SUPPLEMENT DATED APRIL 8, 1999
TO PROSPECTUS DATED MARCH 31, 1999
MARTIN CAPITAL OPPORTUNITY FUNDS
UNTIL FURTHER NOTICE, ONLY THE MARTIN CAPITAL U.S. OPPORTUNITY FUND IS
AVAILABLE FOR PURCHASE.
This Supplement, and the Prospectus dated March 31, 1999, contain information
that you should know before investing in a Fund and should be retained for
future reference. Additional information is included in the Statement of
Additional Information dated March 31, 1999, which has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. It
is available upon request and without charge by calling 888-336-9757.
PROSPECTUS March 31, 1999
The Martin Capital Opportunity Funds
Martin Capital Austin Opportunity Fund
Martin Capital Texas Opportunity Fund
Martin Capital U.S. Opportunity Fund
816 Congress Avenue
Suite 1540
Austin, TX 78701
For Information, Shareholder Services and Requests:
(888) 336-9757
Investment Objective: The investment objective of each of The Martin Capital
Opportunity Funds is long term capital appreciation. Each Fund seeks to achieve
its objective by investing primarily in common stocks which the Funds' advisor
believes offer superior growth potential. Each Fund is a non-diversified fund,
and this Prospectus provides information relating to additional risks associated
with non-diversification.
Martin Capital Austin Opportunity Fund: The Fund invests primarily in equity
securities of companies with significant operations in the city of Austin, Texas
(defined as the Austin-San Marcos Metropolitan Statistical Area which includes
Bastrop, Caldwell, Hays, Travis and Williamson counties). Under normal
circumstances, at least 65% of the Austin Opportunity Fund's assets will be
invested in equity securities of 1) companies headquartered in Austin, or 2)
which have a majority of their operations in Austin, or 3) that rank among the
25 largest publicly held employers in Austin.
Martin Capital Texas Opportunity Fund: The Fund invests primarily in the equity
securities of companies with significant operations in the state of Texas. Under
normal circumstances, at least 65% of the Texas Opportunity Fund's assets will
be invested in equity securities of companies headquartered 1) in the state of
Texas, or 2) which have a majority of their operations in Texas, or 3) that rank
among the 25 largest publicly held employers in Texas.
Martin Capital U.S. Opportunity Fund: The Fund invests primarily in U.S.
equity securities. The asset allocation mix is managed with the goal of
maximizing long term investment returns. Under normal circumstances, at least
65% of the U.S. Opportunity Fund's assets will be invested in equity securities
of companies headquartered in the United States, or which have a majority of
their operations in the United States.
The Funds are "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. Shareholders will be charged a fee for shares redeemed within one
year of purchase. 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 31, 1999 has been filed with the
Securities and Exchange Commission (the "SEC"), is incorporated herein by
reference, and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
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 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. The Funds do impose a redemption
fee on shares redeemed less than one year from the date of purchase. Unlike most
other mutual funds, the Funds do not pay directly for transfer agency, pricing,
custodial, auditing or legal services, nor do they pay directly any general
administrative or other significant operating expenses (including any 12b-1
charges). 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>
Austin Texas U.S.
Opportunity Opportunity Opportunity
Shareholder Transaction Expenses Fund Fund Fund
-------------------- ------------------- -------------------
<S> <C> <C> <C>
Sales Load Imposed on Purchases None None None
Sales Load Imposed on Reinvested Dividends None None None
Deferred Sales Load None None None
Redemption Fees (as a % of redemption amount)1 1.00% 1.00% 1.00%
Exchange Fees None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 1.25% 1.25% 1.25%
12b-1 Charges2 0.00% 0.00% 0.00%
Other Expenses3 0.00% 0.00% 0.00%
Total Fund Operating Expenses4 1.25% 1.25% 1.25%
</TABLE>
1 Each Fund charges a redemption fee of 1% on shares redeemed less than one year
from the date of purchase.
2 Distribution expenses incurred by the Funds under the 12b-1 Distribution Plan
are paid by the Advisor.
3 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 .001% of average net assets for the first fiscal year.
4 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
$13 $40
<PAGE>
THE FUNDS
Martin Capital Austin Opportunity Fund, Martin Capital Texas
Opportunity Fund and Martin Capital U.S. Opportunity Fund (each a "Fund" or
collectively the "Funds" or "Martin Capital Opportunity Funds") were organized
as series of AmeriPrime Funds, an Ohio business trust (the "Trust") on August
14, 1998. 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 Martin Capital Advisors, L.L.P. (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of each of the Funds is long term capital
appreciation. Each Fund seeks to achieve its objective by investing primarily in
common stocks which the Advisor believes offer superior growth potential. After
screening for stocks which meet certain performance criteria, the Advisor uses a
variety of quantitative and qualitative strategies to analyze the growth
prospects of each company, focusing on the company's management, potential for
product or service growth, and technical and economic cycle considerations. As
each Fund will primarily invest in growth-oriented stocks, it is expected that
the Fund will generate a total return primarily from capital appreciation,
although current income is also expected. Each Fund is a non-diversified fund,
and as such, presents substantially more investment risk and potential for
volatility than a mutual fund which is diversified. The Funds are not a complete
investment program, and an investment in a Fund should be considered only a
portion of your overall investment portfolio.
Martin Capital Austin Opportunity Fund: The Fund invests in equity securities of
companies with significant operations in the city of Austin, Texas (defined as
the Austin-San Marcos Metropolitan Statistical Area, which includes Bastrop,
Caldwell, Hays, Travis and Williamson counties), but has the flexibility to
invest in fixed income securities and other financial instruments. Under normal
circumstances, at least 65% of the Fund's assets will be invested in equity
securities of companies 1) headquartered in Austin, or 2) which have a majority
of their operations in Austin, or 3) that rank among the 25 largest publicly
held employers in Austin (the "Austin Companies"). An investment strategy
focused on a single, albeit large, economy may be subject to greater investment
risk because changes in the Austin economy may have a disproportionate effect on
the Fund's portfolio. Austin has a greater concentration of technology companies
than the rest of the United States and weakness in this sector could result in
significant losses for the Fund.
Martin Capital Texas Opportunity Fund: The Fund invests primarily in equity
securities of companies with significant operations in the state of Texas, but
has the flexibility to invest in fixed income securities and other financial
instruments. Under normal circumstances, at least 65% of the Fund's assets will
be invested in equity securities of companies 1) headquartered in the state of
Texas, or 2) which have a majority of their operations in Texas, or 3) that rank
among the 25 largest publicly held employers in Texas (the "Texas Companies").
An investment strategy focused on a single, albeit large, economy may be subject
to greater investment risk because changes in the Texas economy may have a
disproportionate effect on the Fund's portfolio. Texas has a greater
concentration of energy and technology companies than the rest of the United
States and weakness in these sectors could result in significant losses for the
Fund.
Martin Capital U.S. Opportunity Fund: The Fund invests primarily in U.S. equity
securities, but has the flexibility to invest in fixed income securities and
other financial instruments. The asset allocation mix is managed with the goal
of maximizing long term investment returns. Under normal circumstances, at least
65% of the U.S. Opportunity Fund's assets will be invested in equity securities
of companies headquartered in the United States, or which have a majority of
their operations in the United States (the "U.S. Companies").
Advisor's Historical Performance - The Advisor has been managing accounts with
investment objectives, policies and strategies substantially similar to those of
the Martin Capital U.S. Opportunity Fund since 1990 (the "U.S. Composite"). The
performance of the U.S. Composite appears below. The data is provided to
illustrate past performance of the Advisor in managing such accounts, as
compared to the S&P 500 Index. The person responsible for the performance of the
composite is the same person as is responsible for the investment management of
the Martin Capital U.S. Opportunity Fund. As of December 31, 1998 the assets in
the U.S. Composite totaled approximately $41 million.
<TABLE>
<CAPTION>
Summary of Martin Capital Advisors, L.L.P. Annual Investment Returns*
Period U.S. Composite S&P 500 Index
<S> <C> <C> <C>
1991.................................. 33.9% ....................... 30.6%
1992.................................. 26.8% ....................... 7.7%
1993.................................. 14.5% ....................... 10.0%
1994 ................................. (2.1)% ....................... 1.3%
1995.................................. 27.5% ....................... 37.6%
1996.................................. 29.4% ....................... 23.0%
1997.................................. 41.4% ....................... 33.4%
1998.................................. 78.8% ....................... 28.7%
Average Annual Total Return**
One Year.............................. 78.8% ....................... 28.7%
Five Years............................ 32.5% ....................... 24.1%
Since January 1, 1991.................. 29.5% ...................... 20.8%
</TABLE>
* The Martin Capital Advisors , L.L.P. performance is the time-weighted
average total return associated with a composite of equity income accounts
having objectives similar to the U.S. Opportunity Fund. Results include the
reinvestment of income on an accrual basis. Performance figures reflected
are net of management fees of the accounts and net of all expenses,
including transaction costs and commissions. Results include the
reinvestment of dividends and capital gains.
The S&P 500 Index is a widely recognized, unmanaged index of market
activity based upon the aggregate performance of a selected portfolio of
publicly traded common stocks, including monthly adjustments to reflect the
reinvestment of dividends and other distributions. The S&P 500 Index
reflects the total return of securities comprising the Index, including
changes in market prices as well as accrued investment income, which is
presumed to be reinvested. Performance figures for the S&P 500 Index do not
reflect deduction of transaction costs or expenses, including management
fees.
** Average Annual Returns for the periods ended December 31, 1998, using AIMR
calculations of performance (see above), which differ from the standardized
SEC calculations.
The performance of the accounts managed by the Advisor should not be
considered indicative of future performance of the Fund. Results may differ
because of, among other things, differences in brokerage commissions, account
expenses (including management fees), the size of positions taken in relation to
account size and diversification of securities, timing of purchases and sales,
and availability of cash for new investments. In addition, the managed accounts
are not subject to certain investment limitations, diversification requirements
and other restrictions imposed by the Investment Company Act and the Internal
Revenue Code which, if applicable, may have adversely affected the performance
results of the managed accounts composite. The results for different periods may
vary.
The Advisor's security selection process for each Fund will attempt to
reflect the diversification of the Fund's designated economic market; however
the Advisor may adjust sector representation based upon the sector's performance
outlook. Although each Fund intends to invest primarily in equity securities
within its designated economic market, each Fund may invest in other economic
markets and other types of securities. See "Investment Policies and Techniques
and Risk Considerations" on page __ for additional information. 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.
The Advisor anticipates that a significant portion of the Martin
Capital Austin Opportunity Fund's portfolio (and some portion of the Martin
Capital Texas Opportunity Fund) could be invested in smaller capitalization
companies. To the extent a Fund invests in smaller capitalization companies, the
Fund will be subject to the risks associated with such companies. Smaller
capitalization companies may experience higher growth rates and higher failure
rates than do larger capitalization companies. They may have limited product
lines, markets or financial resources and may lack management depth. The trading
volume of securities of smaller capitalization companies is normally less than
that of larger capitalization companies, and, therefore, may disproportionately
affect their market price, tending to make them rise more in response to buying
demand and fall more in response to selling pressure than is the case with
larger capitalization companies.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, none of the Funds can give any assurance that its investment
objective will be achieved. In addition, it should be noted that the Advisor has
limited experience managing mutual funds 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 "no-load" and shares of each Fund are sold directly to
investors on a continuous basis, subject to a minimum initial investment of
$1,000 and minimum subsequent investments of $100. These minimums may be waived
by the Advisor for accounts participating in an automatic investment program.
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem shares directly from a Fund will not incur sales charges
on purchases or redemptions except for the short term redemption fee described
under "How to Redeem Shares Redemption Fee." 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 a 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 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:
Martin Capital Opportunity Funds Martin Capital Opportunity Funds
Unified Fund Services, Inc. Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
Your purchase of shares of a Fund will be effected at the next share
price calculated after receipt of your investment.
By Wire - You may also purchase shares of a Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call Unified Fund Services, Inc (the "Transfer Agent") at
888-336-9757 to set up your account and obtain an account number. You should be
prepared at that time to provide the information on the application. Then, you
should provide your bank with the following information for purposes of wiring
your investment:
Firstar Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Martin Capital Opportunity Funds
Account Name ________________
(write in shareholder name)
For the Account # ______________
(write in account number)
D.D.A.# 488922444
You 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.
Additional Investments
You may purchase additional shares of any Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), 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.
<PAGE>
Automatic Investment Plan
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account.
You may change the amount of your monthly purchase at any time.
Tax Sheltered Retirement Plans
Since the Funds are oriented to longer term investments, 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:
Martin Capital Opportunity 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 888-336-9757. 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.
Redemption Fee - Shares held less than 12 months and redeemed
(including exchanges) from a Fund are subject to a short term redemption fee
equal to 1.0% of the net asset value of shares redeemed. Solely for purposes of
calculating the one-year holding period, each Fund uses the "first-in, first
out" (FIFO) method. That is, the date of any redemption or exchange will be
compared to the earliest purchase date. If this holding period is less than one
year, the fee will be assessed. The fee will be prorated if a portion of the
shares being redeemed or exchanged has been held for more than one year. Shares
acquired through reinvested dividend or capital gain distributions are exempt
from the fee.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (888) 336-9757. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen 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 $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.
DISTRIBUTION PLAN
Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "Plan") under which each Fund is
authorized to incur distribution expenses at an annual rate of 0.25% of the
average daily net assets of the Fund. All distribution expenses incurred by a
Fund under its Plan are Fund expenses, but they are paid by the Advisor pursuant
to the management agreement. The expenses may include payments to securities
dealers and others that are engaged in the sale of shares of the Fund or
advising shareholders regarding the purchase or retention of shares of the Fund;
overhead and telephone expenses; printing and distribution of prospectuses and
reports used in connection with the offering of the Fund's shares to prospective
investors; and preparation, printing and distribution of sales literature and
advertising materials. In addition, each Fund may, under its Plan, make payments
to selected dealers and others which have entered into Service Agreements for
services provided to shareholders of the Fund. The services provided by selected
dealers and others pursuant to each Plan are designed to promote the sale of
shares of the Fund and include the furnishing of office space and equipment,
telephone facilities, personnel and assistance to the Fund in servicing such
shareholders. The services provided pursuant to each Plan also may include
support services to the Fund such as establishing and maintaining shareholders'
accounts and records, processing purchase and redemption transactions, answering
routine client inquiries regarding the Fund, and providing such other services
to the Fund as the Fund may reasonably request. The Advisor may also compensate
such dealers and administrators out of its own assets.
OPERATION OF THE FUNDS
Each Fund is a non-diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Funds.
Like other mutual funds, the Funds retains various organizations to perform
specialized services. The Trust retains Martin Capital Advisors, L.L.P., 816
Congress Avenue, Suite 1540, Austin, Texas 78701 (the "Advisor") to manage the
assets of each Fund. 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 Advisor is a Texas limited liability partnership formed on
January 29, 1999 and Paul Martin is the managing and controlling partner. Each
Fund is authorized to pay the Advisor a fee equal to an annual average rate of
1.25% of the Fund's average daily net assets. The Advisor pays all of the
operating expenses of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Funds' expenses, except those specified
above, are paid by the Advisor.
Paul Martin is responsible for the day-to-day management of The Martin
Capital Opportunity Funds. Paul Martin is the managing and controlling partner
and Chief Investment Officer of the Advisor, a registered investment advisor
managing investment portfolios for long-term income and capital appreciation. As
of December 31, 1998, the firm manages over $30 million for individuals, trusts
and pension plans. Prior to establishing Martin Capital Advisors, L.L.P. in
November 1988, Paul Martin worked four years as a stockbroker in New York City,
managing investment accounts at Merrill Lynch and Oppenheimer & Company. Paul
Martin served seven years active duty with the U.S. Army and U.S. Navy. He also
served thirteen years with the U.S. Naval Reserve, which included eight years
with Naval Special Warfare and a two year assignment as the Commanding Officer
of Naval Reserve SEAL Delivery Vehicle Team Two. He retired as a Commander in
October, 1998. Paul Martin has a B.A. degree in liberal arts from St. John's
College in Santa Fe, New Mexico.
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 Funds) may pay certain financial institutions
(which may include banks, brokers, securities dealers and other industry
professionals) a fee for providing distribution related services and/or for
performing certain administrative servicing functions for Fund shareholders to
the extent these institutions are allowed to do so by applicable statute, rule
or regulation.
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.
Equity Securities. Equity securities consist of common stock, convertible
preferred stock, convertible bonds, rights and warrants. Common stocks, the most
familiar type, represent an equity (ownership) interest in a corporation.
Warrants are options to purchase equity securities at a specified price for a
specific time period. Rights are similar to warrants, but normally have a short
duration and are distributed by the issuer to its shareholders. Although equity
securities have a history of long-term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions.
Equity securities include S&P Depositary Receipts ("SPDRs") and other
similar instruments. SPDRs are shares of a publicly traded unit investment trust
which owns the stocks included in the S&P 500 Index, and changes in the price of
SPDRs track the movement of the Index relatively closely.
Equity securities also include common stocks and common stock
equivalents of domestic real estate investment trusts ("REITS") and other
companies which operate as real estate corporations or which have a significant
portion of their assets in real estate. A Fund will not acquire any direct
ownership of real estate.
Each Fund may invest up to 35% of its assets in foreign equity
securities, including American Depository Receipts ("ADRs"). ADRs are
certificates evidencing ownership of shares of a foreign- based issuer held in
trust by a bank or similar financial institution. They are alternatives to the
direct purchase of the underlying securities in their national markets and
currencies. To the extent that the Fund does invest in foreign securities, such
investments may be subject to special risks. Purchases of foreign securities are
usually made in foreign currencies and, as a result, the Fund may incur currency
conversion costs and may be affected favorably or unfavorably by changes in the
value of foreign currencies against the U.S. dollar. In addition, there may be
less information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of a Fund will fluctuate. Securities in a Fund's portfolio may not increase as
much as the market as a whole and some undervalued securities may continue to be
undervalued for long periods of time. Although profits in some Fund holdings may
be realized quickly, it is not expected that most investments will appreciate
rapidly.
Fixed Income Securities. Each Fund may invest in fixed income securities. Each
Fund will limit its investment in fixed income securities to corporate debt
securities and U.S. government securities. Fixed income securities are generally
considered to be interest rate sensitive, which means that their value will
generally decrease when interest rates rise and increase when interest rates
fall. Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer term securities and are less
affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are long and
short-term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Advisor considers
corporate debt securities to be of investment grade quality if they are rated A
or higher by Standard & Poor's Corporation, or Moody's Investors Services, Inc.,
or if unrated, determined by the Advisor to be of comparable quality. Investment
grade dept securities generally have adequate to strong protection of principal
and interest payments. In the lower end of this category, credit quality may be
more susceptible to potential future changes in circumstances and the securities
have speculative elements. Each Fund may invest up to 5% of its assets in
corporate debt rated below investment grade.
U.S. Government Obligations - U.S. government obligations may be backed
by the credit of the government as a whole or only by the issuing agency. U.S.
Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
When-Issued and Delayed Delivery Securities. Each Fund may purchase securities
on a when-issued or delayed delivery basis. Delivery of and payment for these
securities may take place as long as a month or more after the date of the
purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Fund until
settlement takes place. The Fund maintains with the Custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments.
Repurchase Agreements. 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.
Reverse Repurchase Agreements. Each Fund may invest in reverse repurchase
agreements. Reverse repurchase agreements involve sales of portfolio securities
by a Fund to member banks of the Federal Reserve System, or recognized dealers,
concurrently with an agreement by the Fund to repurchase the same securities at
a later date at a fixed price, which is generally equal to the original sales
price plus interest. The Fund retains record ownership and the right to receive
interest and principal payments on the portfolio security involved. The Fund's
objective in such a transaction would be to obtain funds to pursue additional
investment opportunities whose yield would exceed the cost of the reverse
repurchase transaction. Generally, the use of reverse repurchase agreements
should reduce portfolio turnover and increase yield. In the event of bankruptcy
or other default by the purchaser, the Fund could experience both delays in
repurchasing the portfolio securities and losses.
Leverage. Each Fund may borrow up to one-third of the value of its total assets,
from banks or through the use of reverse repurchase agreements, to increase its
holdings of portfolio securities. Under the 1940 Act, each Fund is required to
maintain continuous asset coverage of 300% with respect to such borrowings and
to sell (within three days) sufficient Fund holdings to restore such coverage if
it should decline to less than 300% due to market fluctuations or otherwise,
even if such liquidations of a Fund's holdings may be disadvantageous from an
investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of a Fund's securities and the Fund's net
asset value. Money borrowed by a Fund will be subject to interest and other
costs (which may include commitment fees and/or the cost of maintaining minimum
average balances) which may or may not exceed the income received from the
securities purchased with borrowed funds.
Investment In Relatively New Issues. Each Fund intends to invest occasionally in
the common stock of selected new issuers. If a Fund invests in credit
instruments of relatively new issuers, it will only be in those issues where the
Advisor believes there are strong covenant protections for the holder. If
issuers meet the investment criteria discussed above, the Fund may invest in
securities without respect to the age of the issuer. Investments in relatively
new issuers, i.e., those having continuous operating histories of less than
three years, may carry special risks and may be more speculative because such
companies are relatively unseasoned. Such companies may also lack sufficient
resources, may be unable to generate internally the funds necessary for growth
and may find external financing to be unavailable on favorable terms or even
totally unavailable. Those companies will often be involved in the development
or marketing of a new product with no established market, which could lead to
significant losses.
Derivatives. Each Fund may invest in various instruments that are commonly known
as derivatives. Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities. There are,
in fact, many different types of derivatives and many different ways to use
them. There are a range of risks associated with those uses. Futures and options
are commonly used for traditional hedging purposes to attempt to protect a fund
from exposure to changing interest rates, securities prices, or currency
exchange rates and as a low cost method of gaining exposure to a particular
securities market without investing directly in those securities. However, some
derivatives are used for leverage, which tends to magnify the effects of an
instrument's price changes as market conditions change. Leverage involves the
use of a small amount of money to control a large amount of financial assets,
and can in some circumstances, lead to significant losses. the Advisor will use
derivatives only in circumstances where they offer the most efficient means of
improving the risk/reward profile of a Fund and when consistent with a Fund's
investment objective and policies. The use of derivatives for non-hedging
purposes may be considered speculative.
Options on Stocks or Bonds. Each Fund may write and purchase options on stocks
or bonds. A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security at the exercise price at
any time during the option period. Similarly, a put option gives the purchaser
of the option the right to sell, and obligates the writer to buy the underlying
security at the exercise price at any time during the option period. A covered
call option with respect to which a Fund owns the underlying security sold by
the Fund exposes the Fund during the term of the option to possible loss of
opportunity to realize appreciation in the market price of the underlying
security or to possible continued holding of a security which might otherwise
have been sold to protect against depreciation in the market price of the
security. A covered put option sold by a Fund exposes the Fund during the term
of the option to a decline in price of the underlying security.
Options on Stock and Bond Indices. Each Fund may purchase and write put and call
options on stock or bond indices listed on domestic and foreign stock exchanges,
in lieu of direct investment in the underlying securities or for hedging
purposes. A stock or bond index fluctuates with changes in the market values of
the securities included in the index. Options on securities indices are
generally similar to options on stocks except that the delivery requirements are
different. Instead of giving the right to take or make delivery of securities at
a specified price, an option on a stock or bond index gives the holders the
right to receive a cash "exercise settlement amount" equal to (a) the amount, if
any, by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the date of the exercise, multiplied by (b) a fixed "index multiplier."
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.
Futures Contracts on Stock and Bond Indices. Each Fund may enter into contracts
providing for the making and acceptance of a cash settlement based upon changes
in the value of an index of domestic or foreign securities ("Futures
Contracts"). This investment technique may be used as a low-cost method of
gaining exposure to a particular securities market without investing directly in
those securities or to hedge against anticipated future changes in general
market prices which otherwise might either adversely affect the value of
securities held by the Fund or adversely affect the prices of securities which
are intended to be purchased at a later date for the Fund. A Futures Contract
may also be entered into to close out or offset an existing futures position.
When used for hedging purposes, each transaction in Futures Contracts
involves the establishment of a position which will move in a direction opposite
to that of the investment being hedged. If these hedging transactions are
successful, the futures position taken for the Fund will rise in value by an
amount which approximately offsets the decline in value of the portion of the
Fund's investments that is being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized. The risks of Futures Contracts also include
a potential lack of liquidity in the secondary market and incorrect assessments
of market. Brokerage costs will be incurred and "margin" will be required to be
posted and maintained as a good faith deposit against performance of obligations
under Futures Contracts written for a Fund. A Fund may not purchase or sell a
Futures Contract if immediately thereafter its margin deposits on its
outstanding Futures Contracts, other than Futures Contracts used for hedging
purposes, would exceed 5% of the market value of the Fund's total assets.
Short Sales. Each Fund may a sell a security short in anticipation of a decline
in the market value of the security. When a Fund engages in a short sale, it
sells a security which it does not own. To complete the transaction, the Fund
must borrow the security in order to deliver it to the buyer. The Fund must
replace the borrowed security by purchasing it at the market price at the time
of replacement, which may be more or less than the price at which the Fund sold
the security. The Fund will incur a loss as a result of the short sale if the
price of the security increases between the date of the short sale and the date
on which the Fund replaces the borrowed security. The Fund will realize a profit
if the security declines in price between those dates.
In connection with its short sales, each Fund will be required to
maintain a segregated account with the Custodian of cash or high grade liquid
assets equal to the market value of the securities sold less any collateral
deposited with its broker. Each Fund will limit its short sales so that no more
than 20% of its net assets (less all its liabilities other than obligations
under the short sales) will be deposited as collateral and allocated to the
segregated account. However, the segregated account and deposits will not
necessarily limit the Fund's potential loss on a short sale, which is unlimited.
General. Each Fund may invest up to 5% of its net assets in each of the
following: mortgage-backed securities, zero coupon municipal securities, zero
coupon treasuries (also known as STRIPS), floating rate bonds, foreign currency
futures and exchange transactions, and options on foreign currencies. Each Fund
may also invest up to 5% of its net assets in illiquid securities including Rule
144A securities (unregistered securities that can be resold to institutions only
under SEC Rule 144A).
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. No 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 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 Martin Capital U.S. Opportunity
Fund, Paul Martin and Eileen Vanderlee purchased for investment all of the
outstanding shares of the Fund and may be deemed to control the Fund.
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 888-336-97576, 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 the Funds invest or worldwide markets and economies.
PERFORMANCE INFORMATION
Each Fund may periodically advertise "average annual total return." The
"average annual total return" of a Fund refers to the average annual compounded
rate of return over the stated period that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of "average annual total return" assumes the
reinvestment of all dividends and distributions.
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.
<PAGE>
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
Martin Capital Advisors, L.L.P.
816 Congress Avenue
Suite 1540
Austin, TX 78701
Legal Counsel Administrator
Brown, Cummins & Brown Co., L.P.A. AmeriPrime Financial Services, Inc.
3500 Carew Tower, 441 Vine Street 1793 Kingswood Drive, Suite 200
Cincinnati, OH 45202 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......................................................
THE FUNDS.....................................................................
INVESTMENT OBJECTIVE AND STRATEGIES..........................................
HOW TO INVEST IN THE FUNDS...................................................
HOW TO REDEEM SHARES......................................................
SHARE PRICE CALCULATION......................................................
DIVIDENDS AND DISTRIBUTIONS...................................................
TAXES
DISTRIBUTION PLAN..............................................................
OPERATION OF THE FUNDS......................................................
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS...................
GENERAL INFORMATION...........................................................
PERFORMANCE INFORMATION......................................................
The Martin Capital Opportunity Funds
Martin Capital Austin Opportunity Fund
Martin Capital Texas Opportunity Fund
Martin Capital U.S. Opportunity Fund
STATEMENT OF ADDITIONAL INFORMATION
March 31, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of The Martin Capital Opportunity
Funds dated March 31, 1999. A copy of the Prospectus can be obtained by writing
the Transfer Agent at 431 North Pennsylvania Street, Indianapolis, Indiana
46204, or by calling 1-888-336-9757.
<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.........................................................8
THE INVESTMENT ADVISOR........................................................10
TRUSTEES AND OFFICERS.........................................................10
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................12
DETERMINATION OF SHARE PRICE..................................................13
INVESTMENT PERFORMANCE........................................................13
CUSTODIAN.....................................................................14
TRANSFER AGENT................................................................14
ACCOUNTANTS...................................................................14
DISTRIBUTOR...................................................................14
<PAGE>
DESCRIPTION OF THE TRUST
The Martin Capital Austin Opportunity Fund, Martin Capital Texas
Opportunity Fund and Martin Capital U.S. Opportunity Fund (each a "Fund" or
collectively, the "Funds" or the "Martin Capital Opportunity Funds") were
organized as series of AmeriPrime Funds (the "Trust"). 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. Leveraging. Leveraging a Fund creates an opportunity for increased
net income but, at the same time, creates special risk considerations. For
example, leveraging may exaggerate changes in the net asset value of Fund shares
and in the yield on the Fund's portfolio. Although the principal of such
borrowings will be fixed, the Fund's assets may change in value during the time
the borrowing is outstanding. Leveraging will create interest expenses for the
Fund which can exceed the income from the assets retained. To the extent the
income derived from securities purchased with borrowed funds exceeds the
interest the Fund will have to pay, the Fund's net income will be greater than
if leveraging were not used. Conversely, if the income from the assets retained
with borrowed funds is not sufficient to cover the cost of leveraging, the net
income of the Fund will be less than if leveraging were not used, and therefore
the amount available for distribution to shareholders will be reduced.
C. Option Transactions. The Funds may engage in option transactions
involving individual stocks and bonds as well as stock and bond indexes. An
option involves either (a) the right or the obligation to buy or sell a specific
instrument at a specific price until the expiration date of the option, or (b)
the right to receive payments or the obligation to make payments representing
the difference between the closing price of a market index and the exercise
price of the option expressed in dollars times a specified multiple until the
expiration date of the option. Options are sold (written) on securities and
market indexes. The purchaser of an option on a security pays the seller (the
writer) a premium for the right granted but is not obligated to buy or sell the
underlying security. The purchaser of an option on a market index pays the
seller a premium for the right granted, and in return the seller of such an
option is obligated to make the payment. A writer of an option may terminate the
obligation prior to expiration of the option by making an offsetting purchase of
an identical option. Options are traded on organized exchanges and in the
over-the-counter market. Call options on securities which the Funds sell (write)
will be covered or secured, which means that the Fund will own the underlying
security in the case of a call option. The Funds will sell (write) put options
only if the Fund is selling an equivalent amount of the same security short.
When the Funds write options, they may be required to maintain a margin account,
to pledge the underlying securities or U.S. government obligations or to deposit
assets in escrow with the Custodian. The Funds may also utilize spreads and
straddle strategies. A spread is the difference in price resulting from a
combination of put and call options within the same class on the same underlying
security. A straddle strategy consists of an equal number of put and call
options on the same underlying stock, stock index, or commodity future at the
same strike price and maturity date.
The purchase and writing of options involves certain risks. The
purchase of options limits a Fund's potential loss to the amount of the premium
paid and can afford a Fund the opportunity to profit from favorable movements in
the price of an underlying security to a greater extent than if transactions
were effected in the security directly. However, the purchase of an option could
result in a Fund losing a greater percentage of its investment than if the
transaction were effected directly. When a Fund writes a covered call option, it
will receive a premium, but it will give up the opportunity to profit from a
price increase in the underlying security above the exercise price as long as
its obligation as a writer continues, and it will retain the risk of loss should
the price of the security decline. When a Fund writes a put option, it will
assume the risk that the price of the underlying security or instrument will
fall below the exercise price, in which case the Fund may be required to
purchase the security or instrument at a higher price than the market price of
the security or instrument. In addition, there can be no assurance that a Fund
can effect a closing transaction on a particular option it has written. Further,
the total premium paid for any option may be lost if the Fund does not exercise
the option or, in the case of over-the-counter options, the writer does not
perform its obligations.
D. Floating Rate, Inverse Floating Rate, and Index Obligations. Each
Fund may invest in debt securities with interest payments or maturity values
that are not fixed, but float in conjunction with (or inversely to) an
underlying index or price. These securities may be backed by U.S. Government or
corporate issuers, or by collateral such as mortgages. The indices and prices
upon which such securities can be based include interest rates, currency rates
and commodities prices. However, the Funds will not invest in any instrument
whose value is computed based on a multiple of the change in price or value of
an asset or an index of or relating to assets in which the Funds cannot or will
not invest.
Floating rate securities pay interest according to a coupon
which is reset periodically. The reset mechanism may be formula based, or
reflect the passing through of floating interest payments on an underlying
collateral pool. Inverse floating rate securities are similar to floating rate
securities except that their coupon payments vary inversely with an underlying
index by use of a formula. Inverse floating rate securities tend to exhibit
greater price volatility than other floating rate securities. No Fund will
invest more than 5% of its total assets in inverse floating rate securities.
Floating rate obligations generally exhibit a low price volatility for a given
stated maturity or average life because their coupons adjust with changes in
interest rates. Interest rate risk and price volatility on inverse floating rate
obligations can be high, especially if leverage is used in the formula. Index
securities pay a fixed rate of interest, but have a maturity value that varies
by formula, so that when the obligation matures a gain or loss may be realized.
The risk of index obligations depends on the volatility of the underlying index,
the coupon payment and the maturity of the obligation.
E. Real Estate Investment Trust. 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.
F. Zero Coupon Treasuries and Municipal Securities. Zero coupon
securities are (i) notes or debentures which do not pay current interest and are
issued at substantial discounts from par value, or (ii) notes or debentures that
pay current interest until a stated date one or more years into the future,
after which the issuer is obligated to pay interest until maturity, usually at a
higher rate than if interest were payable from the date of issuance.
The Federal Reserve creates zero coupon treasuries, also known
as STRIPS (Separate Trading of Registered Interest and Principal of Securities)
by separating the coupon payments and the principal payment from an outstanding
Treasury security and selling them as individual securities. A broker-dealer
creates a derivative zero by depositing a Treasury security with a custodian for
safekeeping and then selling the coupon payments and principal payment that will
be generated by this security separately. Examples are Certificates of Accrual
on Treasury Securities (CATs), Treasury Investment Growth Receipts (TIGRs) and
generic Treasury Receipts (TRs). These derivative zero coupon obligations are
not considered to be government securities unless they are part of the STRIPS
program. Original issue zeros are zero coupon securities issued directly by the
U.S. Government, a government agency, or by a corporation.
Zero coupon municipal securities are long and short term debt
obligations issued by or on behalf of states, territories and possessions of the
United States, the District of Columbia and their political subdivisions,
agencies, instrumentalities and authorities, as well as other qualifying issuers
(including the U.S. Virgin Islands, Puerto Rico and Guam), the income from which
is exempt from regular federal income tax and exempt from state tax in the state
of issuance. Each Fund will accrue income on such securities for tax and
accounting purposes, in accordance with applicable law. This income will be
distributed to shareholders. Because no cash is received at the time such income
is accrued, the Fund may be required to liquidate other portfolio securities to
satisfy its distribution obligations. Because a zero coupon security does not
pay current income, its price can be very volatile when interest rates change.
In calculating its dividend, the Funds take into account as income a portion of
the difference between a zero coupon security's purchase price and its face
value.
Municipal securities are issued to obtain funds to construct,
repair or improve various public facilities such as airports, bridges, highways,
hospitals, housing, schools, streets and water and sewer works, to pay general
operating expenses or to refinance outstanding debts. They also may be issued to
finance various private activities, including the lending of funds to public or
private institutions for construction of housing, educational or medical
facilities or the financing of privately owned or operated facilities. Municipal
securities consist of tax exempt bonds, tax exempt notes and tax exempt
commercial paper. Tax exempt notes generally are used to provide short term
capital needs and generally have maturities of one year or less. Tax exempt
commercial paper typically represents short term, unsecured, negotiable
promissory notes.
The two principal classifications of municipal securities are
"general obligations" and "revenue" bonds. General obligation bonds are backed
by the issuer's full credit and taxing power. Revenue bonds are backed by the
revenues of a specific project, facility or tax. Industrial development revenue
bonds are a specific type of revenue bond backed by the credit of the private
issuer of the facility, and therefore investments in these bonds have more
potential risk that the issuer will not be able to meet scheduled payments of
principal and interest.
G. Mortgage-Backed Securities. Mortgage-backed securities include
securities representing interests in a pool of mortgages. These securities,
including securities issued by FNMA, GNMA and the Federal Home Loan Mortgage
Corporation, provide investors with payments consisting of both interest and
principal as the mortgages in the underlying mortgage pools are repaid. The
Funds will only invest in pools of mortgage loans assembled for the sale to
investors by agencies or instrumentalities of the U.S. government and will limit
their investment to 5% of net assets. Unscheduled or early payments on the
underlying mortgages may shorten the securities' effective maturities.
Other types of securities representing interests in a pool of
mortgage loans are known as collateralized mortgage obligations (CMOs) and real
estate mortgage investment conduits (REMICs) and multi-class pass-throughs. CMOs
and REMICs are debt instruments collateralized by pools of mortgage loans or
other mortgage-backed securities. Multi-class pass-through securities are equity
interests in a trust composed of mortgage loans or other mortgage-backed
securities. Payments of principal and interest on underlying collateral provides
the funds to pay debt service on the CMO or REMIC or make scheduled
distributions on the multi-class pass-through securities. The Funds will only
invest in CMOs, REMICs and multi-class pass-through securities (collectively
"CMOs" unless the context indicates otherwise) issued by agencies or
instrumentalities of the U.S. government (such as the Federal Home Loan Mortgage
Corporation). None of the Funds will invest in "stripped" CMOs, which represent
only the income portion or the principal portion of the CMO.
CMOs are issued with a variety of classes or "tranches," which
have different maturities and are often retired in sequence. One or more
tranches of a CMO may have coupon rates which reset periodically at a specified
increment over an index such as the London Interbank Offered Rate ("LIBOR").
These "floating rate CMOs," typically are issued with lifetime "caps" on their
coupon rate, which means that there is a ceiling beyond which the coupon rate
may not be increased. The yield of some floating rate CMOs varies in excess of
the change in the index, which would cause the value of such CMOs to fluctuate
significantly once rates reach the cap.
REMICs, which have elected to be treated as such under the
Internal Revenue Code, are private entities formed for the purpose of holding a
fixed pool of mortgages secured by an interest in real property. REMICs are
similar to CMOs in that they issue multiple classes of securities. As with other
CMOs, the mortgages which collateralize the REMICs in which a Fund may invest
include mortgages backed by GNMA certificates or other mortgage pass-throughs
issued or guaranteed by the U.S. government, its agencies or instrumentalities.
The average life of securities representing interests in pools
of mortgage loans is likely to be substantially less than the original maturity
of the mortgage pools as a result of prepayments or foreclosures of such
mortgages. Prepayments are passed through to the registered holder with the
regular monthly payments of principal and interest, and have the effect of
reducing future payments. To the extent the mortgages underlying a security
representing an interest in a pool of mortgages are prepaid, the Funds may
experience a loss (if the price at which the respective security was acquired by
the Fund was at a premium over par, which represents the price at which the
security will be redeemed upon prepayment). In addition, prepayments of such
securities held by the Funds will reduce the share price of each Fund to the
extent the market value of the securities at the time of prepayment exceeds
their par value. Furthermore, the prices of mortgage-backed securities can be
significantly affected by changes in interest rates. Prepayments may occur with
greater frequency in periods of declining mortgage rates because, among other
reasons, it may be possible for mortgagors to refinance their outstanding
mortgages at lower interest rates. In such periods, it is likely that any
prepayment proceeds would be reinvested by the Funds at lower rates of return.
H. Foreign Currency Exchange Transactions. The Funds may hold foreign
currency deposits from time to time, and may convert dollars and foreign
currencies in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering into
forward contracts to purchase or sell foreign currencies at a future date and
price. Forward contracts generally are traded in an interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. The parties to a forward contract may agree to offset or terminate
the contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.
The Funds may use currency forward contracts to manage
currency risks and to facilitate transactions in foreign securities. The
following discussion summarizes the principal currency management strategies
involving forward contracts that could be used by any Fund.
In connection with purchases and sales of securities
denominated in foreign currencies, a Fund may enter into currency forward
contracts to fix a definite price for the purchase or sale in advance of the
trade's settlement date. This technique is sometimes referred to as a
"settlement hedge" or "transaction hedge." A Fund also could enter into forward
contracts to purchase or sell a foreign currency in anticipation of future
purchases or sales of securities denominated in foreign currency, even if the
specific investments have not yet been selected by the Advisor.
The Funds also may use forward contracts to hedge against a
decline in the value of existing investments denominated in foreign currency.
For example, if a Fund owned securities denominated in Deutschemarks, it could
enter into a forward contract to sell Deutschemarks in return for U.S. dollars
to hedge against possible declines in the Deutschemark's value. Such a hedge
(sometimes referred to as a "position hedge") would tend to offset both positive
and negative currency fluctuations, but would not offset changes in security
values caused by other factors. A Fund also could hedge the position by selling
another currency expected to perform similarly to the Deutschemark -- for
example, by entering into a forward contract to sell Deutschemarks or European
Currency Units in return for U.S. dollars. This type of hedge, sometimes
referred to as a "proxy hedge," could offer advantages in terms of cost, yield,
or efficiency, but generally will not hedge currency exposure as effectively as
a simple hedge into U.S. dollars. Proxy hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in which the
hedge securities are denominated.
Under certain conditions, SEC guidelines require mutual funds
to segregate cash and appropriate liquid assets to cover currency forward
contracts. As required by SEC guidelines, the Funds will segregate cash or U.S.
Government securities or other high-grade liquid debt securities to cover
currency forward contracts, if any, whose purpose is essentially speculative.
The Funds will not segregate assets to cover forward contracts entered into for
hedging purposes, including settlement hedges, position hedges, and proxy
hedges. In segregating assets, the Funds' custodian or a designated subcustodian
either places such assets in a segregated account or separately identifies such
assets and renders them unavailable for investment by the Funds.
Successful use of forward currency contracts will depend on
the Advisor's skill in analyzing and predicting currency values. Forward
contracts may change the Funds' currency exchange rates substantially, and could
result in losses to the Funds if currencies do not perform as the Advisor
anticipates. For example, if a currency's value rose at a time when the Advisor
had hedged a Fund by selling currency in exchange for dollars, the Fund would be
unable to participate in the currency's appreciation. If the Advisor hedges
currency exposure through proxy hedges, the Fund could realize currency losses
from the hedge and the security position at the same time if the two currencies
do not move in tandem. Similarly, if the Advisor increases a Fund's exposure to
a foreign currency, and that currency's value declines, the Fund will realize a
loss. There is no assurance that the Advisor's use of forward currency contracts
will be advantageous to any of the Funds or that the Advisor will hedge at an
appropriate time.
I. Options and Futures on Foreign Currencies. Each Fund may write
covered put and call options and purchase put and call options on foreign
currencies for the purpose of protecting against declines in the U.S. dollar
value of Fund securities and against increases in the U.S. dollar cost of
securities to be acquired. A Fund may use options on foreign currency to
cross-hedge, which involves writing or purchasing options on one currency to
hedge against changes in exchange rates for a different, but related currency.
As with other types of options, however, the writing of an option on a foreign
currency will constitute only a partial hedge up to the amount of the premium
received, and a Fund could be required to purchase or sell a foreign currency at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may be used to hedge against fluctuations in exchange
rates although, in the event of exchange rate movements adverse to a Fund's
position, it may forfeit the entire amount of the premium plus related
transaction costs. In addition, a Fund may purchase call options on a foreign
currency when the investment Advisor anticipates that the currency will
appreciate in value.
There is no assurance that a liquid secondary market will
exist for any particular option, or at any particular time. If a Fund is unable
to effect a closing purchase transaction with respect to covered options it has
written, the Fund will not be able to sell the underlying currency or dispose of
assets held in a segregated account until it closes out the options or the
options expire or are exercised. Similarly, if the Fund is unable to close out
options it has purchased, it would have to exercise the options in order to
realize any profit and will incur transaction costs. The Funds pay brokerage
commissions or spreads in connection with options transactions.
As in the case of forward contracts, certain options on
foreign currencies are traded over-the-counter and involve liquidity and credit
risks which may not be present in the case of exchange-traded currency options.
The Funds' ability to terminate over-the-counter options ("OTC" Options") will
be more limited than with exchange-traded options. It is also possible that
broker-dealers participating in OTC Options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position, the
Funds will treat purchased OTC Options and assets used to cover written OTC
Options as illiquid securities. With respect to options written with primary
dealers in U.S. government securities pursuant to an agreement requiring a
closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the repurchase formula.
Currency futures contracts are similar to forward currency
exchange contracts, except that they are traded on exchanges (and have margin
requirements) and are standardized as to contract size and delivery date. Most
currency futures contracts call for payment or delivery in U.S. dollars. Each
Fund may purchase and sell currency futures to increase or decrease its exposure
to different foreign currencies. Currency futures can be expected to correlate
with exchange rates, but may not reflect other factors that affect the value of
a Fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a Fund
against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a Fund's foreign-denominated investments
change in response to many factors other than exchange rates, it may not be
possible to match the amount of currency futures to the value of the Fund's
investments exactly over time.
J. Illiquid Securities. Illiquid securities generally include
securities which cannot be disposed of promptly and in the ordinary course of
business without taking a reduced price. Securities may be illiquid due to
contractual or legal restrictions on resale or lack of a ready market. The
following securities are considered to be illiquid: repurchase agreements
maturing in more than seven days, nonpublicly offered securities and restricted
securities. Restricted securities are securities the resale of which is subject
to legal or contractual restrictions. Restricted securities may be sold only in
privately negotiated transactions, in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 or pursuant
to Rule 144 or Rule 144A promulgated under such Act. Where registration is
required, the Fund may be obligated to pay all or part of the registration
expense, and a considerable period may elapse between the time of the decision
to sell and the time such security may be sold under an effective registration
statement. If during such a period adverse market conditions were to develop,
the Fund might obtain a less favorable price than the price it could have
obtained when it decided to sell.
K. Futures Contracts. When a Fund purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future date.
When a Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and sale
will take place is fixed when the Fund enters into the contract. Futures can be
held until their delivery dates, or can be closed out before then if a liquid
secondary market is available.
The value of a futures contract tends to increase and decrease
in tandem with the value of its underlying instrument or precious metal.
Therefore, purchasing futures contracts will tend to increase a Fund's exposure
to positive and negative price fluctuations in the underlying instrument, much
as if it had purchased the underlying instrument directly. When a Fund sells a
futures contract, by contrast, the value of its futures position will tend to
move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive an negative market price changes,
much as if the underlying instrument or precious metal had been sold.
L. Debt Securities. Lower quality corporate debt securities (commonly
called "junk bonds") often are considered to be speculative and involve greater
risk of default or price change due to changes in the issuer's creditworthiness
or changes in economic conditions. The market prices of these securities will
fluctuate over time, may fluctuate more than higher quality securities and may
decline significantly in periods of general economic difficulty, which may
follow periods of rising interest rates. The market for lower quality securities
may be less liquid than the market for securities of higher quality.
Furthermore, the liquidity of lower quality securities may be affected by the
market's perception of their credit quality. Therefore, judgment may at times
play a greater role in valuing these securities than in the case of higher
quality securities, and it also may be more difficult during certain adverse
market conditions to sell lower quality securities at their fair value to meet
redemption requests or to respond to changes in the market. No Fund will invest
more than 5% of the value of its net assets in junk bonds.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of each Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Funds will not act as underwriter of securities
issued by other persons.This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. No Fund will invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
1. Pledging. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. No Fund will purchase any security while borrowings
(including reverse repurchase agreements) representing more than one third of
its total assets are outstanding.
3. Margin Purchases. No Fund will purchase securities or evidences of
interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.
4. Options. No Fund will purchase or sell puts, calls, options or
straddles except as described in the Funds' Prospectus and Statement of
Additional Information.
5. Illiquid Investments. No Fund will invest more than 5% of its net
assets in securities for which there are legal or contractual restrictions on
resale and other illiquid securities.
6. Loans of Portfolio Securities. No Fund will make loans of portfolio
securities.
THE INVESTMENT ADVISOR
The investment advisor to each Fund is Martin Capital Advisors, L.L.P.,
a Texas limited liability partnership formed on January 29, 1999, 816 Congress
Avenue, Suite 1540, Austin, TX 78701 (the "Advisor"). Under the terms of the
management agreement (the "Agreement"), the Advisor manages each Fund's
investments subject to approval of the Board of Trustees and pays all of the
expenses of each Fund except brokerage, taxes, interest, fees and expenses of
the non-interested person trustees and extraordinary expenses. As compensation
for its management services and agreement to pay the Fund's expenses, each Fund
is obligated to pay the Advisor a fee computed and accrued daily and paid
monthly at an annual rate of 1.25% of the average daily net assets of the Fund.
The Advisor may waive all or part of its fee, at any time, and at its sole
discretion, but such action shall not obligate the Advisor to waive any fees in
the future.
The Advisor retains the right to use the names "Austin Opportunity,"
"Texas Opportunity" and "U.S. Opportunity" in connection with another investment
company or business enterprise with which the Advisor is or may become
associated. The Trust's right to use the names "Austin Opportunity," "Texas
Opportunity" and "U.S. Opportunity" automatically ceases ninety days after
termination of the Agreement and may be withdrawn by the Advisor on ninety days
written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
<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.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of 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
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Fund with fund accounting services, which
includes certain monthly reports, record-keeping and other management-related
services. For its services as fund accountant, Unified receives an annual fee
from the Advisor equal to 0.0275% of 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 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.
