PROSPECTUS MARCH 8, 1999
SHEPHERD VALUES MARKET NEUTRAL FUND
SHEPHERD VALUES GROWTH FUND
6760 Corporate Drive, Suite 230
Colorado Springs, CO 80919
For Information, Shareholder Services and Requests:
(877) 636-2766
SHEPHERD VALUES MARKET NEUTRAL FUND: The investment objective of the Shepherd
Values Market Neutral Fund is to provide long term capital appreciation while
maintaining minimal exposure to general equity market risk. The Fund's
investment advisor, Cornerstone Capital Management, Inc. (the "Advisor"), seeks
to achieve this objective by taking long positions in U.S. equity securities
that the Advisor has identified as undervalued, and short positions in stocks
that the Advisor has identified as overvalued, based on certain financial
characteristics. This strategy is commonly referred to as "market neutral
investing." The Fund seeks a total return greater than the return on 3 month
U.S. Treasury Bills.
SHEPHERD VALUES GROWTH FUND: The investment objective of the Shepherd Values
Growth Fund is to provide long term capital appreciation. The Advisor seeks to
achieve this objective by investing primarily in common stocks which the Advisor
believes are undervalued by the market. In searching for investments for the
Fund, the Advisor employs a style that focuses on securities with a low current
price relative to the Advisor's view regarding long term intrinsic value.
THE FUNDS WILL NOT KNOWINGLY INVEST IN AND ACQUIRE OWNERSHIP IN
BUSINESSES THAT ARE ENGAGED, DIRECTLY OR THROUGH SUBSIDIARIES, IN THE
ALCOHOLIC BEVERAGE, TOBACCO, PORNOGRAPHIC AND GAMBLING INDUSTRIES OR
COMPANIES INVOLVED IN THE BUSINESS OF ABORTING LIFE BEFORE BIRTH. IN
ADDITION, THE ADVISOR RESERVES THE RIGHT TO EXERCISE ITS BEST JUDGEMENT
TO EXCLUDE OWNERSHIP IN OTHER COMPANIES WHOSE CORPORATE PRACTICES COULD
BE FOUND OFFENSIVE TO TRADITIONAL JUDEO CHRISTIAN VALUES.
Each Fund is one of the mutual funds comprising AmeriPrime Funds, an
open-end management investment company, distributed by AmeriPrime Financial
Securities, Inc. This Prospectus provides the information a prospective investor
ought to know before investing and should be retained for future reference. A
Statement of Additional Information dated March 8, 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.
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
each Fund. The expense information is based on estimated amounts for the current
fiscal year. The expenses are expressed as a percentage of average net assets.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE FUND PERFORMANCE
OR EXPENSES, BOTH OF WHICH MAY VARY.
Shareholders should be aware that the Funds, unlike most other mutual
funds, do not pay directly for transfer agency, pricing, custodial, auditing or
legal services, nor do they pay directly any general administrative expenses.
The Advisor pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of non-interested person trustees and extraordinary
expenses.
<TABLE>
<CAPTION>
MARKET NEUTRAL GROWTH
SHAREHOLDER TRANSACTION EXPENSES FUND FUND
------------------------ -------------------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering 3.50% 3.50%
price)
Sales Load Imposed on Reinvested Dividends None None
Redemption Fees (as a % of redemption amount) None None
Exchange Fees None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 2.25% 1.75%
12b-1 Charges 0.00% 0.00%
Other Expenses1 0.00% 0.00%
Total Fund Operating Expenses2 2.25% 1.75%
</TABLE>
1 EACH FUND ESTIMATES THAT OTHER EXPENSES (FEES AND EXPENSES OF THE TRUSTEES WHO
ARE NOT "INTERESTED PERSONS" AS DEFINED IN THE INVESTMENT COMPANY ACT) WILL BE
LESS THAN .005% OF AVERAGE NET ASSETS FOR THE FIRST FISCAL YEAR. 2 EACH FUND'S
TOTAL OPERATING EXPENSES ARE EQUAL TO THE MANAGEMENT FEE PAID TO THE ADVISOR
BECAUSE THE ADVISOR PAYS ALL OF THE FUND'S OPERATING EXPENSES (EXCEPT AS
DESCRIBED ABOVE).
The tables above are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
a Fund.
Example As a shareholder in a Fund, you would pay the following expenses on a
$1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 YEAR 3 YEARS
------ -------
Shepherd Values Market Neutral Fund $57 $104
Shepherd Values Growth Fund $52 $89
<PAGE>
THE FUNDS
The Shepherd Values Market Neutral Fund and the Shepherd Values Growth
Fund (each a "Fund" or collectively the "Funds") were organized as series of
AmeriPrime Funds, an Ohio business trust (the "Trust") on February 2, 1999. This
prospectus offers shares of each Fund and each share represents an undivided,
proportionate interest in a Fund. The investment advisor to each Fund is
Cornerstone Capital Management, Inc. (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
SHEPHERD VALUES MARKET NEUTRAL FUND: The investment objective of the Fund is to
provide long term capital appreciation while maintaining minimal exposure to
general equity market risk. The Fund's investment advisor, Cornerstone Capital
Management, Inc. (the "Advisor"), seeks to achieve this objective by taking long
positions in U.S. equity securities that the Advisor has identified as
undervalued and short positions in stocks that the Advisor has identified as
overvalued, based on certain financial characteristics. This strategy is
commonly referred to as "market neutral investing". The Fund seeks a total
return greater than the return on 3 month U.S. Treasury Bills.
The term "long position" means the Fund purchases the stock. The term
"short position" means the Fund sells a stock that it does not own, borrows the
same stock from a broker or other institution to complete the sale, and buys the
same stock at a later date to repay the lender. If the stock is overvalued, and
the price declines before the Fund buys the stock, the Fund makes a profit. If
the price of the stock increases before the Fund buys the stock, the Fund loses
money. The Advisor's strategy of using short positions in overvalued stocks
along with long positions in undervalued stocks is intended to reduce the
effects of general market movements on the Fund's performance, although there is
no assurance that the Advisor will be able to do so.
The success of the market neutral strategy is dependent on the
Advisor's ability to correctly identify undervalued and overvalued stocks. If
the Advisor is not successful, the Fund may experience losses regardless of the
overall performance of the stock markets. In strong "bull" markets, when the
prices of nearly all stocks are rising regardless of the underlying value of the
companies, the Fund is expected to underperform the general markets because the
Fund's short positions will likely lose money.
The Advisor will determine the size of each long or short position by
analyzing the tradeoff between the attractiveness of each position and its
impact on the risk characteristics of the overall portfolio. The Fund's long
positions will consist primarily of U.S. common stocks of large capitalization
companies (those with market capitalizations above $5 billion). The Fund's short
positions will consist primarily of U.S. common stocks of all capitalization
ranges. The Fund seeks to construct a diversified portfolio that has minimal net
exposure to the U.S. equity market generally and near neutral exposure to
specific industries, specific capitalization ranges and certain other risk
factors. An investment in the Fund is different from an investment in 3-month
U.S. Treasury Bills because Treasury Bills are backed by the full faith and
credit of the U.S. Government, and have a fixed rate of return. In contrast,
investors in the Fund bear the risk of losing their investment and an investment
in the Fund is more volatile than an investment in Treasury Bills.
When selling securities short, the Fund will be required to maintain a
segregated account with its Custodian of cash, U.S. Government securities or
other liquid securities equal to the market value of the securities sold less
any collateral deposited with its broker. It is the intention of the Advisor
that the Market Neutral Fund not borrow money to provide this collateral. The
Fund will not make a short sale if, after giving effect to such sale, the market
value of all securities sold exceeds 100% of the value of the Fund's net assets.
The Fund engages in short selling activities which are significantly
different from the investment activities commonly associated with conservative
stock funds. Positions in shorted securities are more risky than long positions
(purchases) in stocks because the maximum sustainable loss on a stock purchased
is limited to the amount paid for the stock plus the transactions costs, whereas
there is no maximum attainable price of the shorted stock. Therefore, in theory,
stocks sold short have unlimited risk.
SHEPHERD VALUES GROWTH FUND: The investment objective of the Fund is to provide
long term capital appreciation. The Advisor seeks to achieve this objective by
investing primarily in common stocks which the Advisor believes are undervalued
by the market based on certain financial characteristics. In searching for
investments for the Fund, the Advisor employs a style that focuses on securities
with a low current price relative to the Advisor's view regarding long term
future value. The Advisor gauges the ability of a company to build long term
value while minimizing long term investment risk, assesses the quality and
quantity of a company's resources and estimates how those resources might be
converted into earnings over time. The Fund engages in a "buy and hold" strategy
emphasizing long term investment. The Fund invests primarily in common stocks of
large capitalization U.S. companies (those with market capitalizations above $5
billion).
VALUES BASED INVESTING: As the final step in the investment process of each
Fund, the Advisor will utilize a set of non-financial screening criteria in
maintaining a portfolio of securities consistent with traditional values. This
specialization requires a substantial amount of additional primary and secondary
research and information resources above and beyond traditional financial
analysis. The Advisor primarily utilizes the services of Values Investment
Forum, Inc. for this non-financial screening process. The Advisor will first
identify its potential list of investment holdings, and then screen such
holdings to eliminate any companies not consistent with the following values:
The Funds will not knowingly invest in and acquire ownership in
businesses that are engaged, directly or through subsidiaries, in the alcoholic
beverage, tobacco, pornographic and gambling industries or companies involved in
the business of aborting life before birth. In addition, the investment advisor
reserves the right to exercise its best judgement to exclude ownership in other
companies whose corporate practices could be found offensive to traditional
Judeo Christian values.
The values based investment policy does not apply to short positions of
the Shepherd Values Market Neutral Fund whereby the Fund does not own the
relevant security when initiating short sales as a hedging strategy for the
Fund. As a result, the Fund may sell short the securities of businesses whose
corporate practices are in violation of the Fund's values based policy.
GENERAL: For temporary defensive purposes under abnormal market or economic
conditions, each Fund may hold all or a portion of its assets in money market
instruments (including money market funds) or U.S. government repurchase
agreements. Each Fund may also invest in such instruments at any time to
maintain liquidity or pending selection of investments in accordance with its
policies. If a Fund acquires securities of a money market fund, the shareholders
of the Fund will be subject to additional management fees. Each Fund may borrow
from a bank or other persons for liquidity purposes, provided such temporary
borrowings are in an amount not exceeding 5% of the Fund's total assets.
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 that the Funds have no
operating history. Rates of total return quoted by a Fund may be higher or lower
than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of each Fund's investment
practices.
HOW TO INVEST IN THE FUNDS
Each Fund is sold on a continuous basis, subject to a minimum initial
investment of $2,500 ($1,000 for qualified retirement accounts) and minimum
subsequent investments of $50. For accounts participating in an automatic
investment program, the minimum initial investment is $500, and the minimum
subsequent investment is $50 per month. To the extent investments of individual
investors are aggregated into an omnibus account established by an investment
adviser, broker or other intermediary, the account minimums apply to the omnibus
account, not to the account of the individual investor.
INITIAL PURCHASE
BY MAIL - You may open an account and make initial investments through
securities dealers having a sales agreement with AmeriPrime Financial
Securities, Inc. (the "Distributor"). You may make a direct initial investment
by completing and signing the investment application form which accompanies this
Prospectus and mailing it, in proper form, together with a check (subject to the
above minimum amounts) made payable to the appropriate fund, and sent to the
P.O. Box listed below. If you prefer overnight delivery, use the overnight
address listed below.
U.S. Mail: Overnight:
Shepherd Values Funds Shepherd Values Funds
Unified Fund Services, Inc. Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
BY WIRE - You may also purchase shares of a Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call Unified Fund Services, Inc. (the "Transfer Agent") at (877)
636-2766 to set up your account and obtain an account number. You should be
prepared at that time to provide the information on the application. Then, you
should provide your bank with the following information for purposes of wiring
your investment:
Firstar Bank, N.A.
Attn: Shepherd Values Funds
D.D.A.# 489022962
Account Name _________________ (write in shareholder name)
For the Account #______________ (write in account number)
You are required to mail a signed application to Firstar 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.
Your purchase of shares of a Fund will be effected at the public
offering price. The public offering price is the next determined net asset value
per share plus a sales load as shown in the following table.
<TABLE>
<CAPTION>
======================================= ------------------------------------------------ ================================
Sales Load as of % of:
Public Net
Offering Amount Dealer Reallowance as % of
Amount of Investment Price Public Offering Price
Invested
======================================= ================================================ ================================
<S> <C> <C> <C>
Less than $100,000 3.50% 3.63% 3.50%
$100,000 but less than $250,000 2.50% 2.56% 2.50%
$250,000 but less than $500,000 1.50% 1.52% 1.50%
$500,000 but less than $1,000,000 1.00% 1.01% 1.00%
$1,000,000 or more None None None
======================================= ================================================ ================================
</TABLE>
Under certain circumstances, the Distributor may change the reallowance to
dealers. Dealers engaged in the sale of shares of the Fund may be deemed to be
underwriters under the Securities Act of 1933. The Distributor retains the
entire sales load on all direct initial investments in the Fund and on all
investments in accounts with no designated dealer of record.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Distributor by 5:00 p.m., Eastern time, that
day are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Distributor by 5:00 p.m., Eastern time. Dealers may
charge a fee for effecting purchase orders. Direct purchase orders received by
4:00 p.m., Eastern time, are confirmed at that day's public offering price.
Direct investments received after 4:00 p.m. and others received from dealers
after 5:00 p.m. are confirmed at the public offering price next determined on
the following business day.
ADDITIONAL INVESTMENTS
You may purchase additional shares of any Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. If your
securities dealer received concessions for selling shares of a Fund to you, such
securities dealer will receive the concessions described above with respect to
additional investments. Each additional mail purchase request must contain your
name, the name of your account(s), your account number(s), and the name of the
Fund. Checks should be made payable to the appropriate fund and should be sent
to the address listed above. A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
REDUCED SALES LOAD
You may use the Right of Accumulation to combine the cost or current
net asset value (whichever is higher) of your shares of a Fund with the amount
of your current purchases in order to take advance of the reduced sales load set
forth in the table above. Purchases made pursuant to a Letter of Intent may also
be eligible for the reduced sales loads. The minimum initial investment under a
Letter of Intent is $25,000. Shareholders should contact the Transfer Agent for
information about the Right of Accumulation and Letter of Intent.
PURCHASES AT NET ASSET VALUE
Purchases may be effected at net asset value for the benefit of the
clients of brokers-dealers and registered investment advisers affiliated with a
broker-dealer, if such broker-dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase of Fund
shares in connection with special investment products, such as wrap accounts or
similar fee based programs.
Trustees, directors, officers and employees of the Trust, the Advisor
and service providers to the Trust, including members of the immediate family of
such individuals and employee benefit plans established by such entities, may
also purchase shares of each Fund at net asset value.
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.
TAX SHELTERED RETIREMENT PLANS
Since the Funds are oriented to longer term investments, shares of the
Funds may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and
profit sharing plans (for employees); tax deferred investment plans (for
employees of public school systems and certain types of charitable
organizations); and other qualified retirement plans. You should contact the
Transfer Agent for the procedure to open an IRA or SEP plan, as well as more
specific information regarding these retirement plan options. Consultation with
an attorney or tax advisor regarding these plans is advisable. Custodial fees
for an IRA will be paid by the shareholder by redemption of sufficient shares of
the Fund from the IRA unless the fees are paid directly to the IRA custodian.
You can obtain information about the IRA custodial fees from the Transfer Agent.
OTHER PURCHASE INFORMATION
Dividends begin to accrue after you become a shareholder. The Funds do
not issue share certificates. All shares are held in non-certificate form
registered on the books of each of the Funds and the Funds' Transfer Agent for
the account of the shareholder. The rights to limit the amount of purchases and
to refuse to sell to any person are reserved by the Funds. If your check or wire
does not clear, you will be responsible for any loss incurred by the Funds. If
you are already a shareholder, the Funds can redeem shares from any identically
registered account in the Funds as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Funds.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Funds reserve the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
BY MAIL - You may redeem any part of your account in a Fund at no charge by
mail. Your request should be addressed to:
Shepherd Values Funds
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
Funds require that signatures be guaranteed by a bank or member firm of a
national securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of each of the Funds or Unified Fund Services,
Inc., a shareholder, prior to redemption, may be required to furnish additional
legal documents to insure proper authorization.
BY TELEPHONE - You may redeem any part of your account in a Fund by
calling the Transfer Agent (877) 636-2766. You must first complete the Optional
Telephone Redemption and Exchange section of the investment application to
institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Funds or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Funds, although neither the Funds nor the Transfer Agent has
ever experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Funds by telephone, you may request a redemption or exchange by mail.
ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (877) 636-2766. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen days. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing or under any emergency circumstances, as determined
by the Securities and Exchange Commission, the Funds may suspend redemptions or
postpone payment dates.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,500 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of each Fund is subject to redemption at anytime if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Funds.
SHARE PRICE CALCULATION
The value of an individual share in each Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding,rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
Each Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
Each Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
a Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by each Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
Each Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, each of the Funds will
request the shareholder's certified taxpayer identification number (social
security number for individuals) and a certification that the shareholder is not
subject to backup withholding. Unless the shareholder provides this information,
each Fund will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, a Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the applicable
Fund may make a corresponding charge against the account.
OPERATION OF THE FUNDS
Each Fund is a 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 Trust retains various organizations to perform
specialized services. The Trust retains Cornerstone Capital Management, Inc.,
6760 Corporate Drive, Suite 230, Colorado Springs, CO 80919 (the "Advisor") to
manage the assets of each Fund. The Advisor, a Colorado corporation organized on
April 1, 1997, is an independent management firm specializing in values-based
investment management. The Advisor manages assets for corporations, endowments,
foundations, institutional investors, individuals and limited partnerships.
Jason D. Huntley is the controlling shareholder of the Advisor.
The Advisor determines the securities to be held or sold by each Fund,
and the portion of each Fund's assets to be held uninvested, subject always to
the Fund's investment objectives, policies and restrictions, and subject further
to such policies and instructions as the Board of Trustees may establish. The
investment decisions of the Funds are made by a committee of the Advisor, which
is primarily responsible for the day-to-day management of each Fund's portfolio.
The Shepherd Values Market Neutral Fund is authorized to pay the
Advisor a fee equal to an annual average rate of 2.25% of the Fund's average
daily net assets. The Shepherd Values Growth Fund is authorized to pay the
Advisor a fee equal to an annual average rate of 1.75% of the Fund's average
daily net assets. The Advisor pays all of the operating expenses of each Fund
except brokerage, taxes, interest (including any dividend expense on securities
sold short), fees and expenses of non-interested person trustees and
extraordinary expenses. In this regard, it should be noted that most investment
companies pay their own operating expenses directly, while the Funds' expenses,
except those specified above, are paid by the Advisor.
The Funds retain AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Funds' business affairs and provide each Fund
with administrative services, including all regulatory reporting and necessary
office equipment, personnel and facilities. The Administrator receives a monthly
fee from the Advisor equal to an annual average rate of 0.10% of each Fund's
average daily net assets up to fifty million dollars, 0.075% of each Fund's
average daily net assets from fifty to one hundred million dollars and 0.050% of
each Fund's average daily net assets over one hundred million dollars (subject
to a minimum annual payment of $20,000). The Funds retain Unified Fund Services,
Inc., 431 North Pennsylvania Street, Indianapolis, Indiana 46204 (the "Transfer
Agent") to serve as transfer agent, dividend paying agent and shareholder
service agent. The Trust retains AmeriPrime Financial Securities, Inc., 1793
Kingswood Drive, Suite 200, Southlake, Texas 76092 (the "Distributor") to act as
the principal distributor of the Funds' shares. The services of the
Administrator, Transfer Agent and Distributor are operating expenses paid by the
Advisor.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
a Fund as a factor in the selection of brokers and dealers to execute portfolio
transactions. 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 Funds may purchase or employ. The
Statement of Additional Information provides more information.
SHORT SALES. Each Fund may a sell a security short in anticipation of a decline
in the market value of the security. When a Fund engages in a short sale, it
sells a security which it does not own. To complete the transaction, the Fund
must borrow the security in order to deliver it to the buyer. The Fund must
replace the borrowed security by purchasing it at the market price at the time
of replacement, which may be more or less than the price at which the Fund sold
the security. The Fund will incur a loss as a result of the short sale if the
price of the security increases between the date of the short sale and the date
on which the Fund replaces the borrowed security. The Fund will realize a profit
if the security declines in price between those dates.
In connection with its short sales, each Fund will be required to
maintain a segregated account with the Custodian of cash or high grade liquid
assets equal to the market value of the securities sold less any collateral
deposited with its broker. The Growth Fund will limit its short sales so that no
more than 30% 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.
Each Fund's use of short sales may result in the Fund realizing more short-term
capital gains (subject to tax at ordinary rates) than it would if it did not
engage in short sales.
EQUITY SECURITIES. Equity securities consist of common stock, convertible
preferred stock, convertible bonds, rights and warrants. Common stocks, the most
familiar type, represent an equity (ownership) interest in a corporation.
Warrants are options to purchase equity securities at a specified price for a
specific time period. Rights are similar to warrants, but normally have a short
duration and are distributed by the issuer to its shareholders. Although equity
securities have a history of long term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions.
Each Fund's investment in convertible securities will be limited to those of
investment grade.
Equity securities include S&P Depositary Receipts ("SPDRs") and other
similar instruments. SPDRs are shares of a publicly traded unit investment trust
which owns the stocks included in the S&P 500 Index, and changes in the price of
SPDRs track the movement of the Index relatively closely.
Equity securities also include common stocks and common stock
equivalents of domestic real estate investment trusts ("REITS") and other
companies which operate as real estate corporations or which have a significant
portion of their assets in real estate. A Fund will not acquire any direct
ownership of real estate.
Each Fund may invest up to 25% of its assets in foreign equity
securities through the purchase of American Depository Receipts ("ADRs"). ADRs
are certificates evidencing ownership of shares of a foreign- based issuer held
in trust by a bank or similar financial institution. They are alternatives to
the direct purchase of the underlying securities in their national markets and
currencies. To the extent that the Fund does invest in foreign securities, such
investments may be subject to special risks. There may be less information
publicly available about a foreign company than about a U.S. company, and
foreign companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of a Fund will fluctuate. Securities in a Fund's portfolio may not increase as
much as the market as a whole and some undervalued securities may continue to be
undervalued for long periods of time. Although profits in some Fund holdings may
be realized quickly, it is not expected that most investments will appreciate
rapidly.
REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements fully
collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, each Fund
intends to enter into repurchase agreements only with Firstar Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Advisor (subject to review by the Board of
Trustees) to be creditworthy. The Advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.
OPTIONS ON STOCKS. Each Fund may write covered call options, and purchase put
and call options, on stocks. A call option gives the purchaser of the option the
right to buy, and obligates the writer to sell, the underlying security at the
exercise price at any time during the option period. Similarly, a put option
gives the purchaser of the option the right to sell, and obligates the writer to
buy the underlying security at the exercise price at any time during the option
period. A covered call option with respect to which a Fund owns the underlying
security sold by the Fund exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying security or to possible continued holding of a security which might
otherwise have been sold to protect against depreciation in the market price of
the security.
OPTIONS ON STOCK INDICES. Each Fund may write covered call options, and purchase
put and call options, on stock indices listed on domestic and foreign stock
exchanges, in lieu of direct investment in the underlying securities or for
hedging purposes. A stock index fluctuates with changes in the market values of
the securities included in the index. Options on securities indices are
generally similar to options on stocks except that the delivery requirements are
different. Instead of giving the right to take or make delivery of securities at
a specified price, an option on a stock or bond index gives the holders the
right to receive a cash "exercise settlement amount" equal to (a) the amount, if
any, by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the date of the exercise, multiplied by (b) a fixed "index multiplier."
To cover the potential obligations involved in writing options, the Fund will
either (a) hold a portfolio of stocks substantially replicating the movement of
the index, or (b) the Fund will segregate with the Custodian high grade liquid
debt obligations equal to the market value of the stock index option, marked to
market daily. Successful use by a Fund of options on security indices will be
subject to the Advisor's ability to predict correctly movement in the direction
of the security market generally or of a particular industry. This requires
different skills and techniques than predicting changes in the price of
individual securities.
GENERAL INFORMATION
FUNDAMENTAL POLICIES. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
applicable Fund. The investment objective of each Fund may be changed without
the affirmative vote of a majority of the outstanding shares of the Fund. Any
such change may result in the Fund having an investment objective different from
the objective which the shareholders considered appropriate at the time of
investment in the Fund.
PORTFOLIO TURNOVER. Neither Fund intends to purchase or sell securities
for short term trading purposes. However, if the objectives of a Fund would be
better served, short-term profits or losses may be realized from time to time.
It is anticipated that the portfolio turnover rate of each Fund will not exceed
100% annually.
SHAREHOLDER RIGHTS. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of a Fund have equal voting rights and liquidation
rights. Prior to the public offering of the Funds, Kenneth D. Trumpfheller
purchased for investment all of the outstanding shares of each Fund and may be
deemed to control each Fund. Mr. Trumpfheller is a Trustee and the President of
the Trust and the President of the Administrator and Distributor.
Each Fund acknowledges that it is solely responsible for the
information or any lack of information about it in this joint Prospectus and in
the joint Statement of Additional Information, and no other Fund is responsible
therefor. There is a possibility that one Fund might be deemed liable for
misstatements or omissions regarding another Fund in this Prospectus or in the
joint Statement of Additional Information; however, the Funds deem this
possibility slight.
Shareholder inquiries should be made by telephone to (877) 636-2766, 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 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 a Fund invests 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.
Each Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
Each Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index, the NASDAQ Composite Index and the Dow Jones Industrial
Average.
THE ADVERTISED PERFORMANCE DATA OF EACH FUND IS BASED ON HISTORICAL
PERFORMANCE AND IS NOT INTENDED TO INDICATE FUTURE PERFORMANCE. RATES OF TOTAL
RETURN QUOTED BY A FUND MAY BE HIGHER OR LOWER THAN PAST QUOTATIONS, AND THERE
CAN BE NO ASSURANCE THAT ANY RATE OF TOTAL RETURN WILL BE MAINTAINED. THE
PRINCIPAL VALUE OF AN INVESTMENT IN EACH FUND WILL FLUCTUATE SO THAT A
SHAREHOLDER'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE
SHAREHOLDER'S ORIGINAL INVESTMENT.
INVESTMENT ADVISOR ADMINISTRATOR
Cornerstone Capital Management, Inc. AmeriPrime Financial Services, Inc.
6760 Corporate Drive, Suite 230 1793 Kingswood Drive, Suite 200
Colorado Springs, CO 80919 Southlake, Texas 76092
CUSTODIAN DISTRIBUTOR
Firstar Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
TRANSFER AGENT (ALL PURCHASES AND INDEPENDENT AUDITORS
ALL REDEMPTION REQUESTS) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 North Pennsylvania Street Westlake, Ohio 44145
Indianapolis, Indiana 46204
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by a
Fund. This Prospectus does not constitute an offer by any of the Funds to sell
its shares in any state to any person to whom it is unlawful to make such offer
in such state.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY OF FUND EXPENSES.......................................................3
Shareholder Transaction Expenses......................................3
Annual Fund Operating Expenses........................................3
THE FUNDS......................................................................4
INVESTMENT OBJECTIVE AND STRATEGIES............................................4
HOW TO INVEST IN THE FUNDS.....................................................5
Initial Purchase......................................................6
By Mail......................................................6
By Wire......................................................6
Additional Investments................................................7
Automatic Investment Plan.............................................7
Reduced Sales Load....................................................7
Purchases at Net Asset Value..........................................7
Additonal Information.................................................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........................................................9
DIVIDENDS AND DISTRIBUTIONS...................................................10
TAXES.........................................................................10
OPERATION OF THE FUNDS........................................................11
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS....................11
Short Sales..........................................................12
Equity Securities....................................................12
Repurchase Agreements................................................13
Options on Stocks....................................................13
Options on Stock Indices.............................................13
GENERAL INFORMATION...........................................................13
Fundamental Policies................................................ 13
Portfolio Turnover...................................................14
Year 2000 Issue......................................................14
PERFORMANCE INFORMATION.......................................................14
Shepherd Values Market Neutral Fund
Shepherd Values Growth Fund
STATEMENT OF ADDITIONAL INFORMATION
March 8, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Shepherd Values Market Neutral
Fund and Shepherd Values Growth Fund dated March 8, 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 1-877-636-2766.
6711 2/8/1999
<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
<PAGE>
DESCRIPTION OF THE TRUST
The Shepherd Values Market Neutral Fund and the Shepherd Values Growth
Fund (each a "Fund" or collectively, the "Funds") were organized as series of
AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. Each Fund is one of a series of funds
currently authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will been titled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
For information concerning the purchase and redemption of shares of the
Fund, see "How to Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Share Price Calculation" in the Fund's
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A. American Depository Receipts (ADRs). ADRs are subject to risks
similar to those associated with direct investment in foreign securities. For
example, there may be less information publicly available about a foreign
company then about a U.S. company, and foreign companies are not generally
subject to accounting, auditing and financial reporting standards and practices
comparable to those in the U.S. Other risks associated with investments in
foreign securities include changes in restrictions on foreign currency
transactions and rates of exchanges, changes in the administrations or economic
and monetary policies of foreign governments, the imposition of exchange control
regulations, the possibility of expropriation decrees and other adverse foreign
governmental action, the imposition of foreign taxes, less liquid markets, less
government supervision of exchanges, brokers and issuers, difficulty in
enforcing contractual obligations, delays in settlement of securities
transactions and greater price volatility. In addition, investing in foreign
securities will generally result in higher commissions than investing in similar
domestic securities.
B. Option Transactions. The Funds may engage in option transactions
involving individual stocks as well as stock indexes. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indexes. The
purchaser of an option on a security pays the seller (the writer) a premium for
the right granted but is not obligated to buy or sell the underlying security.
The purchaser of an option on a market index pays the seller a premium for the
right granted, and in return the seller of such an option is obligated to make
the payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the-counter
market. Call options on securities which the Funds sell (write) will be covered
or secured, which means that the Fund will own the underlying security in the
case of a call option. When the Funds write options, they may be required to
maintain a margin account, to pledge the underlying securities or U.S.
government obligations or to deposit assets in escrow with the Custodian. The
Funds may also utilize spreads and straddle strategies. A spread is the
difference in price resulting from a combination of put and call options within
the same class on the same underlying security. A straddle strategy consists of
an equal number of put and call options on the same underlying stock, stock
index, or commodity future at the same strike price and maturity date.
The purchase and writing of options involves certain risks. The
purchase of options limits a Fund's potential loss to the amount of the premium
paid and can afford a Fund the opportunity to profit from favorable movements in
the price of an underlying security to a greater extent than if transactions
were effected in the security directly. However, the purchase of an option could
result in a Fund losing a greater percentage of its investment than if the
transaction were effected directly. When a Fund writes a covered call option, it
will receive a premium, but it will give up the opportunity to profit from a
price increase in the underlying security above the exercise price as long as
its obligation as a writer continues, and it will retain the risk of loss should
the price of the security decline. In addition, there can be no assurance that a
Fund can effect a closing transaction on a particular option it has written.
Further, the total premium paid for any option may be lost if the Fund does not
exercise the option or, in the case of over-the-counter options, the writer does
not perform its obligations.
C. Real Estate Investment Trusts. A real estate investment trust
("REIT") is a corporation or business trust that invests substantially all of
its assets in interests in real estate. Equity REITs are those which purchase or
lease land and buildings and generate income primarily from rental income.
Equity REITs may also realize capital gains (or losses) when selling property
that has appreciated (or depreciated) in value. Mortgage REITs are those which
invest in real estate mortgages and generate income primarily from interest
payments on mortgage loans. Hydrid REITs generally invest in both real property
and mortgages. In addition, REITs are generally subject to risks associated with
direct ownership of real estate, such as decreases in real estate values or
fluctuations in rental income caused by a variety of factors, including
increases in interest rates, increases in property taxes and other operating
costs, casualty or condemnation losses, possible environmental liabilities and
changes in supply and demand for properties. Risks associated with REIT
investments include the fact that equity and mortgage REITs are dependent upon
specialized management skills and are not fully diversified. These
characteristics subject REITs to the risks associated with financing a limited
number of projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, and self-liquidation. Additionally, equity REITs may be
affected by any changes in the value of the underlying property owned by the
trusts, and mortgage REITs may be affected by the quality of any credit
extended.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of each Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Funds will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. No Fund will invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
1. Pledging. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. Neither Fund will purchase any security while borrowings
(including reverse repurchase agreements) representing more than one third of
its total assets are outstanding.
3. Margin Purchases. Neither Fund will purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.
4. Options. Neither Fund will purchase or sell puts, calls, options or
straddles except as described in the Funds' Prospectus and Statement of
Additional Information.
5. Illiquid Investments. Neither Fund will invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
6. Loans of Portfolio Securities. Neither Fund will make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The investment advisor to the Shepherd Values Growth Fund and Shepherd
Values Market Neutral Fund is Cornerstone Capital Management, Inc., 6760
Corporate Drive, Suite 230, Colorado Springs, CO 80919 (the "Advisor").
Under the terms of the management agreement (the "Agreement"), the
Advisor manages each Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of each Fund except brokerage, taxes,
borrowing costs (such as (a) interest and (b) dividend expenses on securities
sold short), fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, each Fund is obligated to pay the Advisor
a fee computed and accrued daily and paid monthly at an annual rate of 2.25% for
the Shepherd Values Market Neutral Fund and 1.75% for the Shepherd Values Growth
Fund of the average daily net assets of the Fund.
The Advisor retains the right to use the name "Shepherd Values" in
connection with another investment company or business enterprise with which the
Advisor is or may become associated. The Trust's right to use the name "Shepherd
Values" automatically ceases ninety days after termination of the Agreement and
may be withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
<PAGE>
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
==================================== ---------------- ======================================================================
Name, Age and Address Position Principal Occupations During Past 5 Years
==================================== ---------------- ======================================================================
<S> <C> <C>
*Kenneth D. Trumpfheller President and President, Treasurer and Secretary of AmeriPrime Financial Services,
Age: 40 Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
1793 Kingswood Drive Inc., the Fund's distributor, since 1994. Prior to December, 1994,
Suite 200 a senior client executive with SEI Financial Services.
Southlake, Texas 76092
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
Age: 39 Treasurer Financial Services, Inc. and AmeriPrime Financial Securities, Inc.;
1793 Kingswood Drive various positions with Fidelity Investments from 1987 to 1998; most
Suite 200 recently Fund Reporting Unit Manager.
Southlake, Texas 76092
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
Age: 41 services company; various positions with Carbo Ceramics, Inc., oil
2001 Indianwood Avenue field manufacturing/supply company, from 1984 to 1997, most recently
Broken Arrow, OK 74012 Vice President of Marketing.
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
Age: 51 Trust Company since 1992; President and Director of Heritage Trust
600 Jefferson Street Company from 1994-1996; Vice President and Manager of Investments of
Suite 350 Kanaly Trust Company from 1988 to 1992.
Houston, TX 77063
==================================== ================ ======================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
==================================== ----------------------- ==================================
Aggregate Total Compensation
Compensation from Trust (the Trust is
Name from Trust not in a Fund Complex)
==================================== ----------------------- ==================================
<S> <C> <C>
Kenneth D. Trumpfheller 0 0
==================================== ----------------------- ==================================
Steve L. Cobb $4,000 $4,000
==================================== ======================= ==================================
Gary E. Hippenstiel $4,000 $4,000
==================================== ======================= ==================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for each Fund's portfolio decisions and the placing
of each Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for each Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Funds and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Funds effect securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Funds. Although research services and other information are useful to the Funds
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Funds
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
When a Portfolio 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 Portfolios because of the increased volume of the
transaction. If the entire blocked order is not filled, the Portfolio may not be
able to acquire as large a position in such security as it desires or it may
have to pay a higher price for the security. Similarly, the Portfolio may not be
able to obtain as large an execution of an order to sell or as high a price for
any particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. The allocation may be adjusted by the Advisor, taking into account such
factors as the size of the individual orders and transaction costs, when the
Advisor believes an adjustment is reasonable.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "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 Funds may
also provide non-standardized quotations of total return for differing periods
and may provide the value of a $10,000 investment (made on the date of the
initial public offering of the Funds' shares) as of the end of a specified
period.
Each Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with each Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of any of the
Funds may be compared to indices of broad groups of unmanaged securities
considered to be representative of or similar to the portfolio holdings of the
Funds or considered to be representative of the stock market in general. The
Funds may use the Standard & Poor's 500 Stock Index, the NASDAQ Composite Index
or the Dow Jones Industrial Average.
In addition, the performance of any of the Funds may be compared to
other groups of mutual funds tracked by any widely used independent research
firm which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of any of the Funds. Performance rankings and
ratings reported periodically in national financial publications such as
Barron's and Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Funds' transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Funds' shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Funds with fund accounting services, which
includes certain monthly reports, record-keeping and other management-related
services. For its services as fund accountant, Unified receives an annual fee
from the Advisor equal to 0.0275% of the Funds' assets up to $100 million
(subject to various monthly minimum fees, the maximum being $2,000 per month for
assets of $20 to $100 million).
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Funds' financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Funds. The Distributor is obligated to sell the shares of the Funds on a best
efforts basis only against purchase orders for the shares. Shares of the Funds
are offered to the public on a continuous basis.
