PROSPECTUS MARCH 22, 1999
DOBSON COVERED CALL FUND
1422 S. Van Ness Street
Santa Ana, California 92707
For Information, Shareholder Services and Requests:
877-2-DOBSON (877-236-2766)
The investment objective of the Dobson Covered Call Fund is to provide
above average return consistent with lower risk than the S&P 500 Index. The
Fund's advisor, Dobson Capital Management, Inc., seeks to achieve this objective
by creating a broadly diversified and significantly hedged portfolio using
individual stock and stock index options. The Fund invests in common stocks of
issuers represented in the S&P 500 Index, maintaining industry weightings
similar to those of the Index. The Fund hedges its portfolio by selling covered
call options on individual securities and securities indexes.
The Fund is "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, distributed by AmeriPrime Financial
Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information dated March 22, 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.
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................................0.70%
12b-1 Fees.....................................0.20%
Other Expenses.................................0.60%
Total Fund Operating Expenses..................1.50%
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
$15 $47
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THE FUND
The Dobson Covered Call Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust") on March 22, 1999. This
prospectus offers shares of the Fund and each share represents an undivided,
proportionate interest in the Fund. The investment advisor to the Fund is Dobson
Capital Management, Inc. (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to achieve above average return
consistent with lower risk than the S&P 500 Index. The Advisor's basic strategy
is to create a broadly diversified and significantly hedged portfolio using
individual stock and stock index options. The Fund invests in common stocks of
issuers represented in the S&P 500 Index, maintaining industry weightings
similar to those of the Index. The Fund hedges its portfolio by selling covered
call options on individual securities and securities indexes.
Covered call options (selling a call option on securities already owned
by the Fund) will be written on the Fund's portfolio to reduce fluctuation in
total return. The writing of such options tends to reduce fluctuations in total
return because: 1) the premium received from selling the option will reduce any
loss on the underlying security by the amount of the premium and 2) the gain
will be limited to the difference between the strike price and the price of the
underlying security plus the premium received. In general, the premiums received
from writing call options on a broadly diversified portfolio will provide above
average total return in a modestly rising (rising 10% a year or less), flat or
down market as measured by the S&P 500. In a rapidly rising market such as
occurred in 1996 and 1997, a covered call strategy on a broadly diversified
portfolio will underperform the market as measured by the S&P 500. To the extent
the Fund receives premiums from expired options and profits from closing
purchase transactions, any return from dividends and appreciation will be
enhanced. For additional information about options and the risks of entering
into option transactions, see "Investment Policies and Techniques and Risk
Considerations."
The Fund will invest primarily in dividend paying common stocks that
have been approved by one or more exchanges as underlying securities for listed
call options. The Fund has no maximum or minimum level that will be hedged, but
anticipates being fully hedged with the exception of the utility industry, for
which option premiums have historically been low. Under normal circumstances, at
least 65% of the Fund's portfolio will be hedged using covered call options.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load registered investment companies or
repurchase agreements. The Fund may also invest in such instruments at any time
to maintain liquidity or pending selection of investments in accordance with its
policies. If the Fund acquires securities of another investment company, the
shareholders of the Fund will be subject to additional management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, it should be noted that, while the Fund's
portfolio manager has experience managing a mutual fund, both the Advisor and
the Fund have no operating history. Rates of total return quoted by the Fund may
be higher or lower than past quotations, and there can be no assurance that any
rate of total return will be maintained. See "Investment Policies and Techniques
and Risk Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis. There is no minimum on initial or subsequent
purchases of Fund shares by tax deferred retirement plans (including IRA,
SEP-IRA, Profit Sharing and Money Purchase Plans) or uniform gifts to minors
accounts. For other investors the minimum is $2500 for an initial purchase and
no minimum for subsequent purchases. These minimums may be waived by the Advisor
for accounts participating in an automatic investment program.
Investors choosing to purchase or redeem their shares through a
broker/dealer or other institution may be charged a fee by that institution.
Investors choosing to purchase or redeem shares directly from the Fund will not
incur charges on purchases or redemptions. To the extent investments of
individual investors are aggregated into an omnibus account established by an
investment adviser, broker or other intermediary, the account minimums apply to
the omnibus account, not to the account of the individual investor.
INITIAL PURCHASE
BY MAIL - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to the Dobson Covered Call Fund, and sent to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
Dobson Covered Call Fund Dobson Covered Call Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 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 Unified Fund Services, Inc. (the "Transfer Agent") at
877-2-DOBSON 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:
UMB Bank, N.A.
ABA # 101000695
Attn: Dobson Covered Call Fund
D.D.A. # 9870983672
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You are required to mail a signed application to UMB Bank, N.A. (the
"Custodian") at the above address in order to complete your initial wire
purchase. Wire orders will be accepted only on a day on which the Fund,
Custodian and Transfer Agent are open for business. A wire purchase will not be
considered made until the wired money is received and the purchase is accepted
by the Fund. Any delays which may occur in wiring money, including delays which
may occur in processing by the banks, are not the responsibility of the Fund or
the Transfer Agent. There is presently no fee for the receipt of wired funds,
but the right to charge shareholders for this service is reserved by the Fund.
ADDITIONAL INVESTMENTS
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to Dobson Covered Call Fund and should be sent to the address
listed above. A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $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 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:
Dobson Covered Call 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 877-2-DOBSON. 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 877-2-DOBSON. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen days. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing or under any emergency circumstances, as determined
by the Securities and Exchange Commission, the Fund may suspend redemptions or
postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,500 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at anytime if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding,rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the 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.
DISTRIBUTION PLAN
The Fund has adopted a plan, pursuant to Rule 12b-1 under the
Investment Company Act of 1940, which permits the Fund to pay directly, or
reimburse the Fund's Advisor and Distributor, for certain distribution and
promotion expenses related to marketing its shares, in an amount not to exceed
0.25% of the average daily net assets of the Fund. Expenditures pursuant to the
Plan and related agreements may reduce current yield after expenses.
Under the Plan, the Trust may engage in any activities related to the
distribution of Fund shares, including without limitation the following: (a)
payments, including incentive compensation, to securities dealers or other
financial intermediaries, financial institutions, investment advisors and others
that are engaged in the sale of shares, or that may be advising shareholders of
the Trust regarding the purchase, sale or retention of shares, or that hold
shares for shareholders in omnibus accounts or as shareholders of record or
provide shareholder support or administrative services to the Fund and its
shareholders; (b) expenses of maintaining personnel who engage in or support
distribution of shares or who render shareholder support services, including,
allocated overhead, office space and equipment, telephone facilities and
expenses, answering routine inquiries regarding the Trust, processing
shareholder transactions, and providing such other shareholder services as the
Trust may reasonably request; (c) costs of preparing, printing and distributing
prospectuses and statements of additional information and reports of the Fund
for recipients other than existing shareholders of the Fund; (d) costs of
formulating and implementing marketing and promotional activities, including,
sales seminars, direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising; (e) costs of preparing, printing and
distributing sales literature; (f) costs of obtaining such information, analyses
and reports with respect to marketing and promotional activities as the Trust
may deem advisable; and (g) costs of implementing and operating the Plan.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services. The Fund retains the Advisor to manage the assets of the
Fund.
The Fund retains Dobson Capital Management, Inc., 1422 S. Van Ness St.,
Santa Ana, CA 92707 (the "Advisor"), to manage the assets of the Fund and is
authorized to pay the Advisor a fee equal to an annual average rate of 0.80%,
less the amount total operating expenses, including the management fee, exceed
1.50%. The Advisor determines the securities to be held or sold by the Fund, and
the portion of the Fund's assets to be held uninvested, subject always to the
Fund's investment objective, policies and restrictions, and subject further to
such policies and instructions as the Board of Trustees may establish. The
Advisor is a California corporation established in September 1998.
Charles L. Dobson is the President, Director and sole shareholder of
the Advisor, and is primarily responsible for the day-to-day management of the
Fund's portfolio. Mr. Dobson was associated with Analytic/TSA Global Asset
Management for nearly twenty years, acting as Executive Vice President and
Portfolio Manager of the Analytic Optioned Equity Fund from March 1992 until May
1998, and Executive Vice President and Secretary of the Analytic Series Fund
from November 1992 until May 1998. Mr. Dobson graduated from the University of
California at Irvine where he received a BA in Economics and an MS in
Administration.
The Fund is responsible for the payment of all operating expenses of
the Fund, including fees and expenses incurred by the Fund in connection with
membership in investment company organizations; brokerage fees and commissions;
legal, auditing and accounting expenses; non-organizational expenses of
registering shares under federal and state securities laws; insurance expenses;
taxes or governmental fees; fees and expenses of the custodian, transfer agent,
shareholder service agent, dividend disbursing agent, plan agent, administrator,
accounting and pricing services agent and distributor of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the fees and expenses of trustees of the Trust who are not
affiliated with the advisor; 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 stock certificates or any other documents,
statements or reports to shareholders; expenses of shareholders' meetings and
proxy solicitations; such extraordinary or non-recurring expenses as may arise,
including litigation to which the Trust may be a party and indemnification for
the Trust's officers and trustees with respect thereto; and expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act.
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Fund equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). The Fund retains Unified Fund Services, Inc., 431
North Pennsylvania Street, Indianapolis, Indiana 46204 (the "Transfer Agent") to
serve as transfer agent, dividend paying agent and shareholder service agent.
The Trust retains AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive,
Suite 200, Southlake, Texas 76092 (the "Distributor") to act as the principal
distributor of the Fund's shares.
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. The
Statement of Additional Information provides more information.
EQUITY SECURITIES. Equity securities consist of common stock,
convertible preferred stock, rights and warrants. Common stocks, the most
familiar type, represent an equity (ownership) interest in a corporation.
Warrants are options to purchase equity securities at a specified price for a
specific time period. Rights are similar to warrants, but normally have a short
duration and are distributed by the issuer to its shareholders. Although equity
securities have a history of long-term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of a Fund will fluctuate. Securities in a Fund's portfolio may not increase as
much as the market as a whole and some undervalued securities may continue to be
undervalued for long periods of time. Although profits in some Fund holdings may
be realized quickly, it is not expected that most investments will appreciate
rapidly.
COVERED CALL OPTIONS. A call option gives the purchaser of the option
the right to buy, and the writer of the option has the obligation to sell the
underlying securities at the exercise price during the option period. The Fund,
as the writer of the option receives premium from the purchaser of the call
option. The writer, during the time he is obligated under the option, may be
assigned an exercise notice by the broker-dealer through whom the call was sold,
requiring him to deliver the underlying security against payment of the exercise
price. The obligation is terminated only upon expiration of the option or at
such earlier time as the writer purchases the option back (closing purchase
transaction). Once a writer has been assigned an exercise notice, he will
thereafter be unable to enter into a closing purchase transaction. So long as
the Fund is obligated as the writer of a call option, it will own the underlying
securities subject to the option.
To secure this obligation to deliver the underlying security, a covered
call option writer is required to deposit in escrow the underlying securities or
other assets in accordance with the rules of the Clearing Corporation and the
exchange on which the call option is traded. To fulfill this obligation at the
time an option is written, the Fund, in compliance with its custodian agreement,
directs the Custodian of its investment securities, or a securities depository
acting for the Custodian, to act as the Fund's escrow agent by issuing an escrow
receipt to the Clearing Corporation respecting the option's underlying
securities. The Clearing Corporation will release the securities from this
escrow either upon the exercise of the option, the expiration of the option
without being exercised or when the Fund enters into a closing purchase
transaction. Until such release the Fund cannot sell the underlying securities.
The covered call option writer gives up the opportunity to profit from
a price increase in the underlying security above the exercise price of the
option plus the premium received. If the underlying security does not advance to
or beyond the exercise price of the option plus the premium received, the writer
will increase his total return. In some periods the Fund will receive less total
return and in other periods greater total return than it would have received
from its underlying securities unoptioned. The Fund expects to increase its
long-term total return by writing options which in its opinion have sufficiently
large premiums to produce greater total return over the long-term.
The Fund will write options on such portion of its portfolio as
management determines is appropriate in seeking to attain the Fund's objective.
The Fund will write options when management believes that a liquid secondary
market will exist on a national securities exchange for options of the same
series so that the Fund can effect a closing purchase transaction if it desires
to close out its position. Consistent with the investment policies of the Fund,
a closing purchase transaction will ordinarily be effected to realize a profit
on an outstanding option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Effecting a closing purchase
transaction will permit the Fund to write another option on the underlying
security with either a different exercise price or expiration date or both.
The premium the Fund receives for writing an option will reflect, among
other things, the current market price of the underlying security, the
relationship of the exercise price to such market price, the historical price
volatility of the underlying security, the option period, supply and demand and
interest rates. The exercise price of an option may be below, equal to or above
the current market value of the underlying security at the time the option is
written. Options written by the Fund will normally have expiration dates between
one and nine months from the date written. From time to time, for tax and other
reasons, the Fund may purchase an underlying security for delivery in accordance
with an exercise notice assigned to it, rather than delivering such security
from its portfolio.
Risks of Option Writing. In return for the premium received, a covered
call writer during the term of the option is subject to the risk of losing the
potential for capital appreciation of the underlying securities beyond the
exercise price of the option. The gain may be less than not selling a call
option on the underlying securities. The writer has no control over the time
when he has to fulfill his obligation as the writer of an option. Once an option
writer has received an exercise notice he cannot effect a closing purchase
transaction.
If a call expires unexercised, the covered writer realizes a gain in
the amount of the premium received, although there may have been a decline
(unrealized loss) in the market value of the underlying securities during the
option period which may exceed such gain. If the underlying securities should
decline by more than the option premium the call writer received, there will be
a loss on the overall position. The loss will be less than not selling a call
option on the underlying securities.
If the covered writer has to sell the underlying securities because of
the exercise of a call option, the writer will realize a gain or loss from the
sale of the underlying securities with the proceeds being increased by the
amount of the option premium received. By permitting its underlying securities
to be called away or exercised, higher portfolio turnover will result and
therefore increased transaction costs. Portfolio turnover also results in
capital gains for income tax purposes. The Fund will attempt to minimize
portfolio turnover by entering into closing purchase transactions that it deems
appropriate to achieve the Fund's objectives.
STOCK INDEX OPTIONS. The Fund may sell exchange listed stock index call
options to hedge against risks of market wide price movements. The need to hedge
against such risks will depend on the extent of diversification of the Fund's
common stock and the sensitivity of its stock investments to factors influencing
the stock market as a whole. A stock index fluctuates with changes in the market
values of the securities included in the index. Options on securities indices
are generally similar to options on stocks except that the delivery requirements
are different. Instead of giving the right to take or make delivery of
securities at a specified price, an option on a stock index gives the holders
the right to receive a cash "exercise settlement amount" equal to (a) the
amount, if any, by which the fixed exercise price of the option exceeds (in the
case of a put) or is less than (in the case of a call) the closing value of the
underlying index on the date of the exercise, multiplied by (b) a fixed "index
multiplier." To cover the potential obligations involved in writing stock index
options, the Fund will either (a) hold a portfolio of stocks substantially
replicating the movement of the index, or (b) the Fund will segregate with the
Custodian high grade liquid debt obligations equal to the market value of the
stock index option, marked to market daily. The Fund will only write stock index
options when in its opinion the underlying stocks will correlate with the index.
RISKS OF STOCK INDEX OPTIONS. The Fund's ability to hedge effectively
all or a portion of its securities through transactions in stock index options
depends on the degree to which price movements in the underlying securities
correlate with price movements in the relevant index. Inasmuch as such
securities will not duplicate the components of any index, the correlation will
not be perfect. Consequently, the Fund bears the risk that the prices of the
underlying securities being hedged will not move in the same amount as the stock
index.
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government or agency obligations. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Fund)
acquires ownership of a U.S. Government or agency obligation (which may be of
any maturity) and the seller agrees to repurchase the obligation at a future
time at a set price, thereby determining the yield during the purchaser's
holding period (usually not more than seven days from the date of purchase). Any
repurchase transaction in which the Fund engages will require full
collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with UMB Bank, N.A. (the Fund's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Advisor (subject to review by the Board of Trustees) to be creditworthy. The
Advisor monitors the creditworthiness of the banks and securities dealers with
which the Fund engages in repurchase transactions.
GENERAL INFORMATION
FUNDAMENTAL POLICIES. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
PORTFOLIO TURNOVER. The Fund does not intend to purchase or sell
securities for short term trading purposes. However, if the objectives of the
Fund would be better served, short-term profits or losses may be realized from
time to time. It is anticipated that the Fund's portfolio turnover rate will not
exceed 100% annually.
SHAREHOLDER RIGHTS. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of the Fund have equal voting rights and liquidation
rights. Prior to the public offering of the Fund, Kenneth D. Trumpfheller
purchased for investment all of the outstanding shares of the Fund and may be
deemed to control the Fund.
Shareholder inquiries should be made by telephone to 877-2-DOBSON, or
by mail, c/o Unified Fund Services, Inc., to 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.
<PAGE>
THE ADVERTISED PERFORMANCE DATA OF THE FUND IS BASED ON HISTORICAL
PERFORMANCE AND IS NOT INTENDED TO INDICATE FUTURE PERFORMANCE. RATES OF TOTAL
RETURN QUOTED BY THE FUND MAY BE HIGHER OR LOWER THAN PAST QUOTATIONS, AND THERE
CAN BE NO ASSURANCE THAT ANY RATE OF TOTAL RETURN WILL BE MAINTAINED. THE
PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT A
SHAREHOLDER'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE
SHAREHOLDER'S ORIGINAL INVESTMENT.
INVESTMENT ADVISOR
Dobson Capital Management, Inc.
1422 S. Van Ness Street
Santa Ana, California 92707
CUSTODIAN ADMINISTRATOR
UMB Bank, N.A. AmeriPrime Financial Services, Inc.
928 Grand Blvd., 10thfloor 1793 Kingswood Drive, Suite 200
Kansas City, Missouri 64106 Southlake, Texas 76092
TRANSFER AGENT (ALL PURCHASES AND DISTRIBUTOR
ALL REDEMPTION REQUESTS) AmeriPrime Financial Securities, Inc.
Unified Fund Services, Inc. 1793 Kingswood Drive, Suite 200
431 North Pennsylvania Street Southlake, Texas 76092
Indianapolis, Indiana 46204
LEGAL COUNSEL INDEPENDENT AUDITORS
Brown Cummins & Brown McCurdy & Associates CPA's, Inc.
3500 Carew Tower 27955 Clemens Road
441 Vine Street Westlake, Ohio 44145
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 3
THE FUND 4
INVESTMENT OBJECTIVE AND STRATEGIES 4
HOW TO INVEST IN THE FUND 5
HOW TO REDEEM SHARES 6
SHARE PRICE CALCULATION 8
DIVIDENDS AND DISTRIBUTIONS 8
TAXES 8
DISTRIBUTION PLAN 9
OPERATION OF THE FUND 10
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS 11
GENERAL INFORMATION 13
PERFORMANCE INFORMATION 14
<PAGE>
DOBSON COVERED CALL FUND
STATEMENT OF ADDITIONAL INFORMATION
March 22, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Dobson Covered Call Fund dated
March 22, 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 1-877-236-2766.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST.......................................................3
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS................................................................3
INVESTMENT LIMITATIONS.........................................................4
THE INVESTMENT ADVISOR.........................................................6
DISTRIBUTION PLAN..............................................................6
TRUSTEES AND OFFICERS..........................................................7
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
DETERMINATION OF SHARE PRICE...................................................9
INVESTMENT PERFORMANCE.........................................................9
CUSTODIAN.....................................................................10
TRANSFER AGENT................................................................10
ACCOUNTANTS...................................................................11
DISTRIBUTOR...................................................................11
ADMINISTRATOR.................................................................11
<PAGE>
DESCRIPTION OF THE TRUST
The Dobson Covered Call Fund (the "Fund") was organized as a series of
AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of a series of funds
currently authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
For information concerning the purchase and redemption of shares of the
Fund, see "How to Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Share Price Calculation" in the Fund's
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A. Options Transactions. The Fund may write (sell) covered call
options. A covered call option on a security is an agreement to sell a
particular portfolio security if the option is exercised at a specified price,
or before a set date. The Fund may also sell exchange listed stock index call
options to hedge against risks of market wide price movements. Options are sold
(written) on securities and market indices. The purchaser of an option on a
security pays the seller (the writer) a premium for the right granted but is not
obligated to buy or sell the underlying security. The purchaser of an option on
a market index pays the seller a premium for the right granted, and in return
the seller of such an option is obligated to make the payment. A writer of an
option may terminate the obligation prior to the expiration of the option by
making an offsetting purchase of an identical option. Options on securities
which the Fund sells (writes) will be covered or secured, which means that it
will own the underlying security (for a call option) or (for an option on a
stock index) will hold a portfolio of securities substantially replicating the
movement of the index (or, to the extent it does not hold such a portfolio, will
maintain a segregated account with the Custodian of high quality liquid debt
obligations equal to the market value of the option, marked to market daily).
When the Fund writes options, it may be required to maintain a margin account,
to pledge the underlying security or to deposit liquid high quality debt
obligations in a separate account with the Custodian. When a Fund writes an
option, the Fund profits from the sale of the option, but gives up the
opportunity to profit from any increase in the price of the stock above the
option price, and may incur a loss if the stock price falls. Risks associated
with writing covered call options include the possible inability to effect
closing transactions at favorable prices and an appreciation limit on the
securities set aside for settlement. When the Fund writes a covered call option,
it will receive a premium, but will assume the risk of loss should the price of
the underlying security fall below the exercise price.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
this Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not engage in borrowing.
3. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
4. Short Sales. The Fund will not effect short sales of securities.
5. Options. The Fund will not purchase or sell puts, calls, options or
straddles except as described in the Prospectus or Statement of Additional
Information.
6. Illiquid Investments. The Fund will not invest in securities for
which there are legal or contractual restrictions on resale and other illiquid
securities.
7. Loans of Portfolio Securities. The Fund will not make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Dobson Capital Management, Inc. (the
"Advisor"), 1422 S. Van Ness Street, Santa Ana, California 92707. As sole
shareholder of the Advisor, Charles L. Dobson may be deemed to be a controlling
person of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees. As compensation for its management services, the Fund is obligated to
pay the Advisor a fee computed and accrued daily and paid monthly at an annual
rate of 0.80% of the average daily net assets of the Fund, less the amount total
operating expenses, including the management fee, exceed 1.50%.
The Advisor retains the right to use the name "Dobson" in connection
with another investment company or business enterprise with which the Advisor is
or may become associated. The Trust's right to use the name "Dobson"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act (the "Plan"). The Plan permits the Fund to pay directly, or
reimburse the Advisor and Distributor, for distribution expenses in amount not
to exceed 0.25% of the average daily net assets of the Fund. The Trustees expect
that the Plan will significantly enhance the Fund's ability to distribute its
shares. For a description of the Plan, see "Distribution Plan" in the Fund's
Prospectus. The Plan has been approved by the Fund's Board of Trustees,
including a majority of the Trustees who are not "interested persons" of the
Fund and who have no direct or indirect financial interest in the Plan or any
related agreement, by a vote cast in person. Continuation of the Plan and the
related agreements must be approved by the Trustees annually, in the same
manner, and the Plan or any related agreement may be terminated at any time
without penalty by a majority of such independent Trustees or by a majority of
the outstanding shares of the Fund. Any amendment increasing the maximum
percentage payable under the Plan must be approved by a majority of the
outstanding shares of the Fund, and all other material amendments to the Plan or
any related agreement must be approved by a majority of the independent
Trustees. As an executive officer of the Fund's Distributor, Kenneth
Trumpfheller, a Trustee of the Trust, may benefit indirectly from payments
received by the Fund's Distributor.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
==================================== ---------------- ======================================================================
Name, Age and Address Position Principal Occupations During Past 5 Years
==================================== ---------------- ======================================================================
<S> <C> <C>
*Kenneth D. Trumpfheller President and President, Treasurer and Secretary of AmeriPrime Financial Services,
Age: 40 Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
1793 Kingswood Drive Inc., the Fund's distributor, since 1994. Prior to December, 1994,
Suite 200 a senior client executive with SEI Financial Services.
Southlake, Texas 76092
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
Age: 39 Treasurer Financial Services, Inc. and AmeriPrime Financial Securities, Inc.;
1793 Kingswood Drive various positions with Fidelity Investments from 1987 to 1998; most
Suite 200 recently Fund Reporting Unit Manager.
Southlake, Texas 76092
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
Age: 41 services company; various positions with Carbo Ceramics, Inc., oil
2001 Indianwood Avenue field manufacturing/supply company, from 1984 to 1997, most recently
Broken Arrow, OK 74012 Vice President of Marketing.
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
Age: 51 Trust Company since 1992; President and Director of Heritage Trust
600 Jefferson Street Company from 1994-1996; Vice President and Manager of Investments of
Suite 350 Kanaly Trust Company from 1988 to 1992.
Houston, TX 77063
==================================== ================ ======================================================================
</TABLE>
<PAGE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
====================================== -------------------------- =======================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
====================================== -------------------------- =======================================
<S> <C> <C>
Kenneth D. Trumpfheller 0 0
====================================== -------------------------- =======================================
Steve L. Cobb $4,000 $4,000
====================================== ========================== =======================================
Gary E. Hippenstiel $4,000 $4,000
====================================== ========================== =======================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
When the Fund and another of the Advisor's clients seek to purchase or
sell the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. The allocation may be adjusted by the Advisor, taking into account such
factors as the size of the individual orders and transaction costs, when the
Advisor believes adjustment is reasonable.
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.
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
UMB Bank, N.A., 928 Grand Blvd., 10th floor, Kansas City, Missouri
64106, is Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Fund with fund accounting services, which
includes certain monthly reports, record-keeping and other management-related
services. For its services as fund accountant, Unified receives an annual fee
from the Advisor equal to 0.0275% of the Fund's assets up to $100 million
(subject to various monthly minimum fees, the maximum being $2,000 per month for
assets of $20 to $100 million).
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the 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.
