agent. The Trust retains AmeriPrime Financial
Securities, Inc., 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092 (the
"Distributor") to act as the principal distributor of the Fund's shares. The
services of the Administrator, Transfer Agent and Distributor are operating
expenses paid by the Fund.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a 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.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
The fund will invest primarily in U.S. equity securities consisting of
common stock, preferred stock and common stock equivalents such as convertible
preferred stock and convertible debentures, rights and warrants. Convertible
preferred stock is preferred stock that can be converted into common stock
pursuant to its terms. Convertible debentures are debt instruments that can be
converted into common stock pursuant to their terms. The Fund will not invest
more that 5% of its net assets in convertible preferred stock, convertible
debentures, rights or warrants. The Fund reserves the right to invest in foreign
stocks, through the purchase of American Depository Receipts (ADRs), provided
the companies have substantial operations in the U.S. and do not exceed 5% of
the Fund's net assets. ADRs are dollar-denominated receipts that are generally
issued in registered form by domestic banks, and represent the deposit with the
bank of a security of a foreign issuer.
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.
Fixed Income Securities
Although the Fund intends to invest primarily in U.S. common stocks, the Advisor
reserves the right, during periods of unusually high interest rates or unusual
market conditions, to invest in fixed income securities for preservation of
capital, total return and capital gain purposes, if the Advisor believes that
such a position would best serve the Fund's investment objective. Fixed income
securities include corporate debt securities, U.S. government securities and
participation interests in such securities. Fixed income securities are
generally considered to be interest rate sensitive, which means that their value
will generally decrease when interest rates rise and increase when interest
rates fall. Securities with shorter maturities, while offering lower yields,
generally provide greater price stability than longer term securities and are
less affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are long
and short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Advisor considers
corporate debt securities to be of investment grade quality if they are rated A
or higher by Standard & Poor's Corporation, or Moody's Investors Services, Inc.,
or if unrated, determined by the Advisor to be of comparable quality. Investment
grade debt securities generally have adequate to strong protection of principal
and interest payments. In the lower end of this category, credit quality may be
more susceptible to potential future changes in circumstances and the securities
have speculative elements. The Fund will not invest more than 5% of the value of
its net assets in securities that are below investment grade.
U.S. Government Obligations - U.S. government obligations may be backed
by the credit of the government as a whole or only by the issuing agency. U.S.
Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
<PAGE>
Investment Techniques
General
The Fund, on occasion, may write covered call options on securities
held within the portfolio, for income purposes, provided that such investments
do not exceed 5% of the Fund's net assets. The Fund may also use up to 5% of its
net assets to buy call or put options. The Fund may not engage in short sales of
any kind. For income purposes, the Fund may lend its portfolio securities from
time to time, provided that such transactions do not exceed 5% of the Fund's net
assets.
Repurchase Agreements - The Fund may invest in repurchase
agreements fully collateralized by U.S. Government obligations. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Fund)
acquires ownership of a U.S. Government obligation (which may be of any
maturity) and the seller agrees to repurchase the obligation at a future time at
a set price, thereby determining the yield during the purchaser's holding period
(usually not more than seven days from the date of purchase). Any repurchase
transaction in which the Fund engages will require full collateralization of the
seller's obligation during the entire term of the repurchase agreement. In the
event of a bankruptcy or other default of the seller, the Fund could experience
both delays in liquidating the underlying security and losses in value. However,
the Fund intends to enter into repurchase agreements only with Star Bank, N.A.
(the Fund's Custodian), other banks with assets of $1 billion or more and
registered securities dealers determined by the Advisor (subject to review by
the Board of Trustees) to be creditworthy. The Advisor monitors the
creditworthiness of the banks and securities dealers with which the Fund engages
in repurchase transactions.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. However, if the objectives of the
Fund would be better served, short-term profits or losses may be realized from
time to time.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of the Fund have equal voting rights and liquidation
rights.
Shareholder inquiries should be made by telephone to 800-934-5550, or
by mail, c/o American Data Services, Inc., P.O. Box 5536, Hauppauge, NY
11788-0132.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Advisor, Administrator or other
service providers to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Issue." The Advisor and Administrator have taken steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that are used and to obtain reasonable assurances that
comparable steps are being taken by the Fund's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund. In addition, the Advisor cannot make any
assurances that the Year 2000 Issue will not affect the companies in which the
Fund invests or worldwide markets and economies.
<PAGE>
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. Fund performance may be compared to
well-known indices of market performance including the Standard & Poor's (S&P)
500 Index or the Dow Jones Industrial Average. Fund performance may also be
compared to the Value Line Composite Index, an equally-weighted index of over
1,600 companies, including those which make up the S&P 500. The average market
capitalization of the composite is approximately $6 billion. Returns are gross
of fees and as of the end of the quarter.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Advisor Administrator
IMS Capital Management, Inc. AmeriPrime Financial Services, Inc.
10159 S.E. Sunnyside Road, Suite 330 1793 Kingswood Drive, Suite 200
Portland, Oregon 97015 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase and Independent Auditors
redemption requests) McCurdy & Associates CPA's, Inc.
American Data Services, Inc. 27955 Clemens Road
P.O. Box 5536 Westlake, Ohio 44145
Hauppauge, New York 11788-0132
Legal Counsel
Brown Cummins & Brown
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS PAGE
SUMMARY OF FUND EXPENSES.......................................................
Shareholder Transaction Expenses.....................................
Annual Fund Operating Expenses.......................................
FINANCIAL HIGHLIGHTS..........................................................
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES...........................................
HOW TO INVEST IN THE FUND......................................................
Initial Purchase......................................................
By Mail
By Wire
Additional Investments................................................
Automatic Investment Plan.............................................
Tax Sheltered Retirement Plans........................................
Other Purchase Information............................................
HOW TO REDEEM SHARES...........................................................
By Mail
By Telephone..........................................................
Additional Information................................................
SHARE PRICE CALCULATION........................................................
DIVIDENDS AND DISTRIBUTIONS...................................................
TAXES
OPERATION OF THE FUND.........................................................
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS....................
Equity Securities....................................................
Fixed Income Securities..............................................
Corporate Debt Securities....................................
U.S. Government Obligations..................................
Investment Techniques................................................
General
GENERAL INFORMATION...........................................................
Fundamental Policies.................................................
Portfolio Turnover...................................................
Shareholder Rights...................................................
Year 2000 Issue......................................................
PERFORMANCE INFORMATION.......................................................
<PAGE>
Marathon Value Fund
702 W. Idaho Street, Suite 810
Boise, ID 83702
For Information, Shareholder Services and Requests:
(800) 788-6086
PROSPECTUS
February 14, 1999
The investment objective of the Marathon Value Fund (the "Fund") is to
provide shareholders with maximum long term capital appreciation. The Fund's
advisor, Burroughs & Hutchinson, Inc. (the "Advisor"), seeks to achieve this
objective by investing in small and medium size companies that it believes to be
undervalued. These stocks are typically viewed as out-of-favor and have a share
price which does not reflect the intrinsic value of the company. The Advisor
believes its price driven, value-oriented approach will provide investors with
the opportunity for growth, while providing some protection against adverse
events.
The Fund is "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, distributed by AmeriPrime Financial
Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information dated February 14, 1999 has been filed with
the Securities and Exchange Commission (the "SEC"), is incorporated herein by
reference, and can be obtained without charge by calling the Fund at the phone
number listed above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on estimated amounts for the current
fiscal year. The expenses are expressed as a percentage of average net assets.
The Example should not be considered a representation of future Fund performance
or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. In addition, the Fund does not
have a 12b-1 Plan. Unlike most other mutual funds, the Fund does not pay
directly for transfer agency, pricing, custodial, auditing or legal services,
nor does it pay directly any general administrative or other significant
operating expenses. The Advisor pays all of the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases....................................NONE
Sales Load Imposed on Reinvested Dividends.........................NONE
Deferred Sales Load................................................NONE
Redemption Fees....................................................NONE
Exchange Fees......................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)1
Management Fees...................................................1.48%
12b-1 Charges.....................................................0.00%
Other Expenses (after reimbursement)2.............................0.00%
Total Fund Operating Expenses (after reimbursement)2.............1.48%
1 The fund's total operating expenses are equal to the management fee paid to
the Advisor because the Advisor pays all of the Fund's operating expenses
(except as described above).
2 The Advisor has voluntarily agreed to reimburse other expenses for the fiscal
year ended October 31, 1999 to the extent necessary to maintain total operating
expenses as indicated.
The tables above are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
.........1 Year 3 Years 5 years 10 Years
--------- ------- ------- --------
......... $ 15 $ 47 $81 $178
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period March 12, 1998 (commencement of operations) to October 31, 1998 is
derived from the audited financial statements of the Fund. The financial
statements of the Fund have been audited by McCurdy & Associates CPA's, Inc.,
independent public accountants, and are included in the Fund's Annual Report.
The Annual Report contains additional performance information and is available
upon request and without charge. <TABLE> <S> <C>
Net asset value, beginning of period $10.00
------------
Income from investment operations
Net investment income 0.02
Net realized and unrealized gain(loss) (1.54)
------------
Total from investment operations (1.52)
------------
Net asset value, end of period $8.48
============
Total Return -15.20%
Ratios and Supplemental Data
Net assets, end of period (000) $3,259
Ratio of expenses to average net assets 1.47% (a)
Ratio of expenses to average net assets
before reimbursement 1.50% (a)
Ratio of net investment income to average net assets 0.36% (a)
Ratio of net investment income to average net assets
before reimbursement 0.33% (a)
Portfolio turnover rate 61.04% (a)
<FN>
(a) Annualized
</FN>
</TABLE>
THE FUND
Marathon Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on March 9, 1998 and
commenced operations on March 12, 1998. This prospectus offers shares of the
Fund and each share represents an undivided, proportionate interest in the Fund.
The investment advisor to the Fund is Burroughs & Hutchinson, Inc. (the
"Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
The investment objective of the Fund is to provide shareholders with
maximum long term capital appreciation. The Advisor seeks to achieve this
objective by investing in small and medium size companies that it believes to be
undervalued. These stocks are typically viewed as out-of-favor and have a share
price which does not reflect the intrinsic value of the company. The Advisor
believes its price driven, value-oriented approach will provide investors with
the opportunity for growth, while providing some protection against adverse
events. The Fund is designed for shareholders with a long term investment
horizon.
The Fund intends to invest primarily in equity securities of small and
mid-cap companies whose value has been ignored by other investors. These stocks
are typically found at the bottom of the rankings in terms of price-to-book
value, price-to-earnings or price-to-cash flow. These securities include
attractively priced, stable businesses that have not yet been discovered or
become popular, companies having a new catalyst for appreciation, companies that
have declined in value and lost their following, and previously popular
companies out of favor due to circumstances the Advisor believes to be
temporary.
The Advisor considers small capitalization companies to be those with a
market capitalization of less than $1 billion and mid-capitalization companies
to be those with the same capitalization ranges as companies in the Russell
Midcap Index. The Russell Midcap Index is an unmanaged index of equity
securities of companies which, as of June 30, 1998, ranged in capitalization
from $1 billion to $10 billion. It is expected that small-cap company securities
will range from 15% to 40%, and mid-cap company securities will range from 60%
to 85%, of the Fund's net assets. Investments in companies whose capitalizations
grow above the maximum capitalization level of the Russell Midcap Index may
continue to be held if they are deemed by the Advisor to be particularly
attractive.
The Advisor generally plans to stay fully invested (subject to
liquidity requirements) in common stocks, preferred stocks, and common stock
equivalents (such as securities convertible into common stocks), regardless of
price movements. For temporary defensive purposes, the Fund may hold all or a
portion of its assets in money market instruments, securities of other no-load
registered investment companies or U.S. government repurchase agreements. The
Fund may also invest in such instruments at any time to maintain liquidity or
pending selection of investments in accordance with its policies. If the Fund
acquires securities of another investment company, the shareholders of the Fund
will be subject to duplicative management fees.
By investing primarily in small and mid-capitalization companies, the
Fund will be subject to the risks associated with such companies. Smaller
capitalization companies may experience higher growth rates and higher failure
rates than do larger capitalization companies. Companies in which the Fund is
likely to invest may have limited product lines, markets or financial resources
and may lack management depth. The trading volume of securities of smaller
capitalization companies is normally less than that of larger capitalization
companies, and, therefore, may disproportionately affect their market price,
tending to make them rise more in response to buying demand and fall more in
response to selling pressure than is the case with larger capitalization
companies. The Advisor seeks to reduce risk by buying "cheap" stocks,
diversifying broadly and avoiding the institutional favorites.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. It should be noted that the Advisor has not previously managed
assets organized as a mutual fund and has no experience managing a portfolio
composed of small and mid-capitalization stocks. In addition, the Fund has no
operating history. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques" for a more
detailed discussion of the Fund's investment practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis, subject to a minimum initial investment of
$2,500 and minimum subsequent investments of $100. These minimums may be waived
by the Advisor for accounts participating in an automatic investment program.
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to Marathon Value Fund, and sent to the address listed below.
U.S. Mail: Overnight:
Marathon Value Fund Marathon Value Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services,Inc.
P.O. Box 6110 431 N. Pennsylvania Street
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
Your purchase of shares of the Fund will be effected at the next share
price calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at (800) 788-6086 to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
......... Star Bank, N.A. Cinti/Trust
......... ABA #0420-0001-3
Attn: Marathon Value Fund
D.D.A. #488886904
Account Name _________________ (write in shareholder
name) For the Account # ______________ (write in
account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Fund. Any delays which may
occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Fund or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Fund.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to Marathon Value Fund and should be sent to the address listed
above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment plans (for employees of
public school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Transfer Agent for the
procedure to open an IRA or SEP plan, as well as more specific information
regarding these retirement plan options. Consultation with an attorney or tax
advisor regarding these plans is advisable. Custodial fees for an IRA will be
paid by the shareholder by redemption of sufficient shares of the Fund from the
IRA unless the fees are paid directly to the IRA custodian. You can obtain
information about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a securities dealer may be charged a fee by that institution.
By Mail - You may redeem any part of your account in the Fund at no charge
by mail. Your request should be addressed to:
Marathon Value Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, IN 46206-6110
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or Unified Fund Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (800) 788-6086. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) 788-6086. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,500 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains Burroughs & Hutchinson, Inc. 702 W. Idaho Street,
Suite 810, Boise, ID 83702 (the "Advisor") to manage the Fund's investments.
Burroughs & Hutchinson has been providing portfolio management services since
its founding in 1967 by A.H. Burroughs III. The Advisor provides equity,
balanced and fixed income portfolio management services to a select group of
corporations, institutions, foundations, trusts and high net worth individuals.
The Advisor currently manages over $240 million in assets for clients.
Mark Matsko has been primarily responsible for the day-to-day
management of the Fund's portfolio since its inception. A graduate of the
University of Montana in 1980 with a B.S. degree in accounting, he passed his
CPA exam and worked as a tax accountant at Arthur Andersen & Co. After leaving
Arthur Andersen, he worked for and became president of Great Falls Coca-Cola. A
Chartered Financial Analyst (CFA), his work in the investment business during
the last ten years has included positions as a broker, a security analyst, and
manager of his own hedge fund. Since 1986, Mr. Matsko has been a portfolio
manager with Burroughs & Hutchinson.
The Advisor determines the securities to be held or sold by the Fund,
and the portion of the Fund's assets to be held uninvested. The Advisor always
follows the Fund's investment objectives, policies and restrictions and any
policies and instructions of the Board of Trustees. The Fund is authorized to
pay the Advisor a fee equal to an annual average rate of 1.48% of its average
daily net assets. The Advisor pays all of the operating expenses of the Fund
except brokerage, taxes, interest , fees and expenses of non-interested person
trustees and extraordinary expenses. In this regard, it should be noted that
most investment companies pay their own operating expenses directly, while the
Fund's expenses, except those specified above, are paid by the Advisor.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Advisor equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). In addition, the Advisor will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains Unified Fund Services, Inc., 431 N. Pennsylvania St., Indianapolis,
IN 46204 (the "Transfer Agent") to serve as transfer agent, dividend paying
agent and shareholder service agent. The Trust retains AmeriPrime Financial
Securities, Inc., 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092 (the
"Distributor") to act as the principal distributor of the Fund's shares. The
services of the Administrator, Transfer Agent and Distributor are operating
expenses paid by the Advisor.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Advisor (not the fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a 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.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
The Fund will invest primarily in U.S. equity securities of small and
mid-capitalization issuers. Equity securities include common stock and
securities exchangeable for common stock, such as convertible securities, rights
and warrants. The Fund will not invest more than 5% of the value of its net
assets in convertible securities, rights, warrants or real estate investment
trusts. Although equity securities have a history of long-term growth in value,
their prices fluctuate based on changes in a company's financial condition and
on overall market and economic conditions. Smaller companies are especially
sensitive to these factors. The Fund intends to invest primarily in U.S. equity
securities, but reserves the right to invest in short-term cash equivalent
securities, either for temporary defensive purposes or as part of its overall
strategy.
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.
Investment Techniques and Other Investments
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government and agency obligations and
instrumentalities. The Fund may buy and sell securities on a when-issued or
delayed delivery basis, with payment and delivery taking place at a future date,
but investment in such securities may not exceed 5% of the Fund's net assets.
The Fund may buy and write put options, and may buy call options and write
covered call options, on individual securities and market indices, provided the
Fund's investment in options (including premiums and potential settlement
obligations) does not exceed 5% of its net assets. The Fund will not invest more
than 5% of its net assets in illiquid securities, including repurchase
agreements maturing in more than seven days. Also limited to 5% of the Fund's
net assets is the Fund's investment in indexed securities and in STRIPs
(Separate Trading of Registered Interest and Principal of Securities). The
Federal Reserve creates STRIPs by separating the coupon payments and the
principal payments from the outstanding Treasury security and selling them as
individual securities.
Loans of Portfolio Securities
The Fund may make short and long term loans of its portfolio
securities. Under the lending policy authorized by the Board of Trustees and
implemented by the Advisor in response to requests of broker-dealers or
institutional investors which the Advisor deems qualified, the borrower must
agree to maintain collateral, in the form of cash or U.S. government
obligations, with the Fund on a daily mark-to-market basis in an amount at least
equal to 100% of the value of the loaned securities. The Fund will continue to
receive dividends or interest on the loaned securities and may terminate such
loans at any time or reacquire such securities in time to vote on any matter
which the Board of Trustees determines to be important. With respect to loans of
securities, there is the risk that the borrower may fail to return the loaned
securities or that the borrower may not be able to provide additional
collateral.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Advisor believes that market conditions, creditworthiness factors or general
economic conditions warrant such action.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of the Fund have equal voting rights and liquidation
rights.
Shareholder inquiries should be made by telephone to 800-788-6086, or
by mail, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110.
Year 2000 Issue. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Advisor, Administrator or other
service providers to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Issue." The Advisor and Administrator have taken steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that are used and to obtain reasonable assurances that
comparable steps are being taken by the Fund's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund. In addition, the Advisor cannot make any
assurances that the Year 2000 Issue will not affect the companies in which the
Fund invests or worldwide markets and economies.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Russell
Mid-Cap Index.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Advisor Administrator
Burroughs & Hutchinson, Inc. AmeriPrime Financial Services, Inc.
702 W. Idaho Street, Suite 810 1793 Kingswood Drive, Suite 200
Boise, ID 83702 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Services, Inc.
425 Walnut St., M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors all redemption requests)
McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania St. Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS Page
SUMMARY OF FUND EXPENSES
Shareholder Transaction Expenses
Annual Fund Operating Expenses
FINANCIAL HIGHLIGHTS
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
HOW TO INVEST IN THE FUND
Initial Purchase
Additional Investments
Automatic Investment Plan
Tax Sheltered Retirement Plans
Other Purchase Information
HOW TO REDEEM SHARES
By Mail
By Telephone
Additional Information
SHARE PRICE CALCULATION
DIVIDENDS AND DISTRIBUTIONS
TAXES
OPERATION OF THE FUND
INVESTMENT POLICIES AND TECHNIQUES
Equity Securities
Investment Techniques and Other Investments Loans of Portfolio Securities
GENERAL INFORMATION
Fundamental Policies
Portfolio Turnover
Shareholder Rights
Year 2000 Issue
PERFORMANCE INFORMATION
<PAGE>
Supplement Dated , 1999 to the
Prospectus Dated , 1999 of the
NewCap Contrarian Fund
The Board of Trustees of the AmeriPrime Funds has determined, in light
of current market conditions and the relatively small size of the New Cap
Contrarian Fund, that the Fund should no longer pursue its investment objective
and instead should invest 100% of its assets in cash equivalents, money market
funds and investment grade debt securities. These changes in investments and
strategy will remain in effect until further notice. In addition, shares of the
Fund are no longer available for purchase, and the Fund will no longer incur
expenses pursuant to its Distribution Plan, although shares will continue to be
redeemable in accordance with the Prospectus.
This Supplement, and the Prospectus dated , 1998, contain information
that you should know before investing in the Fund and should be retained for
future reference. Additional information is included in the Statement of
Additional Information dated , 1998, which has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. It is available
upon request and without charge by calling (800) .
<PAGE>
THE NEWCAP CONTRARIAN FUND
PROSPECTUS February 14, 1999
23775 Commerce Park Road
Cleveland, Ohio 44122
For Information, Shareholder Services and Requests:
Call toll free: 800-466-7678
Local: 216-514-5151
The NewCap Contrarian Fund (the "Fund") is a no-load mutual fund whose
investment objective is to provide maximum long term growth. The Fund seeks to
achieve its objective by aggressively investing world-wide in securities of
growing companies which its Advisor, Newport Investment Advisors, Inc. believes
are attractively priced and offer investment value. The Fund's aggressive
investment approach may be appropriate for investors who seek potentially high
long term returns and are willing to accept the risks inherent in that approach,
including potentially significant fluctuations in the Fund's share price. The
Fund is a non-diversified fund, and this Prospectus provides additional
information relating to the additional risks associated with
non-diversification.
The Fund is "no-load," which means there are no sales charges or
commissions. The Fund is one of the mutual funds comprising AmeriPrime Funds, an
open-end management investment company, and is distributed by AmeriPrime
Financial Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information dated February 14, 1999, which has been
filed with the Securities and Exchange Commission (the "SEC"), is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
The Board of Trustees of the AmeriPrime Funds has determined, in light
of current market conditions and the relatively small size of the New Cap
Contrarian Fund, that the Fund should no longer pursue its investment objective
and instead should invest 100% of its assets in cash equivalents, money market
funds and investment grade debt securities. These changes in investments and
strategy will remain in effect until further notice. In addition, shares of the
Fund are no longer available for purchase, and the Fund will no longer incur
expenses pursuant to its Distribution Plan, although shares will continue to be
redeemable in accordance with the Prospectus.
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on the most recent fiscal year. The
expenses are expressed as a percentage of average net assets. The Example should
not be considered a representation of future Fund performance or expenses, both
of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. Unlike most other mutual funds,
the Fund does not pay directly for transfer agency, pricing, custodial, auditing
or legal services, nor does it pay directly any general administrative or other
significant operating expenses (except for 12b-1 fees). The Advisor pays all of
the operating expenses of the Fund except 12b-1 fees, brokerage, taxes,
interest, fees and expenses of non-interested person trustees and extraordinary
expenses.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases...........................................NONE
Sales Load Imposed on Reinvested Dividends.................................NONE
Deferred Sales Load.........................................................NONE
Redemption Fees.............................................................NONE
Exchange Fees...............................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees........................................................... 0.00%
Fees1 ....................................................................0.00%
Other Expenses.............................................................0.00%
Total Fund Operating Expenses..............................................0.00%
1........Expense information has been restated to reflect current fees. No
expenses will be charged for the year ended October 31, 1999.
.........The tables above are provided to assist an investor in
understanding the direct and indirect expenses that an investor may incur as a
shareholder in the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
........ 1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
.. $0 $0 $0 $0
THE FUND
The NewCap Contrarian Fund, formerly known as the MAXIM Contrarian Fund
(the "Fund"), was organized as a non-diversified series of AmeriPrime Funds, an
Ohio business trust (the "Trust"), on December 26, 1995, and commenced
operations on May 2, 1996. This prospectus offers shares of the Fund and each
share represents an undivided, proportionate interest in the Fund. The
investment advisor to the Fund is Newport Investment Advisors, Inc. (the
"Advisor").
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period May 2, 1996 (commencement of operations) to October 31, 1996 and for the
fiscal years ended October 31, 1997 and 1998 is derived from the audited
financial statements of the Fund. The financial statements of the Fund have been
audited by McCurdy & Associates CPA's, Inc., independent public accountants, and
are included in the Statement of Additional Information. The Fund's Annual
Report contains additional performance information and will be made available
upon request and without charge.
<TABLE>
<S> <C> <C> <C>
For the periods ended October 31 1998 1997 1996 (b)
Selected Per Share Data
Net asset value, $8.76 $9.21 $10.00
--------------- ------------ -------------
begining of period
Income from investment operations
Net investment income (0.15) (0.22) (0.05)
Net realized and unrealized gain (loss) (4.43) (0.23) (0.74)
--------------- ------------ -------------
Total from investment operations (4.58) (0.45) (0.79)
--------------- ------------ -------------
Less Distributions
From net capital gain (0.07) - -
--------------- ------------ -------------
Net asset value,
end of period $4.11 $8.76 $9.21
=============== ============ =============
Total Return (51.76)% (4.89)% (15.80)% (a)
Ratios and Supplemental Data
Net assets, end of period (000) $358 $1,682 $1,508
Ratio of expenses to
average net assets 2.82% 2.83% 2.89% (a)
Ratio of net investment income to
average net assets (2.16)% (2.56)% (1.16)% (a)
Portfolio turnover rate 146% 92% (a)
<FN>
(a) Annualized
(b) May 2, 1996 (Commencement of Operations) to October 31, 1996. </FN> </TABLE>
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide maximum long term
growth. The Fund seeks to achieve its objective by aggressively investing
world-wide in securities of growing companies which the Advisor believes are
attractively priced and offer investment value. Unlike many mutual funds with
this investment objective, the Fund will attempt to achieve its investment
objective in declining equity markets as well as in rising equity markets. The
Fund's aggressive investment approach may be appropriate for investors who seek
potentially high long term returns and are willing to accept the risks inherent
in that approach, including potentially significant fluctuations in the Fund's
share price.
The Fund focuses its investments primarily on equity securities of
domestic, multinational and foreign companies whose potential values generally
are not recognized by the investing public. Such companies include viable
businesses that have been overlooked by other investors, or that are unpopular
as a result of actual or anticipated unfavorable developments or other factors
affecting the companies, their industries or markets in general. The Advisor may
choose smaller companies that it believes offer significant investment value,
even if they involve more risk. Dividend and interest income received from
portfolio securities is not a significant consideration.
The Advisor generally intends to stay fully invested (subject to
liquidity requirements and defensive purposes) in equity and debt securities of
U.S. and foreign companies. The Fund may invest in debt securities of all types
and qualities, including lower quality securities with more risk. The Fund may
also pursue investment opportunities by investing in indexed securities,
options, futures contracts and precious metals, and by using other aggressive
investment techniques involving leverage and other risks. In selecting
securities for inclusion in the Fund's portfolio, the Advisor may analyze
issuers of all sizes, industries, and geographical markets, including restricted
securities of companies issued in private placements. To retain investment
flexibility, the Fund may be non-diversified to some extent. To the extent that
the Fund invests a significant portion of its assets in a few issuers'
securities, the performance of the Fund could be significantly affected by the
performance of those issuers.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, the aggressive investment techniques of the Fund
may entail risks not encountered by the average mutual fund. See "Investment
Policies, Techniques and Risk Considerations" for a more detailed discussion of
the Fund's investment practices. Investors should also be aware that the Advisor
has no prior experience in acting as an investment advisor to a mutual fund and
that the Fund has no operating history.
HOW TO INVEST IN THE FUND
Shares of the Fund are sold on a continuous basis, and you may invest
any amount you choose, as often as you wish, subject to a minimum initial
investment of $2,500 ($1,000 for IRA retirement accounts) and minimum subsequent
investments of $500 ($100 for IRA retirement accounts). Investors choosing to
purchase or redeem their shares through a broker/dealer or other institution may
be charged a fee by that institution. Investors choosing to purchase or redeem
shares directly from the Fund will not incur charges on purchases or
redemptions.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to The NewCap Contrarian Fund, and sent to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
The NewCap Contrarian Fund The NewCap Contrarian Fund
c/o American Data Services, Inc. c/o American Data Services, Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, New York 11788
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 516-385-9580 to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: The NewCap Contrarian Fund Master Account
D.D.A. # 485772974
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Fund. Any delays which may
occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Fund or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Fund.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to The NewCap Contrarian Fund and should be sent to the address
listed above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement accounts (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); 403(b)(7) tax deferred retirement plans (for employees of public
school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Transfer Agent for the
procedure to open an IRA or SEP plan, as well as more specific information
regarding these retirement plan options. Consultation with an attorney or tax
adviser regarding these plans is advisable. Custodial fees for an IRA will be
paid by the shareholder by redemption of sufficient shares of the Fund from the
IRA unless the fees are paid directly to the IRA custodian. You can obtain
information about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charge a fee by that
institution. Investors choosing to purchase or redeem shares directly from the
Fund will not incur charges on purchases or redemptions.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
The NewCap Contrarian Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or American Data Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (516) 385-9580. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (516) 385-9580. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $1,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax adviser concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
After the initial three months of the Fund's operations, any account opened
during the initial three month period will be subject to the redemption
provisions described above.
<PAGE>
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day the Fund is open for business on which there
is sufficient trading in the Fund's securities to materially affect the net
asset value. The net asset value per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a non-diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
<PAGE>
The Fund retains Newport Investment Advisors, Inc., 23775 Commerce Park
Road, Cleveland, Ohio 44122 (the "Advisor") to manage the Fund's investments.
The Advisor, an Ohio corporation, provides investment management services to
taxable and tax-exempt clients, and currently manages approximately $250 million
in assets. Kenneth M. Holeski, controlling shareholder of the Advisor, has
served as the President of the Advisor since its founding in 1989. He is
primarily responsible for the day-to-day management of the portfolio of the
Fund. Prior to 1996, Mr. Holeski was also the Vice President of Newport
Evaluation Services, Inc., a consulting firm that primarily monitors the
performance of money managers on behalf of retirement funds.
The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 2.50% of its average daily net assets; however, no expenses will
be charged. The Advisor pays all of the operating expenses of the Fund except
12b-1 fees, brokerage, taxes, interest, fees and expenses of non-interested
person trustees and extraordinary expenses. It should be noted that most mutual
funds pay their own operating expenses directly, while the Fund's expenses,
except those specified above, are paid by the Advisor. The 12b-1 fees paid by
the Fund are described below under "Distribution Plan."
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Advisor equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). The Fund retains American Data Services, Inc., P.O.
Box 5536, Hauppauge, New York 11788-0132 (the "Transfer Agent") to serve as
transfer agent, dividend paying agent and shareholder service agent. The Trust
retains AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092 (the "Distributor") to act as the principal distributor
of the Fund's shares The services of the Administrator, Transfer Agent and
Distributor are operating expenses paid by the Advisor.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. WRP Investments, Inc., a registered broker dealer of
which Mr. Holeski is a registered representative and branch manager, may receive
brokerage commissions from the Fund on a basis comparable to trades placed with
unaffiliated broker dealers. Mr. Holeski does not receive compensation on these
trades.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "Plan") under which the Fund may pay the
Advisor an amount which is accrued daily and paid monthly, at an annual rate of
0.25% of the average daily net assets of the Fund. The Board of Trustees has
determined that, until further notice, no distribution expenses are to be
incurred pursuant to the Plan. Amounts paid, if any, under the Plan by the Fund
are in addition to the advisory fee described above and are paid to the Advisor
for services it provides and the expenses it bears in the distribution of the
Fund's shares, including overhead and telephone expenses; printing and
distribution of prospectuses and reports used in connection with the offering of
the Fund's shares to prospective investors; and preparation, printing and
distribution of sales literature and advertising materials. In addition,
payments to the Advisor under the Plan may reimburse the Advisor for payments it
makes to selected dealers and administrators which have entered into Service
Agreements with the Advisor for services provided to shareholders of the Fund.
The services provided by selected dealers pursuant to the Plan are primarily
designed to promote the sale of shares of the Fund and include the furnishing of
office space and equipment, telephone facilities, personnel and assistance to
the Fund in servicing such shareholders. The service provided by administrators
pursuant to the Plan are designed to provide support services to the Fund and
include establishing and maintaining shareholders' accounts and records,
processing purchase and redemption transactions, answering routine client
inquiries regarding the Fund, and providing such other services to the Fund as
the Fund may reasonably request. The Advisor may also compensate such dealers
and administrators out of its own assets.
INVESTMENT POLICIES, TECHNIQUES AND RISK CONSIDERATIONS
The Fund may invest in the following portfolio securities, may engage
in the following practices and will be subject to the following risks and
limitations:
Equity Securities. The Fund emphasizes investments in common stocks,
which represent an equity (ownership) interest in a corporation. The Fund also
may buy securities such as convertible debt, preferred stock, warrants, or other
securities exchangeable for shares of common stock, and publicly-traded
partnership interests. In selecting equity investments for the Fund, the Advisor
considers the fundamental value of the issuing company as well as market and
economic factors that affect securities prices.
Debt Securities. The Fund may invest up to 35% of its assets in debt
securities, including lower quality, high yielding debt securities if it
believes that doing so will result in capital appreciation or will earn income
on idle cash. The Fund may buy debt securities of all types and qualities issued
by both domestic and foreign issuers, including government securities, corporate
bonds and debentures, commercial paper, and certificates of deposit.
Lower quality debt securities (commonly called "junk bonds") often are
considered to be speculative and involve greater risk of default or price change
due to changes in the issuer's creditworthiness or changes in economic
conditions. The market prices of these securities will fluctuate over time, may
fluctuate more than higher quality securities and may decline significantly in
periods of general economic difficulty, which may follow periods of rising
interest rates. The market for lower quality securities may be less liquid than
the market for securities of higher quality. Furthermore, the liquidity of lower
quality securities may be affected by the market's perception of their credit
quality. Therefore, judgment may at times play a greater role in valuing these
securities than in the case of higher quality securities, and it also may be
more difficult during certain adverse market conditions to sell lower quality
securities at their fair value to meet redemption requests or to respond to
changes in the market.
Foreign Securities. Foreign debt and equity securities, and securities
denominated in or indexed to foreign currencies may be affected by the strength
of those currencies relative to the U.S. dollar, or by political or economic
developments in foreign countries. These developments could include restrictions
on foreign currency transactions and rules of exchange, or changes in
administrations or monetary policies of foreign governments. Foreign securities
purchased using foreign currencies may incur currency conversion costs. Foreign
issuers and brokers may not be subject to accounting standards or governmental
supervision comparable to U.S. issuers and brokers, and there may be less public
information about their operations. In addition, foreign markets may be less
liquid or more volatile than U.S. markets, and may offer less protection to
investors.
The Fund may enter into forward contracts (agreements to exchange one
currency for another at a future date) to manage currency risks and to
facilitate transactions in foreign securities. Although currency forward
contracts can be used to protect the Fund from adverse exchange rate changes,
the Fund may incur a loss if the Advisor incorrectly predicts foreign currency
values.
There is no limitation on the amount of the Fund's assets that may be
invested in foreign securities or in any one country or currency, except that no
more than 35% of the Fund's assets may be invested in companies operating
exclusively in one foreign country.
Indexed Securities. The Fund may invest in indexed securities whose
value is linked to currencies, interest rates, commodities, indices, or other
financial indicators (the "reference index"). Most indexed securities are short
to intermediate term fixed-income securities whose values at maturity or
interest rates rise or fall according to the change in one or more specified
underlying instruments. Indexed securities may be positively or negatively
indexed (i.e., their value may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar to direct investments
in the underlying instrument or to one or more options on the underlying
instrument. Indexed securities may be more volatile than the underlying
instrument itself. Because their performance is tied to a reference index, a
fund investing in indexed securities bears the risk of changes in the reference
index in addition to being exposed to the credit risk of the issuer of the
security.
Repurchase Agreements. In a repurchase agreement, the Fund buys a
security at one price and simultaneously agrees to sell it back later at a
higher price. The repurchase date is usually within seven days of the original
purchase. If the other party to a repurchase agreement becomes bankrupt or
otherwise defaults on its obligation to repurchase the security, the Fund may
experience delays in recovering its cash. To the extent that the value of the
security purchased has decreased in the meantime, the Fund could experience a
loss. The Fund's repurchase agreements are fully collateralized.
When Issued Securities and Forward Commitments. The Fund may buy and
sell securities on a when-issued or delayed delivery basis, with payment and
delivery taking place at a future date. The price and interest rate that will be
received on the securities are each fixed at the time the buyer enters into the
commitment. The Fund may enter into such forward commitments if it holds, and
maintains until the settlement date in a separate account at the Fund's
Custodian, cash or U.S. government securities in an amount sufficient to meet
the purchase price. Forward commitments involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date. Any change
in value could increase fluctuations in the Fund's share price and yield.
Although the Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio, the Fund may dispose of a
commitment prior to the settlement if the Advisor deems it appropriate to do so.
Borrowing and Leverage; Reverse Repurchase Agreements. The Fund may
borrow from banks up to one third of its total assets, and the Fund may pledge
assets in connection with such borrowings. The Fund also may engage in reverse
repurchase agreements in which the Fund sells a security to another party, such
as a bank, broker-dealer or other financial institution, and simultaneously
agrees to buy it back later at a higher price. While a reverse repurchase
agreement is outstanding, the Fund generally will direct its custodian to
segregate cash and appropriate liquid assets to cover its obligations under the
agreement. The Fund will enter into reverse repurchase agreements only with
parties whose creditworthiness has been reviewed and deemed satisfactory by the
Advisor. Except for reverse repurchase agreements that it fully collateralizes,
the Fund aggregates reverse repurchase agreements with its bank borrowings for
purposes of limiting borrowings to one third of its total assets.
If the Fund makes additional investments while borrowings are
outstanding, this may be construed as a form of leverage. The Fund's objective
would be to pursue investment opportunities with yields that exceed the cost of
the borrowings. This leverage may exaggerate changes in the Fund's share value
and the gains and losses on the Fund's investment. Leverage also creates
interest expenses that may exceed the return on investments made with the
borrowings.
Lending. The Fund may lend securities to broker-dealers and other
institutions as a means of earning additional income. Under the lending policy
authorized by the Board of Trustees and implemented by the Advisor in response
to requests of broker-dealers or institutional investors which the Advisor deems
qualified, the borrower must agree to maintain collateral, in the form of cash
or U.S. government obligations, with the Fund at least equal to 100% of the
current market value of the loaned securities. The Fund will continue to receive
dividends or interest on the loaned securities and may terminate such loans at
any time or reacquire such securities in time to vote on any matter when the
Board of Trustees determines voting to be in the Fund's interest. If the
borrower becomes bankrupt or otherwise defaults on its obligations, the Fund
could experience delays in recovering its securities. To the extent that, in the
meantime, the value of securities loaned had increased, the Fund could
experience a loss if the borrower had not maintained sufficient collateral.
Loans, in the aggregate, may not exceed one third of the Fund's total assets.
Short Sales. If the Fund anticipates that the price of a security will
decline, it may sell the security short. When the Fund engages in a short sale,
it sells a security it does not own and, to complete the sale, borrows the same
security from a broker or other institution. The Fund must replace the borrowed
security by purchasing it at the market price at the time the Fund chooses to
close the short sale, or at the time it is required to do so by the lender,
whichever is earlier. The Fund may make a profit or loss depending upon whether
the market price of the security decreases or increases between the date of the
short sale and the date on which the Fund must replace the borrowed security.
In connection with its short sales, the Fund will be required to
maintain a segregated account with its custodian of cash or U.S. Government
Securities or other high grade liquid debt securities equal to the market value
of the securities sold less any collateral deposited with its broker. The Fund
will limit its short sales so that no more than 25% of its net assets (less all
its liabilities other than obligations under the short sales) will be deposited
as collateral and allocated to the segregated account. However, the segregated
account and deposits will not necessarily limit the Fund's potential loss on a
short sale, which is unlimited. The Fund limits short sales of any one issuer's
securities to 2% of the Fund's total assets and to 2% of any one class of the
issuer's securities.
Options and Futures Contracts. The Fund may buy and sell options and
futures contracts to manage its exposure to changing interest rates, security
prices, currency exchange rates and precious metal prices. Some options and
futures strategies, including selling futures, buying puts, and writing calls,
hedge the Fund's investment against price fluctuations. Other strategies,
including buying futures, writing puts, and buying calls, tend to increase
market exposure. Options and futures may be combined with each other or with
forward contracts in order to adjust the risk and return characteristics of the
overall strategy. The Fund may invest in options and futures based on any type
of security, index, or currency related to its investments, including options
and futures traded on foreign exchanges and options not traded on exchanges. The
Fund also may invest in precious metal options and futures.
Options and futures can be volatile investments, and involve certain
risks. If the Advisor applies a hedge at an inappropriate time or judges market
conditions incorrectly, options and futures strategies may lower the Fund's
return. Options and futures traded on foreign exchanges generally are not
regulated by U.S. authorities, and may offer less liquidity and less protection
to the Fund if the other party to the contract defaults. The Fund also could
experience losses if the prices of its options and futures positions were poorly
correlated with its other investments, or if it could not close out its
positions because of an illiquid secondary market. In addition, losses from
certain futures transactions are potentially unlimited.
The Fund will not hedge more than 25% of its total assets by selling
futures or writing calls under normal conditions. In general, the Fund also will
not write put options if its settlement obligations would exceed 25% of its
total assets. In addition, the Fund will not buy futures, put options or call
options for other than hedging purposes with an aggregate value exceeding 5% of
its total assets.
Precious Metals. The Fund may invest up to 5% of its total assets in
gold, silver, platinum or other precious metals. Gold and other precious metals
have been subject to substantial price fluctuations over short periods of time
and may be affected by unpredictable international monetary and other
governmental policies, and economic and social conditions. In addition, the Fund
may invest without limitation in securities of companies principally engaged in
exploration, mining or processing of gold or other precious metals and minerals.
These securities involve additional risk because the price volatility of
precious metals has an increased impact on their market value.
Zero Coupon Debt Securities and Pay-in-Kind Securities. The Fund may
invest in zero coupon securities and pay-in-kind securities. Zero coupon debt
securities do not make interest payments; instead, they are sold at a discount
from face value and are redeemed at face value when they mature. Pay-in-kind
securities pay all or a portion of their interest or dividends in the form of
additional securities. Both these types of bonds allow an issuer to avoid the
need to generate cash to meet current interest payments and, accordingly, may
involve greater credit risks than debt securities that make regular interest
payments. Because these securities do not pay current income, their prices can
be very volatile when interest rates change. In calculating its daily dividend,
the Fund takes into account as income a portion of the difference between the
bond's purchase price and its face value. Although zero coupon bonds and
pay-in-kind bonds pay no interest to holders prior to maturity, interest on
these securities is reported as income to the Fund and included with dividends
paid to the Fund's shareholders, if any. These dividends must be made from the
Fund's cash assets or, if necessary, from the proceeds of sales of portfolio
securities. The Fund will not be able to purchase additional income-producing
securities with cash used to pay such dividends, and its current income
ultimately may be reduced as a result.
Illiquid Investments. Under the supervision of and pursuant to the
guidelines adopted by the Board of Trustees, the Advisor determines which of the
Fund's investments are classified as illiquid. Illiquid securities generally
include securities which cannot be disposed of promptly and in the ordinary
course of business without taking a reduced price. Securities may be illiquid
due to contractual or legal restrictions on resale or lack of a ready market.
The absence of a trading market can make it difficult to ascertain a market
value for illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for the Fund to sell them promptly at an acceptable price. The Fund
may not invest more than 15% of its net assets in illiquid investments.
Other Investments. For temporary defensive purposes under adverse
market conditions, the Fund may invest up to 100% of its assets in cash
equivalents, money market funds and investment grade debt securities. The Fund
may also invest in such instruments at any time to maintain liquidity or pending
selection of investments in accordance with its policies. To the extent the Fund
acquires the securities of a money market fund, the shareholders of the Fund
will be subject to duplicative management fees.
Investment Risks.
The aggressive investment techniques of the Fund may entail risks not
encountered by the average mutual fund. Some techniques, such as short sales,
use of put and call options and futures, investments in foreign securities,
leverage and short term trading, may be considered speculative and could result
in higher operating expenses.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Advisor believes that market conditions, creditworthiness factors or general
economic conditions warrant such action. The Fund's portfolio turnover rate may
exceed 100%. To the extent it does, the brokerage commissions incurred by the
Fund will generally be higher than those incurred by a fund with a lower
portfolio turnover rate. The Fund's higher turnover rate may result in the
realization, for federal tax purposes, of more net capital gains, and any
distributions derived from such gains may be ordinary income.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. However,
the Declaration of Trust contains provisions which authorize the shareholders to
call a meeting under certain circumstances. When matters are submitted to
shareholders for a vote, each shareholder is entitled to one vote for each whole
share he owns and fractional votes for fractional shares he owns. All shares of
the Fund have equal voting rights and liquidation rights. As of January 31,
1999, Cheryl and Kenneth Holeski may be deemed to control the Fund as a result
of their beneficial ownership of the shares of the Fund.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual return." A non-standardized quotation of total return may be a cumulative
return which measures the percentage change in the value of an account between
the beginning and end of a period, assuming no activity in the account other
than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index or the Dow Jones Industrial Average.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Advisor Administrator
Newport Investment Advisors, Inc. AmeriPrime Financial Services, Inc.
23775 Commerce Park Road 1793 Kingswood Drive, Suite 200
Cleveland, Ohio 44122 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase and Auditors
redemption requests) McCurdy & Associates CPA's, Inc.
American Data Services, Inc. 27955 Clemens Road
P.O. Box 5536 Westlake, Ohio 44145
Hauppauge, New York 11788-0132
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS
Page #
SUMMARY OF FUND EXPENSES..................................................... 2
Shareholder Transaction Expenses.................................... 2
Annual Fund Operating Expenses...................................... 2
THE FUND 3
FINANCIAL HIGHLIGHTS........................................................ 3
INVESTMENT OBJECTIVE AND STRATEGIES.......................................... 3
HOW TO INVEST IN THE FUND.................................................... 4
Initial Purchase.................................................... 4
By Mail 4
By Wire 4
Additional Investments.............................................. 5
Automatic Investment Plan........................................... 5
Tax Sheltered Retirement Plans...................................... 5
Other Purchase Information.......................................... 6
HOW TO REDEEM SHARES......................................................... 6
By Mail 6
By Telephone........................................................ 7
Additional Information.............................................. 7
SHARE PRICE CALCULATION...................................................... 8
DIVIDENDS AND DISTRIBUTIONS.................................................. 8
TAXES 9
OPERATION OF THE FUND........................................................ 9
DISTRIBUTION PLAN............................................................ 11
INVESTMENT POLICIES, TECHNIQUES AND RISK CONSIDERATIONS...................... 11
Equity Securities.......................................... 11
Debt Securities............................................ 11
Foreign Securities......................................... 12
Indexed Securities......................................... 12
Repurchase Agreements...................................... 12
When Issued Securities and Forward Commitments............. 13
Borrowing and Leverage; Reverse Repurchase Agreements...... 13
Lending 13
Short Sales................................................ 14
Options and Futures Contracts.............................. 14
Zero Coupon Debt Securities and Pay-in-Kind Securities..... 15
Illiquid Investments....................................... 15
Other Investments.......................................... 15
Investment Risks.................................................... 16
GENERAL INFORMATION.......................................................... 16
Fundamental Policies................................................ 16
Portfolio Turnover.................................................. 16
Shareholder Rights.................................................. 16
PERFORMANCE INFORMATION...................................................... 16
<PAGE>
AAM EQUITY FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of AAM Fund dated February 14, 1999.
A copy of the Prospectus can be obtained by writing the Transfer Agent at 431
North Pennsylvania Street, Indianapolis, Indiana 46204, or by calling
1-888-905-2283.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST.......................................................1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS...............................................................1
INVESTMENT LIMITATIONS.........................................................5
THE INVESTMENT ADVISOR........................................................8
TRUSTEES AND OFFICERS..........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
DETERMINATION OF SHARE PRICE..................................................10
INVESTMENT PERFORMANCE........................................................11
CUSTODIAN....................................................................12
TRANSFER AGENT................................................................12
ACCOUNTANTS..................................................................12
DISTRIBUTOR..................................................................12
ADMINISTRATOR................................................................12
FINANCIAL STATEMENTS..........................................................12
<PAGE>
- 14 -
DESCRIPTION OF THE TRUST
The AAM Equity Fund (the "Fund") was organized as a series of
AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of a series of funds
currently authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will been titled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
As of January 31, 1999, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: Davenport & Company LLC,
P.O. Box 85678, Richmond, VA - 23.15%; Parbanc Company, 514 Market Street,
Parkensburg, WV - 9.94%; As of January 31, 1999, the following persons are the
record owners of five percent (5%) or more of the Fund: National Financial
Services Corp. ("National Financial"), 200 Liberty Street, 5th Floor, New York,
New York - 43.29%; National Investor Services Corp. ("National Investor"), 55
Water Street, 32nd Floor, New York, New York - 6.12%. As a result, National
Financial may be deemed to control the Fund. The National Financial and National
Investor accounts are omnibus accounts, and the Fund is unaware of any
individual investors within the accounts owning 5% or more of the Fund.
For information concerning the purchase and redemption of shares of the
Fund, see "How to Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Share Price Calculation" in the Fund's
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A. American Depository Receipts (ADRs). The Fund may invest up to 10%
of its assets in ADRs. ADRs are subject to risks similar to those associated
with direct investment in foreign securities. For example, there may be less
information publicly available about a foreign company then about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
B. Restricted and Illiquid Securities. The portfolio of the Fund may
contain illiquid securities. Illiquid securities generally include securities
which cannot be disposed of promptly and in the ordinary course of business
without taking a reduced price. Securities may be illiquid due to contractual or
legal restrictions on resale or lack of a ready market. The following securities
are considered to be illiquid: repurchase agreements and reverse repurchase
agreements maturing in more than seven days, nonpublicly offered securities and
restricted securities. Restricted securities are securities the resale of which
is subject to legal or contractual restrictions. Restricted securities may be
sold only in privately negotiated transactions, in a public offering with
respect to which a registration statement is in effect under the Securities Act
of 1933 or pursuant to Rule 144 or Rule 144A promulgated under such Act. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expense, and a considerable period may elapse between the time of
the decision to sell and the time such security may be sold under an effective
registration statement. If during such a period adverse market conditions were
to develop, the Fund might obtain a less favorable price than the price it could
have obtained when it decided to sell. The Fund will not invest more than 5% of
its net assets in illiquid securities.
With respect to Rule 144A securities, these restricted securities are
treated as exempt from the 5% limit on illiquid securities, provided that a
dealer or institutional trading market in such securities exists. The Fund will
not, however invest more than 5% of its net assets in Rule 144A securities.
Under the supervision of the Board of Trustees of the Fund, the Advisor
determines the liquidity of restricted securities and, through reports from the
Advisor, the Board will monitor trading activity in restricted securities. If
institutional trading in restricted securities were to decline, the liquidity of
the Fund could be adversely affected.
C. Real Estate Investment Trusts (REITs). A REIT is a corporation or
business trust that invests substantially all of its assets in interests in real
estate. The Fund's investments in REITs will be those characterized as equity
REITs. Equity REITs are those which purchase or lease land and buildings and
generate income primarily from rental income. Equity REITs may also realize
capital gains (or losses) when selling property that has appreciated (or
depreciated) in value. Risks associated with REIT investments include the fact
that REITs are dependent upon specialized management skills and are not fully
diversified. These characteristics subject REITs to the risks associated with
financing a limited number of projects. They are also subject to heavy cash flow
dependency, defaults by borrowers and self-liquidation. Additionally, equity
REITs may be affected by any changes in the value of the underlying property
owned by the trusts.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
this Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
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.
6. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
7. Loans of Portfolio Securities. The Fund will not make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Appalachian Asset Management, 1018
Kanawha Boulevard, East, Suite 309, Charleston, West Virginia 25301. Knox Fuqua
may be deemed to be a controlling person of the Advisor due to his ownership of
a majority of its shares. The Advisor has provided a uniquely comprehensive and
personalized package of investments and total financial consulting services to
small to medium sized businesses and foundations since 1992. Prior to founding
the Advisor, Mr. Fuqua was a trust investment officer at a national bank.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of the non-interested person trustees and
extraordinary expenses (including organizational expenses). As compensation for
its management services and agreement to pay the Fund's expenses, the Fund is
obligated to pay the Advisor a fee computed and accrued daily and paid monthly
at an annual rate of 1.15% of the average daily net assets of the Fund. The
Advisor may waive all or part of its fee, at any time, and at its sole
discretion, but such action shall not obligate the Advisor to waive any fees in
the future. For the period June 30,1988 (commencement of operations) through
October 31, 1998, the Fund paid advisory fees of $8,847.
The Advisor retains the right to use the name AAM in connection with
another investment company or business enterprise with which the Advisor is or
may become associated. The Trust's right to use the name AAM automatically
ceases ninety days after termination of the Agreement and may be withdrawn by
the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
<PAGE>
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
======================================== ----------------- =========================================================
Name, Age and Address Position Principal Occupations During
Past 5 Years
======================================== ----------------- =========================================================
* Kenneth D. Trumpfheller President and President, Treasurer and Secretary of AmeriPrime
Age: 40 Trustee Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
======================================== ----------------- =========================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of
Age: 39 Treasurer AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc. since January 1999; various
Suite 200 positions with Fidelity Investments from 1987 to 1998;
Southlake, Texas 76092 most recently Fund Reporting Unit Manager.
======================================== ----------------- =========================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Avenue Ceramics, Inc., oil field manufacturing/ supply
Broken Arrow, OK 74012 company, from 1984 to 1997, most recently Vice
President of Marketing.
======================================== ================= =========================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer
Age: 51 of Legacy Trust Company since 1992; President and
600 Jefferson Street Director of Heritage Trust Company from 1994-1996.
Suite 350
Houston, TX 77063
======================================== ================= =========================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<S> <C> <C>
====================================== -------------------------- =======================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
====================================== -------------------------- =======================================
Kenneth D. Trumpfheller 0 0
====================================== -------------------------- =======================================
Steve L. Cobb $4,000 $4,000
====================================== ========================== =======================================
Gary E. Hippenstiel $4,000 $4,000
====================================== ========================== =======================================
</TABLE>
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection. For the period June 30, 1998 (commencement of
operations) through October 31, 1998, the Fund paid brokerage commissions of
$10,562.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
In addition to providing average annual total return, the Fund may also
provide 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 June 30,
1998 (commencement of operations) through October 31, 1998, the Fund's average
annual total return was -5.70%, annualized.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each Unified shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Fund with certain monthly reports, record-keeping
and other management-related services. For the period June 30, 1998
(commencement of operations) through October 31, 1998, Unified received $4,800
from the Advisor (not the Fund) for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period June 30, 1998 (commencement of operations) through
October 31, 1998, the Administrator received $10,000 from the Advisor (not the
Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the period ended
October 31, 1998. The Trust will provide the Annual Report without charge by
calling the Fund at 1-888-905-2283.
<PAGE>
AIT VISION U.S. EQUITY PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
February 13, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of AIT Vision U.S. Equity Portfolio
dated February 13, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New
York 11788, or by calling 1-800-507-9922.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST..................................................... 1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS........ 1
INVESTMENT LIMITATIONS....................................................... 2
THE INVESTMENT ADVISER....................................................... 4
TRUSTEES AND OFFICERS........................................................ 5
PORTFOLIO TRANSACTIONS AND BROKERAGE......................................... 6
DETERMINATION OF SHARE PRICE................................................. 8
INVESTMENT PERFORMANCE....................................................... 8
CUSTODIAN................................................................... 9
TRANSFER AGENT............................................................... 9
ACCOUNTANTS................................................................. 9
DISTRIBUTOR................................................................. 9
ADMINISTRATOR............................................................... 9
FINANCIAL STATEMENTS...........................................................9
<PAGE>
DESCRIPTION OF THE TRUST
.........AIT Vision U.S. Equity Portfolio (the "Fund") was organized as a
series of AmeriPrime Funds (the "Trust"). The Trust is an open-end investment
company established under the laws of Ohio by an Agreement and Declaration of
Trust dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits
the Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of a series of funds
currently authorized by the Trustees.
.........Each share of a series represents an equal proportionate interest
in the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
.........As of January 31, 1999, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: Killian Charitable
Remainder Unitrust, U.S. Trust Company of Florida, Trustee, 765 Seagate Drive,
Naples, Florida - 82.80%.
.........As of January 31, 1999, U.S. Trust Company of Florida, Trustee of
the Killian Charitable Remainder Unitrust, owns a majority of the outstanding
shares of the Fund and may be deemed to control the Fund. Raymond Killian, as
beneficiary of the Unitrust, may also be deemed to control the Fund. As of
January 31, 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 Invest in the Fund" and "How to Redeem Shares" in the
Fund's Prospectus. For a description of the methods used to determine the share
price and value of the Fund's assets, see "Share Price Calculation" in the
Fund's Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
.........This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
.........American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund invests in foreign securities, such
investments may be subject to special risks. For example, there may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
.........Convertible Debentures. The Adviser considers convertible
debentures rated A or higher by Standard & Poor's Corporation ("S&P") or by
Moody's Investors Services, Inc. ("Moody's") to be of investment grade quality.
Investment grade securities generally have adequate to strong protection of
principal and interest payments. Convertible debentures rated A possess many
favorable investment attributes and are considered to be upper-medium grade
obligations. Securities rated A may be more susceptible to the adverse effects
of changes in circumstances and economic conditions (changes that increase long
term risk) than higher rated securities.
.........Short Sales. The Fund may sell a security short in anticipation of
a decline in the market value of the security. When the Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security in order to deliver it to the buyer. The Fund
must replace the borrowed security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. The Fund will incur a loss as a result of the short sale if
the price of the security increases between the date of the short sale and the
date on which the Fund replaces the borrowed security. The Fund will realize a
profit if the security declines in price between those dates.
INVESTMENT LIMITATIONS
.........Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
.........1........Borrowing Money. The Fund will not borrow money, except
(a) from a bank, provided that immediately after such borrowing there is an
asset coverage of 300% for all borrowings of the Fund; or (b) from a bank or
other persons for temporary purposes only, provided that such temporary
borrowings are in an amount not exceeding 5% of the Fund's total assets at the
time when the borrowing is made. This limitation does not preclude the Fund from
entering into reverse repurchase transactions, provided that the Fund has an
asset coverage of 300% for all borrowings and repurchase commitments of the Fund
pursuant to reverse repurchase transactions.
.........2........Senior Securities. The Fund will not issue senior
securities. This limitation is not applicable to activities that may be deemed
to involve the issuance or sale of a senior security by the Fund, provided that
the Fund's engagement in such activities is (a) consistent with or permitted by
the Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the Statement
of Additional Information.
.........3........Underwriting. The Fund will not act as underwriter of
securities issued by other persons. This limitation is not applicable to the
extent that, in connection with the disposition of portfolio securities
(including restricted securities), the Fund may be deemed an underwriter under
certain federal securities laws.
.........4........Real Estate. The Fund will not purchase or sell real
estate. This limitation is not applicable to investments in marketable
securities which are secured by or represent interests in real estate. This
limitation does not preclude the Fund from investing in mortgage-related
securities or investing in companies engaged in the real estate business or that
have a significant portion of their assets in real estate (including real estate
investment trusts).
.........5........Commodities. The Fund will not purchase or sell
commodities unless acquired as a result of ownership of securities or other
investments. This limitation does not preclude the Fund from purchasing or
selling options or futures contracts, from investing in securities or other
instruments backed by commodities or from investing in companies which are
engaged in a commodities business or have a significant portion of their assets
in commodities.
.........6........Loans. The Fund will not make loans to other persons,
except (a) by loaning portfolio securities, (b) by engaging in repurchase
agreements, or (c) by purchasing nonpublicly offered debt securities. For
purposes of this limitation, the term "loans" shall not include the purchase of
a portion of an issue of publicly distributed bonds, debentures or other
securities.
.........7........Concentration. The Fund will not invest 25% or more of
its total assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
.........With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
<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 not purchase any security while
borrowings (including reverse repurchase agreements) representing more than 5%
of its total assets are outstanding. The Fund will not enter into reverse
repurchase agreements.
.........iii......Margin Purchases. The Fund will not purchase securities
or evidences of interest thereon on "margin." This limitation is not applicable
to short term credit obtained by the Fund for the clearance of purchases and
sales or redemption of securities, or to arrangements with respect to
transactions involving options, futures contracts, short sales and other
permitted investments and techniques.
.........iv.......Short Sales. The Fund will not effect short sales of
securities unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short.
.........v........Options. The Fund will not purchase or sell puts, calls,
options or straddles, except as described in the Prospectus and the Statement of
Additional Information.
.........vi.......Illiquid Investments. The Fund will not invest in
securities for which there are legal or contractual restrictions on resale or
other illiquid securities.
THE INVESTMENT ADVISER
.........The Fund's investment adviser is Advanced Investment Technology,
Inc., 311 Park Place Blvd., Clearwater, Florida 34619. State Street Global
Advisors, a division of State Street Bank and Trust Company, may be deemed
to control the Adviser due to its majority ownership of shares of the Adviser.
........Under the terms of the management agreement (the "Agreement"), the
Adviser manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a
fee computed and accrued daily and paid monthly at an annual rate of 0.70% of
the average daily net assets of the Fund. The Adviser may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Adviser to waive any fees in the future. For the period November 6,
1995 (commencement of operations) through October 31, 1996 and for the fiscal
years ended October 31, 1997 and 1998, the Fund paid advisory fees of $5,994,
$21,591 and $33,471, respectively.
.........The Adviser retains the right to use the names "AIT" and "AIT
Vision" in connection with another investment company or business enterprise
with which the Adviser is or may become associated. The Trust's right to use the
name "AIT" and "AIT Vision" automatically ceases ninety days after termination
of the Agreement and may be withdrawn by the Adviser on ninety days written
notice.
........The Adviser may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
TRUSTEES AND OFFICERS
.........The names of the Trustees and executive officers of the Trust are
shown below. Each Trustee who is an "interested person" of the Trust, as defined
in the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
===================================== -------------------------- ===========================================================
Name, Age and Address Position Principal Occupations During Past 5 Years
===================================== -------------------------- ===========================================================
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime
Age: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
===================================== -------------------------- ===========================================================
Paul S. Bellany Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: 39 AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc., various positions with
Suite 200 Fidelity Investments from 1987 to 1998; most recently
Southlake, Texas 76092 Fund Reporting Unit Manager.
===================================== -------------------------- ===========================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Avenue Ceramics, Inc., oil field manufacturing/supply Company,
Broken Arrow, Oklahoma 74012 from 1984 to 1997, most recently Vice President of
Marketing.
===================================== ========================== ===========================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and Director
32 Sunlit Forest Drive of Heritage Trust Company from 1994 to 1996.
The Woodlands, Texas 77381
===================================== ========================== ===========================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the period ended
October 31, 1998 is set forth in the following table. Trustee fees are Trust
expenses and each series of the Trust pays a portion of the Trustee fees.
============================== ------------------ =============================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
============================== ------------------ =============================
Kenneth D. Trumpfheller 0 0
============================== ------------------ =============================
Steve L. Cobb $4,000 $4,000
============================== ================== =============================
Gary E. Hippenstiel $4,000 $4,000
============================== ================== =============================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Agreement. Due to research services provided by brokers, the Fund
directed to brokers $746,066 and $ _________ (on which commissions were $991 and
$________) during the fiscal years ended October 31, 1997 and 1998,
respectively.
While the Fund does not deem it practicable and in its best interests
to solicit competitive bids for commission rates on each transaction,
consideration is regularly given to posted commission rates as well as other
information concerning the level of commissions charged on comparable
transactions by qualified brokers.
The Fund has no obligation to deal with any broker or dealer in the
execution of its transactions. However, it is contemplated that Investment
Technology Group, Inc. ("ITG"), in its capacity as a registered broker-dealer,
will effect securities transactions which are executed on a national securities
exchange and over-the-counter transactions conducted on an agency basis. Such
transactions will be executed at competitive commission rates through Jefferies
Group, Inc.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
Under the Investment Company Act of 1940, persons affiliated with an
affiliate of the Adviser (such as ITG) may be prohibited from dealing with the
Fund as a principal in the purchase and sale of securities. Therefore, ITG will
not serve as the Fund's dealer in connection with over-the-counter transactions.
However, ITG may serve as the Fund's broker in over-the-counter transactions
conducted on an agency basis and will receive brokerage commissions in
connection with such transactions. Such agency transactions will be executed
through Jefferies Group, Inc.
The Fund will not effect any brokerage transactions in its portfolio
securities with ITG if such transactions would be unfair or unreasonable to Fund
shareholders, and the commissions will be paid solely for the execution of
trades and not for any other services. The Agreement provides that affiliates of
affiliates of the Adviser may receive brokerage commissions in connection with
effecting such transactions for the Fund. In determining the commissions to be
paid to ITG, it is the policy of the Fund that such commissions will, in the
judgement of the Trust's Board of Trustees, be (a) at least as favorable to the
Fund as those which would be charged by other qualified brokers having
comparable execution capability and (b) at least as favorable to the Fund as
commissions contemporaneously charged by ITG on comparable transactions for its
most favored unaffiliated customers, except for customers of ITG considered by a
majority of the Trust's disinterested Trustees not to be comparable to the Fund.
The disinterested Trustees from time to time review, among other things,
information relating to the commissions charged by ITG to the Fund and its other
customers, and rates and other information concerning the commissions charged by
other qualified brokers.
While the Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to other
firms. ITG will not receive reciprocal brokerage business as a result of the
brokerage business placed by the Fund with others.
To the extent that the Trust and another of the Adviser's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection.
For the period November 6, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Fund paid brokerage commissions of $3,203, $14,536 and $9,342, respectively. For
the fiscal year ended October 31, 1998, the Fund paid $4,212 (45.09% of the
total brokerage commissions paid) to ITG, an affiliate of the Adviser, for
effecting 59.22% of all brokerage transactions.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
......... P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period November
6, 1995 (commencement of operations) through October 31, 1996 and the fiscal
years ended October 31, 1997 and 1998, the Fund's average annual total return
was 26.63%, annualized, and 24.65% and 12.87%, respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc. ("ADS"), Hauppauge Corporate Center, 150
Motor Parkway, Hauppauge, New York 11760, acts as the Fund's transfer agent and,
in such capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, ADS provides the Fund with certain monthly reports, record-keeping and
other management-related services. For the period November 6, 1995 (commencement
of operations) through October 31, 1996 and for the fiscal years ended October
31, 1997 and 1998, ADS received $17,600, $19,200 and $10,425, respectively, from
the Adviser (not the Fund) for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period November 6, 1995 (commencement of operations) though
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $30,000, $30,000 and $30,000, respectively, from the
Adviser (not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without the
charge by calling the Fund at 1-800-507-9922.
<PAGE>
CARL DOMINO EQUITY INCOME FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Investor Class Prospectus of Carl Domino Equity
Income Fund dated February 14, 1999 or the Class A Prospectus of Carl Domino
Equity Income Fund dated February 14, 1999. A copy of either Prospectus can be
obtained by writing the Transfer Agent at 431 N. Pennsylvania Street,
Indianapolis, IN 46204, or by calling 1-800-506-9922.
<PAGE>
-i-
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST..................................................... 1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS............................................................. 2
INVESTMENT LIMITATIONS....................................................... 3
THE INVESTMENT ADVISER....................................................... 6
TRUSTEES AND OFFICERS........................................................ 6
PORTFOLIO TRANSACTIONS AND BROKERAGE......................................... 7
DETERMINATION OF SHARE PRICE.................................................. 9
INVESTMENT PERFORMANCE........................................................ 9
CUSTODIAN................................................................... 10
TRANSFER AGENT............................................................... 10
ACCOUNTANTS................................................................. 10
DISTRIBUTOR................................................................. 10
ADMINISTRATOR................................................................10
FINANCIAL STATEMENTS..........................................................11
<PAGE>
DESCRIPTION OF THE TRUST
Carl Domino Equity Income Fund (the "Fund") was organized as a series
of AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of a series of funds
currently authorized by the Trustees. The Fund is divided into two classes,
designated Class A and Investor Class.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
The Fund may determine to allocate certain of its expenses to the
specific class of the Fund's shares to which those expenses are attributable.
As of January 31, 1999, the following persons may be deemed to
beneficially own or hold of record five percent (5%) or more of the Fund: Carl
Domino Associates Profit Sharing Trust, 580 Village Boulevard, Suite 225, West
Palm Beach, Florida - 18.44% (beneficial); Charles Schwab & Co. ("Schwab"), 101
Montgomery Street, San Francisco, California - 17.66% (of record); Carl Domino
IRA, 108 Toteka Circle, Jupiter, Florida - 5.41% (beneficial); National
Financial, 200 Liberty Street, 5th Floor, New York, New York - 6.34% (of
record). The National Financial and Schwab accounts are omnibus accounts, and
the Fund is unaware of any individual investors within the accounts owning 5% or
more of the Fund.
As of January 31, 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.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A. Equity Securities. Equity securities include common stock, preferred
stock and common stock equivalents (such as convertible preferred stock, rights
and warrants). Convertible preferred stock is preferred stock that can be
converted into common stock pursuant to its terms. Warrants are options to
purchase equity securities at a specified price valid for a specific time
period. Rights are similar to warrants, but normally have a short duration and
are distributed by the issuer to its shareholders. The Fund may invest up to 5%
of its net assets at the time of purchase in each of the following: rights,
warrants, or convertible preferred stocks.
B. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Adviser (subject to review by the Board of Trustees) to be creditworthy.
The Adviser monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
C. Illiquid Securities. The portfolio of the Fund may contain illiquid
securities. Illiquid securities generally include securities which cannot be
disposed of promptly and in the ordinary course of business without taking a
reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. The Fund will
not invest more than 5% of its net assets in illiquid securities.
D. Other Investment Companies. The Fund is permitted to invest up to 5%
of its net assets in other investment companies at any time. The Fund will not
purchase more than 3% of the outstanding voting stock of any investment company.
If the Fund acquires securities of another investment company, the shareholders
of the Fund will be subject to duplicative management fees.
E. Foreign Securities. The Fund may invest in foreign equity securities
including common stock, preferred stock and common stock equivalents issued by
foreign companies, and foreign fixed income securities. Foreign fixed income
securities include corporate debt obligations issued by foreign companies and
debt obligations of foreign governments or international organizations. This
category may include floating rate obligations, variable rate obligations,
Yankee dollar obligations (U.S. dollar denominated obligations issued by foreign
companies and traded on U.S. markets) and Eurodollar obligations (U.S. dollar
denominated obligations issued by foreign companies and traded on foreign
markets).
Foreign government obligations generally consist of debt
securities supported by national, state or provincial governments or similar
political units or governmental agencies. Such obligations may or may not be
backed by the national government's full faith and credit and general taxing
powers. Investments in foreign securities also include obligations issued by
international organizations. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank. In
addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.
Purchases of foreign securities are usually made in foreign
currencies and, as a result, the Fund may incur currency conversion costs and
may be affected favorably or unfavorably by changes in the value of foreign
currencies against the U.S. dollar. In addition, there may be less information
publicly available about a foreign company then about a U.S. company, and
foreign companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
F. When Issued Securities and Forward Commitments. The Fund may buy and
sell securities on a when-issued or delayed delivery basis, with payment and
delivery taking place at a future date. The price and interest rate that will be
received on the securities are each fixed at the time the buyer enters into the
commitment. The Fund may enter into such forward commitments if they hold, and
maintain until the settlement date in a separate account at the Fund's
Custodian, cash or U.S. government securities in an amount sufficient to meet
the purchase price. Forward commitments involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date. Any change
in value could increase fluctuations in the Fund's share price and yield.
Although the Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio, the Fund may dispose of a
commitment prior to the settlement if the Adviser deems it appropriate to do so.
G. Collateralized Mortgage Obligations (CMOs). CMOs are securities
collateralized by mortgages or mortgage-backed securities and are issued with a
variety of classes or series which have different maturities and are often
retired in sequence. CMOs may be issued by governmental or non-governmental
entities such as banks and other mortgage lenders. Non-government securities may
offer a higher yield but also may be subject to greater price fluctuation than
government securities. Investments in CMOs are subject to the same risks as
direct investments in the underlying mortgage and mortgage-backed securities. In
addition, in the event of a bankruptcy or other default of an entity who issued
the CMO held by a Fund, the Fund could experience both delays in liquidating its
position and losses.
H. Financial Services Industry Obligations. The Fund may invest up to
5% of its net assets in each of the following obligations of the financial
services industry:
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
I. Option Transactions. The Fund may engage in option transactions
involving individual securities and market indices. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indices. The
purchaser of an option on a security pays the seller (the writer) a premium for
the right granted but is not obligated to buy or sell the underlying security.
The purchaser of an option on a market index pays the seller a premium for the
right granted, and in return the seller of such an option is obligated to make
the payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the-counter
market. Options on securities which the Fund sells (writes) will be covered or
secured, which means that it will own the underlying security (for a call
option); will segregate with the Custodian high quality liquid debt obligations
equal to the option exercise price (for a put option); or (for an option on a
stock index) will hold a portfolio of securities substantially replicating the
movement of the index (or, to the extent it does not hold such a portfolio, will
maintain a segregated account with the Custodian of high quality liquid debt
obligations equal to the market value of the option, marked to market daily).
When the Fund writes options, it may be required to maintain a margin account,
to pledge the underlying securities or U.S. government obligations or to deposit
liquid high quality debt obligations in a separate account with the Custodian.
The purchase and writing of options involves certain risks; for
example, the possible inability to effect closing transactions at favorable
prices and an appreciation limit on the securities set aside for settlement, as
well as (in the case of options on a stock index) exposure to an indeterminate
liability. The purchase of options limits the Fund's potential loss to the
amount of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a greater
extent than if transactions were effected in the security directly. However, the
purchase of an option could result in the Fund losing a greater percentage of
its investment than if the transaction were effected directly. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. When the Fund
writes a covered put option, it will receive a premium, but it will assume the
risk of loss should the price of the underlying security fall below the exercise
price. When the Fund writes a covered put option on a stock index, it will
assume the risk that the price of the index will fall below the exercise price,
in which case the Fund may be required to enter into a closing transaction at a
loss. An analogous risk would apply if the Fund writes a call option on a stock
index and the price of the index rises above the exercise price.
J. STRIPS. The Federal Reserve creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the coupon
payments and the principal payment from an outstanding Treasury security and
selling them as individual securities. To the extent the Fund purchases the
principal portion of the STRIP, the Fund will not receive regular interest
payments. Instead they are sold at a deep discount from their face value. The
Fund will accrue income on such STRIPS for tax and accounting purposes, in
accordance with applicable law, which income is distributable to shareholders.
Because no cash is received at the time such income is accrued, the Fund may be
required to liquidate other portfolio securities to satisfy its distribution
obligations. Because the principal portion of the STRIP does not pay current
income, its price can be very volatile when interest rates change. In
calculating its dividend, the Fund takes into account as income a portion of the
difference between the principal portion of the STRIP's purchase price and its
face value.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the Statement
of Additional Information.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
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 not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding. The Fund will not enter into reverse repurchase
agreements.
iii. Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. Short Sales. The Fund will not effect short sales of securities.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
vi. Repurchase Agreements. The Fund will not invest more than 5% of its net
assets in repurchase agreements.
vii. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
THE INVESTMENT ADVISER
The Fund's investment adviser is Carl Domino Associates, L.P., 580 Village
Blvd., Suite 225, West Palm Beach, Florida 33409. Carl Domino, Inc. and CW
Partners may both be deemed to control the Adviser due to their respective share
of ownership of the Adviser.
Under the terms of the management agreement (the "Agreement"), the
Adviser manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund (including organizational
expenses) except brokerage, taxes, interest, fees and expenses of the
non-interested person trustees and extraordinary expenses. As compensation for
its management services and agreement to pay the Fund's expenses, the Fund is
obligated to pay the Adviser a fee computed and accrued daily and paid monthly
at an annual rate of 1.50% of the average daily net assets of the Fund. The
Adviser may waive all or part of its fee, at any time, and at its sole
discretion, but such action shall not obligate the Adviser to waive any fees in
the future. For the period November 6, 1995 (commencement of operations) through
October 31, 1996 and the fiscal years ended October 31, 1997 and 1998, the Fund
paid advisory fees of $11,548, $33,503 and $85,109, respectively.
The Adviser retains the right to use the name "Domino" in connection
with another investment company or business enterprise with which the Adviser is
or may become associated. The Trust's right to use the name "Domino"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
TRUSTEES AND OFFICERS
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>
<S> <C> <C>
===================================== -------------------------- ===========================================================
Name, Age and Address Position Principal Occupations During Past 5 Years
===================================== -------------------------- ===========================================================
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime
Age: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
===================================== -------------------------- ===========================================================
Paul S. Bellany Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: 39 AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc.; various positions with
Suite 200 Fidelity Investments from 1987 to 1998; most recently
Southlake, Texas 76092 Fund Reporting Unit Manager.
===================================== -------------------------- ===========================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Ave. Ceramics, Inc., oil field manufacturing/supply company
Broken Arrow, Oklahoma 47012 from 1984 to 1997, most recently Vice President of
Marketing.
===================================== ========================== ===========================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and Director
600 Jefferson Street, Suite 350 of Heritage Trust Company from 1994 to 1996.
Houston, Texas 70002
===================================== ========================== ===========================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the period ended
October 31, 1998 is set forth in the following table. Trustee fees are Trust
expenses and each series of the Trust is responsible for a portion of the
Trustee fees. The Adviser voluntarily reimbursed the Fund for the Fund's share
of the Trustee fees paid for the period ended October 31, 1998.
<TABLE>
<S> <C> <C>
============================== ------------------ =============================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
============================== ------------------ =============================
Kenneth D. Trumpfheller 0 0
============================== ------------------ =============================
Steve L. Cobb $4,000 $4,000
============================== ================== =============================
Gary E. Hippenstiel $4,000 $4,000
============================== ================== =============================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Agreement. Due to research services provided by brokers, the Fund
directed to brokers $2,828,070 and $1,182,116 of brokerage transactions (on
which commissions were $3,651 and $2,352 during the fiscal years ended October
31, 1997 and 1998, respectively.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Adviser's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection.
For the period November 6, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Fund paid brokerage commissions of $2,617, $5,317 and $15,264, respectively.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period November
6, 1995 (commencement of operations) through October 31, 1996 and for the fiscal
years ended October 31, 1997 and 1998, the Fund's average annual total return
was 20.64%, annualized, 36.58% and -3.17%, respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
As of July 1, 1998, Unified Fund Services, Inc. ("Unified"), 431 N.
Pennsylvania Street, Indianapolis, Indiana 46204, acts as the Fund's transfer
agent and, in such capacity, maintains the records of each shareholder's
account, answers shareholders' inquiries concerning their accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent and performs other shareholder service functions.
American Data Services, Inc., 150 Motor Parkway, Hauppauge, New York 11760
("ADS") provides the Fund with certain monthly reports, record-keeping and other
management-related services. For the period November 6, 1995 (commencement of
operations) through October 31, 1996 and for the fiscal years ended October 31,
1997 and 1998, ADS received $17,600, $19,200 and $12,850, respectively, from the
Adviser (not the Fund) for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period November 6, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $30,000, $30,000 and $30,000, respectively, from the
Adviser, (not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-506-9922.
<PAGE>
CORBIN SMALL-CAP VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Corbin Small-Cap Value Fund dated
February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, NY
11788, or by calling 1-800-924-6848.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
DESCRIPTION OF THE TRUST.......................................................3
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
AND RISK CONSIDERATIONS........................................................3
INVESTMENT LIMITATIONS.........................................................4
THE INVESTMENT ADVISOR.........................................................6
TRUSTEES AND OFFICERS..........................................................7
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................8
DETERMINATION OF SHARE PRICE...................................................9
INVESTMENT PERFORMANCE.........................................................9
CUSTODIAN....................................................................10
TRANSFER AGENT............................................................... 10
ACCOUNTANTS................................................................. 11
DISTRIBUTOR................................................................. 11
ADMINISTRATOR............................................................... 11
FINANCIAL STATEMENTS..........................................................11
<PAGE>
DESCRIPTION OF THE TRUST
........Corbin Small-Cap Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of a series of funds
currently authorized by the Trustees.
........Each share of a series represents an equal proportionate interest in the
assets and liabilities belonging to that series with each other share of that
series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent. ........As of January 31, 1999,
the following persons may be deemed to beneficially own or hold of record five
percent (5%) or more of the Fund: Donaldson Lufkin Jenrette Securities Corp.
("DLJ"), P.O. Box 2052, Jersey City, New Jersey - 6.36% (of record); 2525
Company, 2525 Ridgmar Blvd., Fort Worth, Texas - 23.47% (beneficial); Charles
Schwab & Co. ("Schwab"), 101 Montgomery Street, San Francisco, CA 94104 - 32.40%
(of record). As a result, Schwab may be deemed to contol the Fund. The Schwab
and DLJ accounts are omnibus accounts, and the Fund is unaware of any individual
investor within the accounts owning 5% or more of the Fund.
........As of January 31, 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.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
........This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objective and Strategies and Risk
Considerations" and "Investment Policies and Techniques").
........A........Foreign Securities. The Fund may invest up to 5% of its net
assets in foreign equity securities including common stock, preferred stock and
common stock equivalents issued by foreign companies. Purchases of foreign
securities are usually made in foreign currencies and, as a result, the Fund may
incur currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. In addition,
there may be less information publicly available about a foreign company than
about a U.S. company, and foreign companies are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the U.S. Other risks associated with investments in foreign
securities include changes in restrictions on foreign currency transactions and
rates of exchanges, changes in the administrations or economic and monetary
policies of foreign governments, the imposition of exchange control regulations,
the possibility of expropriation decrees and other adverse foreign governmental
action, the imposition of foreign taxes, less liquid markets, less government
supervision of exchanges, brokers and issuers, difficulty in enforcing
contractual obligations, delays in settlement of securities transactions and
greater price volatility. In addition, investing in foreign securities will
generally result in higher commissions than investing in similar domestic
securities.
........B........Financial Services Industry Obligations. The Fund may invest
up to 5% of its net assets in ------------------------------------------ each of
the following obligations of the financial services industry:
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
C. Illiquid Securities. The portfolio of the Fund may contain illiquid
securities. Illiquid securities generally include securities which cannot be
disposed of promptly and in the ordinary course of business without taking a
reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. The Fund will
not invest more than 5% of its net assets in illiquid securities.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the Statement
of Additional Information.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
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).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding. The Fund will not enter into reverse repurchase
agreements.
3. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
4. Short Sales. The Fund will not effect short sales of securities.
5. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
6. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Corbin & Company, 6300 Ridglea Place,
Suite 1111, Fort Worth, Texas (the "Advisor"). David A. Corbin may be deemed to
be a controlling person of the Advisor due to his ownership of shares of the
corporation, and his position as Chairman and President of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a
fee computed and accrued daily and paid monthly at an annual rate of 1.25% of
the average daily net assets of the Fund. The Advisor may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Advisor to waive any fees in the future. For the period June 30,
1997 (commencement of operations) through October 31, 1997 and for the fiscal
year ended October 31, 1998, the Fund paid advisory fees of $2,991 and $ 24,417,
respectively .
The Advisor retains the right to use the name "Corbin" in connection
with another investment company or business enterprise with which the Advisor is
or may become associated. The Trust's right to use the name "Corbin"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
<PAGE>
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
======================================= -------------------------- =========================================================
Name, Age and Address Position Principal Occupations During
Past 5 Years
======================================= -------------------------- =========================================================
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime
Age: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
======================================= -------------------------- =========================================================
Paul S. Bellany Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: 39 AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc.,; various positions with
Suite 200 Fidelity Investments from 1987 to 1998; most recently
Southlake, Texas 76092 Fund Reporting Unit Manager.
======================================= -------------------------- =========================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Ave. Ceramics, Inc., oil field manufacturing/supply company,
Broken Arrow, OK 74012 from 1984 to 1997, most recently Vice President of
Marketing.
======================================= ========================== =========================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer
Age: 51 of Legacy Trust Company since 1992; President and
600 Jefferson St., Suite 350 Director of Heritage Trust Company from 1994 to 1996.
Houston, Texas 77063
======================================= ========================== =========================================================
</TABLE>
Trustee fees are Trust expenses and each series of the Trust pays a
portion of the Trustee fees. The compensation paid to the Trustees for the
fiscal year ended October 31, 1998 is set forth in the following table:
<TABLE>
<S> <C> <C>
============================================== ------------------------ ===============================
Aggregate Compensation Total Compensation from Trust
Name from Trust (the Trust is not in a Fund
Complex)
============================================== ------------------------ ===============================
Kenneth D. Trumpfheller $0 0
============================================== ------------------------ ===============================
Steve L. Cobb $4,000 $4,000
============================================== ======================== ===============================
Gary E. Hippenstiel $4,000 $4,000
============================================== ======================== ===============================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
When the Fund and another of the Advisor's clients seek to purchase or
sell the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated by random client
selection, grouping discretionary and non-discretionary accounts, and in a
manner to reduce custodian transaction costs. For the period June 30, 1997
(commencement of operations) through October 31, 1997 and for the fiscal year
ended October 31, 1998, the Fund paid brokerage commissions of $3,352 and
$18,547, respectively.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus. INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are
reinvested at the net asset value on the reinvestment dates and that a complete
redemption occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period June 30,
1997 (commencement of operations) through October 31, 1997 and for the fiscal
year ended October 31, 1998, the Fund's average annual total return was 34.19%,
annualized, and - 36.07%, respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Russell 2000 Index or the S&P 600 Small-Cap Index.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11788, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, American Data Services, Inc. provides the Fund with certain monthly
reports, record-keeping and other management-related services. For the period
June 30, 1997 (commencement of operations) through October 31, 1997 and for the
fiscal year ended October 31, 1998, ADS received $3,200 and $9,677,
respectively, from the Advisor (not the Fund) for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retain AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake TX 76092, (the "Administrator") to manage the Fund's
business affairs and provide the Fund with administrative services, including
all regulatory reporting and necessary office equipment, personnel and
facilities. For the period June 30, 1997 (commencement of operations) through
October 31, 1997 and for the fiscal year ended October 31, 1998, the
Administrator received $15,000 and $30,000 respectively, from the Advisor (not
the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-924-6848.
<PAGE>
FLORIDA STREET FUNDS
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Florida Street Funds dated
February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, NY
11788, or by calling 1-800-890-5344.
<PAGE>
TABLE OF CONTENTS
Page
DESCRIPTION OF THE TRUST.......................................................1
ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS............................................1
INVESTMENT LIMITATIONS........................................................21
THE INVESTMENT ADVISOR........................................................24
TRUSTEES AND OFFICERS.........................................................24
FUND TRANSACTIONS AND BROKERAGE...............................................26
DETERMINATION OF SHARE PRICE..................................................27
INVESTMENT PERFORMANCE........................................................27
CUSTODIAN....................................................................28
TRANSFER AGENT................................................................28
ACCOUNTANTS................................................................. 28
DISTRIBUTOR................................................................. 28
ADMINISTRATOR................................................................28
FINANCIAL STATEMENTS..........................................................28
<PAGE>
-11-
DESCRIPTION OF THE TRUST
Florida Street Bond Fund and Florida Street Growth Fund (each a "Fund"
or collectively the "Funds") were organized as series of AmeriPrime Funds (the
"Trust"). The Trust is an open-end investment company established under the laws
of Ohio by an Agreement and Declaration of Trust dated August 8, 1995 (the
"Trust Agreement"). The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value. Each Fund is one of a series of funds currently authorized by the
Trustees, and are referred to, and may conduct business as, the "Florida Street
Funds."
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
As of January 31, 1999, Charles Schwab & Co. Inc., 101 Montgomery
Street, San Francisco, California ("Schwab") was the record owner of 98.94% of
the Florida Street Bond Fund and 97.02% of the Florida Street Growth Fund. As a
result, Schwab may be deemed to control the Funds. The Schwab accounts are
omnibus accounts, and the Funds are unaware of any individual investor owning 5%
or more of either Fund. As of January 31, 1999, the officers and trustees as a
group own less than one percent of the Funds.
For information concerning the purchase and redemption of shares of the
Funds, see "How to Invest in the Funds" and "How to Redeem Shares" in the Funds'
Prospectus. For a description of the methods used to determine the share price
and value of each Fund's assets, see "Share Price Calculation" in the Funds'
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments each Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies", "Risk
Considerations" and "Investment Policies and Techniques").
A. Lower Quality Debt Securities. Each Fund may purchase lower quality
debt securities, or unrated debt securities, that have poor protection of
payment of principal and interest. These securities often are considered to be
speculative and involve greater risk of default and of price changes due to
changes in the issuer's creditworthiness. Market prices of these securities may
fluctuate more than higher quality debt securities and may decline significantly
in periods of general economic difficulty which may follow periods of rising
rates. While the market for high yield corporate debt securities has been in
existence for many years and has weathered previous economic downturns, the
market in recent years has experienced a dramatic increase in the large-scale
use of such securities to fund highly leveraged corporate acquisitions and
restructurings. Accordingly, past experience may not provide an accurate
indication of future performance of the high yield bond market, especially
during periods of economic recession. A Fund may invest in securities which are
of lower quality or are unrated if the Advisor determines that the securities
provide the opportunity of meeting a Fund's objective without presenting
excessive risk. The Advisor will consider all factors which it deems
appropriate, including ratings, in making investment decisions for a Fund and
will attempt to minimize investment risks through diversification, investment
analysis and monitoring of general economic conditions and trends. To the extend
a Fund invests in lower quality securities, achievement of its investment
objective may be more dependent on the Advisor's credit analyses than is the
case for higher quality bonds. While the Advisor may refer to ratings, it does
not rely exclusively on ratings, but makes its own independent and ongoing
review of credit quality.
The market for lower quality securities may be thinner and less active
than that for higher quality securities, which can adversely affect the prices
at which these securities can be sold. If there is not established retail
secondary market and market quotations are not available, these securities are
valued in accordance with procedures established by the Board of Trustees,
including the use of outside pricing services. Judgment plays a greater role in
valuing high yield corporate debt securities than is the case for securities for
which external sources for quotations and last-sale information are available.
Adverse publicity and changing investor perceptions may affect the ability of
outside pricing services used by a Fund to value as Fund securities, and a
Fund's ability to dispose of these lower quality debt securities.
Lower quality securities present risks based on payment expectations.
For example, high yield bonds may contain redemption or call provisions. If an
issuer exercises the provisions in a declining interest rate market, a Fund
would have to replace the security with a lower yielding security, resulting in
a decreased return for investors. Conversely, a high yield bond's value will
decrease in a rising interest rate market, as will the value of a Fund's assets.
If a Fund experiences unexpected net redemptions, this may force it to sell its
high yield bonds, without regard to their investment merits, thereby decreasing
the asset base upon which the Fund's expenses can be spread and possibly
reducing the Fund's rate of return.
Since the risk of default is higher for lower quality securities and
sometimes increases with the age of these securities, the Advisor's research and
credit analysis are an integral part of managing any securities of this type
held by a Fund. In considering investments for a Fund, the Advisor attempts to
identify those issuers of high-yielding securities whose financial condition is
adequate to meet future obligations, has improved or is expected to improve in
the future. The Advisor's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earning prospects, and
the experience and managerial strength of the issuer.
B. Brady Bonds. Each Fund may invest in "Brady bonds," which have been
issued by the governments of Argentina, Brazil, Costa Rica, Mexico, Nigeria,
Philippines, Uruguay and Venezuela. Most Brady bonds are currently rated below
BBB by S&P or Baa by Moody's.
The Brady Plan was conceived by the U.S. Treasury in the 1980's in an
attempt to produce a debt restructuring program which would enable a debt
country to (i) reduce the absolute level of debt of its creditor banks, and (ii)
reschedule its external debt repayments, based upon its ability to service such
debts by persuading its creditor banks to accept a debt write-off by offering
them a selection of options, each of which represented an attractive substitute
for the nonperforming debt. Although it was envisaged that each debtor country
would agree to a unique package of options with its creditor banks, the plan was
that these options would be based upon the following:(i) a discount bond
carrying a market rate of interest (whether fixed or floating), with principal
collateralized by the debtor country with cash or securities in an amount equal
to at least one year of rolling interest; (ii) a par bond carrying a low rate of
interest (whether fixed or floating), collateralized in the same way as in (i)
above; and (iii) retention of existing debt (thereby avoiding a debt write-off)
coupled with an advance of new money or subscription of new bonds.
Each Fund may invest in either collateralized or uncollateralized Brady
bonds. U.S. dollar-denominated, collateralized Brady bonds, which may be fixed
rate par bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time and is adjusted at regular intervals
thereafter.
C. Municipal Bonds. Municipal bonds generally fund longer-term capital
needs than municipal notes and have maturities exceeding one year when issued.
Municipal bonds include:
General Obligation Bonds. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind general obligation bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
Revenue Bonds. The principal security for a revenue bond is generally
the net revenues derived from a particular facility, group of facilities or, in
some cases, the proceeds of a special excise tax or other specific revenue
source. Revenue bonds are issued to finance a wide variety of capital projects,
including electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and hospitals.
Although the principal security behind these bonds may vary, many provide
additional security in the form of a debt service reserve fund that may be used
to make principal and interest payments on the issuer's obligations. Housing
finance authorities have a wide range of security, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, certificates
of deposit and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
Private Activity Bonds. Private activity bonds, which are considered
municipal obligations if the interest paid thereon is excluded from gross income
for Federal income tax purposes but is a specific tax preference item for
Federal individual and corporate alternative minimum tax purposes, are issued by
or on behalf of public authorities to raise money to finance various
privately-operated facilities such as manufacturing facilities, certain hospital
and university facilities and housing projects. These bonds are also used to
finance public facilities such as airports, mass transit systems and ports. The
payment of the principal and interest on these bonds is dependent solely on the
ability of the facility's user to meet its financial obligations and generally
the pledge, if any, of real and personal property so financed as security for
payment.
Municipal Notes. Municipal notes generally fund short-term capital needs. Each
Fund may invest in municipal notes, which include:
Tax Anticipation Notes. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenue, such as income, sales, use and
business taxes, and are payable from these specific future taxes.
Revenue Anticipation Notes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as Federal revenues
available under Federal revenue sharing programs.
Bond Anticipation Notes. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term bonds provide funds for the repayment of these notes.
Miscellaneous, Temporary and Anticipatory Instruments. These
instruments may include notes issued to obtain interim financing pending
entering into alternate financial arrangements, such as receipt of anticipated
Federal, state or other grants or aid, passage of increased legislative
authority to issue longer-term instruments or obtaining other refinancing.
Construction Loan Notes. Construction loan notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of construction loan notes, is sometimes provided by a commitment
of the Government National Mortgage Association (`GNMA") to purchase the loan,
accompanied by a commitment by the Federal Housing Administration to insure
mortgage advances thereunder. In other instances, permanent financing is
provided by commitments of banks to purchase the loan. Each Fund will only
purchase construction loan notes that are subject to permanent GNMA or bank
purchase commitments.
Tax Exempt Commercial Paper. Each Fund may invest in tax-exempt
commercial paper. Tax-exempt commercial paper is a short-term obligation with a
stated maturity of 365 days or less. It is issued by agencies of state and local
governments to finance seasonal working capital needs or as short-term financing
in anticipation of longer-term financing.
Standby Commitments. Each Fund may acquire standby commitments or
"puts" solely to facilitate Fund liquidity; the Fund intends to exercise its
rights thereunder for trading purposes. The maturity of a municipal obligation
is not to be considered shortened by any standby commitment to which the
obligation is subject. Thus, standby commitments do not affect the
dollar-weighted average maturity of the Fund.
When municipal obligations are subject to puts separate from the
underlying securities, no value is assigned to the put. Because of the
difficulty of evaluating the likelihood of exercise or the potential benefit of
a put, the Board of Trustees has determined that puts shall have a fair market
value of zero, regardless of whether any direct or indirect consideration was
paid.
Since the value of the put is partly dependent on the ability of the
put writer to meet its obligation to repurchase, the Fund's policy is to enter
into put transactions only with put writers who are approved by Advisor. It is
the Fund's general policy to enter into put transactions only with those put
writers which are determined to present minimal credit risks. In connection with
this determination, the Board of Trustees will review regularly Advisor's list
of approved put writers, taking into consideration, among other things, the
ratings, if available, of their equity and debt securities, their reputation in
the municipal securities markets, their net worth, their efficiency in
consummating transactions and any collateral arrangements, such as letters of
credit securing the puts written by them. Commercial banks normally will be
members of the Federal Reserve System, and other dealers will be members of the
National Association of Securities Dealers, Inc. or members of a national
securities exchange. Other put writers will have outstanding debt rated Aa or
better by Moody's Investors Services, Inc. (`Moody's") or AA or better by
Standard & Poor's Ratings Group (`S&P"), or will be of comparable quality in
Advisor's opinion, or such put writers' obligations will be collateralized and
of comparable quality in Advisor's opinion. The Board of Trustees has directed
Advisor not to enter into put transactions with any put writer that, in the
judgment of Advisor using the above-described criteria, is or becomes a
recognizable credit risk. The Trust is unable to predict whether all or any
portion of any loss sustained could subsequently be recovered from a put writer
in the event that a put writer should default on its obligation to repurchase an
underlying security.
D. Zero Coupon Bonds. Zero coupon bonds do not make regular interest
payments. Instead they are sold at a deep discount from their face value. Each
Fund will accrue income on such bonds for tax and accounting purposes, in
accordance with applicable law. This income will be distributed to shareholders.
Because no cash is received at the time such income is accrued, the Fund may be
required to liquidate other portfolio securities to satisfy its distribution
obligations. Because a zero coupon bond does not pay current income, its price
can be very volatile when interest rates change. In calculating its dividend,
the Funds take into account as income a portion of the difference between a zero
coupon bond's purchase price and its face value. Certain types of CMOs pay no
interest for a period of time and therefore present risks similar to zero coupon
bonds.
E. Foreign Securities. Each Fund may invest in foreign equity
securities including common stock, preferred stock and common stock equivalents
issued by foreign companies, and foreign fixed income securities. Foreign fixed
income securities include corporate debt obligations issued by foreign companies
and debt obligations of foreign governments or international organizations. This
category may include floating rate obligations, variable rate obligations,
Yankee dollar obligations (U.S. dollar denominated obligations issued by foreign
companies and traded on U.S. markets) and Eurodollar obligations (U.S. dollar
denominated obligations issued by foreign companies and traded on foreign
markets).
Foreign government obligations generally consist of debt securities
supported by national, state or provincial governments or similar political
units or governmental agencies. Such obligations may or may not be backed by the
national government's full faith and credit and general taxing powers.
Investments in foreign securities also include obligations issued by
international organizations. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank. In
addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.
Purchases of foreign securities are usually made in foreign currencies
and, as a result, a Fund may incur currency conversion costs and may be affected
favorably or unfavorably by changes in the value of foreign currencies against
the U.S. dollar. In addition, there may be less information publicly available
about a foreign company then about a U.S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. Other risks associated with
investments in foreign securities include changes in restrictions on foreign
currency transactions and rates of exchanges, changes in the administrations or
economic and monetary policies of foreign governments, the imposition of
exchange control regulations, the possibility of expropriation decrees and other
adverse foreign governmental action, the imposition of foreign taxes, less
liquid markets, less government supervision of exchanges, brokers and issuers,
difficulty in enforcing contractual obligations, delays in settlement of
securities transactions and greater price volatility. In addition, investing in
foreign securities will generally result in higher commissions than investing in
similar domestic securities.
F. Financial Services Industry Obligations. Each Fund may invest up to
5% of its net assets in each of the following obligations of the financial
services industry:
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
G. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., a Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which a Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, a Fund could experience both delays in liquidating
the underlying security and losses in value. However, each Fund intends to enter
into repurchase agreements only with the Custodian, other banks with assets of
$1 billion or more and registered securities dealers determined by the Advisor
(subject to review by the Board of Trustees) to be creditworthy. The Advisor
monitors the creditworthiness of the banks and securities dealers with which a
Fund engages in repurchase transactions.
H. Mortgage-Backed Securities. Mortgage-backed securities represent
participation interests in pools of one-to-four family residential mortgage
loans originated by private mortgage originators. Traditionally, residential
mortgage-backed securities have been issued by governmental agencies such as
Fannie Mae, Freddie Mac and Ginnie Mae. Non-governmental entities that have
issued or sponsored residential mortgage-backed securities offerings include
savings and loan associations, mortgage banks, insurance companies, investment
banks and special purpose subsidiaries of the foregoing.
While residential loans do not typically have prepayment penalties or
restrictions, they are often structured so that subordinated classes may be
locked out of prepayments for a period of time. However, in a period of
extremely rapid prepayments, during which senior classes may be retired faster
than expected, the subordinated classes may receive unscheduled payments of
principal and would have average lives that, while longer than the average lives
of the senior classes, would be shorter than originally expected. The types of
residential mortgage-backed securities which the Fund may invest in may include
the following:
Guaranteed Mortgage Pass-Through Securities. Each Fund may invest in
mortgage pass-through securities representing participation interests in pools
of residential mortgage loans originated by the U.S. government and guaranteed,
to the extent provided in such securities, by the U.S. government or one of its
agencies or instrumentalities. Such securities, which are ownership interests in
the underlying mortgage loans, differ from conventional debt securities, which
provide for periodic payment of interest in fixed amounts (usually
semi-annually) and principal payments at maturity or on specified call dates.
Mortgage pass-through securities provide for monthly payments that are a
"pass-through" of the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans, net
of any fees paid to the guarantor of such securities and the servicer of the
underlying mortgage loans. The guaranteed mortgage pass-through securities in
which the Fund will invest are those issued or guaranteed by Ginnie Mae, Fannie
Mae and Freddie Mac.
Ginnie Mae Certificates. Ginnie Mae is a wholly-owned corporate
instrumentality of the United States Government within the Department of Housing
and Urban Development. The National Housing Act of 1934, as amended (the
"Housing Act"), authorizes Ginnie Mae to guarantee the timely payment of the
principal of and interest on certificates that are based on and backed by a pool
of mortgage loans insured by the Federal Housing Administration under the
Housing Act, or Title V of the Housing Act of 1949 ("FHA Loans"), or guaranteed
by the Veterans' Administration under the Servicemen's Readjustment Act of 1944,
as amended ("VA Loans"), or by pools of other eligible mortgage loans. The
Housing Act provides that the full faith and credit of the U.S. government is
pledged to the payment of all amounts that may be required to be paid under any
guarantee. In order to meet its obligations under such guarantee, Ginnie Mae is
authorized to borrow from the U.S. Treasury with no limitations as to amount.
The Ginnie Mae Certificates will represent a pro rata interest in one
or more pools of the following types of mortgage loans: (i) fixed rate level
payment mortgage loans; (ii) fixed rate graduated payment mortgage loans; (iii)
fixed rate growing equity mortgage loans; (iv) fixed rate mortgage loans secured
by manufactured (mobile) homes; (v) mortgage loans on multifamily residential
properties under construction; (vi) mortgage loans on completed multifamily
projects; (vii) fixed rate mortgage loans as to which escrowed funds are used to
reduce the borrower's monthly payments during the early years of the mortgage
loans ("buydown" mortgage loans); (viii) mortgage loans that provide for
adjustments in payments based on periodic changes in interest rates or in other
payment terms of the mortgage loans; and (ix) mortgage-backed serial notes. All
of these mortgage loans will be FHA Loans or VA Loans and, except as otherwise
specified above, will be fully-amortizing loans secured by first liens on
one-to-four family housing units.
Fannie Mae Certificates. Fannie Mae is a federally chartered and
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act. Fannie Mae was originally established in 1938
as a U.S. government agency to provide supplemental liquidity to the mortgage
market and was transformed into a stockholder owned and privately managed
corporation by legislation enacted in 1968. Fannie Mae provides funds to the
mortgage market primarily by purchasing home mortgage loans from local lenders,
thereby replenishing their funds for additional lending. Fannie Mae acquires
funds to purchase home mortgage loans from many capital market investors that
may not ordinarily invest in mortgage loans directly, thereby expanding the
total amount of funds available for housing.
Each Fannie Mae Certificate entitles the registered holder thereof to
receive amounts representing such holder's pro rata interest in scheduled
principal payments and interest payments (at such Fannie Mae Certificate's
pass-through rate, which is net of any servicing and guarantee fees on the
underlying mortgage loans), and any principal prepayments on the mortgage loans
in the pool represented by such Fannie Mae Certificate and such holder's
proportionate interest in the full principal amount of any foreclosed or
otherwise finally liquidated mortgage loan. The full and timely payment of
principal of and interest on each Fannie Mae Certificate will be guaranteed by
Fannie Mae, which guarantee is not backed by the full faith and credit of the
U.S. government.
Each Fannie Mae Certificate will represent a pro rata interest in one
or more pools of FHA Loans, VA Loans or conventional mortgage loans (i.e.,
Mortgage Loans that are not insured or guaranteed by any governmental agency) of
the following types; (i) fixed rate level payment mortgage loans; (ii) fixed
rate growing equity mortgage loans; (iii) fixed rate graduated payment mortgage
loans; (iv) variable rate California mortgage loans; (v) other adjustable rate
mortgage loans; and (vi) fixed rate mortgage loans secured by multifamily
projects.
Freddie Mac Certificates. Freddie Mac is a corporate instrumentality of
the United States Government created pursuant to the Emergency Home Finance Act
of 1970, as amended (the "FHLMC Act"). Freddie Mac was established primarily for
the purpose of increasing the availability of mortgage credit for the financing
of needed housing. The principal activity of Freddie Mac currently consists of
the purchase of first lien, conventional, residential mortgage loans and
participation interests in such mortgage loans and the resale of the mortgage
loans so purchased in the form of mortgage securities, primarily Freddie Mac
Certificates.
Freddie Mac guarantees to each registered holder of a Freddie Mac
Certificate the timely payment of interest at the rate provided for by such
Freddie Mac Certificate, whether or not received. Freddie Mac also guarantees to
each registered holder of a Freddie Mac Certificate ultimate collection of all
principal of the related mortgage loans, without any offset or deduction, but
does not generally guarantee the timely payment of scheduled principal. Freddie
Mac may remit the amount due on account of its guarantee of collection of
principal at any time after default on an underlying mortgage loan, but not
later than 30 days following (i) foreclosure sale, (ii) payment of a claim by
any mortgage insurer, or (iii) the expiration of any right of redemption,
whichever occurs later, but in any event no later than one year after demand has
been made upon the mortgagor for acceleration of payment of principal. The
obligations of Freddie Mac under its guarantee are obligations solely of Freddie
Mac and are not backed by the full faith and credit of the U.S. government.
Freddie Mac Certificates represent a pro rata interest in a group of
mortgage loans (a "Freddie Mac Certificate group") purchased by Freddie Mac. The
mortgage loans underlying the Freddie Mac Certificates will consist of fixed
rate or adjustable rate mortgage loans with original terms to maturity of
between ten and thirty years, substantially all of which are secured by first
liens on one-to-four family residential properties or multifamily projects. Each
mortgage loan must meet the applicable standards set forth in the FHLMC Act. A
Freddie Mac Certificate group may include whole loans, participation interests
in whole loans and undivided interests in whole loans and participations
comprising another Freddie Mac Certificate group.
Private Mortgage Pass-Through Securities. Private mortgage pass-through
securities ("Private Pass-Throughs") are structured similarly to the Ginnie Mae,
Fannie Mae and Freddie Mac mortgage pass-through securities described above and
are issued by originators of and investors in mortgage loans, including savings
and loan associations, mortgage banks, commercial banks, investment banks and
special purpose subsidiaries of the foregoing. Private Pass-Throughs are usually
backed by a pool of conventional fixed rate or adjustable rate mortgage loans.
Since Private Pass-Throughs typically are not guaranteed by an entity
having the credit status of Ginnie Mae, Fannie Mae or Freddie Mac, such
securities generally are structured with one or more types of credit
enhancement.
Collateralized Mortgage Obligations. Collateralized mortgage
obligations or "CMOs" are debt obligations collateralized by mortgage loans or
mortgage pass-through securities. Typically, CMOs are collateralized by Ginnie
Mae, Fannie Mae or Freddie Mac Certificates, but also may be collateralized by
whole loans or Private Pass-Throughs (such collateral collectively hereinafter
referred to as "Mortgage Assets").
Stripped Mortgage-Backed Securities. Multi-class pass-through
securities are equity interests in a fund composed of Mortgage Assets. Unless
the context indicates otherwise, all references herein to CMOs include
multi-class pass-through securities. Payments of principal of and interest on
the Mortgage Assets, and any reinvestment income thereon, provide the funds to
pay debt service on the CMOs or make scheduled distributions on the multi-class
pass-through securities. CMOs may be sponsored by agencies or instrumentalities
of the U.S. Government, or by private originators of, or investors in, mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing. Under
current law, every newly created CMO issuer must elect to be treated for federal
income tax purposes as a Real Estate Mortgage Investment Conduit (a "REMIC").
In a CMO, a series of bonds or certificates is issued in multiple
classes. Each class of CMOs, often referred to as a "tranche", is issued at a
specific fixed or floating coupon rate and has a stated maturity or final
distribution date. Principal prepayments on the Mortgage Assets may cause the
CMOs to be retired substantially earlier than their stated maturities or final
distribution dates. Interest is paid or accrues on all classes of the CMOs on a
monthly, quarterly or semi-annual basis. The principal of and interest on the
Mortgage Assets may be allocated among the several classes of a series of a CMO
in innumerable ways. In one structure, payments of principal, including any
principal prepayments, on the Mortgage Assets are applied to the classes of a
CMO in the order of their respective stated maturities or final distribution
dates, so that no payment of principal will be made on any class of CMOs until
all other classes having an earlier stated maturity or final distribution date
have been paid in full.
The Fund may also invest in, among others, parallel pay CMOs and
Planned Amortization Class CMOs ("PAC Bonds"). Parallel pay CMOs are structured
to provide payments of principal on each payment date to more than one class.
These simultaneous payments are taken into account in calculating the stated
maturity date or final distribution date of each class, which, as with other CMO
structures, must be retired by its payments of a specified amount of principal
on each payment date.
Multi-class Pass-Through Securities. Stripped mortgage-backed
securities ("SMBS") may be issued by agencies or instrumentalities of the U.S.
Government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing. SMBS issued
by parties other than agencies or instrumentalities of the U.S. Government are
considered, under current guidelines of the staff of the Securities and Exchange
Commission, to be illiquid securities. The Fund will only invest in stripped
mortgage-backed securities of the U.S. Government and certain of its agencies
and instrumentalities.
SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool of
Mortgage Assets. A common type of SMBS will have at least one class receiving
none or only a small portion of the interest and all or a larger portion of the
principal from the Mortgage Assets, while the other classes will receive
primarily or entirely interest and only a small portion of the principal.
RTC Securities. The Resolution Trust Corporation ("RTC") was organized
by the U.S. Government in connection with the savings and loan crisis. RTC holds
assets of failed savings and loans either as conservator or receiver for such
institutions or acquires such assets in its corporate capacity. These assets
include, among other things, single family and multifamily mortgage loans as
well as commercial mortgage loans. In order to dispose of such assets in an
orderly manner, RTC has established a vehicle registered with the Securities and
Exchange Commission ("SEC") through which it sells credit-enhanced
Mortgage-Backed Securities ("RTC Securities"). These securities represent pro
rata interests in pools of single family and multifamily mortgage loans which
RTC holds or has acquired as described above. It is expected that commercial
mortgage loans may also be included in discrete pools in the near future. Credit
enhancement of RTC Securities is obtained from external sources (including pool
insurance policies, letters of credit and surety guarantees), internal sources
(including subordination and spread accounts) and independent sources (including
reserve funds and cash collateral accounts).
I. Future Contracts and Options on Future Contracts. The successful use
of such instruments draws upon the Advisor's skill and experience with respect
to such instruments and usually depends on the Advisor's ability to forecast
interest rate and currency exchange rate movements correctly. Should interest or
exchange rates move in an unexpected manner, a Fund may not achieve the
anticipated benefits of futures contracts or options on futures contracts or may
realize losses and thus will be in a worse position than if such strategies had
not been used. In addition, the correlation between movements in the price of
futures contracts or options on futures contracts and movements in the price of
the securities and currencies hedged or used for cover will not be perfect and
could produce unanticipated losses.
Futures Contracts. Each Fund may enter into contracts for the purchase
or sale for future delivery of fixed-income securities, foreign currencies, or
contracts based on financial indices including any index of U.S. government
securities, foreign government securities or corporate debt securities. U.S.
futures contracts have been designed by exchanges which have been designated
"contracts markets" by the Commodity Futures Trading Commission ("CFTC"), and
must be executed through a futures commission merchant, or brokerage firm, which
is a member of the relevant contract market. Futures contracts trade on a number
of exchange markets, and, through their clearing corporations, the exchanges
guarantee performance of the contracts as between the clearing members of the
exchange. A Fund may enter into futures contracts which are based on debt
securities that are backed by the full faith and credit of the U.S. Government,
such as long-term U.S. Treasury Bonds, Treasury Notes, Government National
Mortgage Association (`GNMA") modified pass-through mortgage-backed securities
and three-month U.S. Treasury Bills. A Fund may also enter into futures
contracts which are based on bonds issued by entities other than the U.S.
government. At the same time a futures contract is purchased or sold, the Fund
must allocate cash or securities as a deposit payment ("initial deposit"). It is
expected that the initial deposit would be approximately 1 1/2% to 5% of a
contract's face value. Daily thereafter, the futures contract is valued and the
payment of "variation margin" may be required, since each day the Fund would
provide or receive cash that reflects any decline or increase in the contract's
value. At the time of delivery of securities pursuant to such a contract,
adjustments are made to recognize differences in value arising from the delivery
of securities with a different interest rate from that specified in the
contract. In some (but not many) cases, securities called for by a futures
contract may not have been issued when the contract was written.
Although futures contracts by their terms call for the actual delivery
or acquisition of securities, in most cases the contractual obligation is
fulfilled before the date of the contract without having to make or take
delivery of the securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels
the obligation to make or take delivery of the securities. Since all
transactions in the futures market are made, offset or fulfilled through a
clearinghouse associated with the exchange on which the contracts are traded,
the Fund will incur brokerage fees when it purchases or sells futures contracts.
The purpose of the acquisition or sale of a futures contract, in the
case of a Fund which holds or intends to acquire fixed-income securities, is to
attempt to protect the Fund from fluctuations in interest or foreign exchange
rates without actually buying or selling fixed-income securities or foreign
currencies. For example, if interest rates were expected to increase, the Fund
might enter into futures contracts for the sale of debt securities. Such a sale
would have much the same effect as selling an equivalent value of the debt
securities owned by the Fund. If interest rates did increase, the value of the
debt security in the Fund would decline, but the value of the futures contracts
to the Fund would increase at approximately the same rate, thereby keeping the
net asset value of the Fund from declining as much as it otherwise would have.
The Fund could accomplish similar results by selling debt securities and
investing in bonds with short maturities when interest rates are expected to
increase. However, since the futures market is more liquid than the cash market,
the use of futures contracts as an investment technique allows the Fund to
maintain a defensive position without having to sell its Fund securities.
Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to attempt to hedge against anticipated purchases of
debt securities at higher prices. Since the fluctuations in the value of futures
contracts should be similar to those of debt securities, a Fund could take
advantage of the anticipated rise in the value of debt securities without
actually buying them until the market had stabilized. At that time, the futures
contracts could be liquidated and the Fund could then buy debt securities on the
cash market. To the extent a Fund enters into futures contracts for this
purpose, the assets in the segregated asset account maintained to cover the
Fund's obligations with respect to such futures contracts will consist of cash,
cash equivalents or high quality liquid debt securities from its Fund in an
amount equal to the difference between the fluctuating market value of such
futures contracts and the aggregate value of the initial and variation margin
payments made by the Fund with respect to such futures contracts.
The ordinary spreads between prices in the cash and futures market, due
to differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial deposit and
variation requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing distortion. Third, from
the point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of general interest rate trends by the Advisor may still not
result in a successful transaction.
In addition, futures contracts entail risks. Although the Advisor
believes that use of such contracts will benefit the Funds, if the Advisor's
investment judgment about the general direction of interest rates is incorrect,
a Fund's overall performance would be poorer than if it had not entered into any
such contract. For example, if a Fund has hedged against the possibility of an
increase in interest rates which would adversely affect the price of debt
securities held in its Fund and interest rates decrease instead, the Fund will
lose part or all of the benefit of the increased value of its debt securities
which it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if a Fund has insufficient cash, it
may have to sell debt securities from its Fund to meet daily variation margin
requirements. Such sales of bonds may be, but will not necessarily be, at
increased prices which reflect the rising market. A Fund may have to sell
securities at a time when it may be disadvantageous to do so.
Options on Futures Contracts. Each Fund may purchase and write options
on futures contracts for hedging purposes. The purchase of a call option on a
futures contract is similar in some respects to the purchase of a call option on
an individual security. Depending on the pricing of the option compared to
either the price of the futures contract upon which it is based or the price of
the underlying debt securities, it may or may not be less risky than ownership
of the futures contract or underlying debt securities. As with the purchase of
futures contracts, when a Fund is not fully invested it may purchase a call
option on a futures contract to hedge against a market advance due to declining
interest rates.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign currency which
is deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is below the exercise price, a Fund will retain the
full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Fund's holdings. The writing of a put
option on a futures contract constitutes a partial hedge against increasing
prices of the security or foreign currency which is deliverable upon exercise of
the futures contract. If the futures price at expiration of the option is higher
than the exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any increase in the price of
securities which the Fund intends to purchase. If a put or call option the Fund
has written is exercised, the Fund will incur a loss which will be reduced by
the amount of the premium it receives. Depending on the degree of correlation
between changes in the value of its Fund securities and changes in the value of
its futures positions, the Fund's losses from existing options on futures may to
some extent be reduced or increased by changes in the value of Fund securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on Fund securities. For
example, a Fund may purchase a put option on a futures contract to hedge against
the risk of rising interest rates.
The amount of risk a Fund assumes when it purchases an option on a
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.
The Board of Trustees of each Fund has adopted a further restriction
that the Fund will not enter into any futures contracts or options on futures
contracts if immediately thereafter the amount of margin deposits on all the
futures contracts of the Fund and premiums paid on outstanding options on
futures contracts owned by the Fund (other than those entered into for bona fide
hedging purposes) would exceed 5% of the market value of the total assets of the
Fund.
Options on Foreign Currency. Each Fund may purchase and write options
on foreign currencies for hedging purposes in a manner similar to that in which
futures contracts on foreign currencies, or forward contracts, will be utilized.
For example, a decline in the dollar value of a foreign currency in which Fund
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant. In order to protect
against such diminutions in the value of Fund securities, the Fund may purchase
put options on the foreign currency. If the value of the currency does decline,
a Fund will have the right to sell such currency for a fixed amount in dollars
and will thereby offset, in whole or in part, the adverse effect on its Fund
which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Fund may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Fund deriving from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, where currency exchange rates do not move in the direction
or to the extent anticipated, the Fund could sustain losses on transactions in
foreign currency options which would require it to forego a portion or all of
the benefits of advantageous changes in such rates.
Each Fund may write options on foreign currencies for the same types of
hedging purposes. For example, where a Fund anticipates a decline in the dollar
value of foreign currency denominated securities due to adverse fluctuations in
exchange rates it could, instead of purchasing a put option, write a call option
on the relevant currency. If the expected decline occurs, the options will most
likely not be exercised, and the diminution in value of Fund securities will be
offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the Fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow the Fund to hedge such
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund would be required to purchase or sell the underlying currency at a loss
which may not be offset by the amount of the premium. Through the writing of
options on foreign currencies, the Fund also may be required to forego all or a
portion of the benefits which might otherwise have been obtained from favorable
movements in exchange rates.
Additional Risks of Options on Futures Contracts and Forward Contracts.
Unlike transactions entered into by a Fund in futures contracts, options on
forward contracts are not traded on contract markets regulated by the CFTC or by
the SEC. To the contrary, such instruments are traded through financial
institutions acting as market-makers, subject to SEC regulation. In an
over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option writer and a
trader of forward contracts could lose amounts substantially in excess of their
initial investments, due to the margin and collateral requirements associated
with such positions.
In addition, futures contracts, options on futures contracts and
forward contracts may be traded on foreign exchanges. Such transactions are
subject to the risk of governmental actions affecting trading in or the prices
of securities. The value of such positions also could be adversely affected by:
(i) other complex foreign political and economic factors; (ii) lesser
availability than in the United States of data on which to make trading
decisions; (iii) delays in the Fund's ability to act upon economic events
occurring in foreign markets during nonbusiness hours in the United States; (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the United States; and (v) lesser trading volume.
Options on Securities. Each Fund may write (sell) call and put options
to a limited extent on its Fund securities in an attempt to increase income.
However, the Fund may forgo the benefits of appreciation on securities sold or
may pay more than the market price on securities acquired pursuant to call and
put options written by the Fund.
When a Fund writes a call option, it gives the purchaser of the option
the right to buy the underlying security at the price specified in the option
(the "exercise price") by exercising the option at any time during the option
period. If the option expires unexercised, the Fund will realize income in an
amount equal to the premium received for writing the option. If the option is
exercised, a decision over which the Fund has no control, the Fund must sell the
underlying security to the option holder at the exercise price. By writing a
call option, the Fund forgoes, in exchange for the premium less the commission
("net premium"), the opportunity to profit during the option period from an
increase in the market value of the underlying security above the exercise
price.
When a Fund writes a put option, it gives the purchaser of the option
the right to sell the underlying security to the Fund at the specified exercise
price at any time during the option period. If the option expires unexercised,
the Fund will realize income in the amount of the premium received for writing
the option. If the put option is exercised, a decision over which the Fund has
no control, the Fund must purchase the underlying security from the option
holder at the exercise price. By writing a put option, the Fund, in exchange for
the net premium received, accepts the risk of a decline in the market value of
the underlying security below the exercise price.
A Fund may terminate its obligation as the writer of a call or put
option by purchasing an option with the same exercise price and expiration date
as the option previously written. This transaction is called a "closing purchase
transaction." The Fund will realize a profit or loss for a closing purchase
transaction if the amount paid to purchase an option is less or more, as the
case may be, than the amount received from the sale thereof. To close out a
position as a purchaser of an option, the Fund, may make a `closing sale
transaction" which involves liquidating the Fund's position by selling the
option previously purchased. Where the Fund cannot effect a closing purchase
transaction, it may be forced to incur brokerage commissions or dealer spreads
in selling securities it receives or it may be forced to hold underlying
securities until an option is exercised or expires.
When a Fund writes an option, an amount equal to the net premium
received by the Fund is included in the liability section of the Fund's
Statement of Assets and Liabilities as a deferred credit. The amount of the
deferred credit will be subsequently marked to market to reflect the current
market value of the option written. The current market value of a traded option
is the last sale price or, in the absence of a sale, the mean between the
closing bid and asked price. If an option expires on its stipulated expiration
date or if the Fund enters into a closing purchase transaction, the Fund will
realize a gain (or loss if the cost of a closing purchase transaction exceeds
the premium received when the option was sold), and the deferred credit related
to such option will be eliminated. If a call option is exercised, the Fund will
realize a gain or loss from the sale of the underlying security and the proceeds
of the sale will be increased by the premium originally received. The writing of
covered call options may be deemed to involve the pledge of the securities
against which the option is being written. Securities against which call options
are written will be segregated on the books of the Custodian for the Fund.
A Fund may purchase call and put options on any securities in which it
may invest. The Fund would normally purchase a call option in anticipation of an
increase in the market value of such securities. The purchase of a call option
would entitle the Fund, in exchange for the premium paid, to purchase a security
at a specified price during the option period. The Fund would ordinarily have a
gain if the value of the securities increased above the exercise price
sufficiently to cover the premium and would have a loss if the value of the
securities remained at or below the exercise price during the option period.
A Fund would normally purchase put options in anticipation of a decline
in the market value of securities in its Fund ("protective puts") or securities
of the type in which it is permitted to invest. The purchase of a put option
would entitle the Fund, in exchange for the premium paid, to sell a security,
which may or may not be held in the Fund's holdings, at a specified price during
the option period. The purchase of protective puts is designed merely to offset
or hedge against a decline in the market value of the Fund's holdings. Put
options also may be purchased by the Fund for the purpose of affirmatively
benefiting from a decline in the price of securities which the Fund does not
own. The Fund would ordinarily recognize a gain if the value of the securities
decreased below the exercise price sufficiently to cover the premium and would
recognize a loss if the value of the securities remained at or above the
exercise price. Gains and losses on the purchase of protective put options would
tend to be offset by countervailing changes in the value of underlying Fund
securities.
The hours of trading for options on securities may not conform to the
hours during which the underlying securities are traded. To the extent that the
option markets close before the markets for the underlying securities,
significant price and rate movements can take place in the underlying securities
markets that cannot be reflected in the option markets. It is impossible to
predict the volume of trading that may exist in such options, and there can be
no assurance that viable exchange markets will develop or continue.
A Fund may engage in over-the-counter options transactions with
broker-dealers who make markets in these options. At present, approximately ten
broker-dealers, including several of the largest primary dealers in U.S.
government securities, make these markets. The ability to terminate
over-the-counter option positions is more limited than with exchange-traded
option positions because the predominant market is the issuing broker rather
than an exchange, and may involve the risk that broker-dealers participating in
such transactions will not fulfill their obligations. To reduce this risk, the
Fund will purchase such options only from broker-dealers who are primary
government securities dealers recognized by the Federal Reserve Bank of New York
and who agree to (and are expected to be capable of) entering into closing
transactions, although there can be no guarantee that any such option will be
liquidated at a favorable price prior to expiration. The Advisor will monitor
the creditworthiness of dealers with whom the Fund enters into such options
transactions under the general supervision of the Funds' Board of Trustees.
Options on Securities Indices. In addition to options on securities,
each Fund may also purchase and write (sell) call and put options on securities
indices. Such options give the holder the right to receive a cash settlement
during the term of the option based upon the difference between the exercise
price and the value of the index. Such options will be used for the purposes
described above under "Options on Securities."
Options on securities indices entail risks in addition to the risks of
options on securities. The absence of a liquid secondary market to close out
options positions on securities indices is more likely to occur, although the
Fund generally will only purchase or write such an option if the Advisor
believes the option can be closed out.
Use of options on securities indices also entails the risk that trading
in such options may be interrupted if trading in certain securities included in
the index is interrupted. The Fund will not purchase such options unless the
Advisor believes the market is sufficiently developed such that the risk of
trading in such options is no greater than the risk of trading in options on
securities.
Price movements in a Fund's holdings may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indices
cannot serve as a complete hedge. Because options on securities indices require
settlement in cash, the Advisor may be forced to liquidate Fund securities to
meet settlement obligations.
Forward Foreign Currency Exchange Contracts. Because each Fund may buy
and sell securities denominated in currencies other than the U.S. dollar and
receives interest, dividends and sale proceeds in currencies other than the U.S.
dollar, a Fund from time to time may enter into foreign currency exchange
transactions to convert to and from different foreign currencies and to convert
foreign currencies to and from the U.S. dollar. A Fund either enters into these
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or uses forward contracts to purchase or sell
foreign currencies.
A forward foreign currency exchange contract is an obligation by a Fund
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract. Forward foreign currency exchange
contracts establish an exchange rate at a future date. These contracts are
transferable in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward foreign currency
exchange contract generally has no deposit requirement and is traded at a net
price without commission. Each Fund maintains with its custodian a segregated
account of high grade liquid assets in an amount at least equal to its
obligations under each forward foreign currency exchange contract. Neither spot
transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of the Fund's securities or in foreign exchange
rates, or prevent loss if the prices of these securities should decline.
Each Fund may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a Fund position or
an anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into the Advisor's long-term investment
decisions, a Fund will not routinely enter into foreign currency hedging
transactions with respect to security transactions. However, the Advisor
believes that it is important to have the flexibility to enter into foreign
currency hedging transactions when it determines that the transactions would be
in the Fund's best interest. Although these transactions tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time they tend to limit any potential gain that might be realized should the
value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
While these contracts are not presently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contracts. In such event
the Fund's ability to utilize forward contracts in the manner set forth in the
Prospectus may be restricted. Forward contracts may reduce the potential gain
from a positive change in the relationship between the U.S. dollar and foreign
currencies. Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it had not entered into such contracts.
The use of foreign currency forward contracts may not eliminate fluctuations in
the underlying U.S. dollar equivalent value of the prices of or rates of return
on a Fund's foreign currency denominated Fund securities and the use of such
techniques will subject a Fund to certain risks.
The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, a Fund may not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the Fund's ability to use
such contracts to hedge or cross-hedge its assets. Also, with regard to a Fund's
use of cross-hedges, there can be no assurance that historical correlations
between the movement of certain foreign currencies relative to the U.S. dollar
will continue. Thus, at any time poor correlation may exist between movements in
the exchange rates of the foreign currencies underlying a Fund's cross-hedges
and the movements in the exchange rates of the foreign currencies in which the
Fund's assets that are the subject of such cross-hedges are denominated.
J. Short-Term Instruments. When a Fund experiences large cash inflows
through the sale of securities and desirable equity securities, that are
consistent with the Fund's investment objective, which are unavailable in
sufficient quantities or at attractive prices, each Fund may invest in
short-term instruments for a limited time pending availability of such Fund
securities. Short-term instruments consist of foreign or domestic: (i)
short-term obligations of sovereign governments, their agencies,
instrumentalities, authorities or political subdivisions; (ii) other short-term
debt securities rated AA or higher by Standard & Poor's Rating Group (`S&P") or
Aa or higher by Moody's Investors Services, Inc. (`Moody's") or, if unrated, of
comparable quality in the opinion of Advisor; (iii) commercial paper; (iv) bank
obligations, including negotiable certificates of deposit, time deposits and
banker's acceptances; and (v) repurchase agreements. At the time the Fund
invests in commercial paper, bank obligations or repurchase agreements, the
issuer of the issuer's parent must have outstanding debt rated AA or higher by
S&P or Aa or higher by Moody's or outstanding commercial paper or bank
obligations rated A-1 by S&P or Prime-1 by Moody's; or, if no such ratings are
available, the instrument must be of comparable quality in the opinion of
Advisor. These instruments may be denominated in U.S. dollars or in foreign
currencies.
K. Illiquid Securities. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale because they
have not been registered under the Securities Act of 1933, as amended (the "1933
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a remaining maturity of longer than seven days. Securities
which have not been registered under the 1933 Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a significant
amount of these restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations on resale may
have an adverse effect on the marketability of Fund securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
In recent years, however, a large institutional market has developed
for certain securities that are not registered under the 1933 Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale of such investments to the
general public or to certain institutions may not be indicative of their
liquidity.
The Securities and Exchange Commission the (the "SEC") has adopted Rule
144A, which allows a broader institutional trading market for securities
otherwise subject to restriction on their resale to the general public. Rule
144A establishes a "safe harbor" from the registration requirements of the 1933
Act of resales of certain securities to qualified institutional buyers. The
Advisor anticipates that the market for certain restricted securities such as
institutional commercial paper will expand further as a result of this
regulation and the development of automated systems for the trading, clearance
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL System sponsored by the National Association of Securities
Dealers, Inc.
The Advisor will monitor the liquidity of Rule 144A securities in each
Fund's holdings under the supervision of the Fund's Board of Trustees. In
reaching liquidity decisions, the Advisor will consider, among other things, the
following factors: (1) the frequency of trades and quotes for the security; (2)
the number of dealers and other potential purchasers or sellers of the security;
(3) dealer undertakings to make a market in the security and (4) the nature of
the security and of the marketplace trades (e.g., the time needed to dispose of
the security, the method of soliciting offers and the mechanics of the
transfer).
L. Restricted Securities. Restricted securities generally can be sold
in privately negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933, or in a registered public offering. Where the
registration is required, a Fund holding restricted securities may be obligated
to pay all or part of the registration expense and a considerable period may
elapse between the time it decides to seek registration and the time the Fund
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to seek
registration of the security.
Each Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as security holder to seek to
protect the interests of security holders if it determines this to be in the
best interests of the Fund shareholders.
M. Securities Lending. Each Fund may lend securities to parties such as
broker-dealers, banks, or institutional investors. Securities lending allows a
Fund to retain ownership of the securities loaned and, at the same time, to earn
additional income. Since there may be delays in the recovery of loaned
securities, or even a loss of rights in collateral supplied, should the borrower
fail financially, loans will be made only to parties whose creditworthiness has
been reviewed and deemed satisfactory by the Advisor. Furthermore, they will
only be made if, in the judgment of the Advisor, the consideration to be earned
from such loans would justify the risk.
The Advisor understands that it is the current view of the staff of the
Securities and Exchange Commission ("SEC") that a Fund may engage in loan
transactions only under the following conditions: (1) a Fund must receive 100%
collateral in the form of cash, cash equivalents (e.g., U.S. Treasury bills or
notes) or other high grade liquid debt instruments from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, the Fund must be able to terminate the loan
at any time; (4) the Fund must receive reasonable interest on the loan or a flat
fee from the borrower, as well as amounts equivalent to any dividends, interest,
or other distributions on the securities loaned and to any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) the Board of Trustees must be able to vote proxies on the
securities loaned, either by terminating the loan or by entering into an
alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security
in which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
N. Leveraging. Leveraging a Fund creates an opportunity for increased
net income but, at the same time, creates special risk considerations. For
example, leveraging may exaggerate changes in the net asset value of Fund shares
and in the yield on a Fund's Fund. Although the principal of such borrowings
will be fixed, a Fund's assets may change in value during the time the borrowing
is outstanding. Leveraging will create interest expenses for the Fund which can
exceed the income from the assets retained. To the extent the income derived
from securities purchased with borrowed funds exceeds the interest the Fund will
have to pay, the Fund's net income will be greater than if leveraging were not
used. Conversely, if the income from the assets retained with borrowed funds is
not sufficient to cover the cost of leveraging, the net income of the Fund will
be less than if leveraging were not used, and therefore the amount available for
distribution to shareholders will be reduced.
O. Assest-Backed Securities. Assest-backed securities are undivided
fractional interests in pools of consumer loans (unrelated to mortgage loans)
held in a trust. Payments of principal and interest are passed through to
certificate holders and are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guaranty or
senior/subordination. The degree of credit enhancement varies, but generally
amounts to only a fraction of the asset-backed security's par value until
exhausted. If the credit enhancement is exhausted, certificateholders may
experience losses or delays in payment if the required payments of principal and
interest are not made to the trust with respect to the underlying loans. The
value of these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the loan pool, the
originator of the loans or the financial institution providing the credit
enhancement. Assest-backed securities are ultimately dependent upon payment of
consumer loans by individuals, and the certificateholder generally has no
recourse against the entity that originated the loans. The underlying loans are
subject to prepayments which shorten the securities' weighted average life and
may lower their return. As prepayments flow through at par, total returns would
be affected by the prepayments: if a security were trading at a premium, its
total return would be lowered by prepayments, and if a security were trading a
discount, its total return would be increased by prepayments.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the Statement
of Additional Information.
3. Underwriting. The Funds will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of Fund securities (including restricted
securities), a Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude a Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude a Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by
loaning Fund securities, (b) by engaging in repurchase agreements, or (c) by
purchasing nonpublicly offered debt securities. For purposes of this limitation,
the term "loans" shall not include the purchase of a portion of an issue of
publicly distributed bonds, debentures or other securities.
7. Concentration. Each Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the Trust with
respect to each Fund and are Non-Fundamental (see "Investment Restrictions"
above).
i. Pledging. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of a Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. Each Fund will not purchase any security while
borrowings (including reverse repurchase agreements) representing more than 5%
of its total assets are outstanding.
iii. Margin Purchases. The Funds will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by a Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. Illiquid Securities. Neither Fund will invest more than 15% of its net
assets in illiquid -------------------- securities.
THE INVESTMENT ADVISOR
The Funds' investment advisor is CommonWealth Advisors, Inc., 247
Florida Street, Baton Rouge, LA 70801 (the "Advisor"). Walter A. Morales may be
deemed to be a controlling person of the Advisor due to his ownership of the
shares of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages each Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of each Fund except brokerage, taxes,
interest, fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Funds' expenses, the Funds are obligated to pay the Advisor
a fee computed and accrued daily and paid monthly at an annual rate of 1.10% of
the average daily net assets of the Florida Street Bond Fund, and 1.35% of the
average daily net assets of the Florida Street Growth Fund. The Advisor may
waive all or part of its fee, at any time, and at its sole discretion, but such
action shall not obligate the Advisor to waive any fees in the future. For the
period August 4, 1997 (commencement of operations) through October 31, 1997, and
for the fiscal year ended October 31, 1998, the Florida Street Bond Fund paid
advisory fees of $14,080 and $103,008 respectively. For the period August 6,
1997 (commencement of operations) through October 31, 1997 and for the fiscal
year ended October 31, 1998, the Florida Street Growth Fund paid advisory fees
of $6,339 and $34,640, respectively.
The Advisor retains the right to use the name "Florida Street" in
connection with another investment company or business enterprise with which the
Advisor is or may become associated. The Trust's right to use the name "Florida
Street" automatically ceases ninety days after termination of the Agreement and
may be withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Funds believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Funds believes that there would be no material impact on a Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. Each Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for a Fund, no preference will be shown for such
securities.
<PAGE>
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown below.
Each Trustee who is an "interested person" of the Trust, as defined in the
Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
======================================= ------------------------------ ====================================================
Name, Age and Address Position Principal Occupations During
Past 5 Years
======================================= ------------------------------ ====================================================
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime
Age: 40 Financial Services, Inc., the Funds'
1793 Kingswood Drive administrator, and AmeriPrime Financial
Suite 200 Securities, Inc., the Funds' distributor, since
Southlake, Texas 76092 1994. Prior to December, 1994, a senior client
executive with SEI Financial Services.
======================================= ------------------------------ ====================================================
Paul S. Bellany Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer
Age: 39 of AmeriPrime Financial Services, Inc. and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc. , various
Suite 200 positions with Fidelity Investments from 1987 to
Southlake, Texas 76092 1998; most recently Fund Reporting Unit Manager.
======================================= ------------------------------ ====================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C.,
Age: 41 oil and gas services company; various positions
2001 Indianwood Ave. with Carbo Ceramics, Inc., oil field
Broken Arrow, OK 74012 manufacturing/supply company, from 1984 to 1997,
most recently Vice President of Marketing.
======================================= ============================== ====================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment
Age: 51 Officer of Legacy Trust Company since 1992;
600 Jefferson St. Suite 350 President and Director of Heritage Trust Company
Houston, Texas 77063 from 1994 to 1996.
======================================= ============================== ====================================================
</TABLE>
Trustee fees are Trust expenses and each series of the Trust pays a
portion of the Trustee fees. The compensation paid to the Trustees of the Trust
for the fiscal year ended October 31, 1998 is set forth in the following table:
<TABLE>
<S> <C> <C>
===================================== --------------------- ==================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
===================================== --------------------- ==================================
Kenneth D. Trumpfheller 0 0
===================================== --------------------- ==================================
Steve L. Cobb $4,000 $4,000
===================================== ===================== ==================================
Gary E. Hippenstiel $4,000 $4,000
===================================== ===================== ==================================
</TABLE>
<PAGE>
FUND TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for each Fund's Fund decisions and the placing of
each Fund's Fund transactions. In placing Fund transactions, the Advisor seeks
the best qualitative execution for each Fund, taking into account such factors
as price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. The Advisor generally seeks favorable prices and commission rates that
are reasonable in relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Funds and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom a Fund effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Funds. Although research services and other information are useful to the Funds
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Funds
under the Agreement. Due to research services provided by brokers, the Florida
Street Bond Fund and the Florida Street Growth Fund directed to brokers
$2,102,020 and $714,080 (on which commissions were $6,351 and $1,560),
respectively, during the fiscal year ended October 31, 1998.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
When a Fund and another of the Advisor's clients seek to purchase or
sell the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Funds because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. The allocation may be adjusted by the Advisor, taking into account such
factors as the size of the individual orders and transaction costs, when the
Advisor believes an adjustment is reasonable. For the period August 4, 1997
(commencement of operations) through October 31, 1997 and for the fiscal year
ended October 31, 1998, the Florida Street Bond Fund paid brokerage commissions
of $480 and $9,337, respectively. For the period August 6, 1997 (commencement of
operations) through October 31, 1997 and for the fiscal year ended October 31,
1998 the Florida Street Growth Fund paid brokerage commissions of $3,897 and
$8,780 respectively.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in each Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are
reinvested at the net asset value on the reinvestment dates and that a complete
redemption occurs at the end of the applicable period.
Each Fund's investment performance will vary depending upon market
conditions, the composition of each Fund's Fund and operating expenses of each
Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing a Fund's performance to those of other investment companies or
investment vehicles. The risks associated with each Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period August 4,
1997 (commencement of operations) through October 31, 1997 and for the fiscal
year ended October 31, 1998, the Florida Street Bond Fund's average annual total
return was 0.90%, annualized, and -1.20%, respectively. For the period August 6,
1997 (commencement of operations) through October 31, 1997 and for the fiscal
year ended October 31, 1998, the Florida Street Growth Fund's average annual
total return was 1.90%, annualized, and -9.73%, respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of each Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the Fund holdings of the Fund or considered
to be representative of the market in general.
In addition, the performance of each Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of each Funds investments. The Custodian acts as each Fund's
depository, safekeeps its Fund securities, collects all income and other
payments with respect thereto, disburses funds at a Fund's request and maintains
records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11788, acts as each Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of each Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, American Data Services, Inc. provides each Fund with certain monthly
reports, record-keeping and other management-related services. For the period
August 4, 1997 (commencement of operations) through October 31, 1997 and for the
fiscal year ended October 31, 1998, ADS received $1,600 and $18,736
respectively, from the Advisor (not the Fund) for these services provided to the
Florida Street Bond Fund. For the period August 6, 1997 (commencement of
operations) through October 31, 1997 and for the fiscal year ended October 31,
1998, ADS received $1,600 and $9,680, respectively, from the Advisor (not the
Fund) for these services provided to the Florida Street Growth Fund.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of each Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of
each Fund. The Distributor is obligated to sell the shares of each Fund on a
best efforts basis only against purchase orders for the shares. Shares of each
Fund are offered to the public on a continuous basis.
ADMINISTRATOR
The Funds retain AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the"Administrator") to manage the Funds'
business affairs and provide the Funds with administrative services, including
all regulatory reporting and necessary office equipment, personnel and
facilities. For the period August 4, 1997 (commencement of operations) through
October 31, 1997 and for the fiscal year ended October 31, 1998, the
Administrator received $10,417 and $25,000, respectively, from the Advisor (not
the Funds) for these services provided to the Florida Street Bond Fund. For the
period August 6, 1997 (commencement of operations) through October 31, 1997 and
for the fiscal year ended October 31, 1998, the Administrator received $10,417
and $25,000, respectively, from the Advisor (not the Funds) for these services
provided to the Florida Street Growth Fund.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report Shareholders for the period ended
October 31, 1998. The Trust will provide the Annual Report without charge by
calling the Fund at 1-800-890-5344.
<PAGE>
FOUNTAINHEAD SPECIAL VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Fountainhead Special Value Fund
dated February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at 431 N. Pennsylvania St., Indianapolis, IN 46204 or by calling
1-800-868-9535.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST..................................................... 1
ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS.......................................... 1
INVESTMENT LIMITATIONS....................................................... 6
THE INVESTMENT ADVISOR....................................................... 8
TRUSTEES AND OFFICERS........................................................ 9
PORTFOLIO TRANSACTIONS AND BROKERAGE........................................ 10
DETERMINATION OF SHARE PRICE................................................. 11
INVESTMENT PERFORMANCE...................................................... 11
CUSTODIAN................................................................... 12
TRANSFER AGENT............................................................... 12
ACCOUNTANTS................................................................. 12
DISTRIBUTOR................................................................. 12
ADMINISTRATOR................................................................12
FINANCIAL STATEMENTS......................................................... 12
<PAGE>
DESCRIPTION OF THE TRUST
Fountainhead Special Value Fund (the "Fund") was organized as a series
of AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of four series currently
authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
As of January 31, 1999, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: Jenswold, King
Investment Advisors, Inc. Profit Sharing Plan, Roger E. King, Trustee, 1980 Post
Oak Boulevard, #2400, Houston, Texas - 14.69%; Betty F. Wolfenson, 5555 Del
Monte, Suite 106, Houston, Texas - 7.28%; A. Orwig, P.O. Box 1280, Point Clear,
Alabama 36564 - 5.61%. As of January 31, 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 Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Share Price Calculation" in the Fund's
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A........Equity Securities. Equity securities include common stock,
preferred stock and common stock equivalents (such as convertible preferred
stock, rights and warrants). Convertible preferred stock is preferred stock that
can be converted into common stock pursuant to its terms. Warrants are options
to purchase equity securities at a specified price valid for a specific time
period. Rights are similar to warrants, but normally have a short duration and
are distributed by the issuer to its shareholders. The Fund may invest up to 5%
of its net assets at the time of purchase in rights or warrants.
B........Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Advisor (subject to review by the Board of Trustees) to be creditworthy.
The Advisor monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
C........Reverse Repurchase Agreements. Reverse repurchase agreements
involve sales of portfolio securities by the Fund to member banks of the Federal
Reserve System or recognized securities dealers, concurrently with an agreement
by the Fund to repurchase the same securities at a later date at a fixed price,
which is generally equal to the original sales price plus interest. The Fund
retains record ownership and the right to receive interest and principal
payments on the portfolio security involved. The Fund's objective in such a
transaction would be to obtain funds to pursue additional investment
opportunities whose yield would exceed the cost of the reverse repurchase
transaction. Generally, the use of reverse repurchase agreements should reduce
portfolio turnover and increase yield.
........In connection with each reverse repurchase agreement, the Fund will
direct its Custodian to place cash or U.S. government obligations in a separate
account in an amount equal to the repurchase price. In the event of bankruptcy
or other default by the purchaser, the Fund could experience both delays in
repurchasing the portfolio securities and losses.
D........Illiquid Securities. The portfolio of the Fund may contain
illiquid securities. Illiquid securities generally include securities which
cannot be disposed of promptly and in the ordinary course of business without
taking a reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be illiquid: repurchase agreements and reverse repurchase
agreements maturing in more than seven days, nonpublicly offered securities and
restricted securities. Restricted securities are securities the resale of which
is subject to legal or contractual restrictions. Restricted securities may be
sold only in privately negotiated transactions, in a public offering with
respect to which a registration statement is in effect under the Securities Act
of 1933 or pursuant to Rule 144 or Rule 144A promulgated under such Act. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expense, and a considerable period may elapse between the time of
the decision to sell and the time such security may be sold under an effective
registration statement. If during such a period adverse market conditions were
to develop, the Fund might obtain a less favorable price than the price it could
have obtained when it decided to sell. The Fund will not invest more than 5% of
its net assets in illiquid securities.
E........Mortgage-Related Securities. Mortgage-related securities
include securities representing interests in a pool of mortgages. These
securities, including securities issued by FNMA, GNMA and the Federal Home Loan
Mortgage Corporation, provide investors with payments consisting of both
interest and principal as the mortgages in the underlying mortgage pools are
repaid. The Fund will only invest in pools of mortgage loans assembled for sale
to investors by agencies or instrumentalities of the U.S. government and will
limit its investment to 5% of its net assets. Unscheduled or early payments on
the underlying mortgages may shorten the securities' effective maturities.
........Other types of securities representing interests in a pool of mortgage
loans are known as collateralized mortgage obligations (CMOs) and real estate
mortgage investment conduits (REMICs) and multi-class pass-throughs. CMOs and
REMICs are debt instruments collateralized by pools of mortgage loans or other
mortgage-backed securities. Multi-class pass-through securities are equity
interests in a trust composed of mortgage loans or other mortgage-backed
securities. Payments of principal and interest on underlying collateral provides
the funds to pay debt service on the CMO or REMIC or make scheduled
distributions on the multi-class pass-through securities. The Fund will only
invest in CMOs, REMICs and multi-class pass-through securities (collectively
"CMOs" unless the context indicates otherwise) issued by agencies or
instrumentalities of the U.S. government (such as the Federal Home Loan Mortgage
Corporation). Neither Fund will invest in "stripped" CMOs, which represent only
the income portion or the principal portion of the CMO.
........CMOs are issued with a variety of classes or "tranches," which have
different maturities and are often retired in sequence. One or more tranches of
a CMO may have coupon rates which reset periodically at a specified increment
over an index such as the London Interbank Offered Rate ("LIBOR"). These
"floating rate CMOs," typically are issued with lifetime "caps" on their coupon
rate, which means that there is a ceiling beyond which the coupon rate may not
be increased. The yield of some floating rate CMOs varies in excess of the
change in the index, which would cause the value of such CMOs to fluctuate
significantly once rates reach the cap.
........REMICs, which have elected to be treated as such under the Internal
Revenue Code, are private entities formed for the purpose of holding a fixed
pool of mortgages secured by an interest in real property. REMICs are similar to
CMOs in that they issue multiple classes of securities. As with other CMOs, the
mortgages which collateralize the REMICs in which a Fund may invest include
mortgages backed by GNMA certificates or other mortgage pass-throughs issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
........The average life of securities representing interests in pools of
mortgage loans is likely to be substantially less than the original maturity of
the mortgage pools as a result of prepayments or foreclosures of such mortgages.
Prepayments are passed through to the registered holder with the regular monthly
payments of principal and interest, and have the effect of reducing future
payments. To the extent the mortgages underlying a security representing an
interest in a pool of mortgages are prepaid, the Fund may experience a loss (if
the price at which the respective security was acquired by the Fund was at a
premium over par, which represents the price at which the security will be
redeemed upon prepayment). In addition, prepayments of such securities held by
the Fund will reduce the share price of the Fund to the extent the market value
of the securities at the time of prepayment exceeds their par value.
Furthermore, the prices of mortgage-related securities can be significantly
affected by changes in interest rates. Prepayments may occur with greater
frequency in periods of declining mortgage rates because, among other reasons,
it may be possible for mortgagors to refinance their outstanding mortgages at
lower interest rates. In such periods, it is likely that any prepayment proceeds
would be reinvested by the Fund at lower rates of return.
F........Foreign Securities. The Fund may invest up to 5% of its net
assets at the time of purchase in foreign equity securities including common
stock, preferred stock and common stock equivalents issued by foreign companies,
and foreign fixed income securities. Foreign fixed income securities include
corporate debt obligations issued by foreign companies and debt obligations of
foreign governments or international organizations. This category may include
floating rate obligations, variable rate obligations, Yankee dollar obligations
(U.S. dollar denominated obligations issued by foreign companies and traded on
U.S. markets) and Eurodollar obligations (U.S. dollar denominated obligations
issued by foreign companies and traded on foreign markets).
........Foreign government obligations generally consist of debt securities
supported by national, state or provincial governments or similar political
units or governmental agencies. Such obligations may or may not be backed by the
national government's full faith and credit and general taxing powers.
Investments in foreign securities also include obligations issued by
international organizations. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank. In
addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.
........Purchases of foreign securities are usually made in foreign currencies
and, as a result, the Fund may incur currency conversion costs and may be
affected favorably or unfavorably by changes in the value of foreign currencies
against the U.S. dollar. In addition, there may be less information publicly
available about a foreign company then about a U.S. company, and foreign
companies are not generally subject to accounting, auditing and financial
reporting standards and practices comparable to those in the U.S. Other risks
associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
G........Option Transactions. Up to 5% of the Fund's net assets may be
invested in option transactions involving individual securities and market
indices. An option involves either (a) the right or the obligation to buy or
sell a specific instrument at a specific price until the expiration date of the
option, or (b) the right to receive payments or the obligation to make payments
representing the difference between the closing price of a market index and the
exercise price of the option expressed in dollars times a specified multiple
until the expiration date of the option. Options are sold (written) on
securities and market indices. The purchaser of an option on a security pays the
seller (the writer) a premium for the right granted but is not obligated to buy
or sell the underlying security. The purchaser of an option on a market index
pays the seller a premium for the right granted, and in return the seller of
such an option is obligated to make the payment. A writer of an option may
terminate the obligation prior to expiration of the option by making an
offsetting purchase of an identical option. Options are traded on organized
exchanges and in the over-the-counter market. Options on securities which the
Fund sells (writes) will be covered or secured, which means that it will own the
underlying security (for a call option); will segregate with the Custodian high
quality liquid debt obligations equal to the option exercise price (for a put
option); or (for an option on a stock index) will hold a portfolio of securities
substantially replicating the movement of the index (or, to the extent it does
not hold such a portfolio, will maintain a segregated account with the Custodian
of high quality liquid debt obligations equal to the market value of the option,
marked to market daily). When the Fund writes options, it may be required to
maintain a margin account, to pledge the underlying securities or U.S.
government obligations or to deposit liquid high quality debt obligations in a
separate account with the Custodian.
The purchase and writing of options involves certain risks; for
example, the possible inability to effect closing transactions at favorable
prices and an appreciation limit on the securities set aside for settlement, as
well as (in the case of options on a stock index) exposure to an indeterminate
liability. The purchase of options limits the Fund's potential loss to the
amount of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a greater
extent than if transactions were effected in the security directly. However, the
purchase of an option could result in the Fund losing a greater percentage of
its investment than if the transaction were effected directly. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. When the Fund
writes a covered put option, it will receive a premium, but it will assume the
risk of loss should the price of the underlying security fall below the exercise
price. When the Fund writes a covered put option on a stock index, it will
assume the risk that the price of the index will fall below the exercise price,
in which case the Fund may be required to enter into a closing transaction at a
loss. An analogous risk would apply if the Fund writes a call option on a stock
index and the price of the index rises above the exercise price.
H. Hedging Transactions. The Fund may hedge all or a portion of its
portfolio investments through the use of options and futures contracts. The
objective of the hedging program is to protect a profit or offset a loss in a
portfolio security from future price erosion or to assure a definite price for a
security by acquiring the right or option to purchase or to sell a fixed amount
of the security at a future date. For example, in order to hedge against the
risk that the value of the Fund's portfolio securities may decline, the fund
might sell futures contracts on stock indices. When hedging of this character is
successful, any depreciation in the value of the hedged portfolio securities
will be substantially offset by an increase in the Fund's equity in the stock
index futures position.
.........There is no assurance that the objective of the hedging
program will be achieved, since the success of the program will depend on the
Advisor's ability to predict the future direction of the relevant security or
stock index, and incorrect predictions by the Advisor may have an adverse effect
on the Fund. In this regard, skills and techniques necessary to arrive at such
predictions are different from those needed to predict price changes in
individual stocks.
........A stock index futures contract is a binding contractual commitment which
involves the payment or receipt of payments representing, respectively, the loss
or gain of a specified market index. Ordinarily, the Fund would enter into stock
index futures contracts to hedge its investments in common stocks. Futures
contracts are traded on exchanges licensed and regulated by the Commodity
Futures Trading Commission. The Fund will be subject to any limitations imposed
by the exchanges with respect to futures contracts trading and positions. A
clearing corporation associated with the particular exchange assumes
responsibility for all purchases and sales and guarantees delivery and payment
on the contracts. Although most futures contracts call for actual delivery or
acceptance of the underlying securities or currency, in most cases the contracts
are closed out before settlement date without the making or taking of delivery.
Closing out is accomplished by entering into an offsetting transaction, which
may result in a profit or a loss. There is no assurance that the Fund will be
able to close out a particular futures contract.
........A hedging strategy involving options and futures contracts entails some
risks. For example, the total premium paid for an option may be lost if the Fund
does not exercise the option or futures contract, or the writer does not perform
his obligations. It is also possible that the futures contracts selected by the
Fund will not follow the price movement of the underlying stock index. If this
occurs, the hedging strategy may not be successful. Further, if the Fund sells a
stock index futures contract and is required to pay an amount measured by any
increase in the market index, it will be exposed to an indeterminate liability.
In addition, a liquid secondary market may not exist for any particular option
or futures contract at any specific time.
........The Fund will incur transactional costs in connection with the hedging
program. When the Fund purchases or sells a futures contract, an amount of cash
and liquid assets will be deposited in a segregated account with the Trust's
Custodian to guarantee performance of the futures contract. The amount of such
deposits will depend upon the requirements of each exchange and broker and will
vary with each futures contract. Because open futures contract positions are
marked to market and gains and losses are settled on a daily basis, the Fund may
be required to deposit additional funds in such a segregated account if it has
incurred a net loss on its open futures contract positions on any day.
.........The Trust has filed a supplemental notice of eligibility with
the Commodity Futures Trading Commission ("CFTC") to claim relief from
regulation as a commodity "pool" within the meaning of the CFTC's regulations.
In its filing, the Trust has represented that the Fund's transactions in futures
contracts will constitute bona fide hedging transactions within the meaning of
such regulations and that the Fund will enter into commitments which require as
deposits for initial margin for futures contracts no more than 5% of the fair
market value of its assets.
I........Short Sales. The Fund may sell a security short in
anticipation of a decline in the market value of the security. When the Fund
engages in a short sale, it sells a security which it does not own. To complete
the transaction, the Fund must borrow the security in order to deliver it to the
buyer. The Fund must replace the borrowed security by purchasing it at the
market price at the time of replacement, which may be more or less than the
price at which the Fund sold the security. The Fund will incur a loss as a
result of the short sale if the price of the security increases between the date
of the short sale and the date on which the Fund replaces the borrowed security.
The Fund will realize a profit if the security declines in price between those
dates.
.........In connection with its short sales, the Fund will be required
to maintain a segregated account with its Custodian of cash or high grade liquid
assets equal to the market value of the securities sold less any collateral
deposited with its broker. The Fund will limit its short sales so that no more
than 5% of its net assets (less all its liabilities other than obligations under
the short sales) will be deposited as collateral and allocated to the segregated
account. However, the segregated account and deposits will not necessarily limit
the Fund's potential loss on a short sale, which is unlimited. The Fund's policy
with respect to short sales is non-fundamental, and may be changed by the Board
of Trustees without the vote of the Fund's shareholders.
J........Corporate Debt Securities. Corporate debt securities are bonds
or notes issued by corporations and other business organizations, including
business trusts, in order to finance their credit needs. Corporate debt
securities include commercial paper which consist of short term (usually from
one to two hundred seventy days) unsecured promissory notes issued by
corporations in order to finance their current operations.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be 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.
<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 not purchase any security while
borrowings (including reverse repurchase agreements) representing more than 5%
of its total assets are outstanding. The Fund will not invest more than 5% of
its net assets in reverse repurchase agreements.
iii......Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv.......Short Sales. The Fund will not effect short sales of
securities unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short.
v........Options. The Fund will not purchase or sell puts, calls,
options or straddles, except as described in the Prospectus and the Statement of
Additional Information.
vi.......Repurchase Agreements. The Fund will not invest more than 5% of its net
assets in repurchase --------------------- agreements.
vii......Illiquid Investments. The Fund will not invest more than 5% of
its net assets in securities for which there are legal or contractual
restrictions on resale and other illiquid securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is King Investment Advisors, Inc.
(formerly Jenswold, King & Associates, Inc.), Two Post Oak Central, 1980 Post
Oak Boulevard, Suite 2400, Houston, Texas 77056-3898. Roger E. King may be
deemed to be a controlling person of the Advisor due to his ownership of a
majority of its shares.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees. As compensation for its management services, the Fund is obligated to
pay the Advisor a fee computed and accrued daily and paid monthly at an annual
rate of 1.75% of the average daily net assets of the Fund. The Advisor may waive
all or part of its fee, at any time, and at its sole discretion, but such action
shall not obligate the Advisor to waive any fees in the future. For the period
December 31, 1996 (commencement of operations) through October 31, 1997 and the
fiscal year ended October 31, 1998, the Fund paid advisory fees of $6,173 and
$63,759, respectively.
The Advisor retains the right to use the name "Fountainhead" in
connection with another investment company or business enterprise with which the
Advisor is or may become associated. The Trust's right to use the name
"Fountainhead" automatically ceases ninety days after termination of the
Agreement and may be withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
===================================== -------------------------- ===========================================================
Name, Age and Address Position Principal Occupations During Past 5 Years
===================================== -------------------------- ===========================================================
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime
Age: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
===================================== -------------------------- ===========================================================
Paul S. Bellany Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: 39 AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc.; various positions with
Suite 200 Fidelity Investments from 1987 to 1998; most recently
Southlake, Texas 76092 Fund Reporting Unit Manager.
===================================== -------------------------- ===========================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Avenue Ceramics, Inc., oil field manufacturing/supply company,
Broken Arrow, OK 74012 from 1984 to 1997, most recently Vice President of
Marketing.
===================================== ========================== ===========================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and Director
600 Jefferson Street, Suite 350 of Heritage Trust Company from 1994-1996.
Houston, TX 77063
===================================== ========================== ===========================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
============================== ------------------ =============================
Aggregate Total Compensation
Compensation from Trust (the Trust is
Name from Trust not in a Fund Complex)
============================== ------------------ =============================
Kenneth D. Trumpfheller 0 0
============================== ------------------ =============================
Steve L. Cobb $4,000 $4,000
============================== ================== =============================
Gary E. Hippenstiel $4,000 $4,000
============================== ================== =============================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement. Due to research services provided by brokers, the Fund
directed to brokers $8,651,609 (on which commissions were $29,701) during the
fiscal year ended October 31, 1998.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection. For the period December 31, 1996 (commencement of
operations) through October 31, 1997 and the fiscal year ended October 31, 1998,
the Fund paid brokerage commissions of $4,398 and $29,416, respectively.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
......... P(1+T)n=ERV
Where: P =a hypothetical $1,000 initial investment
T =average annual total return
n =number of years
ERV =ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the applicable
period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period December
31, 1996 (commencement of operations) through October 31, 1997 and for fiscal
year ended October 31, 1998, the Fund's average annual total return was 40.09%,
annualized, and -4.67%, respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
As of July 1, 1998, Unified Fund Services, Inc., 431 N. Pennsylvania
St., Indianapolis, IN 46204 ("Unified"), acts as the Fund's transfer agent and,
in such capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. American Data Services,
Inc., Hauppauge Corporate Center, 150 Motor Parkway, New York, 11760 ("ADS")
provides the Fund with certain monthly reports, record-keeping and other
management-related services. For the period December 31, 1996 (commencement of
operations) through October 31, 1997 and for the fiscal year ended October 31,
1998, ADS received $16,000 and $12,597, respectively, from the Fund for these
services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period December 31, 1996 (commencement of operations)
through October 31, 1997 and for the fiscal year ended October 31, 1998, the
Administrator received $30,000 and $25,000, respectively, from the Fund for
these services.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Fund's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Fund will provide the Annual Report without charge
at written request or request by telephone.
<PAGE>
GLOBALT GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of GLOBALT Growth Fund dated February
14, 1999. A copy of the Prospectus can be obtained by writing the Transfer Agent
at 431 N. Pennsylvania St., Indianapolis, IN 46204, or by calling
1-877-BUY-GROWX (877-289-4769).
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST..................................................... 1
ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS.......................................... 1
INVESTMENT LIMITATIONS....................................................... 3
THE INVESTMENT ADVISER....................................................... 6
TRUSTEES AND OFFICERS....................................................... 7
PORTFOLIO TRANSACTIONS AND BROKERAGE......................................... 8
DETERMINATION OF SHARE PRICE................................................. 9
INVESTMENT PERFORMANCE....................................................... 9
CUSTODIAN................................................................... 10
TRANSFER AGENT............................................................... 10
ACCOUNTANTS................................................................. 10
DISTRIBUTOR................................................................. 10
ADMINISTRATOR................................................................10
FINANCIAL STATEMENTS..........................................................10
<PAGE>
DESCRIPTION OF THE TRUST
........Globalt Growth Fund (the "Fund") was organized as a series of AmeriPrime
Funds (the "Trust"). The Trust is an open-end investment company established
under the laws of Ohio by an Agreement and Declaration of Trust dated August 8,
1995 (the "Trust Agreement"). The Trust Agreement permits the Trustees to issue
an unlimited number of shares of beneficial interest of separate series without
par value. The Fund is one of a series of funds currently authorized by the
Trustees.
........Each share of a series represents an equal proportionate interest in the
assets and liabilities belonging to that series with each other share of that
series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
........ As of January 31, 1999, the following persons may be deemed to
beneficially own or hold of record five percent (5%) or more of the Fund: Samuel
Emory Allen IRA, 3060 Peachtree Road, NW, Suite 225 Atlanta, Georgia - 5.33%
(beneficial); Lorraine & Lloyd Glidden Foundation, Inc., 3060 Peachtree Road,
NE, Atlanta, Georgia - 10.06% (beneficial); National Bank of Commerce ("National
Bank"), 1987 First Avenue North, Birmingham, Alabama - 11.48% (of record). The
National Bank accounts are omnibus accounts, and the Fund is unaware of any
individual investor within the accounts owning 5% or more of the Fund. As of
January 31, 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 Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Share Price Calculation" in the Fund's
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
........This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
........
........A........Equity Securities. Equity securities include common stock,
preferred stock and common stock equivalents (such as convertible preferred
stock, rights and warrants). Convertible preferred stock is preferred stock that
can be converted into common stock pursuant to its terms. Warrants are options
to purchase equity securities at a specified price valid for a specific time
period. Rights are similar to warrants, but normally have a short duration and
are distributed by the issuer to its shareholders. The Fund may invest up to 5%
of its net assets at the time of purchase in each of the following: rights,
warrants, or convertible preferred stocks.
........B........Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Adviser (subject to review by the Board of Trustees) to be creditworthy.
The Adviser monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
........C........Other Investment Companies. The Fund is permitted to invest in
other investment companies at any time. The Fund will not purchase more than 3%
of the outstanding voting stock of any investment company. If the Fund acquires
securities of another investment company, the shareholders of the Fund will be
subject to duplicative management fees.
........D........Financial Services Industry Obligations. The Fund may invest
up to 5% of its net assets in each of the following obligations of the financial
services industry:
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
E. Option Transactions. The Fund may engage in option transactions
involving individual securities and market indices. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indices. The
purchaser of an option on a security pays the seller (the writer) a premium for
the right granted but is not obligated to buy or sell the underlying security.
The purchaser of an option on a market index pays the seller a premium for the
right granted, and in return the seller of such an option is obligated to make
the payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the-counter
market. Options on securities which the Fund sells (writes) will be covered or
secured, which means that it will own the underlying security (for a call
option); will segregate with the Custodian high quality liquid debt obligations
equal to the option exercise price (for a put option); or (for an option on a
stock index) will hold a portfolio of securities substantially replicating the
movement of the index (or, to the extent it does not hold such a portfolio, will
maintain a segregated account with the Custodian of high quality liquid debt
obligations equal to the market value of the option, marked to market daily).
When the Fund writes options, it may be required to maintain a margin account,
to pledge the underlying securities or U.S. government obligations or to deposit
liquid high quality debt obligations in a separate account with the Custodian.
The purchase and writing of options involves certain risks; for
example, the possible inability to effect closing transactions at favorable
prices and an appreciation limit on the securities set aside for settlement, as
well as (in the case of options on a stock index) exposure to an indeterminate
liability. The purchase of options limits the Fund's potential loss to the
amount of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a greater
extent than if transactions were effected in the security directly. However, the
purchase of an option could result in the Fund losing a greater percentage of
its investment than if the transaction were effected directly. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. When the Fund
writes a covered put option, it will receive a premium, but it will assume the
risk of loss should the price of the underlying security fall below the exercise
price. When the Fund writes a covered put option on a stock index, it will
assume the risk that the price of the index will fall below the exercise price,
in which case the Fund may be required to enter into a closing transaction at a
loss. An analogous risk would apply if the Fund writes a call option on a stock
index and the price of the index rises above the exercise price.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all 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.
<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 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 period December 1, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Fund paid advisory fees of $21,686, $62,923 and $122,484, 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.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
===================================== -------------------------- ===========================================================
Name, Age and Address Position Principal Occupations During Past 5 Years
===================================== -------------------------- ===========================================================
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime
Age: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
===================================== -------------------------- ===========================================================
Paul S. Bellany Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: 39 AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc., since January 1999; various
Suite 200 positions with Fidelity Investments from 1987 to 1998;
Southlake, Texas 76092 most recently Fund Reporting Unit Manager.
===================================== -------------------------- ===========================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C. oil and
Age: 41 gas services company; various positions with Carbo
2001 Indianwood Avenue Ceramics, Inc., oil field manufacturing/supply company,
Broken Arrow, Oklahoma 74012 from 1984 to 1997, most recently Vice President of
Marketing.
===================================== ========================== ===========================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and Director
600 Jefferson Street, Suite 350 of Heritage Trust Company from 1994 to 1996.
Houston, TX 77063
===================================== ========================== ===========================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust is responsible for a portion of the
Trustee fees. The Adviser voluntarily reimbursed the Fund for the Fund's share
of the Trustee fees paid for the fiscal year ended October 31, 1998.
============================== ------------------ =============================
Aggregate Total Compensation
Compensation from Trust (the Trust is
Name from Trust not in a Fund Complex)
============================== ------------------ =============================
Kenneth D. Trumpfheller 0 0
============================== ------------------ =============================
Steve L. Cobb $4,000 $4,000
============================== ================== =============================
Gary E. Hippenstiel $4,000 $4,000
============================== ================== =============================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Adviser's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection.
For the period December 1, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Fund paid brokerage commissions of $7,819, $7,702 and $20,472, respectively.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period December
1, 1995 (commencement of operations) through October 31, 1996 and for the fiscal
years ended October 31, 1997 and 1998, the Fund's average annual total return
was _____%, annualized, and 27.15% and 13.28%, respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
As of July 1, 1998, Unified Fund Services, Inc., 431 N. Pennsylvania
St., Indianapolis, IN 46204 ("Unified"), acts as the Fund's transfer agent and,
in such capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. American Data Services,
Inc. ("ADS"), Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York
11760, provides the Fund with certain monthly reports, record-keeping and other
management-related services. For the period December 1, 1995 (commencement of
operations) through October 31, 1996 and for the fiscal years ended October 31,
1997 and 1998, ADS received $17,600, $22,000 and $16,578, respectively, from the
Adviser (not the Fund) for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period December 1, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $30,000, $30,000, and $30,000, respectively, from the
Adviser (not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-831-9922.
<PAGE>
IMS CAPITAL VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of IMS Capital Value Fund dated
February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New
York 11788, or by calling 1-800-934-5550.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST.....................................................-1-
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS........-1-
INVESTMENT LIMITATIONS.......................................................-3-
THE INVESTMENT ADVISOR.......................................................-5-
TRUSTEES AND OFFICERS........................................................-6-
PORTFOLIO TRANSACTIONS AND BROKERAGE.........................................-7-
DETERMINATION OF SHARE PRICE.................................................-8-
INVESTMENT PERFORMANCE.......................................................-8-
CUSTODIAN...................................................................-9-
TRANSFER AGENT...............................................................-9-
ACCOUNTANTS................................................................-10-
DISTRIBUTOR................................................................-10-
ADMINISTRATOR..............................................................-10-
FINANCIAL STATEMENTS........................................................-10-
<PAGE>
DESCRIPTION OF THE TRUST
IMS Capital Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of a series of funds
currently authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
As of January 31, 1999, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: Hamill & Co. F.B.O.
Eunice P. West, P.O. Box 2558, Houston, Texas 25580 - 13.5%. As of January 31,
1999, the officers and trustees as a group own less than 1% of the Fund. Upon
sixty days prior written notice to shareholders, the Fund may make redemption
payments in whole or in part in securities or other property if the Trustees
determine that existing conditions make cash payments undesirable. For other
information concerning the purchase and redemption of shares of the Fund, see
"How to Invest in the Fund" and "How to Redeem Shares" in the Fund's Prospectus.
For a description of the methods used to determine the share price and value of
the Fund's assets, see "Share Price Calculation" in the Fund's Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A. Equity Securities. Equity securities include common stock, preferred
stock and common stock equivalents (such as convertible preferred stock, rights
and warrants). Convertible preferred stock is preferred stock that can be
converted into common stock pursuant to its terms. Warrants are options to
purchase equity securities at a specified price valid for a specific time
period. Rights are similar to warrants, but normally have a short duration and
are distributed by the issuer to its shareholders. The Fund may invest up to 5%
of its net assets at the time of purchase in convertible preferred stock,
convertible debentures, rights or warrants.
B. American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund invests in foreign securities, such
investments may be subject to special risks. For example, there may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
C. Covered Call Options. The Fund may write (sell) covered call options
on common stocks in the Fund's portfolio. A covered call option on a security is
an agreement to sell a particular portfolio security if the option is exercised
at a specified price, or before a set date. The Fund profits from the sale of
the option, but gives up the opportunity to profit from any increase in the
price of the stock above the option price, and may incur a loss if the stock
price falls. Risks associated with writing covered call options include the
possible inability to effect closing transactions at favorable prices and an
appreciation limit on the securities set aside for settlement. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. The Fund will
only engage in exchange-traded options transactions.
D. Loans of Portfolio Securities. The Fund may made short and long term
loans of its portfolio securities. Under the lending policy authorized by the
Board of Trustees and implemented by the Advisor in response to requests of
broker-dealers or institutional investors which the Advisor deems qualified, the
borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time to vote on
any matter which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral.
E. Purchases of Options. Up to 5% of the Fund's net assets may be
invested in purchases of put and call options involving individual securities
and market indices. An option involves either (a) the right or the obligation to
buy or sell a specific instrument at a specific price until the expiration date
of the option, or (b) the right to receive payments or the obligation to make
payments representing the difference between the closing price of a market index
and the exercise price of the option expressed in dollars times a specified
multiple until the expiration date of the option. Options are sold (written) on
securities and market indices. The purchaser of an option on a security pays the
seller (the writer) a premium for the right granted but is not obligated to buy
or sell the underlying security. The purchaser of an option on a market index
pays the seller a premium for the right granted, and in return the seller of
such an option is obligated to make the payment. Options are traded on organized
exchanges and in the over-the-counter market.
The purchase of options involves certain risks. The purchase of options
limits the Fund's potential loss to the amount of the premium paid and can
afford the Fund the opportunity to profit from favorable movements in the price
of an underlying security to a greater extent than if transactions were effected
in the security directly. However, the purchase of an option could result in the
Fund losing a greater percentage of its investment than if the transaction were
effected directly.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, which will not be considered as borrowings
provided they are fully collateralized.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the Statement
of Additional Information.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which have
a significant portion of their assets in real estate.
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing non-publicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the Trust with
respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
i. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. The Fund will not purchase any security while borrowings
representing more than 5% of its total assets are outstanding. The Fund will not
invest in reverse repurchase agreements.
iii. Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options and other permitted investments and techniques.
iv. Short Sales. The Fund will not effect short sales.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
vi. Repurchase Agreements. The Fund may invest some or all of the funds
assets in U.S. Government repurchase agreements temporarily under certain
conditions described in the prospectus.
vii. Illiquid Investments. The Fund will not invest in securities for
which there are legal or contractual restrictions on resale and other illiquid
securities.
viii. Mortgage-related Securities. The Fund will not invest in
mortgage-related securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is IMS Capital Management, 10159 S.E.
Sunnyside Road, Suite 330, Portland, Oregon 97015. Carl W. Marker may be deemed
to be a controlling person of the Advisor due to his ownership of the shares of
the corporation.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees. As compensation for its management services, the Fund is obligated to
pay the Advisor a fee computed and accrued daily and paid monthly at an annual
rate of 1.59% of the average daily net assets of the Fund. The Advisor may waive
all or part of its fee, at any time, and at its sole discretion, but such action
shall not obligate the Advisor to waive any fees in the future. For the period
August 5, 1996 (commencement of operations) through October 31, 1996 and for the
fiscal years ended October 31, 1997 and 1998, the Fund paid advisory fees of
$9,952, $108,433 and $164,074, respectively.
The Advisor retains the right to use the name "IMS" in connection with
another investment company or business enterprise with which the Advisor is or
may become associated. The Trust's right to use the name "IMS" automatically
ceases ninety days after termination of the Agreement and may be withdrawn by
the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
<PAGE>
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
======================================= -------------------------- ============================================================
Name, Age and Address Position Principal Occupations During
Past 5 Years
======================================= -------------------------- ============================================================
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime Financial
Age: 40 Services, Inc., the Fund's administrator, and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc., the Fund's distributor, since
Suite 200 1994. Prior to December, 1994, a senior client executive
Southlake, Texas 76092 with SEI Financial Services.
======================================= -------------------------- ============================================================
Paul S. Bellany Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: 39 AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc., since January 1999; various
Suite 200 positions with Fidelity Investments from 1987 to 1998;
Southlake, Texas 76092 most recently Fund Reporting unit Manager.
======================================= -------------------------- ============================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and
Age: 41 gas services company; various positions with Carbo
2001 Indianwood Ave. Ceramics, Inc., oil field manufacturing/supply company,
Broken Arrow, Oklahoma 74102 from 1984 to 1997, most recently Vice President of
Marketing.
======================================= ========================== ============================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and Director of
600 Jefferson St. Suite 350 Heritage Trust Company from 1994 to 1996.
Houston, Texas 77063
======================================= ========================== ============================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<S> <C> <C>
======================================== ----------------------------------- ==================================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
======================================== ----------------------------------- ==================================================
Kenneth D. Trumpfheller 0 0
======================================== ----------------------------------- ==================================================
Steve L. Cobb $4,000 $4,000
======================================== =================================== ==================================================
Gary E. Hippenstiel $4,000 $4,000
======================================== =================================== ==================================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
<PAGE>
-10-
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. Due to research services provided by brokers, the Fund
directed to brokers $4,421,901 and $12,288,660 of brokerage transactions (on
which commissions were $11,328 and $29,459) during the fiscal years ended
October 31, 1997 and 1998.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection.
For the period August 5, 1996 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Fund paid brokerage commissions of $3,318, $22,002 and $46,635, respectively.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
<PAGE>
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period August 5,
1996 (commencement of operations) to October 31, 1996 and for the fiscal years
ended October 31, 1997 and 1998, the Fund's average annual total return was
30.23%, annualized, 12.08% and 2.27% respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeping its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc. ("ADS"), Hauppauge Corporate Center, 150
Motor Parkway, Hauppauge, New York 11788, acts as the Fund's transfer agent and,
in such capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, ADS provides the Fund with certain monthly reports, record-keeping and
other management-related services. For the period August 5, 1996 (commencement
of operations) through October 31, 1996 and for the fiscal years ended October
31, 1997 and 1998, ADS received $4,800, $20,000 and $16,878, respectively, from
the Fund for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period August 5, 1996 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $12,500, $30,000, and $30,000, respectively from the Fund
for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-934-5550.
<PAGE>
- 12 -
MARATHON VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Marathon Value Fund dated Febuary
14, 1999. A copy of the Prospectus can be obtained by writing the Transfer Agent
at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge New York 11788, or
by calling (800) 788-6086.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS
INVESTMENT LIMITATIONS
THE INVESTMENT ADVISOR
TRUSTEES AND OFFICERS
PORTFOLIO TRANSACTIONS AND BROKERAGE
DETERMINATION OF SHARE PRICE
INVESTMENT PERFORMANCE
CUSTODIAN
TRANSFER AGENT
ACCOUNTANTS
DISTRIBUTOR
ADMINISTRATOR
FINANCIAL STATEMENTS
<PAGE>
DESCRIPTION OF THE TRUST
Marathon Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of a series of funds
currently authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
As of January 31, 1999, Charles Schwab & Co. ("Schwab"), 101 Montgomery
Street, San Francisco, CA was the record owner of 74.26% 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 January 31, 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.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A. Equity Securities. Equity securities include common stock and common
stock equivalents (such as convertible securities, rights and warrants).
Warrants are options to purchase equity securities at a specified price valid
for a specific time period. Rights are similar to warrants, but normally have a
short duration and are distributed by the issuer to its shareholders. The Fund
may invest up to 5% of its net assets at the time of purchase in each of the
following: rights, warrants, or convertible securities.
B. Convertible Securities. A convertible security is a bond, debenture,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock. The Fund may invest up to 5% of its assets in
convertible securities rated B or higher by Standard & Poor's Corporation
("S&P") or by Moody's Investors Services, Inc. ("Moody's"), or if 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 securit-ies, and it
also may be more difficult during certain adverse market conditions to sell
lower rated securities at their fair value to meet redemption requests or to
respond to changes in the market.
If the rating of a security by S&P or Moody's drops below B, the
Advisor will dispose of the security as soon as practicable (depending on market
conditions) unless the Advisor determines based on its own credit analysis that
the security provides the opportunity of meeting the Fund's objective without
presenting excessive risk. The Advisor will consider all factors which it deems
appropriate, including ratings, in making investment decisions for the Fund and
will attempt to minimize investment risk through conditions and trends. While
the Advisor may refer to ratings, it does not rely exclusively on ratings, but
makes its own independent and ongoing review of credit quality.
C. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Advisor (subject to review by the Board of Trustees) to be creditworthy.
The Advisor monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
D. When Issued Securities and Forward Commitments. The Fund may buy and
sell securities on a when-issued or delayed delivery basis, with payment and
delivery taking place at a future date. The price and interest rate that will be
received on the securities are each fixed at the time the buyer enters into the
commitment. The Fund may enter into such forward commitments if the Fund holds,
and maintains until the settlement date in a separate account at the Fund's
Custodian, cash or U.S. government securities in an amount sufficient to meet
the purchase price. The Fund will not invest more than 5% of its total assets in
forward commitments. Forward commitments involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date. Any change
in value could increase fluctuations in the Fund's share price and yield.
Although the Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio, the Fund may dispose of a
commitment prior to the settlement if the Advisor deems it appropriate to do so.
E. STRIPS. The Federal Reserve creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the coupon
payments and the principal payment from an outstanding Treasury security and
selling them as individual securities. To the extent the Fund purchases the
principal portion of the STRIP, the Fund will not receive regular interest
payments. Instead they are sold at a deep discount from their face value. The
Fund will accrue income on such STRIPS for tax and accounting purposes, in
accordance with applicable law, which income is distributable to shareholders.
Because no cash is received at the time such income is accrued, the Fund may be
required to liquidate other portfolio securities to satisfy its distribution
obligations. Because the principal portion of the STRIP does not pay current
income, its price can be very volatile when interest rates change. In
calculating its dividend, the Fund takes into account as income a portion of the
difference between the principal portion of the STRIP's purchase price and its
face value. The Fund will not invest more than 5% of its net assets in STRIPS.
F. Illiquid Securities. The portfolio of the Fund may contain illiquid
securities. Illiquid securities generally include securities which cannot be
disposed of promptly and in the ordinary course of business without taking a
reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. Restricted
securities are securities the resale of which is subject to legal or contractual
restrictions. Restricted securities may be sold only in privately negotiated
transactions, in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 or pursuant to Rule 144
or Rule 144A promulgated under such Act. Where registration is required, the
Fund may be obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision to sell and the
time such security may be sold under an effective registration statement. If
during such a period adverse market conditions were to develop, the Fund might
obtain a less favorable price than the price it could have obtained when it
decided to sell. The Fund will not invest more than 5% of its net assets in
illiquid securities.
G. Option Transactions. An option involves either (a) the right or the
obligation to buy or sell a specific instrument at a specific price until the
expiration date of the option, or (b) the right to receive payments or the
obligation to make payments representing the difference between the closing
price of a market index and the exercise price of the option expressed in
dollars times a specified multiple until the expiration date of the option.
Options are sold (written) on securities and market indices. The purchaser of an
option on a security pays the seller (the writer) a premium for the right
granted but is not obligated to buy or sell the underlying security. The
purchaser of an option on a market index pays the seller a premium for the right
granted, and in return the seller of such an option is obligated to make the
payment. A writer of an option may terminate the obligation prior to expiration
of the option by making an offsetting purchase of an identical option. Options
are traded on organized exchanges and in the over-the-counter market. Options on
securities which the Fund sells (writes) will be covered or secured, which means
that it will own the underlying security (for a call option); will segregate
with the Custodian high quality liquid debt obligations equal to the option
exercise price (for a put option); or (for an option on a stock index) will hold
a portfolio of securities substantially replicating the movement of the index
(or, to the extent it does not hold such a portfolio, will maintain a segregated
account with the Custodian of high quality liquid debt obligations equal to the
market value of the option, marked to market daily). When the Fund writes
options, it may be required to maintain a margin account, to pledge the
underlying securities or U.S. government obligations or to deposit liquid high
quality debt obligations in a separate account with the Custodian.
The purchase and writing of options involves certain risks; for
example, the possible inability to effect closing transactions at favorable
prices and an appreciation limit on the securities set aside for settlement, as
well as (in the case of options on a stock index) exposure to an indeterminate
liability. The purchase of options limits the Fund's potential loss to the
amount of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a greater
extent than if transactions were effected in the security directly. However, the
purchase of an option could result in the Fund losing a greater percentage of
its investment than if the transaction were effected directly. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. When the Fund
writes a covered put option, it will receive a premium, but it will assume the
risk of loss should the price of the underlying security fall below the exercise
price. When the Fund writes a covered put option on a stock index, it will
assume the risk that the price of the index will fall below the exercise price,
in which case the Fund may be required to enter into a closing transaction at a
loss. An analogous risk would apply if the Fund writes a call option on a stock
index and the price of the index rises above the exercise price.
H. Indexed Securities. The Fund may invest up to 5% of its net assets
in purchases of securities whose prices are indexed to the prices of other
securities, securities indices, or other financial indicators. Indexed
securities typically, but not always, are debt securities or deposits whose
value at maturity or coupon rate is determined by reference to a specific
instrument or statistic.
The performance of indexed securities depends to a great extent on the
performance of the security, or other instrument to which they are indexed, and
also may be influenced by interest rate changes in the U.S. and abroad. At the
same time, indexed securities are subject to the credit risks associated with
the issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government agencies.
I. REITs. The Fund may invest up to 5% of its assets in real estate
investment trusts ("REITs"). A REIT is a corporation or business trust that
invests substantially all of its assets in interests in real estate. Equity
REITs are those which purchase or lease land and buildings and generate income
primarily from rental income. Equity REITs may also realize capital gains (or
losses) when selling property that has appreciated (or depreciated) in value.
Mortage REITs are those which invest in real estate mortgages and generate
income primarily from interest payments on mortgage loans. Hydrid REITs
generally invest in both real property and mortgages. In addition, REITs are
generally subject to risks associated with direct ownership of real estate, such
as decreases in real estate values or fluctuations in rental income caused by a
variety of factors, including increases in interest rates, increases in property
taxes and other operating costs, casualty or condemnation losses, possible
environmental liabilities and changes in supply and demand for properties. Risks
associated with REIT investments include the fact that equity and mortgage REITs
are dependent upon specialized management skills and are not fully diversified.
These characteristics subject REITs to the risks associated with financing a
limited number of projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, and self-liquidation. Additionally, equity REITs may be
affected by any changes in the value of the underlying property owned by the
trusts, and mortgage REITs may be affected by the quality of any credit
extended.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the Trust with
respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
i. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding. The Fund will not enter into reverse repurchase
agreements.
iii. Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. Short Sales. The Fund will not effect short sales of securities.
v. Repurchase Agreements. The Fund will not invest more than 5% of its net
assets in repurchase agreements. ---------------------
vi. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
THE INVESTMENT ADVISOR
The Fund's investment adviser is Burroughs & Hutchinson, 702 W. Idaho
street, Suite 810, Boise, Idaho, 83702. John Hutchinson, President of the
Advisor, and Mark Matsko, the Fund's portfolio manager, are the controlling
shareholders of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a
fee computed and accrued daily and paid monthly at an annual rate of 1.48% of
the average daily net assets of the Fund. The Advisor may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Advisor to waive any fees in the future. For the period March
12,1998 (commencement of operations) through October 31, 1998, the Fund paid
advisory fees of $25,156.
The Advisor retains the right to use the name "Marathon" in connection
with another investment company or business enterprise with which the Advisor is
or may become associated. The Trust's right to use the name "Marathon"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, a defined in the
Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
====================================== -------------------------- ==========================================================
Name, Age and Address Position Principal Occupations During Past 5 Years
====================================== -------------------------- ==========================================================
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime
Age: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
====================================== -------------------------- ==========================================================
Paul S. Bellany Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: 39 AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc., since January 1999; various
Suite 200 positions with Fidelity Investments from 1987 to 1998;
Southlake, Texas 76092 most recently Fund Reporting Unit Manager.
====================================== -------------------------- ==========================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Avenue Ceramics, Inc., oil field manufacturing/supply Company,
Broken Arrow, Oklahoma 74012 from 1984 to 1997, most recently Vice President of
Marketing.
====================================== ========================== ==========================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and Director
600 Jefferson Street, Suite 350 of Heritage Trust Company from 1994 to 1996.
Houston, Texas 77063
====================================== ========================== ==========================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the period ended
October 31, 1998 is set forth in the following table. Trustee fees are Trust
expenses and each series of the Trust is responsible for a portion of the
Trustee fees. <TABLE> <S> <C> <C>
============================== ------------------------------ ==========================================
Name Aggregate Compensation Total Compensation from Trust
from Trust (the Trust is not in a Fund Complex)
============================== ------------------------------ ==========================================
Kenneth D. Trumpfheller 0 0
============================== ------------------------------ ==========================================
Steve L. Cobb $4,000 $4,000
============================== ============================== ==========================================
Gary E. Hippenstiel $4,000 $4,000
============================== ============================== ==========================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection. For the period March 12, 1998 (commencement of
operations) through October 31, 1998, the Fund paid brokerage commissions of
$26,124.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return (over the one and five year periods and the period from initial public
offering through the end of the Fund's most recent fiscal year) that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
<PAGE>
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period March 12,
1998 (commencement of operations) through October 31, 1998, the Fund's average
annual total return was -15.20%, annualized.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Russell Midcap Index.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11788, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, American Data Services, Inc. provides the Fund with certain monthly
reports, record-keeping and other management-related services. For the period
March 12, 1998 (commencement of operations) through October 31, 1998, ADS
received $8,000 from the Advisor (not the Fund) for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period March 12, 1998 (commencement of operations) through
October 31, 1998, the Administrator received $17,500 from the Advisor (not the
Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the period ended
October 31, 1998. The Trust will provide the Annual Report without charge by
calling the Fund at 1-800-788-6086.
<PAGE>
THE NEWCAP CONTRARIAN FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of The NewCap Contrarian Fund dated
February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppage Corporate Center, 150 Motor Parkway, Hauppauge, New
York 11788, or by calling toll free 1-888-816-2946.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST..................................................... 1
ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS.......................................... 1
INVESTMENT LIMITATIONS....................................................... 14
THE INVESTMENT ADVISOR....................................................... 16
DISTRIBUTION PLAN............................................................ 17
TRUSTEES AND OFFICERS........................................................ 17
PORTFOLIO TRANSACTIONS AND BROKERAGE......................................... 19
DETERMINATION OF SHARE PRICE................................................. 21
INVESTMENT PERFORMANCE...................................................... 21
CUSTODIAN................................................................... 22
TRANSFER AGENT............................................................... 22
ACCOUNTANTS................................................................. 22
DISTRIBUTOR................................................................. 22
ADMINISTRATOR................................................................22
FINANCIAL STATEMENTS......................................................... 22
<PAGE>
DESCRIPTION OF THE TRUST
The NewCap Contrarian Fund (the "Fund"), formerly known as the MAXIM
Contrarian Fund, was organized as a series of AmeriPrime Funds (the "Trust").
The Trust is an open-end investment company established under the laws of Ohio
by an Agreement and Declaration of Trust dated August 8, 1995 (the "Trust
Agreement"). The Trust Agreement permits the Trustees to issue an unlimited
number of shares of beneficial interest of separate series without par value.
The Fund is one of several series of funds currently authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
As of January 31, 1999, the following persons may be deemed to beneficially
own five percent (5%) or more of the Fund: Cheryl Holeski, 12448 Bentbrook
Drive, Chesterland, Ohio - 58.09%; Lynne Voltz FBO Jeremy Voltz, 3655 Brush
Road, Richfield, Ohio - 8.12%; Brian A. Holzinger c/o Ed Zielinski, 7177 Abbot
Drive, Parma, Ohio - 8.08%.
As of January 31, 1999, Cheryl and Kenneth Holeski may be deemed to control
the Fund as a result of their beneficial ownership of the shares of the Fund. As
of January 31, 1999, the officers and trustees as a group may be deemed to
beneficially 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.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A........Equity Securities. Equity securities include common stock,
preferred stock and common stock equivalents (such as convertible preferred
stock, rights and warrants). Convertible preferred stock is preferred stock that
can be converted into common stock pursuant to its terms. Warrants are options
to purchase equity securities at a specified price valid for a specific time
period. Rights are similar to warrants, but normally have a short duration and
are distributed by the issuer to its shareholders.
B........Lower Quality Debt Securities. The Fund may purchase lower
quality debt securities, or unrated debt securities, that have poor protection
of payment of principal and interest. These securities often are considered to
be speculative and involve greater risk of default of price changes due to
changes in the issuer's creditworthiness. Market prices of these securities may
fluctuate more than higher quality debt securities and may decline significantly
in periods of general economic difficulty which may follow periods of rising
rates. While the market for high yield corporate debt securities has been in
existence for many years and has weathered previous economic downturns, the
market in recent years has experienced a dramatic increase in the large-scale
use of such securities to fund highly leveraged corporate acquisitions and
restructurings. Accordingly, past experience may not provide an accurate
indication of future performance of the high yield bond market, especially
during periods of economic recession. The Fund may invest in securities which
are of lower quality or are unrated if the Advisor determines that the
securities provide the opportunity of meeting the Fund's objective without
presenting excessive risk. The Advisor will consider all factors which it deems
appropriate, including ratings, in making investment decisions for the Fund and
will attempt to minimize investment risks through diversification, investment
analysis and monitoring of general economic conditions and trends. To the extend
the Fund invests in lower quality securities, achievement of its investment
objective may be more dependent on the Advisor's credit analyses than is the
case for higher quality bonds. While the Advisor may refer to ratings, it does
not rely exclusively on ratings, but makes its own independent and ongoing
review of credit quality.
The market for lower quality securities may be thinner and less active
than that for higher quality securities, which can adversely affect the prices
at which these securities can be sold. If there is not established retail
secondary market and market quotations are not available, these securities are
valued in accordance with procedures established by the Board of Trustees,
including the use of outside pricing services. Judgment plays a greater role in
valuing high yield corporate debt securities than is the case for securities for
which external sources for quotations and last-sale information are available.
Adverse publicity and changing investor perceptions may affect the ability of
outside pricing services used by the Fund to value as portfolio securities, and
the Fund's ability to dispose of these lower quality debt securities.
Lower quality securities present risks based on payment expectations.
For example, high yield bonds may contain redemption or call provisions. If an
issuer exercises the provisions in a declining interest rate market, the Fund
would have to replace the security with a lower yielding security, resulting in
a decreased return for investors. Conversely, a high yield bond's value will
decrease in a rising interest rate market, as will the value of the Fund's
assets. If the Fund experiences unexpected net redemptions, this may force it to
sell its high yield bonds, without regard to their investment merits, thereby
decreasing the asset base upon which the Fund's expenses can be spread and
possibly reducing the Fund's rate of return.
Since the risk of default is higher for lower quality securities and
sometimes increases with the age of these securities, the Advisor's research and
credit analysis are an integral part of managing any securities of this type
held by the Fund. In considering investments for the Fund, the Advisor attempts
to identify those issuers of high-yielding securities whose financial condition
is adequate to meet future obligations, has improved or is expected to improve
in the future. The Advisor's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earning prospects, and
the experience and managerial strength of the issuer.
The Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as security holder to seek to
protect the interests of security holders if it determines this to be in the
best interests of the Fund shareholders.
C........Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase agreement, the Fund purchases a security and
simultaneously commits to resell that security to the seller at an agreed upon
price on an agreed upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is, in
effect, secured by the value (at least equal to the amount of the agreed upon
resale price and marked to market daily) of the underlying security. The Fund
may engage in a repurchase agreement with respect to any security in which it is
authorized to invest. Any repurchase transaction in which the Fund engages will
require collateralization equal to at least 102% of the Seller's obligation
during the entire term of the repurchase agreement. While it does not presently
appear possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities, as
well as delays and costs to the Fund in connection with bankruptcy proceedings),
it is the Fund's current policy to limit repurchase agreement transactions to
those parties whose creditworthiness has been reviewed and deemed satisfactory
by the Advisor.
D........Securities Lending. The Fund may lend securities to parties
such as broker-dealers, banks, or institutional investors. Securities lending
allows the Fund to retain ownership of the securities loaned and, at the same
time, to earn additional income. Since there may be delays in the recovery of
loaned securities, or even a loss of rights in collateral supplied, should the
borrower fail financially, loans will be made only to parties whose
creditworthiness has been reviewed and deemed satisfactory by the Advisor.
Furthermore, they will only be made if, in the judgment of the Advisor, the
consideration to be earned from such loans would justify the risk.
The Advisor understands that it is the current view of the staff of the
Securities and Exchange Commission ("SEC") that the Fund may engage in loan
transactions only under the following conditions: (1) a Fund must receive 100%
collateral in the form of cash, cash equivalents (e.g., U.S. Treasury bills or
notes) or other high grade liquid debt instruments from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, the Fund must be able to terminate the loan
at any time; (4) the Fund must receive reasonable interest on the loan or a flat
fee from the borrower, as well as amounts equivalent to any dividends, interest,
or other distributions on the securities loaned and to any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) the Board of Trustees must be able to vote proxies on the
securities loaned, either by terminating the loan or by entering into an
alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security
in which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
E........Foreign Investments. Subject to the limitations described in
the prospectus, the Fund may invest in foreign securities. Foreign investments
can involve significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in or indexed to foreign
currencies, and of dividends and interest from such securities, can change
significantly when foreign currencies strengthen or weaken relative to the U.S.
dollar. Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be highly
volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial costs, generally are
higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may invoke increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It also may be difficult to enforce legal rights
in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic or social instability, military action or unrest, or adverse diplomatic
developments. There is no assurance that an Advisor will be able to anticipate
or counter these potential events and their impacts on the Fund's share price.
The considerations noted above generally are intensified for
investments in developing countries. Developing countries may have relatively
unstable governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
The Fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject to
transfer restrictions may be marketable abroad, they may be less liquid than
foreign securities of the same class that are not subject to such restrictions.
American Depositary Receipts and European Depositary Receipts ("ADRs"
and "EDRs") are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed for
use in U.S. and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in their national
market and currencies.
F........Foreign Currency Transactions. The Fund may hold foreign
currency deposits from time to time, and may convert dollars and foreign
currencies in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering into
forward contracts to purchase or sell foreign currencies at a future date and
price. Forward contracts generally are traded in an interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. The parties to a forward contract may agree to offset or terminate
the contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.
The Fund may use currency forward contracts to manage currency risks
and to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the Fund.
In connection with purchases and sales of securities denominated in
foreign currencies, the fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's settlement
date. This technique is sometimes referred to as a "settlement hedge" or
"transaction hedge." The Advisor expects to enter into settlement hedges in the
normal course of managing the Fund's foreign investments. The Fund also could
enter into forward contracts to purchase or sell a foreign currency in
anticipation of future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected by the
Advisor.
The Fund also may use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For example,
if the Fund owned securities denominated in Deutschemarks, it could enter into a
forward contract to sell Deutschemarks in return for U.S. dollars to hedge
against possible declines in the Deutschemark's value. Such a hedge (sometimes
referred to as a "position hedge") would tend to offset both positive and
negative currency fluctuations, but would not offset changes in security values
caused by other factors. The fund also could hedge the position by selling
another currency expected to perform similarly to the Deutschemark -- for
example, by entering into a forward contract to sell Deutschemarks or European
Currency Units in return for U.S. dollars. This type of hedge, sometimes
referred to as a "proxy hedge," could offer advantages in terms of cost, yield,
or efficiency, but generally will not hedge currency exposure as effectively as
a simple hedge into U.S. dollars. Proxy hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in which the
hedge securities are denominated.
Under certain conditions, SEC guidelines require mutual funds to
segregate cash and appropriate liquid assets to cover currency forward
contracts. As required by SEC guidelines, the Fund will segregate cash or U.S.
Government securities or other high-grade liquid debt securities to cover
currency forward contracts, if any, whose purpose is essentially speculative.
The Fund will not segregate assets to cover forward contracts entered into for
hedging purposes, including settlement hedges, position hedges, and proxy
hedges. In segregating assets, the Fund's custodian or a designated subcustodian
either places such assets in a segregated account or separately identifies such
assets and renders them unavailable for investment by the Fund.
Successful use of forward currency contracts will depend on the
Advisor's skill in analyzing and predicting currency values. Forward contracts
may change the Fund's currency exchange rates substantially, and could result in
losses to the Fund if currencies do not perform as the Advisor anticipates. For
example, if a currency's value rose at a time when the Advisor had hedged the
Fund by selling currency in exchange for dollars, the Fund would be unable to
participate in the currency's appreciation. If the Advisor hedges currency
exposure through proxy hedges, the Fund could realize currency losses from the
hedge and the security position at the same time if the two currencies do not
move in tandem. Similarly, if the Advisor increases the Fund's exposure to a
foreign currency, and that currency's value declines, the Fund will realize a
loss. There is no assurance that the Advisor's use of forward currency contracts
will be advantageous to the Fund or that the Advisor will hedge at an
appropriate time.
G........Short Sales. The Fund may seek to hedge investments or realize
additional gains through short sales. The Fund may make short sales, which are
transactions in which the Fund sells a security it does not own, in anticipation
of a decline in the market value of that security. To complete such a
transaction, the Fund must borrow the security to make delivery to the buyer.
The Fund than is obligated to replace the security borrowed by purchasing it at
the market price at or prior to the time of replacement. The price at such time
may be more or less than the price at which the security was sold by the Fund.
Until the security is replaced, the Fund is required to repay the lender any
dividends or interest that accrue during the period of the loan. To borrow the
security, the Fund also may be required to pay a premium, which would increase
the cost of the security sold. The net proceeds of the short sale will be
retained by the broker, to the extent necessary to meet margin requirements,
until the short position is closed out. The Fund also will incur transaction
costs in effecting short sales.
The Fund will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and the date on
which the Fund replaces the borrowed security. The Fund will realize a gain if
the security declines in price between those dates. The amount of any gain will
be decreased, and the amount of any loss increased by the amount of the premium,
dividends, interest, or expenses the Fund may be required to pay in connection
with a short sale.
No securities will be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed 25%
of the value of the Fund's total assets. The Fund similarly will limit its short
sales of the securities of any single issuer if the market value of the
securities that have been sold short by the Fund would exceed two percent (2%)
of the value of the Fund's net equity or if such securities would constitute
more than two percent (2%) of any class of the issuer's securities.
Whenever the Fund engages in short sales, its custodian will segregate
an amount of cash or U.S. Government securities or other high-grade liquid debt
securities equal to the difference between (a) the market value of the
securities sold short at the time they were sold short and (b) any cash or U.S.
Government securities required to be deposited with the broker in connection
with the short sale (not including the proceeds from the short sale). The
segregated assets are marked to market daily, provided that at no time will the
amount deposited in it plus the amount deposited with the broker be less than
the market value of the securities at the time they were sold short.
In addition, the Fund may make short sales "against the box," i.e.,
when a security identical to one owned by the Fund is borrowed and sold short.
If the Fund enters into a short sale against the box, it is required to
segregate securities equivalent in kind and amount of the securities sold short
(or securities convertible or exchangeable into such securities) and is required
to hold such securities while the short sale is outstanding. The Fund will incur
transaction costs in connection with opening, maintaining and closing short
sales against the box.
H........Indexed Securities. The Fund may purchase securities whose
prices are indexed to the prices of other securities, securities indices,
currencies, precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or deposits
whose value at maturity or coupon rate is determined by reference to a specific
instrument or statistic. Gold-indexed securities, for example, typically provide
for a maturity value that depends on the price of gold, resulting in a security
whose price tends to rise and fall together with gold prices. Currency-indexed
securities typically are short-term to intermediate-term debt securities whose
maturity values or interest rates are determined by reference to the values of
one or more specified foreign currencies, and may offer higher yield than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed securities
may be positively or negatively indexed; that is, their maturity value may
increase when the specified currency value increases, resulting in a security
whose price characteristics are similar to a put on the underlying currency.
Currency-indexed securities also may have prices that depend on the values of a
number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, commodity or other instrument to which
they are indexed, and also may be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the credit
risks associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
Government agencies.
I........Forward Commitments and Reverse Repurchase Agreements. The
Fund will direct its Custodian to place cash or U.S. government obligations in a
separate account of the Trust in an amount equal to the commitments of the Fund
to purchase or repurchase securities as a result of its forward commitment or
reverse repurchase agreement obligations. With respect to forward commitments to
sell securities, the Trust will direct its Custodian to place the securities in
a separate account. The Fund will direct its Custodian to segregate such assets
for when, as and if issued commitments only when it determines that issuance of
the security is probable. When a separate account is maintained, the securities
deposited in the separate account will be valued daily at market for the purpose
of determining the adequacy of the securities in the account. To the extent
funds are in a separate account, they will not be available for new investment
or to meet redemptions.
Commitments to purchase securities on a when, as and if issued basis
will not be recognized in the portfolio of the Fund until the Advisor determines
that issuance of the security is probable. At such time, the Fund will record
the transaction and, in determining its net asset value, will reflect the value
of the security daily.
Securities purchased on a forward commitment basis and subject to
reverse repurchase agreements are subject to changes in market value based upon
the public's perception of the creditworthiness of the issuer and changes in the
level of interest rates (which will generally result in all of those securities
changing in value in the same way, i.e., all those securities experiencing
appreciation when interest rates decline and depreciation when interest rates
rise). Therefore, if in order to achieve a higher level of income, the Fund
remains substantially fully invested at the same time that it has purchased on a
forward commitment basis or entered into reverse repurchase transactions, there
will be a possibility that the market value of the Fund's assets will have
greater fluctuation.
J........Leveraging. Leveraging the Fund creates an opportunity for
increased net income but, at the same time, creates special risk considerations.
For example, leveraging may exaggerate changes in the net asset value of Fund
shares and in the yield on the Fund's portfolio. Although the principal of such
borrowings will be fixed, the Fund's assets may change in value during the time
the borrowing is outstanding. Leveraging will create interest expenses for the
Fund which can exceed the income from the assets retained. To the extent the
income derived from securities purchased with borrowed funds exceeds the
interest the Fund will have to pay, the Fund's net income will be greater than
if leveraging were not used. Conversely, if the income from the assets retained
with borrowed funds is not sufficient to cover the cost of leveraging, the net
income of the Fund will be less than if leveraging were not used, and therefore
the amount available for distribution to shareholders will be reduced.
K........Futures Contracts. When the Fund purchases a futures contract,
it agrees to purchase a specified underlying instrument or precious metal at a
specified future date. When the Fund sells a futures contract, it agrees to sell
the underlying instrument at a specified future date. The price at which the
purchase and sale will take place is fixed when the Fund enters into the
contract. Some currently available futures contracts are based on specific
securities, such as U.S. Treasury bonds or notes, and some are based on indices
of securities or precious metal prices, such as the Standard & Poor's 500
Composite Stock Price Index ("S&P 500") or gold. Futures can be held until their
delivery dates, or can be closed out before then if a liquid secondary market is
available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument or precious metal. Therefore,
purchasing futures contracts will tends to increase a Fund's exposure to
positive and negative price fluctuations in the underlying instrument or
precious metal, much as if it had purchased the underlying instrument or
precious metal directly. When a Fund sells a futures contract, by contrast, the
value of its futures position will tend to move in a direction contrary to the
market. Selling futures contracts, therefore, will tend to offset both positive
and negative market price changes, much as if the underlying instrument or
precious metal had been sold. ........Futures Margin Payments. The purchaser or
seller of a futures contract is not required to deliver or pay for the
underlying instrument or precious metal unless the contact is held until the
delivery date. However, both the purchaser and seller are required to deposit
"initial margin" with futures broker, known as a futures commission merchant
("FCM"), when the contract is entered into. Initial margin deposits are
typically equal to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make additional
"variation margin" payments to settle the change in value on a daily basis. The
party that has a gain may be entitled to receive all or a portion of this
amount. Initial and variation margin payments do not constitute purchasing
securities on margin for purposes of the Fund's investment limitations. In the
event of the bankruptcy of the FCM that holds margin on behalf of a Fund, the
Fund may be entitled to return of margin owed to it only in proportion to the
amount received by the FCM's other customers, potentially resulting in losses to
the Fund.
L........Put and Call Options. The Fund may purchase put and call options.
--------------------
........Purchasing Options. By purchasing a put option, the Fund obtains the
right (but not the obligation) to sell the option's underlying instrument at a
fixed "strike" price. In return for this right, the Fund pays the current market
price for the option (known as the option premium). Options have various types
of underlying instruments, including specific securities, indices of securities
prices, and futures contracts. The Fund may terminate its position in a put
option it has purchased by allowing it to expire or by exercising the option. If
the option is allowed to expire, the Fund will lose the entire premium it paid.
If the Fund exercises the option, it completes the sale of the underlying
instrument at the "strike" price. The Fund also may terminate a put option
position by closing it out in the secondary market at its current price, if a
liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium paid,
plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's "strike"
price. A call buyer typically attempts to participate in potential price
increases of the underlying instrument with risk limited to the cost of the
option if security prices fall. At the same time, the buyer can expect to suffer
a loss if the underlying prices do not rise sufficiently to offset the cost of
the option.
........Writing Options. When the Fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the Fund assumes the obligation to pay the "strike"
price for the option's underlying instrument if the other party to the option
chooses to exercise it. When writing an option on a futures contract the Fund
will be required to make margin payments to the FCM described above for futures
contracts. The fund may seek to terminate its position in a put option it writes
before exercise by closing out the option in the secondary market at its current
price. If the secondary market is not liquid for a put option the Fund has
written, however, the Fund must continue to be prepared to pay the "strike"
price while the option is outstanding, regardless of price changes, and must
continue to segregate assets to cover its position.
If the underlying prices rise, a put writer would generally expect to
profit. Although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, the writer also may
profit, because it should be able to close out the option at a lower price. If
the underlying prices fall, the put writer would expect to suffer a loss. This
loss should be less than the loss from purchasing the underlying instrument
directly, however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the Fund to sell or deliver the
option's underlying instrument, in return for the "strike" price, upon exercise
of the option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if the underlying prices remain the same or fall. Through receipt of
the option premium, a call writer mitigates the effects of a price decline. At
the same time, because a call writer must be prepared to deliver the underlying
instrument in return for the "strike" price, even if its current value is
greater, a call writer gives up some ability to participate in the underlying
price increases.
........Combined Positions. A Fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to adjust
the risk and return characteristics of the overall position. For example, the
Fund may purchase a put option and write a call option on the same underlying
instrument, in order to construct a combined position whose risk and return
characteristics are similar to selling a futures contract. Another possible
combined position would involve writing a call option at one "strike" price and
buying a call option at a lower price, in order to reduce the risk of the
written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.
M........Correlation of Price Changes. Because there are a limited
number of types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a Fund's current or
anticipated investments exactly. The Fund may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests.
Options and futures prices also can diverge from the prices of their
underlying instruments or precious metals, even if the underlying instruments or
precious metals match the Fund's investment well. Options and futures prices are
affected by such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument or precious metal, and the
time remaining until expiration of the contract, which may not affect the
security or the precious metal prices the same way. Imperfect correlation also
may result from: differing levels of demand in the options and futures markets
and the securities or precious metal markets, structural differences in how
options and futures and securities or precious metal are traded, or imposition
of daily price fluctuation limits or trading halts. The Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities or precious metal it wishes to hedge or intends to purchase in order
to attempt to compensate for differences in volatility between the contract and
the securities or precious metals, although this may not be successful in all
cases. If price changes in the Fund's options or futures positions are poorly
correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in other
investments.
N........Liquidity of Options and Futures Contracts. There is no
assurance a liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively low trading
volume and liquidity if their "strike" prices are not close to the underlying
instrument or precious metal's current price. In addition, exchanges may
establish daily price fluctuation limits for options and futures contracts, and
may halt trading if a contract's price moves upward or downward more than the
limit in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the Fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions, and
potentially could require the Fund to continue to hold a position until delivery
or expiration regardless of changes in its value. As a result, the Fund's access
to other assets held to cover its options or futures positions also could be
impaired. In addition, one of the requirements for qualification as a regulated
investment company for tax purposes in that less than 30% of the Fund's gross
income be derived from gains from the sale or other disposition of securities
held for less than three months. Accordingly, the Fund may be restricted in
effecting closing transactions within three months after entering into an option
or futures contract.
O........OTC Options. Unlike exchange-traded options, which are
standardized with respect to the underlying instrument, expiration date,
contract size, and "strike" price, the terms of over-the-counter options i.e.,
options not traded on exchanges ("OTC options"), generally are established
through negotiation with the other party to the option contract. While this type
of arrangement allows the Fund greater flexibility to tailor an option to its
needs, OTC options generally involve greater credit risk than exchange-traded
options, which are guaranteed by the clearing organization of the exchanges
where they are traded. The risk of illiquidity also is greater with OTC options,
since these options generally can be closed out only by negotiation with the
other party to the option.
P........Options and Futures Relating to Foreign Currencies. Currency
futures contracts are similar to forward currency exchange contracts, except
that they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally is
purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser or a currency call obtains the right to purchase the
underlying currency, and the purchaser of a currency put obtains the right to
sell the underlying currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed above. The
Fund may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign currencies.
The fund also may purchase and write currency options in conjunction with each
other or with currency futures or forward contracts. Currency futures and
options values can be expected to correlate with exchange rates, but may not
reflect other factors that affect the value of the Fund's investments. A
currency hedge, for example, should protect a Yen-denominated security from a
decline in the Yen, but will not protect a Fund against a price decline
resulting from deterioration in the issuer's creditworthiness. Because the value
of the Fund's foreign-denominated investments change in response to many factors
other than exchange rates, it may not be possible to match the amount of
currency options and futures to the value of the Fund's investments exactly over
time.
Q........Asset Coverage for Futures and Options Positions. The Fund
will comply with guidelines established by the Securities and Exchange
Commission with respect to coverage of options and futures by mutual funds, and
if the guidelines so require will segregate cash or U.S. Government securities
or other high-grade liquid debt securities in the amount prescribed. Segregated
securities cannot be sold while the futures or option strategy is outstanding,
unless they are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the Fund's assets could
impede portfolio management or the Fund's ability to meet redemption requests or
other current obligations.
R........Limitations on Futures and Options Transactions. The Fund will
file a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission ("CFTC")
and the National Futures Association, which regulate trading in the futures
markets before the Fund engages in any purchases or sales of futures contracts,
options on futures contracts, or gold, silver, platinum or other precious metals
futures contracts or options thereon. The Fund intends to comply with Section
4.5 of the regulations under the Commodity Exchange Act, which limits the extent
to which the Fund can commit assets to initial margin deposits and options
premiums.
In addition, the Fund will not: (a) sell futures contracts (including
futures contracts for precious metals) or write call options (including options
on futures) if, as a result, more than 25% of the Fund's total assets would be
hedged with such futures or options; or (b) write put options (including options
on futures) if, as a result, the Fund's total obligations upon settlement of
written put options would exceed 25% of its total assets; or (c) purchase
futures contracts or put or call options (including options on futures) for
other than hedging purposes if, as a result, the aggregate value of margin for
futures contracts and option premiums for options purchased by the Fund would
exceed 5% of the Fund's total assets, except that aggregate value of initial
margin deposits for futures and options premiums for options on futures may not
exceed 5% of the Fund's total assets (after taking into account unrealized
profits and unrealized losses on any such positions) and that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount may
be excluded from such 5%; or (d) purchase futures, put or call options
(including options on futures) for hedging purposes if the aggregate value of
the initial margin deposits for futures contracts purchased would exceed 5% of a
Fund's total assets and initial option premiums for options purchased would
exceed 20% of the Fund's net assets. These limitations do not apply to options
attached to or acquired or traded together with their underlying securities, and
do not apply to securities that incorporate features similar to options.
The Fund currently intends to treat the value of any over-the-counter
option purchased as illiquid for the purposes of investment limits. Similarly,
for any over-the-counter option the Fund writes, the Fund will treat as illiquid
the value of the option's underlying instrument; however, if the Fund has a
guaranteed right to close out the option with a primary U.S. Government
securities dealer, only the maximum price of the closing transaction minus the
amount the option is in-the-money will be considered illiquid.
S........Precious Metals. In addition to its investments in securities,
the Fund may invest a portion of its assets in precious metals, such as gold,
silver, platinum, and palladium, and precious metal options and futures. The
prices of precious metals are affected by broad economic and political
conditions, but are less subject to local and company-specific factors than
securities of individual companies. As a result, precious metals and precious
metal options and futures may be more or less volatile in price than securities
of companies engaged in precious metals-related businesses. The Fund may
purchase precious metals in any form, including bullion and coins, provided that
the Advisor intends to purchase only those forms of precious metals that are
readily marketable and that can be stored in accordance with custody regulations
applicable to mutual funds. The Fund may incur higher custody and transaction
costs for precious metals than for securities. Also, precious metals investments
do not pay income.
The value of the Fund's investments may be affected by changes in the
price of gold and other precious metals. Gold has been subject to substantial
price fluctuations over short periods of time and may be affected by
unpredictable international monetary and other governmental policies, such as
currency devaluations or revaluations; economic and social conditions within a
country; trade imbalances; or trade or currency restrictions between countries.
Since much of the world's known gold reserves are located in South Africa,
political and social conditions there may pose certain risks to the Fund's
investments. For instance, social upheaval and related economic difficulties in
South Africa could cause a decrease in the share values of South African issues.
The fund is authorized to invest up to 5% of its total assets in
precious metals. As a further limit on precious metals investment, under current
federal tax law, gains from selling precious metals may not exceed 10% of the
Fund's annual gross income. This tax requirement could cause the fund to hold or
sell precious metals, securities, options or futures when it would not otherwise
do so.
T........Illiquid Investments. Illiquid investments are investments
that cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments and, through reports from the Advisor, the Board monitors trading
activity in illiquid investments. In determining the liquidity of the Fund's
investments, the Advisor may consider various factors, including (i) the
frequency of trades and quotations, (ii) the number of dealers and prospective
purchasers in the marketplace, (iii) dealer undertakings to make a market, (iv)
the nature of the security (including any demand or tender features), and (v)
the nature of the marketplace for trades (including the ability to assign or
offset the Fund's rights and obligations relating to the investment).
Investments currently considered by the Trust to be illiquid include repurchase
agreements not entitling the holder to payments of principal and interest within
seven days, over-the-counter options, and restricted securities. However, with
respect to OTC options which the Fund writes, all or a portion of the value of
the underlying instrument may be illiquid depending on the assets held to cover
the option and the nature and terms of any agreement the Fund may have to close
out the option before expiration. In the absence of market quotations, illiquid
investments are priced at fair value as determined in good faith by the Advisor,
subject to review of the Board of Trustees. If, through a change in values, net
assets or other circumstances, the Fund were in a position where more than 15%
of its net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
U........Restricted Securities. Restricted securities generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the Securities Act of 1933, or in a registered public
offering. Where the registration is required, the Fund holding restricted
securities may be obligated to pay all or part of the registration expense and a
considerable period may elapse between the time it decides to seek registration
and the time the Fund may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market conditions were
to develop, the Fund might obtain a less favorable price than prevailed when it
decided to seek registration of the security.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1........Borrowing Money. The Fund will not borrow money, except (a)
from a bank, provided that immediately after such borrowing there is an asset
coverage of 300% for all borrowings of the Fund; or (b) from a bank or other
persons for temporary purposes only, provided that such temporary borrowings are
in an amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions which the Fund has not fully collateralized as
described in the Prospectus.
2........Senior Securities. The Fund will not issue senior securities.
This limitation is not applicable to activities that may be deemed to involve
the issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended (the "1940 Act"), the rules and
regulations promulgated thereunder or interpretations of the Securities and
Exchange Commission or its staff and (b) as described in the Prospectus and the
Statement of Additional Information.
3........Underwriting. The Fund will not act as underwriter of
securities issued by other persons. This limitation is not applicable to the
extent that, in connection with the disposition of portfolio securities
(including restricted securities), the Fund may be deemed an underwriter under
certain federal securities laws.
4........Real Estate. The Fund will not purchase or sell real estate.
This limitation is not applicable to investments in marketable securities which
are secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5........Commodities. Except for gold, silver, platinum, palladium or
other precious metals (and then not with respect to more than 5% of its net
assets), the Fund will not purchase or sell commodities unless acquired as a
result of ownership of securities or other investments. This limitation does not
preclude the Fund from purchasing or selling forward contracts, options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6........Loans. The Fund will not make loans to other persons, except
(a) by loaning portfolio securities, (b) by engaging in repurchase agreements,
or (c) by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7........Concentration. The Fund will not invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
<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 not purchase any security while
borrowings (including reverse repurchase agreements which the Fund has not fully
collateralized as described in the Prospectus) representing more than 5% of its
total assets are outstanding.
iii......Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv.......Illiquid Investments. The Fund will not invest more than 15% of its net
assets in securities for which --------------------- there are legal or
contractual restrictions on resale and other illiquid securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Newport Investment Advisors, Inc.,
23775 Commerce Park Road, Cleveland, Ohio 44122. Kenneth M. Holeski may be
deemed to control the Advisor due to his ownership of its shares and his
positions as an officer and director of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the operating expenses of the Fund except 12b-1 fees
brokerage, taxes, interest, fees, and expenses of the non-interested person
trustees and extraordinary expenses. As compensation for its management services
and agreement to pay the Fund's expenses, the Fund is obligated to pay the
Advisor a fee computed and accrued daily and paid monthly at an annual rate of
2.50% of the average daily net assets of the Fund. The Advisor may waive all or
part of its fee, at any time, and at its sole discretion, but such action shall
not obligate the Advisor to waive any fees in the future. The Fund is
responsible for the payment of all expenses incurred in connection with the
organization and initial registration of shares of the Fund. For the period May
2, 1996 (commencement of operations) through October 31, 1996 and for the fiscal
years ended October 31, 1997 and 1998, the Fund paid advisory fees of $11,261,
$43,568 and $30,486, respectively.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act (the "Plan") under which the Fund may pay the Advisor an amount at
an annual rate of 0.25% of the average daily net assets of the Fund. For a
description of the Plan, see "Distribution Plan" in the Fund's Prospectus. The
Board of Trustees have determined that, until further notice, no expenses are to
be incurred pursuant to the Plan. During the period ended October 31, 1998,
AmeriPrime Financial Securities, Inc., the Trust's distributor, spent $______
under the Distribution Plan. Of this amount, approximately $______ was spent on
printing of the prospectus and $______ was spent on compensation to brokers.
Kenneth M. Holeski, as controlling shareholder of the Advisor, and other
employees of the Advisor may indirectly benefit from any payments made pursuant
to the Plan. TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
===================================== -------------------------- ===========================================================
Name, Age and Address Position Principal Occupations During Past 5 Years
===================================== -------------------------- ===========================================================
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime
Age: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
===================================== -------------------------- ===========================================================
Paul S. Bellany Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: 39 AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc., since January 1999; various
Suite 200 positions with Fidelity Investments from 1987 to 1998;
Southlake, Texas 76092 most recently Fund Reporting Unit Manager.
===================================== -------------------------- ===========================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., and
Age: 41 services company; various positions with Carbo Ceramics,
2001 Indianwood Ave. Inc., oil field manufacturing/supply company from 1994 to
Broken Arrow, OK 74012 1997, most recently Vice President of Marketing.
===================================== ========================== ===========================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and Director
600 Jefferson Street, Suite 350 of Heritage Trust Company from 1994 to 1996.
Houston, TX 77063
===================================== ========================== ===========================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
============================== ------------------ =============================
Aggregate Total Compensation
Compensation from Trust (the Trust is
Name from Trust not in a Fund Complex)
============================== ------------------ =============================
Kenneth D. Trumpfheller 0 0
============================== ------------------ =============================
Steve L. Cobb $4,000 $4,000
============================== ================== =============================
Gary E. Hippenstiel $4,000 $4,000
============================== ================== =============================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection. For the period May 2, 1996 (commencement of operations)
through October 31, 1996 and for the fiscal years ended October 31, 1997 and
1998, the Fund paid total brokerage commissions of $14,358, $20,521 and $7,570,
respectively. For the fiscal year ended October 31, 1998, the Fund paid $449
(5.92% of the total brokerage commissions paid) to WRP Investments, Inc., an
affiliate of the Advisor, for effecting 16.33% of all brokerage transactions.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
......... P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period May 2,
1996 (commencement of operations) to October 31, 1996 and for the fiscal years
ended October 31, 1997 and 1998, the Fund's average annual total return was
- -15.80%, annualized -4.89% and -51.76%, respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc. ("ADS"), Hauppauage Corporate Center, 150
Motor Parkway, Hauppauge, New York 11788, acts as the Fund's transfer agent and,
in such capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, ADS provides the Fund with certain monthly reports, record-keeping and
other management-related services. For the period May 2, 1996 (commencement of
operations) through October 31, 1996 and for the fiscal years ended October 31,
1997 and 1998, ADS received $9,600, $19,200 and $9,816, respectively, from the
Advisor (not the Fund) for these services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period May 2, 1996 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $20,000, $30,000 and $30,000, respectively, from the
Advisor (not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-466-7678.
<PAGE>
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 is filed
herewith.
(xiv) Copy of Amendment No. 13 to Registrant's Declaration of Trust is filed
herewith.
(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 Advanced Investment
Technology, Inc., Adviser to AIT Vision U.S. Equity Portfolio, which was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 11, is hereby
incorporated by reference.
(iv) Copy of Registrant's Management Agreement with GLOBALT, Inc., Adviser to
GLOBALT Growth Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 11, is hereby incorporated by reference.
(v) Copy of Registrant's Management Agreement with Newport Investment Advisors,
Inc., Adviser to the MAXIM Contrarian Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 2, is hereby incorporated by
reference.
(vi) Copy of Registrant's Management Agreement with IMS Capital Management,
Inc., Adviser to the IMS Capital Value Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 2, is hereby incorporated by
reference.
(vii) Copy of Registrant's Management Agreement with Commonwealth Advisors,
Inc., Adviser to Florida Street Bond Fund and Florida Street Growth Fund, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 8, is
hereby incorporated by reference.
(viii) Copy of Registrant's Management Agreement with Corbin & Company, Adviser
to Corbin Small-Cap Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 8, is hereby incorporated by reference.
(ix) Copy of Registrant's proposed Management Agreement with Vuong Asset
Management Company, LLC, Adviser to MAI Enhanced Index Fund, MAI Growth & Income
Fund, MAI Aggressive Growth Fund, MAI High-Yield Income Fund, MAI Capital
Appreciation Fund and MAI Global Equity Fund (the "MAI Family of Funds"), which
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 12, is
hereby incorporated by reference.
(x) Copy of Registrant's proposed Management Agreement with CWH Associates,
Inc., Advisor to Worthington Theme Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 10, is hereby incorporated by
reference.
(xi) Copy of Registrant's Management Agreement with Burroughs & Hutchinson,
Inc., Advisor to the Marathon Value Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 15, is hereby incorporated by
reference. (xii) Copy of Registrant's Management Agreement with The Jumper
Group, Inc., Adviser to the Jumper Strategic Advantage Fund, is filed herewith.
(xiii) Copy of Registrant's Management Agreement with Appalachian Asset
Management, Inc., Advisor to the AAM Equity Fund, which was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 17, is hereby incorporated by
reference. (xiv) Copy of Registrant's Management Agreement with Martin
Capital Advisors, L.L.P., Advisor to the Austin Opportunity Fund, is filed
herewith. (xv) Copy of Registrant's proposed Management Agreement with Paul
B. Martin, Jr. d/b/a Martin Capital Advisors, Advisor to the Texas Opportunity
Fund, which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
17, is hereby incorporated by reference.
(xvi) Copy of Registrant's proposed Management Agreement with Paul B. Martin,
Jr. d/b/a Martin Capital Advisors, Advisor to the U.S. Opportunity Fund, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 17, is
hereby incorporated by reference. (xvii) Copy of Registrant's Management
Agreement with Gamble, Jones, Morphy & Bent, Advisor to the GJMB Growth Fund, is
filed herewith. (xviii) Copy of Registrant's Proposed Management Agreement
with Cornerstone Investment Management, Advisor to the Cornerstone MVP Fund,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No.18, is
hereby incorporated by reference. (xix) Copy of Registrant's Management
Agreement with Carl Domino Associates, L.P., Advisor to the Carl Domino Growth
Fund, is filed herewith.
(xx) Copy of Registrant's Management Agreement with Carl Domino Associates,
L.P., Advisor to the Carl Domino Global Equity Income Fund, is filed herewith.
(xxi) Copy of Registrant's Proposed 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. 19, is hereby incorporated
by reference.
(xxii) Copy of Registrant's Proposed Management Agreement with Auxier Investment
Management, LLC, Advisor to the Auxier Focus Fund, which was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 19, is hereby incorporated by
reference.
(xxiii) Copy of Registrant's Proposed 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. 19,
is hereby incorporated by reference.
(xxiv) Copy of Registrant's Proposed 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. 19, is hereby
incorporated by reference.
(xxv) Copy of Registrant's Proposed Management Agreement with Monument
Investments, Inc., Advisor to the 10K Smart Trust, which was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 19, is hereby incorporated by
reference.
(xxvi) Copy of Registrant's Proposed Management Agreement with Columbia
Partners, L.L.C., Investment Management, Advisor to the Columbia Partners Equity
Fund, which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
20, is hereby incorporated by reference.
(xxvii) Copy of Registrant's Proposed Management Agreement with Legacy
Investment Group, LLC, d/b/a Cash Management Systems ("CMS"), Adviser to The
Cash Fund, which was filed as an exhibit to Registrant's Post-Effective
Amendment No. 22 is hereby incorporated by reference. (xxviii) Sub-Advisory
Agreement for The Cash Fund [to be supplied].
(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, Star Bank, N.A., which
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 11, is
hereby incorporated by reference.
(ii) Copy of Registrant's Appendix B to the Agreement with the Custodian, Star
Bank, N.A., which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 8, is hereby incorporated by reference. (iii) Copy of
Registrant's Proposed Agreement with UMB Bank, N.A., Custodian to the Dobson
Covered Call Fund, is filed herewith. (h) Other Material Contracts. Copy of
Registrant's Agreement with the Administrator, AmeriPrime Financial Services,
Inc., which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
11, is hereby incorporated by reference.
(i) Legal Opinion. Opinion and Consent of Brown, Cummins & Brown Co., L.P.A.,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 9, is
hereby incorporated by reference.
(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) Copy of Registrant's Rule 12b-1 Distribution Plan for The MAXIM Contrarian
Fund (now the NewCap Contrarian Fund), which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 1, is hereby incorporated by
reference.
(ii) Form of Registrant's Rule 12b-1 Service Agreement which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1, is hereby incorporated
by reference.
(iii) Copy of Registrant's Rule 12b-1 Distribution Plan for the Austin
Opportunity Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 17, is hereby incorporated by reference.
(iv) Copy of Registrant's Rule 12b-1 Distribution Plan for the Texas Opportunity
Fund, which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
17, is hereby incorporated by reference.
(v) Copy of Registrant's Rule 12b-1 Distribution Plan for the U.S. Opportunity
Fund, which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
17, is hereby incorporated by reference.
(vi) Copy of Registrant's Proposed Rule 12b-1 Distribution Plan for the 10K
Smart Trust, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 19, is hereby incorporated by reference.
(vii) Copy of Registrant's Proposed Rule 12b-1 Distribution 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.
(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.
(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. 8, is hereby incorporated
by reference.
Item 24. Persons Controlled by or Under Common Control with the Registrant (As
of November 18, 1998)
(a) U.S. Trust Company of Florida, as Trustee of the Killian Charitable
Remainder Unitrust, may be deemed to control the AIT Vision U.S. Equity
Portfolio as a result of its beneficial ownership of the Portfolio. The
Registrant is unaware of any person under common control with the
Portfolio.
(b) Cheryl and Kenneth Holeski may be deemed to control The NewCap Contrarian
Fund as a result of their beneficial ownership of the Fund. The Fund and
the Fund's adviser, Newport Investment Advisors, Inc., may be under common
control.
(c) Sun Trust Bank, as custodian for the Arthur S. Damos Foundation, may be
deemed to control the Jumper Strategic Advantage Fund as a result of its
beneficial ownership of the Fund. The Registrant is unaware of any person
under common control with the Fund.
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,
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. Advanced Investment Technology, Inc., 311 Park Place Boulevard, Suite 250,
Clearwater, Florida 34619 ("AIT"), adviser to AIT Vision U.S. Equity Portfolio,
is a registered investment adviser.
(1) AIT has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of AIT during the past two fiscal years.
(a) Dean S. Barr, director and the CEO of AIT, was has been the managing
director LBS Capital Management, Inc., 311 Park Place Blvd., Clearwater, Florida
from 1989 1996, head of research at State Street Global Advisors in Boston,
Massachasetts since October 1997.
(b) Nicholas Lopardo, a director of AIT, is the Investment Advisor CEO of State
Street Global Advisors, Bank and Trust in Boston, Massachusetts.
(c) Bryan Stypul, CFO & Treasure of AIT, was the comptroller for Terra
Communications, Clearwater, Florida in 1996, and prior to that, the CEO of
Beacong Advisors, Treasure Island, Florida
(d) Raymond L. Killian, a director of AIT, is the Chairman of the Board of
Investment Technology Group, Inc., 900 3rd Avenue, New York, New York.
(e) Marc Simmons, a director of AIT, is a principal of State Street Global
Advisors.
(f) Alan Brown, a director of AIT, is the CEO of State Street Global Advisors.,
28 King Street, London, England.
(g) John Snow, a director of AIT, is the managing director of State Street
Global Advisors. Prior to 1997, he was the president of NatWest Investment
Advisers, Boston Massachusetts.
D. GLOBALT, Inc., 3060 Peachtree Road, N.W., One Buckhead Plaza, Suite 225,
Atlanta, Georgia 30305 ("GLOBALT"), adviser to GLOBALT Growth Fund, is a
registered investment adviser.
(1) GLOBALT has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
officers and directors of GLOBALT during the past two years.
(a) Gregory S. Paulette, an officer of GLOBALT, is the president of GLOBALT
Capital Management, a division of GLOBALT.
E. Newport Investment Advisors, Inc., 20600 Chagrin Boulevard, Suite 1020,
Shaker Heights, Ohio 44122 ("Newport"), adviser to The NewCap Contrarian Fund,
is a registered investment adviser.
(1) Newport has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
officers and directors of Newport during the past two years.
(a) Kenneth Holeski, president of Newport, is the vice president of Newport
Evaluation Services, Inc., a fiduciary consulting business at 20600 Chagrin
Boulevard, Shaker Heights, Ohio 44122, and a registered representative of WRP
Investments, Inc., 4407 Belmont Avenue, Youngstown, Ohio 44505, a registered
broker/dealer.
(b) Donn M. Goodman, vice president of Newport, is the president of Newport
Evaluation Services, Inc.
F. IMS Capital Management, Inc., 10159 S.E. Sunnyside Road, Suite 330, Portland,
Oregon 97015, ("IMS"), Adviser to the IMS Capital Value Fund, is a registered
investment adviser.
(1) IMS has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of IMS during the past two years - None.
G. CommonWealth Advisors, Inc., 929 Government Street, Baton Rouge, Louisiana
70802, ("CommonWealth"), Adviser to the Florida Street Bond Fund and the Florida
Street Growth Fund, is a registered investment adviser.
(1) CommonWealth has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth other substantial business activities of the
directors and officers of CommonWealth during the past two years.
(a) Walter A. Morales, President/Chief Investment Officer of CommonWealth was
the Director of an insurance/broadcasting corporation, Guaranty Corporation, 929
Government Street, Baton Rouge, Louisiana 70802 from August 1994 to February
1996. From September 1994 through the present, a registered representative of a
Broker/Dealer company, Securities Service Network, 2225 Peters Road, Knoxville,
Tennessee 37923. Beginning August 1995 through the present, an instructor at the
University of Southwestern Louisiana in Lafayette, Louisiana.
H. Corbin & Company, 1320 S. University Drive, Suite 406, Fort Worth, Texas
76107, ("Corbin"), Adviser to the Corbin Small-Cap Value Fund, is a registered
investment adviser.
(1) Corbin has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of Corbin during the past two years - None.
I. Vuong Asset Management Company, LLC, 6575 West Loop South, Suite 110,
Houston, Texas 77401, ("VAMCO"), Adviser to the MAI Family of Funds, is a
registered investment adviser.
(1) VAMCO has engaged in no other business during the past two fiscal years.
(2) The following list sets forth substantial business activities of the
directors and officers of VAMCO during the past two years.
(a) Qui Tu Vuong, the Chief Investment Officer and head of Equity Asset
Management of VAMCO, is the Chief Executive Officer of Vuong & Co., LLC, a
holding company at 6575 West Loop South #110, Bellaire, Texas 77401; and Sales
Manager/Equities Regulation Representative of Omni Financial Group, LLC, a
securities brokerage company at 6575 West Loop South #110, Bellaire, Texas
77401; and President of 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.
J. CWH Associates, Inc., 200 Park Avenue, Suite 3900, New York, New York 10166,
("CWH"), Advisor to the Worthington Theme Fund, is a registered investment
Advisor.
(1) CWH has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of CWH during the past two years.
Andrew M. Abrams, the Chief Operating Officer of CWH, is a General Partner of
Abrams Investment Partners, L.P., an investment limited partnership at 200 Park
Avenue, Suite 3900, New York, New York 10166.
K. Burroughs & Hutchinson, Inc., 702 West Idaho Street, Suite 810, Boise, Idaho
("B&H"), advisor to Marathon Value Fund, is a registered investment adviser.
(1) B&H has engaged in no other business during the past two fiscal years.
<PAGE>
(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. Matskoo, Vice President and Director of B&H, was broker with D.A.
Davidson & Co., a broker/dealer in Boise, Idaho, from 1994 to 1996.
L. 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.
M. Appalachian Asset Management, Inc., 1018 Kanawha Blvd., East, Suite 209,
Charleston, WV 25301 ("AAM"), advisor to AAM Equity Fund, is a registered
investment advisor.
(1) AAM has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of AAM during the past two years - None.
N. Martin Capital Advisors, L.L.P. ("Martin"), 812 San Antonio, Suite G14,
Austin, TX 78701 ("Martin"), advisor to Austin Opportunity Fund, Texas
Opportunity Fund, and U.S. Opportunity Fund, is a registered investment advisor.
(1) Martin has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of GJMB during the past two years - None.
O. Gamble, Jones, Morphy & Bent, Inc., 301 East Colorado Boulevard, Suite 802,
Pasadena, California 91101 ("GJMB"), Advisor to the GJMB Fund, is a registered
investment advisor.
(1) GJMB has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of GJMB during the past two years - None.
P. Cornerstone Investment Management, L.L.C. 132 West Main Street, Aspen,
Colorado 81611 ("Cornerstone"), Advisor to the Cornerstone MVP Fund, is a
registered investment advisor.
(1) Cornerstone has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth other substantial business activities of the
directors and officers of Cornerstone during the past two years:
Christopher Shawn Ryan, managing member of Cornerstone, was Vice
President-Portfolio Manager at NationsBank in Dallas, Texas from January 1994 to
October 1997.
Q. Dobson Capital Management, Inc., 1422 Van Ness Street., Santa Ana, CA 92707
("Dobson"), Advisor to the Dobson Covered Call Fund, is a registered investment
advisor.
(1) Dobson has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of Dobson during the past two years: 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.
R. Auxier Investment, Inc., LLC, 25628 N.E. Glass Road, Oregon, OR 97002
("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.
S. Cornerstone Capital Management, Inc., 6760 Corporate Drive, Suite 230,
Colorado Springs, CO 80919 ("CCM"), Adviser to the Shepherd Value Market Fund
and the Shepherd Value Growth Fund, is a registered investment advisor.
(1) CCM has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of CCM during the past two years: a) Ted M. Ehrlichman,
Director of CCM, was a principal with SunTek, Inc., Colorado Springs, CO, a
pension consulting firm, from 1995 to 1997.
b) Frank Franiak, Director of CCM, is the President of Monroe Capital, Inc.,
Chicago, IL, a consulting firm, and a registered representative of March
Capital, Inc., Chicago, IL, a broker-dealer.
c) Jason D. Huntley, Director of CCM, was Director of Institutional Services
with First Affirmative/Walnut Street Advisers, Colorado Springs, CO, an
investment advisory firm, from 1996 to 1997.
d) Craig D. Van Hulzen, Director of CCM, was Director of Research with First
Affirmative/Walnut Street Advisers, and a registered representative of Walnut
Street Securities, Colorado Springs, CO, a broker-dealer, from 1995 to 1997.
T. Monument Investments, Inc., 5952 Royal Lane, Suite 270, Dallas, TX 85230
("Monument"), Advisor to the 10K Smart Trust, is a registered investment
advisor.
(1) Monument has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of Monument during the past two years:
Gerald R. James, Jr. a director of Monument, has been a Vice President/Bank
Manager at First State Bank of North Texas in Dallas, Texas since February 1998.
From February 1996 to February 1998, Mr. James served as Vice President of
Fidelity Bank in Dallas, Texas.
Robert W. Manry, a director of Monument, has been an Account Executive at Global
Dallas (a trucking company) in Irving, Texas since 1987.
U. 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.
V. 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.
Item 27. Principal Underwriters
A. AmeriPrime Financial Securities, Inc., is the Registrant's principal
underwriter. Kenneth D. Trumpfheller, 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the President, Secretary and Treasurer of the
underwriter and the President and a Trustee of the Registrant. It is also the
underwriter for the AmeriPrime Insurance Trust, the Kenwood Funds, the Rockland
Funds Trust, the TANAKA Funds, Inc. and the Grand Prix Fund.
B. Omni Financial Group, LLC ("OMNI") acts as co-distributor, along with
AmeriPrime Financial Securities, Inc., of the MAI Family of Funds. Qui T. Vuong,
Quyen N. Vuong and Diep N. Vuong, each of whose principal business address is
6575 West Loop South, Suite 125, Bellaire, Texas 77401, are the managers of
OMNI, and they hold no offices or position with the Registrant.
Item 28. Location of Accounts and Records
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder will be maintained by the Registrant at 1793 Kingswood Drive, Suite
200, Southlake, Texas 76092 and/or by the Registrant's Custodian, Star Bank,
N.A., 425 Walnut Street, Cincinnati, Ohio 45202, and/or transfer and shareholder
service agents, American Data Services, Inc., Hauppauge Corporate Center, 150
Motor Parkway, Hauppauge, New York 11760 and Unified Fund Services, Inc., 431
Pennsylvania Street, Indianapolis, IN 46204.
Item 29. Management Services Not Discussed in Parts A or B
None.
Item 32. Undertakings
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement under Rule
485(b) under the Securities Act and 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 12th day of February, 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 February 12, 1999
_______/s/________________ February 12, 1999
Paul S. Bellany, Treasurer
<PAGE>
EXHIBIT INDEX
1. Amendment No. 12 to Declaration of Trust....................... EX-99.B1.1
2. Amendment No. 13 to Declaration of Trust...................... EX-99.B1.2
3. Management Agreement with The Jumper Group, Inc............... EX-99.B5.1
4. Management Agreement with Martin Capital Advisors, L.L.P........EX-99.B5.2
5. Management Agreement with Gamble, Jones, Morphy & Bent........ EX-99.B5.3
6. Management Agreement with Carl Domino Associates, L.P., for the
Carl Domino Growth Fund....................................... EX-99.B5.4
7. Management Agreement with Carl Domino Associates, L.P., for the
Carl Domino Global Equity Income Fund.......................... EX-99.B5.5
8. Proposed Custody Agreement with UMB Bank, N.A........ EX-99.B8
9. Consent of Accountant........................................ EX-99.B11
AmeriPrime Funds Amendment No. 12
Agreement and Declaration of Trust
1. Pursuant to Section 4.1 of the Agreement and Declaration of Trust of
AmeriPrime Funds and effective upon execution of this document, the undersigned,
being a majority of the trustees of AmeriPrime Funds, hereby establish three (3)
new series of shares of the Trust and designate such series the "Austin
Opportunity Fund", the "Texas Opportunity Fund" and the "U.S. Opportunity Fund"
(the "Series"). The relative rights and preferences of each series shall be
those rights and preferences set forth in Section 4.2 of the Agreement and
Declaration of Trust of AmeriPrime Funds.
2. This document shall have the status of an Amendment to said
Agreement and Declaration of Trust, and may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
/s/
--------------------------------------
Steve L. Cobb
/s/
--------------------------------------
Gary E. Hippenstiel
/s/
---------------------------------------
Kenneth D. Trumpfheller
Date: August 14, 1998
ASA0313D-080598-01
AmeriPrime Funds Amendment No. 13
Agreement and Declaration of Trust
1. Pursuant to Section 4.1 of the Agreement and Declaration of Trust of
AmeriPrime Funds and effective upon the execution of this document, the
undersigned, being a majority of the trustees of AmeriPrime Funds, hereby
establish four new series of shares of the Trust and designate such series the
"Cornerstone MVP Fund", the "GJMB Growth Fund", the "Carl Domino Growth Fund"
and the "Carl Domino Global Equity Income Fund" (the "Series"). The relative
rights and preferences of each series shall be those rights and preferences set
forth in Section 4.2 of the Agreement and Declaration of Trust of AmeriPrime
Funds.
2. This document shall have the status of an Amendment to said
Agreement and Declaration of Trust, and may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
/s/
Steve L. Cobb
/s/
Gary E. Hippenstiel
/s/
Kenneth D. Trumpfheller
Dated: October 28, 1998
MANAGEMENT AGREEMENT
TO: The Jumper Group, Inc.
One Union Square, Suite 505
Chattanooga, TN 37402
Dear Sirs:
AmeriPrime Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is the Jumper Strategic Reserve Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, excluding expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and
2809 12/21/98
<PAGE>
expenses of the custodian, transfer agent, dividend disbursing agent,
shareholder service agent, plan agent, administrator, accounting and pricing
services agent and underwriter of the Fund; expenses, including clerical
expenses, of issue, sale, redemption or repurchase of shares of the Fund; the
cost of preparing and distributing reports and notices to shareholders, the cost
of printing or preparing prospectuses and statements of additional information
for delivery to the Fund's current and prospective shareholders; the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders; expenses of shareholders' meetings and proxy
solicitations; advertising, promotion and other expenses incurred directly or
indirectly in connection with the sale or distribution of the Fund's shares; and
all other operating expenses not specifically assumed by the Fund.
<PAGE>
The Fund will pay all brokerage fees and commissions, taxes,
interest, fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including organizational
expenses, and litigation to which the Fund may be a party and indemnification of
the Trust's trustees and officers with respect thereto. You may obtain
reimbursement from the Fund, at such time or times as you may determine in your
sole discretion, for any of the expenses advanced by you, which the Fund is
obligated to pay, and such reimbursement shall not be considered to be part of
your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
Fund will pay you a fee at the annual rate of 0.75% of the average value of its
daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Fund and/or the other
accounts over which you exercise investment discretion. You are authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a Fund portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if you determine in good faith that the amount of the
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or your overall
responsibilities with respect to the Fund and to accounts over which you
exercise investment discretion. The Fund and you understand and acknowledge
that, although the information may be useful to the Fund and you, it is not
possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the Investment Company Act of
1940, as amended, and other applicable law, you, any of your affiliates or any
affiliates of your affiliates may retain compensation in connection with
effecting the Fund's portfolio transactions, including transactions effected
through others. If any occasion should arise in which you give any advice to
clients of yours concerning the shares of the Fund, you will act solely as
investment counsel for such client and not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and other services to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the Investment
Company Act of 1940 or the rules thereunder, neither you nor your shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with, any error of judgment, mistake
of law, any act or omission connected with or arising out of any services
rendered under, or payments made pursuant to, this Agreement or any other matter
to which this Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the performance of
your duties under this Agreement, or by reason of reckless disregard by any of
such persons of your obligations and duties under this Agreement.
<PAGE>
Any person, even though also a director, officer, employee,
shareholder or agent of you, who may be or become an officer, director, trustee,
employee or agent of the Trust, shall be deemed, when rendering services to the
Trust or acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of you, or one under your control or direction, even though
paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority (as defined in the Investment Company Act
of 1940) of the outstanding voting securities of the Fund, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, of
you or the Trust, by a vote cast in person at a meeting called for the purpose
of voting such approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name
"Jumper" belongs to you, and that the Trust is being granted a limited license
to use such words in its Fund name or in any class name. In the event you cease
to be the adviser to the Fund, the Trust's right to the use of the name "Jumper"
shall automatically cease on the ninetieth day following the termination of this
Agreement. The right to the name may also be withdrawn by you during the term of
this Agreement upon ninety (90) days' written notice by you to the Trust.
Nothing contained herein shall impair or diminish in any respect, your right to
use the name "Jumper" in the name of, or in connection with, any other business
enterprises with which you are or may become associated. There is no charge to
the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
current interpretations of the Act by the Securities and Exchange Commission) by
vote of the holders of a majority of the outstanding voting securities of the
series to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act of 1940, as amended (the "Act") shall be
resolved by reference to such term or provision of the Act and to interpretation
thereof, if any, by the United States courts or in the absence of any
controlling decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission issued pursuant to said Act. In addition,
where the effect of a requirement of the Act, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
1793 Kingswood Drive, Suite 200, Southlake, Texas 76092, and your address for
this purpose shall be One Union Square, Suite 505, Chattanooga, TN 37402.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
ATTEST: AmeriPrime Funds
By /s/
Name/Title:___________________ Kenneth D. Trumpfheller, President
Dated: ___________, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: The Jumper Group, Inc.
/s/ By /s/
Name/Title: Ron Peterson Name/Title:Jay Jumper, President
Dated: June 11, 1998
MANAGEMENT AGREEMENT
TO: Martin Capital Advisors, L.L.P.
812 San Antonio, Suite G14
Austin, TX 78701
Dear Sirs:
AmeriPrime Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is Austin Opportunity Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, excluding expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's current and prospective
shareholders; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; expenses of shareholders'
meetings and proxy solicitations; advertising, promotion and other expenses
incurred directly or indirectly in connection with the sale or distribution of
the Fund's shares, including expenses incurred pursuant to the Fund's
Distribution Plan; and all other operating expenses not specifically assumed by
the Fund.
<PAGE>
The Fund will pay all brokerage fees and commissions, taxes,
interest, fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Fund may be a party and indemnification of the Trust's trustees and
officers with respect thereto. You may obtain reimbursement from the Fund, at
such time or times as you may determine in your sole discretion, for any of the
expenses advanced by you, which the Fund is obligated to pay, and such
reimbursement shall not be considered to be part of your compensation pursuant
to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
Fund will pay you a fee at the annual rate of 1.25% of the average value of its
daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Fund and/or the other
accounts over which you exercise investment discretion. You are authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a Fund portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if you determine in good faith that the amount of the
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or your overall
responsibilities with respect to the Fund and to accounts over which you
exercise investment discretion. The Fund and you understand and acknowledge
that, although the information may be useful to the Fund and you, it is not
possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the Investment Company Act of
1940, as amended, and other applicable law, you, any of your affiliates or any
affiliates of your affiliates may retain compensation in connection with
effecting the Fund's portfolio transactions, including transactions effected
through others. If any occasion should arise in which you give any advice to
clients of yours concerning the shares of the Fund, you will act solely as
investment counsel for such client and not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and other services to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the Investment
Company Act of 1940 or the rules thereunder, neither you nor your partners,
shareholders, officers, directors, employees, agents, control persons or
affiliates of any thereof shall be subject to any liability for, or any damages,
expenses or losses incurred by the Trust in connection with, any error of
judgment, mistake of law, any act or omission connected with or arising out of
any services rendered under, or payments made pursuant to, this Agreement or any
other matter to which this Agreement relates, except by reason of willful
misfeasance, bad faith or gross negligence on the part of any such persons in
the performance of your duties under this Agreement, or by reason of reckless
disregard by any of such persons of your obligations and duties under this
Agreement.
Any person, even though also a partner, director, officer,
employee, shareholder or agent of you, who may be or become an officer,
director, trustee, employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust (other
than services or business in connection with your duties hereunder), to be
rendering such services to or acting solely for the Trust and not as a partner,
director, officer, employee, shareholder or agent of you, or one under your
control or direction, even though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority (as defined in the Investment Company Act
of 1940) of the outstanding voting securities of the Fund, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, of
you or the Trust, by a vote cast in person at a meeting called for the purpose
of voting such approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name
"Austin Opportunity" belong to you, and that the Trust is being granted a
limited license to use such words in its Fund name or in any class name. In the
event you cease to be the adviser to the Fund, the Trust's right to the use of
the name "Austin Opportunity" shall automatically cease on the ninetieth day
following the termination of this Agreement. The right to the name may also be
withdrawn by you during the term of this Agreement upon ninety (90) days'
written notice by you to the Trust. Nothing contained herein shall impair or
diminish in any respect, your right to use the name "Austin Opportunity" in the
name of, or in connection with, any other business enterprises with which you
are or may become associated. There is no charge to the Trust for the right to
use these names.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
interpretations of the Act by the Securities and Exchange Commission) by vote of
the holders of a majority of the outstanding voting securities of the series to
which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act of 1940, as amended (the "Act") shall be
resolved by reference to such term or provision of the Act and to interpretation
thereof, if any, by the United States courts or in the absence of any
controlling decision of any such court, by the Securities and Exchange
Commission or its staff. In addition, where the effect of a requirement of the
Act, reflected in any provision of this Agreement is revised by rule,
regulation, order or interpretation of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such rule,
regulation, order or interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
1793 Kingswood Drive, Suite 200, Southlake, TX 76092, and your address for this
purpose shall be 812 San Antonio, Suite G14, Austin, TX 78701.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
<PAGE>
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
ATTEST: AmeriPrime Funds
By:_/s/_____________________________
/s/ Kenneth D. Trumpfheller, President
Name/Title: Paul Bellany
Dated: February 12, 1999
ACCEPTANCE
The foregoing Agreement is hereby accepted.
Martin Capital Advisors, L.L.P.
By:_/s/_____________________________
Paul B. Martin, Jr., Managing Partner
5438 12/13/98
MANAGEMENT AGREEMENT
TO: Gamble, Jones, Morphy & Bent, Inc.
301 East Colorado Blvd., Suite 802
Pasadena, California 91101
Dear Sirs:
AmeriPrime Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is GJMB Growth Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, including expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's current and prospective
shareholders; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; expenses of shareholders'
meetings and proxy solicitations; advertising, promotion and other expenses
incurred directly or indirectly in connection with the sale or distribution of
the Fund's shares (excluding expenses which the Fund is authorized to pay
pursuant to Rule 12b-1 under the Investment Company Act of 1940, (the "1940
Act") as amended); and all other operating expenses not specifically assumed by
the Fund.
<PAGE>
The Fund will pay all brokerage fees and commissions, taxes,
interest, fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Fund may be a party and indemnification of the Trust's trustees and
officers with respect thereto. The Fund will also pay expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act. You may obtain
reimbursement from the Fund, at such time or times as you may determine in your
sole discretion, for any of the expenses advanced by you, which the Fund is
obligated to pay, and such reimbursement shall not be considered to be part of
your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
Fund will pay you a fee at the annual rate of 1.20% of the average value of its
daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the 1940 Act, and other
applicable law, you, any of your affiliates or any affiliates of your affiliates
may retain compensation in connection with effecting the Fund's portfolio
transactions, including transactions effected through others. If any occasion
should arise in which you give any advice to clients of yours concerning the
shares of the Fund, you will act solely as investment counsel for such client
and not in any way on behalf of the Fund. Your services to the Fund pursuant to
this Agreement are not to be deemed to be exclusive and it is understood that
you may render investment advice, management and other services to others,
including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the 1940 Act or
the rules thereunder, neither you nor your shareholders, members, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee,
member, shareholder or agent of you, who may be or become an officer, director,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with your duties hereunder), to be rendering
such services to or acting solely for the Trust and not as a director, officer,
employee, member, shareholder or agent of you, or one under your control or
direction, even though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority of the outstanding voting securities of
the Fund, provided that in either event continuance is also approved by a
majority of the trustees who are not interested persons of you or the Trust, by
a vote cast in person at a meeting called for the purpose of voting such
approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name
"GJMB" belong to you, and that the Trust is being granted a limited license to
use such words in its Fund name or in any class name. In the event you cease to
be the adviser to the Fund, the Trust's right to the use of the name "GJMB"
shall automatically cease on the ninetieth day following the termination of this
Agreement. The right to the name may also be withdrawn by you during the term of
this Agreement upon ninety (90) days' written notice by you to the Trust.
Nothing contained herein shall impair or diminish in any respect, your right to
use the name "GJMB" in the name of, or in connection with, any other business
enterprises with which you are or may become associated. There is no charge to
the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or in the absence of any controlling decision of any such court,
by the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
1793 Kingswood Drive, Suite 200, Southlake, TX 76092, and your address for this
purpose shall be 301 East Colorado Blvd., Suite 802, Pasadena, CA 91101.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
ATTEST:
AmeriPrime Funds
By: Monta B. Henry By___/s/_____________________________
Ken Trumpfheller, President
Name/Title:
Dated: 12/29, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Gamble, Jones, Morphy & Bent, Inc.
/s/_______________________________
/s/
Name/Title: Gary Pulford Name/Title:Thomas S. Jones, Presdient_
Dated: 12/29, 1998
5469 12/15/98 11:56 AM
MANAGEMENT AGREEMENT
TO: Carl Domino Associates, L.P.
580 Village Boulevard, Suite 225
West Palm Beach, Florida 33409
Dear Sirs:
AmeriPrime Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is Carl Domino Growth Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, including expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's current and prospective
shareholders; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; expenses of shareholders'
meetings and proxy solicitations; advertising, promotion and other expenses
incurred directly or indirectly in connection with the sale or distribution of
the Fund's shares (excluding expenses which the Fund is authorized to pay
pursuant to Rule 12b-1 under the Investment Company Act of 1940, (the "1940
Act") as amended); and all other operating expenses not specifically assumed by
the Fund.
<PAGE>
The Fund will pay all brokerage fees and commissions, taxes,
interest, fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Fund may be a party and indemnification of the Trust's trustees and
officers with respect thereto. The Fund will also pay expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act. You may obtain
reimbursement from the Fund, at such time or times as you may determine in your
sole discretion, for any of the expenses advanced by you, which the Fund is
obligated to pay, and such reimbursement shall not be considered to be part of
your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
Fund will pay you a fee at the annual rate of 1.50% of the average value of its
daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the 1940 Act, and other
applicable law, you, any of your affiliates or any affiliates of your affiliates
may retain compensation in connection with effecting the Fund's portfolio
transactions, including transactions effected through others. If any occasion
should arise in which you give any advice to clients of yours concerning the
shares of the Fund, you will act solely as investment counsel for such client
and not in any way on behalf of the Fund. Your services to the Fund pursuant to
this Agreement are not to be deemed to be exclusive and it is understood that
you may render investment advice, management and other services to others,
including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the 1940 Act or
the rules thereunder, neither you nor your shareholders, members, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee,
member, shareholder or agent of you, who may be or become an officer, director,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with your duties hereunder), to be rendering
such services to or acting solely for the Trust and not as a director, officer,
employee, member, shareholder or agent of you, or one under your control or
direction, even though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority of the outstanding voting securities of
the Fund, provided that in either event continuance is also approved by a
majority of the trustees who are not interested persons of you or the Trust, by
a vote cast in person at a meeting called for the purpose of voting such
approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name
"Carl Domino" or any variation thereof belong to you, and that the Trust is
being granted a limited license to use such words in its Fund name or in any
class name. In the event you cease to be the adviser to the Fund, the Trust's
right to the use of the name "Carl Domino" shall automatically cease on the
ninetieth day following the termination of this Agreement. The right to the name
may also be withdrawn by you during the term of this Agreement upon ninety (90)
days' written notice by you to the Trust. Nothing contained herein shall impair
or diminish in any respect, your right to use the name "Carl Domino" in the name
of, or in connection with, any other business enterprises with which you are or
may become associated. There is no charge to the Trust for the right to use this
name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or in the absence of any controlling decision of any such court,
by the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
1793 Kingswood Drive, Suite 200, Southlake, TX 76092, and your address for this
purpose shall be 580 Village Boulevard, Suite 225, West Palm Beach, Florida
33409.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
ATTEST:
AmeriPrime Funds
By: /s/ By____/s/____________________________
Ken Trumpfheller, President
Name/Title: Monta B. Henry
Dated: 12/29, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Carl Domino Associates, L.P.
By: By: /s/
- --------------------------------
Name/Title______________________ Name/Title:_Janet N. Perry,
Assistant Secretary
Dated: 12-28, 1998
5470 12/15/98 11:50 AM
MANAGEMENT AGREEMENT
TO: Carl Domino Associates, L.P.
580 Village Boulevard, Suite 225
West Palm Beach, Florida 33409
Dear Sirs:
AmeriPrime Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is Carl Domino Global Equity Income Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, including expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's current and prospective
shareholders; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; expenses of shareholders'
meetings and proxy solicitations; advertising, promotion and other expenses
incurred directly or indirectly in connection with the sale or distribution of
the Fund's shares (excluding expenses which the Fund is authorized to pay
pursuant to Rule 12b-1 under the Investment Company Act of 1940, (the "1940
Act") as amended); and all other operating expenses not specifically assumed by
the Fund.
<PAGE>
The Fund will pay all brokerage fees and commissions, taxes,
interest, fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Fund may be a party and indemnification of the Trust's trustees and
officers with respect thereto. The Fund will also pay expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act. You may obtain
reimbursement from the Fund, at such time or times as you may determine in your
sole discretion, for any of the expenses advanced by you, which the Fund is
obligated to pay, and such reimbursement shall not be considered to be part of
your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
Fund will pay you a fee at the annual rate of 1.50% of the average value of its
daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the 1940 Act, and other
applicable law, you, any of your affiliates or any affiliates of your affiliates
may retain compensation in connection with effecting the Fund's portfolio
transactions, including transactions effected through others. If any occasion
should arise in which you give any advice to clients of yours concerning the
shares of the Fund, you will act solely as investment counsel for such client
and not in any way on behalf of the Fund. Your services to the Fund pursuant to
this Agreement are not to be deemed to be exclusive and it is understood that
you may render investment advice, management and other services to others,
including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the 1940 Act or
the rules thereunder, neither you nor your shareholders, members, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee,
member, shareholder or agent of you, who may be or become an officer, director,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with your duties hereunder), to be rendering
such services to or acting solely for the Trust and not as a director, officer,
employee, member, shareholder or agent of you, or one under your control or
direction, even though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority of the outstanding voting securities of
the Fund, provided that in either event continuance is also approved by a
majority of the trustees who are not interested persons of you or the Trust, by
a vote cast in person at a meeting called for the purpose of voting such
approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name
"Carl Domino" or any variation thereof belong to you, and that the Trust is
being granted a limited license to use such words in its Fund name or in any
class name. In the event you cease to be the adviser to the Fund, the Trust's
right to the use of the name "Carl Domino" shall automatically cease on the
ninetieth day following the termination of this Agreement. The right to the name
may also be withdrawn by you during the term of this Agreement upon ninety (90)
days' written notice by you to the Trust. Nothing contained herein shall impair
or diminish in any respect, your right to use the name "Carl Domino" in the name
of, or in connection with, any other business enterprises with which you are or
may become associated. There is no charge to the Trust for the right to use this
name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or in the absence of any controlling decision of any such court,
by the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
1793 Kingswood Drive, Suite 200, Southlake, TX 76092, and your address for this
purpose shall be 508 Village Boulevard, Suite 225, West Palm Beach, Florida,
33409.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
ATTEST:
AmeriPrime Funds
By: /s/ By_____/s/__________________________
Ken Trumpfheller, President
Name/Title: Monta B. Henry
Dated: 12/29, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Carl Domino Associates, L.P.
By: By__/s/___________________________
Name/Title_____________________ Name/Title_Janet N. Perry,
Assistant Secretary
Dated: 12-28, 1998
5471 12/15/98 11:40 AM
CUSTODY AGREEMENT
Dated February 2, 1999
Between
UMB BANK, N.A.
and
THE DOBSON COVERED CALL FUND
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. Appointment of Custodian 1
2. Definitions 1
(a) Securities 1
(b) Assets 1
(c) Instructions and Special Instructions 1
3. Delivery of Corporate Documents 2
4. Powers and Duties of Custodian and Domestic Subcustodian 2
(a) Safekeeping 3
(b) Manner of Holding Securities 3
(c) Free Delivery of Assets 4
(d) Exchange of Securities 4
(e) Purchases of Assets 4
(f) Sales of Assets 5
(g) Options 5
(h) Futures Contracts 6
(i) Segregated Accounts 6
(j) Depositary Receipts 6
(k) Corporate Actions, Put Bonds, Called Bonds, Etc. 6
(l) Interest Bearing Deposits 7
(m) Foreign Exchange Transactions 7
(n) Pledges or Loans of Securities 8
(o) Stock Dividends, Rights, Etc. 8
(p) Routine Dealings 8
(q) Collections 8
(r) Bank Accounts 9
(s) Dividends, Distributions and Redemptions 9
(t) Proceeds from Shares Sold 9
(u) Proxies and Notices; Compliance with the Shareholders
Communication Act of 1985 9
(v) Books and Records 9
(w)Opinion of Fund's Independent Certified Public Accountants 10
(x) Reports by Independent Certified Public Accountants 10
(y) Bills and Others Disbursements 10
5. Subcustodians 10
(a) Domestic Subcustodians 10
(b) Foreign Subcustodians 10
(c) Interim Subcustodians 11
(d) Special Subcustodians 11
(e) Termination of a Subcustodian 11
(f) Certification Regarding Foreign Subcustodians 11
6. Standard of Care 12
(a) General Standard of Care 12
(b) Actions Prohibited by Applicable Law, Events Beyond
Custodian's Control,Armed 12
Conflict,Sovereign Risk, etc.
(c) Liability for Past Records 12
(d) Advice of Counsel 12
(e) Advice of the Fund and Others 12
(f) Instructions Appearing to be Genuine 13
(g) Exceptions from Liability 13
7. Liability of the Custodian for Actions of Others 13
(a) Domestic Subcustodians 13
(b) Liability for Acts and Omissions of Foreign
Subcustodians 13
(c) Securities Systems, Interim Subcustodians, Special
Subcustodians, Securities 13
Depositories and Clearing Agencies
(d) Defaults or Insolvency's of Brokers, Banks, Etc. 14
(e) Reimbursement of Expenses 14
8. Indemnification 14
(a) Indemnification by Fund 14
(b) Indemnification by Custodian 14
9. Advances 14
10. Liens 15
11. Compensation 15
12. Powers of Attorney 15
13. Termination and Assignment 15
14. Additional Funds 15
15. Notices 16
16. Miscellaneous 16
<PAGE>
19
CUSTODY AGREEMENT
This agreement made as of this ____ day of February, 1999, between UMB
Bank, n.a., a national banking association with its principal place of business
located in Kansas City, Missouri (hereinafter "Custodian"), and the AmeriPrime
Funds, an Ohio Business Trust, (The "Trust") on behalf of the Dobson Covered
Call Fund, together with such additional Funds which shall be made parties to
this Agreement by the execution of Appendix B hereto (individually, a "Fund" and
collectively, the "Funds").
WITNESSETH:
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended; and
WHEREAS, each Fund desires to appoint Custodian as its custodian for
the custody of Assets (as hereinafter defined) owned by such Fund which Assets
are to be held in such accounts as such Fund may establish from time to time;
and
WHEREAS, Custodian is willing to accept such appointment on the terms
and conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN.
Each Fund hereby constitutes and appoints the Custodian as custodian of
Assets belonging to each such Fund which have been or may be from time to time
deposited with the Custodian. Custodian accepts such appointment as a custodian
and agrees to perform the duties and responsibilities of Custodian as set forth
herein on the conditions set forth herein.
2. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings so indicated:
(a) "Security" or "Securities" shall mean stocks, bonds, bills, rights,
script, warrants, interim certificates and all negotiable or nonnegotiable paper
commonly known as Securities and other instruments or obligations.
(b) "Assets" shall mean Securities, monies and other property held by
the Custodian for the benefit of a Fund.
(c)(1) "Instructions", as used herein, shall mean: (i) a tested telex,
a written (including, without limitation, facsimile transmission) request,
direction, instruction or certification signed or initialed by or on behalf of a
Fund by an Authorized Person; (ii) a telephonic or other oral communication from
a person the Custodian reasonably believes to be an Authorized Person; or (iii)
a communication effected directly between an electro-mechanical or electronic
device or system (including, without limitation, computers) on behalf of a Fund.
Instructions in the form of oral communications shall be confirmed by the
appropriate Fund by tested telex or in writing in the manner set forth in clause
(i) above, but the lack of such confirmation shall in no way affect any action
taken by the Custodian in reliance upon such oral Instructions prior to the
Custodian's receipt of such confirmation. Each Fund authorizes the Custodian to
record any and all telephonic or other oral Instructions communicated to the
Custodian.
(c)(2) "Special Instructions", as used herein, shall mean Instructions
countersigned or confirmed in writing by the Treasurer or any Assistant
Treasurer of a Fund or any other person designated by the Treasurer of such Fund
in writing, which countersignature or confirmation shall be included on the same
instrument containing the Instructions or on a separate instrument relating
thereto.
(c)(3) Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, facsimile transmission or telex
number agreed upon from time to time by the Custodian and each Fund.
(c)(4) Where appropriate, Instructions and Special Instructions shall be
continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS.
Each of the parties to this Agreement represents that its execution
does not violate any of the provisions of its respective charter, articles of
incorporation, articles of association, declaration of trust or bylaws and all
required corporate action to authorize the execution and delivery of this
Agreement has been taken.
Each Fund has furnished the Custodian with copies, properly certified
or authenticated, with all amendments or supplements thereto, of the following
documents:
(a) Certificate of Incorporation (or equivalent document) of the Fund as in
effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Directors of the Fund appointing the
Custodian and approving the form of this Agreement; and
(d) The Fund's current prospectus and statements of additional
information.
Each Fund shall promptly furnish the Custodian with copies of any
updates, amendments or supplements to the foregoing documents.
In addition, each Fund has delivered or will promptly deliver to the
Custodian, copies of the Resolution(s) of its Board of Directors or Trustees and
all amendments or supplements thereto, properly certified or authenticated,
designating certain officers or employees of each such Fund who will have
continuing authority to certify to the Custodian: (a) the names, titles,
signatures and scope of authority of all persons authorized to give Instructions
or any other notice, request, direction, instruction, certificate or instrument
on behalf of each Fund, and (b) the names, titles and signatures of those
persons authorized to countersign or confirm Special Instructions on behalf of
each Fund (in both cases collectively, the "Authorized Persons" and
individually, an "Authorized Person"). Such Resolutions and certificates may be
accepted and relied upon by the Custodian as conclusive evidence of the facts
set forth therein and shall be considered to be in full force and effect until
delivery to the Custodian of a similar Resolution or certificate to the
contrary. Upon delivery of a certificate which deletes or does not include the
name(s) of a person previously authorized to give Instructions or to countersign
or confirm Special Instructions, such persons shall no longer be considered an
Authorized Person authorized to give Instructions or to countersign or confirm
Special Instructions. Unless the certificate specifically requires that the
approval of anyone else will first have been obtained, the Custodian will be
under no obligation to inquire into the right of the person giving such
Instructions or Special Instructions to do so. Notwithstanding any of the
foregoing, no Instructions or Special Instructions received by the Custodian
from a Fund will be deemed to authorize or permit any director, trustee,
officer, employee, or agent of such Fund to withdraw any of the Assets of such
Fund upon the mere receipt of such authorization, Special Instructions or
Instructions from such director, trustee, officer, employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN.
Except for Assets held by any Subcustodian appointed pursuant to
Sections 5(b), (c), or (d) of this Agreement, the Custodian shall have and
perform the powers and duties hereinafter set forth in this Section 4. For
purposes of this Section 4 all references to powers and duties of the
"Custodian" shall also refer to any Domestic Subcustodian appointed pursuant to
Section 5(a).
<PAGE>
(a) Safekeeping.
The Custodian will keep safely the Assets of each Fund which are
delivered to it from time to time. The Custodian shall not be responsible for
any property of a Fund held or received by such Fund and not delivered to the
Custodian.
(b) Manner of Holding Securities.
(1) The Custodian shall at all times hold Securities of each Fund
either: (i) by physical possession of the share certificates or other
instruments representing such Securities in registered or bearer form; or (ii)
in book-entry form by a Securities System (as hereinafter defined) in accordance
with the provisions of sub-paragraph (3) below.
(2) The Custodian may hold registrable portfolio Securities which
have been delivered to it in physical form, by registering the same in the name
of the Custodian or its nominee, for whose actions the Custodian shall be fully
responsible. Upon the receipt of Instructions, the Custodian shall hold such
Securities in street certificate form, so called, with or without any indication
of fiduciary capacity. However, unless it receives Instructions to the contrary,
the Custodian will register all such portfolio Securities in the name of the
Custodian's authorized nominee. All such Securities shall be held in an account
of the Custodian containing only assets of the appropriate Fund or only assets
held by the Custodian as a fiduciary, provided that the records of the Custodian
shall indicate at all times the Fund or other customer for which such Securities
are held in such accounts and the respective interests therein.
(3) The Custodian may deposit and/or maintain domestic Securities
owned by a Fund in, and each Fund hereby approves use of: (a) The Depository
Trust Company; (b) The Participants Trust Company; and (c) any book-entry system
as provided in (i) Subpart O of Treasury Circular No. 300, 31 CFR 306.115, (ii)
Subpart B of Treasury Circular Public Debt Series No. 27-76, 31 CFR 350.2, or
(iii) the book-entry regulations of federal agencies substantially in the form
of 31 CFR 306.115. Upon the receipt of Special Instructions, the Custodian may
deposit and/or maintain domestic Securities owned by a Fund in any other
domestic clearing agency registered with the Securities and Exchange Commission
("SEC") under Section 17A of the Securities Exchange Act of 1934 (or as may
otherwise be authorized by the SEC to serve in the capacity of depository or
clearing agent for the Securities or other assets of investment companies) which
acts as a Securities depository. Each of the foregoing shall be referred to in
this Agreement as a "Securities System", and all such Securities Systems shall
be listed on the attached Appendix A. Use of a Securities System shall be in
accordance with applicable Federal Reserve Board and SEC rules and regulations,
if any, and subject to the following provisions:
(i) The Custodian may deposit the Securities directly or
through one or more agents or Subcustodians which are also qualified to act as
custodians for investment companies.
(ii) The Custodian shall deposit and/or maintain the
Securities in a Securities System, provided that such Securities are represented
in an account ("Account") of the Custodian in the Securities System that
includes only assets held by the Custodian as a fiduciary, custodian or
otherwise for customers.
(iii) The books and records of the Custodian shall at all
times identify those Securities belonging to any one or more Funds which are
maintained in a Securities System.
(iv) The Custodian shall pay for Securities purchased for the
account of a Fund only upon (a) receipt of advice from the Securities System
that such Securities have been transferred to the Account of the Custodian in
accordance with the rules of the Securities System, and (b) the making of an
entry on the records of the Custodian to reflect such payment and transfer for
the account of such Fund. The Custodian shall transfer Securities sold for the
account of a Fund only upon (a) receipt of advice from the Securities System
that payment for such Securities has been transferred to the Account of the
Custodian in accordance with the rules of the Securities System, and (b) the
making of an entry on the records of the Custodian to reflect such transfer and
payment for the account of such Fund. Copies of all advices from the Securities
System relating to transfers of Securities for the account of a Fund shall be
maintained for such Fund by the Custodian. The Custodian shall deliver to a Fund
on the next succeeding business day daily transaction reports that shall include
each day's transactions in the Securities System for the account of such Fund.
Such transaction reports shall be delivered to such Fund or any agent designated
by such Fund pursuant to Instructions, by computer or in such other manner as
such Fund and Custodian may agree.
(v) The Custodian shall, if requested by a Fund pursuant to
Instructions, provide such Fund with reports obtained by the Custodian or any
Subcustodian with respect to a Securities System's accounting system, internal
accounting control and procedures for safeguarding Securities deposited in the
Securities System.
(vi) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any Securities System on behalf of a Fund as promptly as
practicable and shall take all actions reasonably practicable to safeguard the
Securities of such Fund maintained with such Securities System.
(c) Free Delivery of Assets.
Notwithstanding any other provision of this Agreement and except as
provided in Section 3 hereof, the Custodian, upon receipt of Special
Instructions, will undertake to make free delivery of Assets, provided such
Assets are on hand and available, in connection with a Fund's transactions and
to transfer such Assets to such broker, dealer, Subcustodian, bank, agent,
Securities System or otherwise as specified in such Special Instructions.
(d) Exchange of Securities.
Upon receipt of Instructions, the Custodian will exchange portfolio
Securities held by it for a Fund for other Securities or cash paid in connection
with any reorganization, recapitalization, merger, consolidation, or conversion
of convertible Securities, and will deposit any such Securities in accordance
with the terms of any reorganization or protective plan.
Without Instructions, the Custodian is authorized to exchange Securities
held by it in temporary form for Securities in definitive form, to surrender
Securities for transfer into a name or nominee name as permitted in Section
4(b)(2), to effect an exchange of shares in a stock split or when the par value
of the stock is changed, to sell any fractional shares, and, upon receiving
payment therefor, to surrender bonds or other Securities held by it at maturity
or call.
(e) Purchases of Assets.
(1) Securities Purchases. In accordance with Instructions, the
Custodian shall, with respect to a purchase of Securities, pay for such
Securities out of monies held for a Fund's account for which the purchase was
made, but only insofar as monies are available therein for such purpose, and
receive the portfolio Securities so purchased. Unless the Custodian has received
Special Instructions to the contrary, such payment will be made only upon
receipt of Securities by the Custodian, a clearing corporation of a national
Securities exchange of which the Custodian is a member, or a Securities System
in accordance with the provisions of Section 4(b)(3) hereof. Notwithstanding the
foregoing, upon receipt of Instructions: (i) in connection with a repurchase
agreement, the Custodian may release funds to a Securities System prior to the
receipt of advice from the Securities System that the Securities underlying such
repurchase agreement have been transferred by book-entry into the Account
maintained with such Securities System by the Custodian, provided that the
Custodian's instructions to the Securities System require that the Securities
System may make payment of such funds to the other party to the repurchase
agreement only upon transfer by book-entry of the Securities underlying the
repurchase agreement into such Account; (ii) in the case of Interest Bearing
Deposits, currency deposits, and other deposits, foreign exchange transactions,
futures contracts or options, pursuant to Sections 4(g), 4(h), 4(l), and 4(m)
hereof, the Custodian may make payment therefor before receipt of an advice of
transaction; and (iii) in the case of Securities as to which payment for the
Security and receipt of the instrument evidencing the Security are under
generally accepted trade practice or the terms of the instrument representing
the Security expected to take place in different locations or through separate
parties, such as commercial paper which is indexed to foreign currency exchange
rates, derivatives and similar Securities, the Custodian may make payment for
such Securities prior to delivery thereof in accordance with such generally
accepted trade practice or the terms of the instrument representing such
Security.
(2) Other Assets Purchased. Upon receipt of Instructions and except as
otherwise provided herein, the Custodian shall pay for and receive other Assets
for the account of a Fund as provided in Instructions.
(f) Sales of Assets.
(1) Securities Sold. In accordance with Instructions, the Custodian
will, with respect to a sale, deliver or cause to be delivered the Securities
thus designated as sold to the broker or other person specified in the
Instructions relating to such sale. Unless the Custodian has received Special
Instructions to the contrary, such delivery shall be made only upon receipt of
payment therefor in the form of: (a) cash, certified check, bank cashier's
check, bank credit, or bank wire transfer; (b) credit to the account of the
Custodian with a clearing corporation of a national Securities exchange of which
the Custodian is a member; or (c) credit to the Account of the Custodian with a
Securities System, in accordance with the provisions of Section 4(b)(3) hereof.
Notwithstanding the foregoing, Securities held in physical form may be delivered
and paid for in accordance with "street delivery custom" to a broker or its
clearing agent, against delivery to the Custodian of a receipt for such
Securities, provided that the Custodian shall have taken reasonable steps to
ensure prompt collection of the payment for, or return of, such Securities by
the broker or its clearing agent, and provided further that the Custodian shall
not be responsible for the selection of or the failure or inability to perform
of such broker or its clearing agent or for any related loss arising from
delivery or custody of such Securities prior to receiving payment therefor.
(2) Other Assets Sold. Upon receipt of Instructions and except as
otherwise provided herein, the Custodian shall receive payment for and deliver
other Assets for the account of a Fund as provided in Instructions.
(g) Options.
(1) Upon receipt of Instructions relating to the purchase of an option
or sale of a covered call option, the Custodian shall: (a) receive and retain
confirmations or other documents, if any, evidencing the purchase or writing of
the option by a Fund; (b) if the transaction involves the sale of a covered call
option, deposit and maintain in a segregated account the Securities (either
physically or by book-entry in a Securities System) subject to the covered call
option written on behalf of such Fund; and (c) pay, release and/or transfer such
Securities, cash or other Assets in accordance with any notices or other
communications evidencing the expiration, termination or exercise of such
options which are furnished to the Custodian by the Options Clearing Corporation
(the "OCC"), the securities or options exchanges on which such options were
traded, or such other organization as may be responsible for handling such
option transactions.
(2) Upon receipt of Instructions relating to the sale of a naked option
(including stock index and commodity options), the Custodian, the appropriate
Fund and the broker-dealer shall enter into an agreement to comply with the
rules of the OCC or of any registered national securities exchange or similar
organizations(s). Pursuant to that agreement and such Fund's Instructions, the
Custodian shall: (a) receive and retain confirmations or other documents, if
any, evidencing the writing of the option; (b) deposit and maintain in a
segregated account, Securities (either physically or by book-entry in a
Securities System), cash and/or other Assets; and (c) pay, release and/or
transfer such Securities, cash or other Assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the securities or options exchanges on which such options
were traded, or such other organization as may be responsible for handling such
option transactions. The appropriate Fund and the broker-dealer shall be
responsible for determining the quality and quantity of assets held in any
segregated account established in compliance with applicable margin maintenance
requirements and the performance of other terms of any option contract.
<PAGE>
(h) Futures Contracts.
Upon receipt of Instructions, the Custodian shall enter into a futures
margin procedural agreement among the appropriate Fund, the Custodian and the
designated futures commission merchant (a "Procedural Agreement"). Under the
Procedural Agreement the Custodian shall: (a) receive and retain confirmations,
if any, evidencing the purchase or sale of a futures contract or an option on a
futures contract by such Fund; (b) deposit and maintain in a segregated account
cash, Securities and/or other Assets designated as initial, maintenance or
variation "margin" deposits intended to secure such Fund's performance of its
obligations under any futures contracts purchased or sold, or any options on
futures contracts written by such Fund, in accordance with the provisions of any
Procedural Agreement designed to comply with the provisions of the Commodity
Futures Trading Commission and/or any commodity exchange or contract market
(such as the Chicago Board of Trade), or any similar organization(s), regarding
such margin deposits; and (c) release Assets from and/or transfer Assets into
such margin accounts only in accordance with any such Procedural Agreements. The
appropriate Fund and such futures commission merchant shall be responsible for
determining the type and amount of Assets held in the segregated account or paid
to the broker-dealer in compliance with applicable margin maintenance
requirements and the performance of any futures contract or option on a futures
contract in accordance with its terms.
(i) Segregated Accounts.
Upon receipt of Instructions, the Custodian shall establish and maintain
on its books a segregated account or accounts for and on behalf of a Fund, into
which account or accounts may be transferred Assets of such Fund, including
Securities maintained by the Custodian in a Securities System pursuant to
Paragraph (b)(3) of this Section 4, said account or accounts to be maintained
(i) for the purposes set forth in Sections 4(g), 4(h) and 4(n) and (ii) for the
purpose of compliance by such Fund with the procedures required by the SEC
Investment Company Act Release Number 10666 or any subsequent release or
releases relating to the maintenance of segregated accounts by registered
investment companies, or (iii) for such other purposes as may be set forth, from
time to time, in Special Instructions. The Custodian shall not be responsible
for the determination of the type or amount of Assets to be held in any
segregated account referred to in this paragraph, or for compliance by the Fund
with required procedures noted in (ii) above.
(j) Depositary Receipts.
Upon receipt of Instructions, the Custodian shall surrender or cause to be
surrendered Securities to the depositary used for such Securities by an issuer
of American Depositary Receipts or International Depositary Receipts
(hereinafter referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such Securities and written evidence satisfactory
to the organization surrendering the same that the depositary has acknowledged
receipt of instructions to issue ADRs with respect to such Securities in the
name of the Custodian or a nominee of the Custodian, for delivery in accordance
with such instructions.
Upon receipt of Instructions, the Custodian shall surrender or cause to be
surrendered ADRs to the issuer thereof, against a written receipt therefor
adequately describing the ADRs surrendered and written evidence satisfactory to
the organization surrendering the same that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to deliver the
Securities underlying such ADRs in accordance with such instructions.
(k) Corporate Actions, Put Bonds, Called Bonds, Etc.
Upon receipt of Instructions, the Custodian shall: (a) deliver warrants,
puts, calls, rights or similar Securities to the issuer or trustee thereof (or
to the agent of such issuer or trustee) for the purpose of exercise or sale,
provided that the new Securities, cash or other Assets, if any, acquired as a
result of such actions are to be delivered to the Custodian; and (b) deposit
Securities upon invitations for tenders thereof, provided that the consideration
for such Securities is to be paid or delivered to the Custodian, or the tendered
Securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary in Instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall notify the appropriate Fund of such action in writing by
facsimile transmission or in such other manner as such Fund and Custodian may
agree in writing.
The Fund agrees that if it gives an Instruction for the performance of an
act on the last permissible date of a period established by any optional offer
or on the last permissible date for the performance of such act, the Fund shall
hold the Bank harmless from any adverse consequences in connection with acting
upon or failing to act upon such Instructions.
(l) Interest Bearing Deposits.
Upon receipt of Instructions directing the Custodian to purchase interest
bearing fixed term and call deposits (hereinafter referred to, collectively, as
"Interest Bearing Deposits") for the account of a Fund, the Custodian shall
purchase such Interest Bearing Deposits in the name of such Fund with such banks
or trust companies, including the Custodian, any Subcustodian or any subsidiary
or affiliate of the Custodian (hereinafter referred to as "Banking
Institutions"), and in such amounts as such Fund may direct pursuant to
Instructions. Such Interest Bearing Deposits may be denominated in U.S. dollars
or other currencies, as such Fund may determine and direct pursuant to
Instructions. The responsibilities of the Custodian to a Fund for Interest
Bearing Deposits issued by the Custodian shall be that of a U.S. bank for a
similar deposit. With respect to Interest Bearing Deposits other than those
issued by the Custodian, (a) the Custodian shall be responsible for the
collection of income and the transmission of cash to and from such accounts; and
(b) the Custodian shall have no duty with respect to the selection of the
Banking Institution or for the failure of such Banking Institution to pay upon
demand.
(m) Foreign Exchange Transactions.
(l) Each Fund hereby appoints the Custodian as its agent in the
execution of all currency exchange transactions. The Custodian agrees to provide
exchange rate and U.S. Dollar information, in writing, to the Funds. Such
information shall be supplied by the Custodian at least by the business day
prior to the value date of the foreign exchange transaction, provided that the
Custodian receives the request for such information at least two business days
prior to the value date of the transaction.
(2) Upon receipt of Instructions, the Custodian shall settle foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf of and for the account of a Fund with such
currency brokers or Banking Institutions as such Fund may determine and direct
pursuant to Instructions. If, in its Instructions, a Fund does not direct the
Custodian to utilize a particular currency broker or Banking Institution, the
Custodian is authorized to select such currency broker or Banking Institution as
it deems appropriate to execute the Fund's foreign currency transaction.
(3) Each Fund accepts full responsibility for its use of third party
foreign exchange brokers and for execution of said foreign exchange contracts
and understands that the Fund shall be responsible for any and all costs and
interest charges which may be incurred as a result of the failure or delay of
its third party broker to deliver foreign exchange. The Custodian shall have no
responsibility or liability with respect to the selection of the currency
brokers or Banking Institutions with which a Fund deals or the performance of
such brokers or Banking Institutions.
(4) Notwithstanding anything to the contrary contained herein, upon
receipt of Instructions the Custodian may, in connection with a foreign exchange
contract, make free outgoing payments of cash in the form of U.S. Dollars or
foreign currency prior to receipt of confirmation of such foreign exchange
contract or confirmation that the countervalue currency completing such contract
has been delivered or received.
(5) The Custodian shall not be obligated to enter into foreign exchange
transactions as principal. However, if the Custodian has made available to a
Fund its services as a principal in foreign exchange transactions and subject to
any separate agreement between the parties relating to such transactions, the
Custodian shall enter into foreign exchange contracts or options to purchase and
sell foreign currencies for spot and future delivery on behalf of and for the
account of the Fund, with the Custodian as principal.
(n) Pledges or Loans of Securities.
(1) Upon receipt of Instructions from a Fund, the Custodian will
release or cause to be released Securities held in custody to the pledgees
designated in such Instructions by way of pledge or hypothecation to secure
loans incurred by such Fund with various lenders including but not limited to
UMB Bank, n.a.; provided, however, that the Securities shall be released only
upon payment to the Custodian of the monies borrowed, except that in cases where
additional collateral is required to secure existing borrowings, further
Securities may be released or delivered, or caused to be released or delivered
for that purpose upon receipt of Instructions. Upon receipt of Instructions, the
Custodian will pay, but only from funds available for such purpose, any such
loan upon re-delivery to it of the Securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing such loan. In lieu of
delivering collateral to a pledgee, the Custodian, on the receipt of
Instructions, shall transfer the pledged Securities to a segregated account for
the benefit of the pledgee.
(2) Upon receipt of Special Instructions, and execution of a separate
Securities Lending Agreement, the Custodian will release Securities held in
custody to the borrower designated in such Instructions and may, except as
otherwise provided below, deliver such Securities prior to the receipt of
collateral, if any, for such borrowing, provided that, in case of loans of
Securities held by a Securities System that are secured by cash collateral, the
Custodian's instructions to the Securities System shall require that the
Securities System deliver the Securities of the appropriate Fund to the borrower
thereof only upon receipt of the collateral for such borrowing. The Custodian
shall have no responsibility or liability for any loss arising from the delivery
of Securities prior to the receipt of collateral. Upon receipt of Instructions
and the loaned Securities, the Custodian will release the collateral to the
borrower.
(o) Stock Dividends, Rights, Etc.
The Custodian shall receive and collect all stock dividends, rights, and
other items of like nature and, upon receipt of Instructions, take action with
respect to the same as directed in such Instructions.
(p) Routine Dealings.
The Custodian will, in general, attend to all routine and mechanical
matters in accordance with industry standards in connection with the sale,
exchange, substitution, purchase, transfer, or other dealings with Securities or
other property of each Fund except as may be otherwise provided in this
Agreement or directed from time to time by Instructions from any particular
Fund. The Custodian may also make payments to itself or others from the Assets
for disbursements and out-of-pocket expenses incidental to handling Securities
or other similar items relating to its duties under this Agreement, provided
that all such payments shall be accounted for to the appropriate Fund.
(q) Collections.
The Custodian shall (a) collect amounts due and payable to each Fund with
respect to portfolio Securities and other Assets; (b) promptly credit to the
account of each Fund all income and other payments relating to portfolio
Securities and other Assets held by the Custodian hereunder upon Custodian's
receipt of such income or payments or as otherwise agreed in writing by the
Custodian and any particular Fund; (c) promptly endorse and deliver any
instruments required to effect such collection; and (d) promptly execute
ownership and other certificates and affidavits for all federal, state, local
and foreign tax purposes in connection with receipt of income or other payments
with respect to portfolio Securities and other Assets, or in connection with the
transfer of such Securities or other Assets; provided, however, that with
respect to portfolio Securities registered in so-called street name, or physical
Securities with variable interest rates, the Custodian shall use its best
efforts to collect amounts due and payable to any such Fund. The Custodian shall
notify a Fund in writing by facsimile transmission or in such other manner as
such Fund and Custodian may agree in writing if any amount payable with respect
to portfolio Securities or other Assets is not received by the Custodian when
due. The Custodian shall not be responsible for the collection of amounts due
and payable with respect to portfolio Securities or other Assets that are in
default.
(r) Bank Accounts.
Upon Instructions, the Custodian shall open and operate a bank account or
accounts on the books of the Custodian; provided that such bank account(s) shall
be in the name of the Custodian or a nominee thereof, for the account of one or
more Funds, and shall be subject only to draft or order of the Custodian. The
responsibilities of the Custodian to any one or more such Funds for deposits
accepted on the Custodian's books shall be that of a U.S. bank for a similar
deposit.
(s) Dividends, Distributions and Redemptions.
To enable each Fund to pay dividends or other distributions to
shareholders of each such Fund and to make payment to shareholders who have
requested repurchase or redemption of their shares of each such Fund
(collectively, the "Shares"), the Custodian shall release cash or Securities
insofar as available. In the case of cash, the Custodian shall, upon the receipt
of Instructions, transfer such funds by check or wire transfer to any account at
any bank or trust company designated by each such Fund in such Instructions. In
the case of Securities, the Custodian shall, upon the receipt of Special
Instructions, make such transfer to any entity or account designated by each
such Fund in such Special Instructions.
(t) Proceeds from Shares Sold.
The Custodian shall receive funds representing cash payments received for
shares issued or sold from time to time by each Fund, and shall credit such
funds to the account of the appropriate Fund. The Custodian shall notify the
appropriate Fund of Custodian's receipt of cash in payment for shares issued by
such Fund by facsimile transmission or in such other manner as such Fund and the
Custodian shall agree. Upon receipt of Instructions, the Custodian shall: (a)
deliver all federal funds received by the Custodian in payment for shares as may
be set forth in such Instructions and at a time agreed upon between the
Custodian and such Fund; and (b) make federal funds available to a Fund as of
specified times agreed upon from time to time by such Fund and the Custodian, in
the amount of checks received in payment for shares which are deposited to the
accounts of such Fund.
(u) Proxies and Notices; Compliance with the Shareholders Communication
Act of 1985.
The Custodian shall deliver or cause to be delivered to the appropriate
Fund all forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to Securities owned by such Fund that are
received by the Custodian, any Subcustodian, or any nominee of either of them,
and, upon receipt of Instructions, the Custodian shall execute and deliver, or
cause such Subcustodian or nominee to execute and deliver, such proxies or other
authorizations as may be required. Except as directed pursuant to Instructions,
neither the Custodian nor any Subcustodian or nominee shall vote upon any such
Securities, or execute any proxy to vote thereon, or give any consent or take
any other action with respect thereto.
The Custodian will not release the identity of any Fund to an issuer which
requests such information pursuant to the Shareholder Communications Act of 1985
for the specific purpose of direct communications between such issuer and any
such Fund unless a particular Fund directs the Custodian otherwise in writing.
(v) Books and Records.
The Custodian shall maintain such records relating to its activities under
this Agreement as are required to be maintained by Rule 31a-1 under the
Investment Company Act of 1940 ("the 1940 Act") and preserve them for the
periods prescribed in Rule 31a-2 under the 1940 Act. These records shall be open
for inspection by duly authorized officers, employees or agents (including
independent public accountants) of the appropriate Fund during normal business
hours of the Custodian.
The Custodian shall provide accountings relating to its activities under
this Agreement as shall be agreed upon by each Fund and the Custodian.
(w) Opinion of Fund's Independent Certified Public Accountants.
The Custodian shall take all reasonable action as each Fund may request to
obtain from year to year favorable opinions from each such Fund's independent
certified public accountants with respect to the Custodian's activities
hereunder and in connection with the preparation of each such Fund's periodic
reports to the SEC and with respect to any other requirements of the SEC.
(x) Reports by Independent Certified Public Accountants.
At the request of a Fund, the Custodian shall deliver to such Fund a
written report prepared by the Custodian's independent certified public
accountants with respect to the services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, Securities and
other Assets, including cash, Securities and other Assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report shall be
of sufficient scope and in sufficient detail as may reasonably be required by
such Fund and as may reasonably be obtained by the Custodian.
(y) Bills and Other Disbursements.
Upon receipt of Instructions, the Custodian shall pay, or cause to be
paid, all bills, statements, or other obligations of a Fund.
5. SUBCUSTODIANS.
From time to time, in accordance with the relevant provisions of this
Agreement, the Custodian may appoint one or more Domestic Subcustodians, Foreign
Subcustodians, Special Subcustodians, or Interim Subcustodians (as each are
hereinafter defined) to act on behalf of any one or more Funds. A Domestic
Subcustodian, in accordance with the provisions of this Agreement, may also
appoint a Foreign Subcustodian, Special Subcustodian, or Interim Subcustodian to
act on behalf of any one or more Funds. For purposes of this Agreement, all
Domestic Subcustodians, Foreign Subcustodians, Special Subcustodians and Interim
Subcustodians shall be referred to collectively as "Subcustodians".
(a) Domestic Subcustodians.
The Custodian may, at any time and from time to time, appoint any bank as
defined in Section 2(a)(5) of the 1940 Act or any trust company or other entity,
any of which meet the requirements of a custodian under Section 17(f) of the
1940 Act and the rules and regulations thereunder, to act for the Custodian on
behalf of any one or more Funds as a subcustodian for purposes of holding Assets
of such Fund(s) and performing other functions of the Custodian within the
United States (a "Domestic Subcustodian"). The Custodian's appointment of any
such Domestic Subcustodian shall not be effective without prior written approval
of the appointment by the Fund(s). Each such duly approved Domestic Subcustodian
shall be listed on Appendix A attached hereto, as it may be amended, from time
to time.
(b) Foreign Subcustodians.
The Custodian may at any time appoint, or cause a Domestic Subcustodian to
appoint, any bank, trust company or other entity meeting the requirements of an
"eligible foreign custodian" under Section 17(f) of the 1940 Act and the rules
and regulations thereunder to act for the Custodian on behalf of any one or more
Funds as a subcustodian or sub-subcustodian (if appointed by a Domestic
Subcustodian) for purposes of holding Assets of the Fund(s) and performing other
functions of the Custodian in countries other than the United States of America
(hereinafter referred to as a "Foreign Subcustodian" in the context of either a
subcustodian or a sub-subcustodian); provided that the Custodian shall have
obtained prior written confirmation from each Fund of the approval of the Board
of Directors or other governing body of each such Fund (which approval may be
withheld in the sole discretion of such Board of Directors or other governing
body or entity) with respect to (i) the identity of any proposed Foreign
Subcustodian (including branch designation), (ii) the country or countries in
which, and the securities depositories or clearing agencies (hereinafter
"Securities Depositories and Clearing Agencies"), if any, through which, the
Custodian or any proposed Foreign Subcustodian is authorized to hold Securities
and other Assets of each such Fund, and (iii) the form and terms of the
subcustodian agreement to be entered into with such proposed Foreign
Subcustodian. Each such duly approved Foreign Subcustodian and the countries
where and the Securities Depositories and Clearing Agencies through which they
may hold Securities and other Assets of the Fund(s) shall be listed on Appendix
A attached hereto, as it may be amended, from time to time. Each Fund shall be
responsible for informing the Custodian sufficiently in advance of a proposed
investment which is to be held in a country in which no Foreign Subcustodian is
authorized to act, in order that there shall be sufficient time for the
Custodian, or any Domestic Subcustodian, to effect the appropriate arrangements
with a proposed Foreign Subcustodian, including obtaining approval as provided
in this Section 5(b). In connection with the appointment of any Foreign
Subcustodian, the Custodian shall, or shall cause the Domestic Subcustodian to,
enter into a subcustodian agreement with the Foreign Subcustodian in form and
substance approved by each such Fund. The Custodian shall not consent to the
amendment of, and shall cause any Domestic Subcustodian not to consent to the
amendment of, any agreement entered into with a Foreign Subcustodian, which
materially affects any Fund's rights under such agreement, except upon prior
written approval of such Fund pursuant to Special Instructions.
(c) Interim Subcustodians.
Notwithstanding the foregoing, in the event that a Fund shall invest in an
Asset to be held in a country in which no Foreign Subcustodian is authorized to
act, the Custodian shall notify such Fund in writing by facsimile transmission
or in such other manner as such Fund and the Custodian shall agree in writing of
the unavailability of an approved Foreign Subcustodian in such country; and upon
the receipt of Special Instructions from such Fund, the Custodian shall, or
shall cause its Domestic Subcustodian to, appoint or approve an entity (referred
to herein as an "Interim Subcustodian") designated in such Special Instructions
to hold such Security or other Asset.
(d) Special Subcustodians.
Upon receipt of Special Instructions, the Custodian shall, on behalf of a
Fund, appoint one or more banks, trust companies or other entities designated in
such Special Instructions to act for the Custodian on behalf of such Fund as a
subcustodian for purposes of: (i) effecting third-party repurchase transactions
with banks, brokers, dealers or other entities through the use of a common
custodian or subcustodian; (ii) providing depository and clearing agency
services with respect to certain variable rate demand note Securities, (iii)
providing depository and clearing agency services with respect to dollar
denominated Securities, and (iv) effecting any other transactions designated by
such Fund in such Special Instructions. Each such designated subcustodian
(hereinafter referred to as a "Special Subcustodian") shall be listed on
Appendix A attached hereto, as it may be amended from time to time. In
connection with the appointment of any Special Subcustodian, the Custodian shall
enter into a subcustodian agreement with the Special Subcustodian in form and
substance approved by the appropriate Fund in Special Instructions. The
Custodian shall not amend any subcustodian agreement entered into with a Special
Subcustodian, or waive any rights under such agreement, except upon prior
approval pursuant to Special Instructions.
(e) Termination of a Subcustodian.
The Custodian may, at any time in its discretion upon notification to the
appropriate Fund(s), terminate any Subcustodian of such Fund(s) in accordance
with the termination provisions under the applicable subcustodian agreement, and
upon the receipt of Special Instructions, the Custodian will terminate any
Subcustodian in accordance with the termination provisions under the applicable
subcustodian agreement.
(f) Certification Regarding Foreign Subcustodians.
Upon request of a Fund, the Custodian shall deliver to such Fund a
certificate stating: (i) the identity of each Foreign Subcustodian then acting
on behalf of the Custodian; (ii) the countries in which and the Securities
Depositories and Clearing Agencies through which each such Foreign Subcustodian
is then holding cash, Securities and other Assets of such Fund; and (iii) such
other information as may be requested by such Fund, and as the Custodian shall
be reasonably able to obtain, to evidence compliance with rules and regulations
under the 1940 Act.
6. STANDARD OF CARE.
(a) General Standard of Care.
The Custodian shall be liable to a Fund for all losses, damages and
reasonable costs and expenses suffered or incurred by such Fund resulting from
the negligence or willful misfeasance of the Custodian or any Domestic
Subcustodian.
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's
Control, Sovereign Risk, Etc.
In no event shall the Custodian or any Domestic Subcustodian incur
liability hereunder (i) if the Custodian or any Subcustodian or Securities
System, or any subcustodian, Securities System, Securities Depository or
Clearing Agency utilized by the Custodian or any such Subcustodian, or any
nominee of the Custodian or any Subcustodian (individually, a "Person") is
prevented, forbidden or delayed from performing, or omits to perform, any act or
thing which this Agreement provides shall be performed or omitted to be
performed, by reason of: (a) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or of
any foreign country, or political subdivision thereof or of any court of
competent jurisdiction (and neither the Custodian nor any other Person shall be
obligated to take any action contrary thereto); or (b) any event beyond the
control of the Custodian or other Person such as armed conflict, riots, strikes,
lockouts, labor disputes, equipment or transmission failures, natural disasters,
or failure of the mails, transportation, communications or power supply; or (ii)
for any loss, damage, cost or expense resulting from "Sovereign Risk." A
"Sovereign Risk" shall mean nationalization, expropriation, currency
devaluation, revaluation or fluctuation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting a Fund's Assets; or acts of armed conflict,
terrorism, insurrection or revolution; or any other act or event beyond the
Custodian's or such other Person's control.
(c) Liability for Past Records.
Neither the Custodian nor any Domestic Subcustodian shall have any
liability in respect of any loss, damage or expense suffered by a Fund, insofar
as such loss, damage or expense arises from the performance of the Custodian or
any Domestic Subcustodian in reliance upon records that were maintained for such
Fund by entities other than the Custodian or any Domestic Subcustodian prior to
the Custodian's employment hereunder.
(d) Advice of Counsel.
The Custodian and all Domestic Subcustodians shall be entitled to receive
and act upon advice of counsel of its own choosing on all matters. The Custodian
and all Domestic Subcustodians shall be without liability for any actions taken
or omitted in good faith pursuant to the advice of counsel.
(e) Advice of the Fund and Others.
The Custodian and any Domestic Subcustodian may rely upon the advice of
any Fund and upon statements of such Fund's accountants and other persons
believed by it in good faith to be expert in matters upon which they are
consulted, and neither the Custodian nor any Domestic Subcustodian shall be
liable for any actions taken or omitted, in good faith, pursuant to such advice
or statements.
<PAGE>
(f) Instructions Appearing to be Genuine.
The Custodian and all Domestic Subcustodians shall be fully protected and
indemnified in acting as a custodian hereunder upon any Resolutions of the Board
of Directors or Trustees, Instructions, Special Instructions, advice, notice,
request, consent, certificate, instrument or paper appearing to it to be genuine
and to have been properly executed and shall, unless otherwise specifically
provided herein, be entitled to receive as conclusive proof of any fact or
matter required to be ascertained from any Fund hereunder a certificate signed
by any officer of such Fund authorized to countersign or confirm Special
Instructions.
(g) Exceptions from Liability.
Without limiting the generality of any other provisions hereof, neither
the Custodian nor any Domestic Subcustodian shall be under any duty or
obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities purchased by or for
any Fund, the legality of the purchase thereof or evidence of ownership required
to be received by any such Fund, or the propriety of the decision to purchase or
amount paid therefor;
(ii) the legality of the sale of any Securities by or for any Fund,
or the propriety of the amount for which the same were sold; or
(iii) any other expenditures, encumbrances of Securities, borrowings
or similar actions with respect to any Fund's Assets;
and may, until notified to the contrary, presume that all Instructions or
Special Instructions received by it are not in conflict with or in any way
contrary to any provisions of any such Fund's Declaration of Trust, Partnership
Agreement, Articles of Incorporation or By-Laws or votes or proceedings of the
shareholders, trustees, partners or directors of any such Fund, or any such
Fund's currently effective Registration Statement on file with the SEC.
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.
(a) Domestic Subcustodians
The Custodian shall be liable for the acts or omissions of any Domestic
Subcustodian to the same extent as if such actions or omissions were performed
by the Custodian itself.
(b) Liability for Acts and Omissions of Foreign Subcustodians.
The Custodian shall be liable to a Fund for any loss or damage to such
Fund caused by or resulting from the acts or omissions of any Foreign
Subcustodian to the extent that, under the terms set forth in the subcustodian
agreement between the Custodian or a Domestic Subcustodian and such Foreign
Subcustodian, the Foreign Subcustodian has failed to perform in accordance with
the standard of conduct imposed under such subcustodian agreement and the
Custodian or Domestic Subcustodian recovers from the Foreign Subcustodian under
the applicable subcustodian agreement.
(c) Securities Systems, Interim Subcustodians, Special Subcustodians,
Securities Depositories and Clearing Agencies.
The Custodian shall not be liable to any Fund for any loss, damage or
expense suffered or incurred by such Fund resulting from or occasioned by the
actions or omissions of a Securities System, Interim Subcustodian, Special
Subcustodian, or Securities Depository and Clearing Agency unless such loss,
damage or expense is caused by, or results from, the negligence or willful
misfeasance of the Custodian or any Domestic Subcustodian.
<PAGE>
(d) Defaults or Insolvency's of Brokers, Banks, Etc.
The Custodian shall not be liable for any loss, damage or expense suffered
or incurred by any Fund resulting from or occasioned by the actions, omissions,
neglects, defaults or insolvency of any broker, bank, trust company or any other
person with whom the Custodian may deal (other than any of such entities acting
as a Subcustodian, Securities System or Securities Depository and Clearing
Agency, for whose actions the liability of the Custodian is set out elsewhere in
this Agreement) unless such loss, damage or expense is caused by, or results
from, the negligence or willful misfeasance of the Custodian.
(e) Reimbursement of Expenses.
Each Fund agrees to reimburse the Custodian for all out-of-pocket expenses
incurred by the Custodian in connection with this Agreement, but excluding
salaries and usual overhead expenses.
8. INDEMNIFICATION.
(a) Indemnification by Fund.
Subject to the limitations set forth in this Agreement, each Fund agrees
to indemnify and hold harmless the Custodian and its nominees from all losses,
damages and expenses (including attorneys' fees) suffered or incurred by the
Custodian or its nominee caused by or arising from actions taken by the
Custodian, its employees or agents in the performance of its duties and
obligations under this Agreement, including, but not limited to, any
indemnification obligations undertaken by the Custodian under any relevant
subcustodian agreement; provided, however, that such indemnity shall not apply
to the extent (i) such loss, damage or expense is incurred by, or results from,
the negligence or willful misfeasance of the Custodian or any Domestic
Subcustodian, or (ii) the Custodian is liable under Section 6 or 7 hereof.
If any Fund requires the Custodian to take any action with respect to
Securities, which action involves the payment of money or which may, in the
opinion of the Custodian, result in the Custodian or its nominee assigned to
such Fund being liable for the payment of money or incurring liability of some
other form, such Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
(b) Indemnification by Custodian.
Subject to the limitations set forth in this Agreement and in addition to
the obligations provided in Sections 6 and 7, the Custodian agrees to indemnify
and hold harmless each Fund from all losses, damages and expenses suffered or
incurred by each such Fund caused by the negligence or willful misfeasance of
the Custodian or any Domestic Subcustodian.
9. ADVANCES.
In the event that, pursuant to Instructions, the Custodian or any
Subcustodian, Securities System, or Securities Depository or Clearing Agency
acting either directly or indirectly under agreement with the Custodian (each of
which for purposes of this Section 9 shall be referred to as "Custodian"), makes
any payment or transfer of funds on behalf of any Fund as to which there would
be, at the close of business on the date of such payment or transfer,
insufficient funds held by the Custodian on behalf of any such Fund, the
Custodian may, in its discretion without further Instructions, provide an
advance ("Advance") to any such Fund in an amount sufficient to allow the
completion of the transaction by reason of which such payment or transfer of
funds is to be made. In addition, in the event the Custodian is directed by
Instructions to make any payment or transfer of funds on behalf of any Fund as
to which it is subsequently determined that such Fund has overdrawn its cash
account with the Custodian as of the close of business on the date of such
payment or transfer, said overdraft shall constitute an Advance. Any Advance
shall be payable by the Fund on behalf of which the Advance was made on demand
by Custodian, unless otherwise agreed by such Fund and the Custodian, and shall
accrue interest from the date of the Advance to the date of payment by such Fund
to the Custodian at a rate agreed upon in writing from time to time by the
Custodian and such Fund. It is understood that any transaction in respect of
which the Custodian shall have made an Advance, including but not limited to a
foreign exchange contract or transaction in respect of which the Custodian is
not acting as a principal, is for the account of and at the risk of the Fund on
behalf of which the Advance was made, and not, by reason of such Advance, deemed
to be a transaction undertaken by the Custodian for its own account and risk.
The Custodian and each of the Funds which are parties to this Agreement
acknowledge that the purpose of Advances is to finance temporarily the purchase
or sale of Securities for prompt delivery in accordance with the settlement
terms of such transactions or to meet emergency expenses not reasonably
foreseeable by a Fund. The Custodian shall promptly notify the appropriate Fund
of any Advance. Such notification shall be sent by facsimile transmission or in
such other manner as such Fund and the Custodian may agree.
10. LIENS.
If the Bank advances cash or securities to the Fund for any purpose or in
the event that the Bank or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with the
performance of its duties hereunder, except such as may arise from its or its
nominee's negligent action, negligent failure to act or willful misconduct, any
Property at any time held for the Custody Account shall be security therefor and
the Fund hereby grants a security interest therein to the Bank. The Fund shall
promptly reimburse the Bank for any such advance of cash or securities or any
such taxes, charges, expenses, assessments, claims or liabilities upon request
for payment, but should the Fund fail to so reimburse the Bank, the Bank shall
be entitled to dispose of such Property to the extent necessary to obtain
reimbursement. The Bank shall be entitled to debit any account of the Fund with
the Bank including, without limitation, the Custody Account, in connection with
any such advance and any interest on such advance as the Bank deems reasonable.
11. COMPENSATION.
Each Fund will pay to the Custodian such compensation as is agreed to in
writing by the Custodian and each such Fund from time to time. Such
compensation, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 7(e), shall be billed to each such Fund
and paid in cash to the Custodian. The Custodian may debit such Fund's account
if any such bill is not paid on a timely basis.
12. POWERS OF ATTORNEY.
Upon request, each Fund shall deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
13. TERMINATION AND ASSIGNMENT.
Any Fund or the Custodian may terminate this Agreement by notice in
writing, delivered or mailed, postage prepaid (certified mail, return receipt
requested) to the other not less than 90 days prior to the date upon which such
termination shall take effect. Upon termination of this Agreement, the
appropriate Fund shall pay to the Custodian such fees as may be due the
Custodian hereunder as well as its reimbursable disbursements, costs and
expenses paid or incurred. Upon termination of this Agreement, the Custodian
shall deliver, at the terminating party's expense, all Assets held by it
hereunder to the appropriate Fund or as otherwise designated by such Fund by
Special Instructions. Upon such delivery, the Custodian shall have no further
obligations or liabilities under this Agreement except as to the final
resolution of matters relating to activity occurring prior to the effective date
of termination.
This Agreement may not be assigned by the Custodian or any Fund without
the respective consent of the other, duly authorized by a resolution by its
Board of Directors or Trustees.
<PAGE>
14. ADDITIONAL FUNDS.
An additional Fund or Funds may become a party to this Agreement after the
date hereof by an instrument in writing to such effect signed by such Fund or
Funds and the Custodian. If this Agreement is terminated as to one or more of
the Funds (but less than all of the Funds) or if an additional Fund or Funds
shall become a party to this Agreement, there shall be delivered to each party
an Appendix B or an amended Appendix B, signed by each of the additional Funds
(if any) and each of the remaining Funds as well as the Custodian, deleting or
adding such Fund or Funds, as the case may be. The termination of this Agreement
as to less than all of the Funds shall not affect the obligations of the
Custodian and the remaining Funds hereunder as set forth on the signature page
hereto and in Appendix B as revised from time to time.
15. NOTICES.
As to the Dobson Covered Call Fund, notices, requests, instructions and
other writings delivered to Dobson Capital Management, Attn. Chuck Dobson, 1422
S. Van Ness, Santa Ana, California 92707 postage prepaid, with a copy to
AmeriPrime Financial Services, Inc. attn: Ken Trumpfheller, 175 Westwood, Suite
500, Southlake, TX 76092, postage prepaid, or to such other address as the Fund
may have designated to the Custodian in writing, shall be deemed to have been
properly delivered or given to the Fund. For every other Fund, such notices,
requests, instructions and other writings delivered to AmeriPrime Securities
Inc., as set forth above, or to such other address as the Fund may have
designated to the Custodian in writing, shall be deemed to have been properly
delivered or given to the Fund.
Notices, requests, instructions and other writings delivered to the
Securities Administration department of the Custodian at its office at 928 Grand
Blvd., 10th Floor, Attn: Ralph Santoro, Kansas City, Missouri 64106, or mailed
postage prepaid, to the Custodian's Securities Administration department, Post
Office Box 226, Attn: Ralph Santoro, Kansas City, Missouri 64141, or to such
other addresses as the Custodian may have designated to each Fund in writing,
shall be deemed to have been properly delivered or given to the Custodian
hereunder; provided, however, that procedures for the delivery of Instructions
and Special Instructions shall be governed by Section 2(c) hereof.
16. MISCELLANEOUS.
(a) This Agreement is executed and delivered in the State of Missouri and
shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement shall be binding
upon, and inure to the benefit of, and be enforceable by the respective
successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended, modified or waived, in
any manner except in writing, properly executed by both parties hereto;
provided, however, Appendix A may be amended from time to time as Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians, and Securities
Depositories and Clearing Agencies are approved or terminated according to the
terms of this Agreement.
(d) The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(e) This Agreement shall be effective as of the date of execution hereof.
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(g) The following terms are defined terms within the meaning of this
Agreement, and the definitions thereof are found in the following sections of
the Agreement:
<PAGE>
Term Section
- ---- -------
Account 4(b)(3)(ii)
ADR'S 4(j)
Advance 9
Assets 2(b)
Authorized Person 3
Banking Institution 4(1)
Domestic Subcustodian 5(a)
Foreign Subcustodian 5(b)
Instruction 2(c)(1)
Interim Subcustodian 5(c)
Interest Bearing Deposit 4(1)
Liens 10
OCC 4(g)(1)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2(a)
Securities Depositories and Clearing Agencies 5(b)
Securities System 4(b)(3)
Shares 4(s)
Sovereign Risk 6(b)
Special Instruction 2(c)(2)
Special Subcustodian 5(d)
Subcustodian 5
1940 Act 4(v)
(h) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid by any court of competent
jurisdiction, the remaining portion or portions shall be considered severable
and shall not be affected, and the rights and obligations of the parties shall
be construed and enforced as if this Agreement did not contain the particular
part, term or provision held to be illegal or invalid.
(i) This Agreement constitutes the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof, and accordingly
supersedes, as of the effective date of this Agreement, any custodian agreement
heretofore in effect between the Fund and the Custodian.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Custody
Agreement to be executed by their respective duly authorized officers.
AMERIPRIME FUNDS
Attest: By:
- --------------------
-----------------------------------------------
Name: Kenneth D. Trumpfheller
-----------------------------------------------
Title: President
----------------------------------------------
Date: February ___, 1999
---------------------------------------------
UMB BANK, N.A.
Attest: By:
- -----------------------------
----------------------------------------------
Name: Ralph R. Santoro
---------------------------------------------
Title: Senior Vice President
---------------------------------------------
Date: February ___, 1999
--------------------------------------------
<PAGE>
APPENDIX A
CUSTODY AGREEMENT
DOMESTIC SUBCUSTODIANS:
United Missouri Trust Company of New York
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
Participant Trust Company
SPECIAL SUBCUSTODIANS:
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS CLEARING AGENCIES
Euroclear
AMERIPRIME FUNDS UMB BANK, N.A.
By: By:
- ---------------------------------- ----------------------------------------
Name: Kenneth D. Trumpfheller Name: Ralph R. Santoro
- -------------------------------- -----------------------------------------
Title: President Title: Senior Vice President
- -------------------------------- ----------------------------------------
Date: February ___, 1999 Date: February ___, 1999
- ------------------------------- ----------------------------------------
<PAGE>
APPENDIX B
CUSTODY AGREEMENT
The following open-end management investment companies ("Funds") are
hereby made parties to the Custody Agreement dated February 2, 1999, with UMB
Bank, n.a. ("Custodian") and The Dobson Covered Call Fund, and agree to be bound
by all the terms and conditions contained in said Agreement:
THE DOBSON COVERED CALL FUND
AMERIPRIME FUNDS
Attest: By:
- ------------------------------ ---------------------------------------------
Name: Kenneth D. Trumpfheller
--------------------------------------------
Title: President
--------------------------------------------
Date: February ___, 1999
--------------------------------------------
UMB BANK, N.A.
Attest: By:
- -------------------------- ---------------------------------------------
Name: Ralph R. Santoro
---------------------------------------------
Title: Senior Vice President
---------------------------------------------
Date: February ___, 1999
-------------------------------------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 23 to the AmeriPrime
Funds' Registration Statement on Form N-1A to the references made to us under
the captions "Financial Highlights" and "Auditors" included in each Prospectus
and under the caption "Accountants" included in each Statement of Additional
Information.
/s/
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
February 12, 1999