WESTCOTT
FUNDS
PROSPECTUS DATED NOVEMBER 1, 1999
WESTCOTT NOTHING BUT NET FUND
WESTCOTT LARGE-CAP FUND
WESTCOTT FIXED INCOME FUND
230 Westcott, Suite 1
Houston, Texas 77007
(800) 998-6658
LIKE ALL MUTUAL FUND SHARES AND PROSPECTUSES, THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SHARES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
Westcott Nothing But Net Fund..................................................1
Westcott Large-Cap Fund........................................................2
Westcott Fixed Income Fund.....................................................2
How the Funds Have Performed...................................................3
Fees and Expenses of the Funds.................................................3
How To Buy Shares..............................................................5
Distribution Plans.............................................................7
Additional Purchase Information................................................7
How To Redeem Shares..........................................................10
How To Exchange Shares........................................................11
Determination of Net Asset Value..............................................12
Dividends, Distributions and Taxes............................................12
Management of the Funds.......................................................12
Other Information About Investments...........................................13
For More Information .................................................Back Cover
<PAGE>
WESTCOTT NOTHING BUT NET FUND
INVESTMENT OBJECTIVE
The investment objective of the Nothing But Net Fund is long term growth
of capital.
PRINCIPAL STRATEGIES
Under normal circumstances, the Fund will invest 100% of its assets
(except for liquidity purposes) in internet companies. An internet company is
defined as a company where at least 50% of its assets, gross income or net
profits are derived from or committed to internet businesses and technologies.
These businesses and technologies include research, design, development,
manufacturing or distribution of products, processes or services for use with
the internet or the intranet and related businesses. The adviser focuses on
companies it believes will experience long term growth based on its
participation in the internet industry. The Fund invests primarily in the common
stock of internet companies.
The Fund may sell a stock if the Fund's adviser believes that the company's
long term growth prospects have deteriorates. Growth prospects may be measured
by earnings, revenue growth, stock price performance, web site traffic, market
dominance or technological innovation.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o COMPANY RISK is the risk that the Fund might decrease in value in response
to the activities and financial prospects of an individual company.
o MARKET RISK is the risk that the Fund might decrease in value in response
to general market and economic conditions.
o INTERNET CONCENTRATION RISK means that your investment in the Fund is
subject to special risks because the Fund concentrates its
investments in internet companies. Internet companies are subject to
competitive pressures and changing demands that may have a significant
effect on the financial condition of internet companies. Changes in
governmental policies, such as telephone and cable regulations and
anti-trust enforcement, may have a material effect on the products and
services of these companies. In addition, the rate of technological change
is generally higher than other companies, often requiring extensive and
sustained investment in research and development, and exposing such
companies to the risk of rapid product obsolescence. It is likely that some
of today's public internet companies will not exist in the future. The
price of many internet stocks has risen based on projections of future
earnings and company growth. If a company does not perform as expected, the
price of the stock could decline significantly. Many internet companies are
currently operating at a loss and may never be profitable.
o VOLATILITY RISK means that common stocks of internet companies tend to be
more volatile than other investment choices. Because of its narrow focus,
the Fund's performance is closely tied to any factors which may affect
internet companies and, as a result, is more likely to fluctuate than that
of a fund which is invested in a broader range of companies.
o SMALLER COMPANY RISK means that the stocks of smaller sized companies are
subject to certain risks including: possible dependence on a limited
product line, market, financial resources or management group, less
frequent trading and trading with smaller volume than larger stocks, which
may make it difficult for the Fund to buy or sell the stocks, and greater
fluctuation in value than larger, more established company stocks.
o As with any mutual fund investment, the Fund's returns will vary and you
could lose money.
o The Fund is not a complete investment Program.
IS THIS FUND RIGHT FOR YOU? The Fund may be a suitable investment for:
o long term investors seeking to diversify into internet securities
o investors willing to accept significant price fluctuations in their
investment
o investors who can tolerate the greater risks associated with internet
investments
<PAGE>
WESTCOTT LARGE-CAP FUND
INVESTMENT OBJECTIVE
The investment objective of the Large-Cap Fund is long term growth of
capital.
PRINCIPAL STRATEGIES
The Fund will normally invest at least 65 % of its assets in common stocks
of larger-sized U.S. companies (those with a market capitalization above $5
billion). The Fund's advisor selects stocks based on their long-term earnings
potential and capital appreciation prospects. The adviser focuses on companies
with high earnings growth and stock prices that the adviser considers to be
undervalued based on the company's historic returns.
The Fund may sell a stock if the Fund's adviser believes that the stock no
longer possesses superior earnings and price growth relative to its peers and/or
the market index. The adviser will also consider negative changes in earnings
per share estimates and material changes in the company's business plan that may
adversely affect future earnings momentum.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o COMPANY RISK is the risk that the Fund might decrease in value in response
to the activities and financial prospects of an individual company.
o MARKET RISK is the risk that the Fund might decrease in value in response
to general market and economic conditions. o VOLATILITY RISK means that
common stocks tend to be more volatile than other investment choices.
o The Fund is not a complete investment program.
o As with any mutual fund investment, the Fund's returns will vary and you
could lose money.
WESTCOTT FIXED INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Fixed Income Fund is income over the long
term consistent with preservation of capital.
PRINCIPAL STRATEGIES
The Fund invests primarily in a broad range of investment grade fixed
income securities. These include bonds, notes, convertible bonds,
mortgage-backed securities, collateralized mortgage obligations, corporate debt,
government securities, zero coupon bonds and short term obligations, such as
commercial paper and repurchase and reverse repurchase agreements. The Fund's
advisor typically selects fixed income securities with maturities of less than
five years, based on the available yield at various maturity levels. The Fund
will normally invest at least 65 % of its assets in fixed income securities.
The Fund may sell a security if its rating is downgraded, to shorten or
lengthen the average maturity of the Fund's portfolio, or if Fund's adviser
believes that the issuer`s business is experiencing material negative changes.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o INTEREST RATE RISK is the risk that the value of your investment may
decrease when interest rates rise. To the extent the Fund invests in fixed
income securities with longer maturities, the Fund will be more greatly
affected by changes in interest rates, and will be more volatile, than a
fund that invests in securities with shorter maturities.
o CREDIT RISK is the risk that the issuer of the fixed income security may
not be able to make interest and principal payments when due. Generally,
the lower the credit rating of a security, the greater the risk that the
issuer will default on its obligation.
o PREPAYMENT RISK means that during periods of declining interest rates,
prepayment of loans underlying mortgage-backed securities usually
accelerates. Prepayment may shorten the effective maturities of these
securities and the Fund may have to reinvest at lower interest rates.
o The Fund is not a complete investment program.
o As with any mutual fund investment, the Fund's returns will vary and you
could lose money.
<PAGE>
HOW THE FUNDS HAVE PERFORMED
Although past performance of a fund is no guarantee of how it will perform
in the future, historical performance may give you some indication of the risk
of investing in the fund because it demonstrates how its returns have varied
over time. The Bar Chart and Performance Table that would otherwise appear in
this prospectus have been omitted because the Funds are recently organized and
have limited performance histories.
FEES AND EXPENSES OF THE FUNDS
The tables describe the fees and expenses that you may pay if you buy and hold
shares of a Fund.
<TABLE>
<S> <C> <C> <C>
SHAREHOLDER FEES
(fees paid directly from your investment) Class A Class B Institutional
NOTHING BUT NET FUND
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 5.00% NONE NONE
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or
redemption proceeds, whichever is less) NONE* 5.00% NONE
LARGE-CAP FUND
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 5.00% NONE NONE
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or
redemption proceeds, whichever is less) NONE* 5.00% NONE
FIXED INCOME FUND
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 3.00% NONE NONE
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or
redemption proceeds, whichever is less) NONE* 3.00% NONE
</TABLE>
*If you purchase $1 million or more of Class A shares of a Fund, the purchase
may be made without an initial sales load. However, those shares are subject to
a CDSC if redeemed within one year of the date of purchase. See "How To Buy
Shares".
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<TABLE>
<S> <C> <C> <C>
NOTHING BUT NET FUND Class A Class B Institutional
------- ------- -------------
Management Fee 1.70% 1.70% 1.70%
Distribution and/or Service (12b-1) Fees 0.25% 1.00% None
Other Expenses1 0.02% 0.02% 0.02%
Total Annual Fund Operating Expenses 1.97% 2.72% 1.72%
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
LARGE-CAP FUND Class A Class B Institutional
------- ------- -------------
Management 1.00% 1.00% 1.00%
Distribution and/or Service (12b-1) Fees 0.25% 1.00% None
Other Expenses1 0.02% 0.02% 0.02%
Total Annual Fund Operating Expenses 1.27% 2.02% 1.02%
FIXED INCOME FUND
Management Fees 0.75% 0.75% 0.75%
Distribution and/or Service (12b-1) Fees 0.25% 1.00% None
Other Expenses1 0.02% 0.02% 0.02%
Total Annual Fund Operating Expenses 1.02 % 1.77% 0.77%
</TABLE>
1 "Other Expenses" are based on estimated amounts for the current fiscal year.
Example:
This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated, reinvest dividends, and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
Nothing But Net 1 year 3 years
------ --------
Class A $692 $1,093
Class B $779 $1,155
Institutional $176 $ 546
Large-Cap 1 year 3 years
------ --------
Class A $624 $885
Class B $707 $940
Institutional $105 $326
Fixed Income 1 year 3 years
------ --------
Class A $401 $616
Class B $481 $662
Institutional $ 79 $247
For Class B shares, you would pay the following expenses if you did not redeem
your shares:
1 year 3 years
------ -------
Nothing But Net $279 $855
Large-Cap $207 $640
Fixed Income $181 $562
<PAGE>
HOW TO BUY SHARES
INITIAL PURCHASE
The minimum initial investment in each Fund is $1,000 ($200 for qualified
retirement accounts and medical savings accounts. The minimum initial investment
in each Fund is $50 for shareholders participating in the continuing automatic
investment plan.
You may open an account and make an initial investment through securities
dealers who have a sales agreement with AmeriPrime Financial Securities, Inc.,
the Funds' distributor. Your securities dealer may charge you additional fees.
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.
BY MAIL
You may also make a direct initial investment by following these steps: o
complete and sign the investment application form which accompanies this
Prospectus; o draft a check made payable to the appropriate Fund; o identify on
the check and the application the Class in which you would like to invest; o
mail the application and check to:
U.S. Mail: Overnight:
Westcott Funds Westcott Funds
Unified Fund Services, Inc. Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
BY WIRE you may also purchase shares of a Fund by wiring federal funds
from your bank, which may charge you a fee for doing so. To wire money, you must
call Unified Fund Services, Inc (the "Transfer Agent") at (800) 998-6658 to set
up your account and obtain an account number. You should be prepared at that
time to provide the information on the application. Then, provide your bank with
the following information for purposes of wiring your investment:
Firstar Bank, N.A.
ABA #0420-0001-3
Attn: Westcott Funds
Account Name _________________
(write in shareholder name)
For the Account # ______________
(write in account number)
D.D.A.# 821-637634
You must 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 Fund may
charge shareholders for this service in the future.
<PAGE>
SALES LOADS
o CLASS A SHARES
Shares of the Fund are purchased at the public offering price. The public
offering price for Class A shares of the Nothing But Net Fund and the Large-Cap
Fund is the next determined NAV plus a sales load as shown in the following
table.
<TABLE>
<S> <C> <C>
======================================== ------------------------------------- ================================
Sales Load as of % of:
Nothing But Net Fund and Large Cap Fund Public Net
Offering Amount Dealer Reallowance as % of
Amount of Investment Price Invested Public Offering Price
======================================== ===================================== ================================
Less than $25,000 5.00% 5.26% 5.00%
$25,000 but less than $50,000 4.75% 4.99% 4.75%
$50,000 but less than $100,000 4.50% 4.71% 4.50%
$100,000 but less than $200,000 3.75% 3.90% 3.75%
$200,000 but less than $500,000 3.25% 3.36% 3.25%
$500,000 but less than $1million 2.00% 2.04% 2.00%
$1 million or more None* None* 1.00%
======================================== ===================================== ================================
======================================== ------------------------------------- ================================
Sales Load as of % of:
Fixed Income Fund Public Net
Offering Amount Dealer Reallowance as % of
Amount of Investment Price Invested Public Offering Price
======================================== ===================================== ================================
Less than $50,000 3.00% 3.09% 3.00%
$50,000 but less than $100,000 2.25% 2.30% 2.25%
$100,000 but less than $250,000 1.75% 1.78% 1.75%
$250,000 but less than $500,000 1.50% 1.52% 1.50%
$500,000 but less than $1million 0.50% 0.50% 0.50%
$1 million or more None* None* 0.25%
======================================== ===================================== ================================
</TABLE>
*If you purchase $1 million or more of Class A shares of a Fund, the purchase
may be made without an initial sales load. However, those shares are subject to
a contingent deferred sales charge ("CDSC") if redeemed within one year of the
date of purchase. The CDSC is 1.00% for the Nothing But Net Fund and Large Cap
Fund, and 0.25% for the Fixed Income Fund, based on the lower of the original
purchase price or net asset value at the time of the redemption. Reinvested
dividends and distributions from Class A shares are not subject to the CDSC. o
<PAGE>
Class B Shares
You can purchase Class B shares at NAV. However, when you redeem them, you
may pay a contingent deferred sales change ("CDSC") in the following
percentages:
<TABLE>
<S> <C> <C> <C>
Year Since Purchase Date Nothing But Net Fund* Large Cap Fund* Fixed Income Fund**
First 5% 5% 3%
Second 4 4 2
Third 3 3 2
Fourth 3 3 1
Fifth 2 2 None
Sixth 1 1 None
Seventh and following None None None
</TABLE>
* Convert to Class A shares after eighth year.
**Convert to Class A shares after sixth year.
o INSTITUTIONAL SHARES
Institutional shares are available for purchase by registered investment
advisers, bank trust departments, financial planners and other financial
intermediaries on behalf of their clients. Institutional shareholders pay
no sales load or 12b-1 fees.
DISTRIBUTION PLANS
Each Fund has adopted plans under Rule 12b-1 that allow Class A and Class
B of the Fund to pay distribution fees for the sale and distribution of its
shares. The distribution plan for Class B shares also allows the class to pay
for services provided to shareholders. Class A shares pay annual 12b-1 expenses
of 0.25% and Class B shares pay annual 12b-1 expenses of 1.00% (of which 0.75%
is an asset based sales charge and 0.25% is a service fee). Because these fees
are paid out of the Fund's assets on an on-going basis, over time these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.
ADDITIONAL PURCHASE INFORMATION
ADDITIONAL PURCHASES
You may purchase additional shares of any Fund (subject to the minimum
investment of $50) by mail, wire, or automatic investment. If you purchase
additional Class A shares, you will pay a sales load unless the purchase is made
by reinvesting a dividend or capital gain distribution. If your securities
dealer received concessions for selling shares of a Fund to you, such securities
dealer will receive the concessions described above with respect to additional
investments. Each additional mail purchase request must contain: o your name o
the name of your account(s), o your account number(s), o the name of the Fund o
a check Send your purchase request 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.
REDUCED SALES LOAD
You may use the Right of Accumulation to combine the cost or current
net asset value (whichever is higher) of your shares of a Fund with the amount
of your current purchases in order to take advantage of the reduced sales loads
set forth in the table above. Purchases made pursuant to a Letter of Intent may
also be eligible for the reduced sales loads. The minimum initial investment
under a Letter of Intent is $50,000. Shareholders should contact the Transfer
Agent for information about the Right of Accumulation and Letter of Intent.
PURCHASES AT NET ASSET VALUE
Purchases of Class A shares may be effected at net asset value for the
benefit of the clients of brokers-dealers and registered investment advisers
affiliated with a broker-dealer, if such broker-dealer or investment adviser has
entered into an agreement with the Distributor providing specifically for the
purchase of Fund shares in connection with special investment products, such as
wrap accounts or similar fee based programs.
Trustees, directors, officers and employees of the Trust, the Advisor
and service providers to the Trust, including members of the immediate family of
such individuals and employee benefit plans established by such entities, may
also purchase shares of each Fund at net asset value.
ADDITIONAL INFORMATION
For purposes of determining the applicable sales load, a purchaser
includes an individual, his spouse and their children under the age of 21,
purchasing shares for his or their own account; or a trustee or other fiduciary
purchasing shares for a single fiduciary account although more than one
beneficiary is involved; or employees of a common employer, provided that
economies of scale are realized through remittances from a single source and
quarterly confirmation of such purchases; or an organized group, provided that
the purchases are made through a central administration, or a single dealer, or
by other means which result in economy of sales effort or expense.
TAX SHELTERED RETIREMENT PLANS
Since the Funds are oriented to longer term investments, shares of the
Funds may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and
profit sharing plans (for employees); tax deferred investment plans (for
employees of public school systems and certain types of charitable
organizations); and other qualified retirement plans. Contact the Transfer Agent
for the procedure to open an IRA or SEP plan and more specific information
regarding these retirement plan options. Please consult with your attorney or
tax advisor regarding these plans. You must pay custodial fees for your IRA by
redemption of sufficient shares of the Fund from the IRA unless you pay the fees
directly to the IRA custodian. Call the Transfer Agent about the IRA custodial
fees.
<PAGE>
OTHER PURCHASE INFORMATION
Each Fund may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred by the 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,
less any applicable CDSC. You may receive redemption payments in the form of a
check or federal wire transfer. Presently there is no charge for wire
redemptions; however, the Funds may charge for this service in the future. Any
charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. If you redeem your shares through a
broker/dealer or other institution, you may be charged a fee by that
institution.
BY MAIL - You may redeem any part of your account in a Fund at no charge by
mail. Your request should be addressed to:
Westcott 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 the Funds or Unified Fund Services, Inc., you
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 (800) 998-6658. You must first complete the Optional
Telephone Redemption and Exchange section of the investment application to
institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The Funds may terminate the telephone redemption and exchange
procedures at any time. During periods of extreme market activity it is possible
that shareholders may encounter some difficulty in telephoning the Funds,
although neither the Funds nor the Transfer Agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Funds by
telephone, you may request a redemption or exchange by mail.
ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) 998-6658. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Funds may suspend
redemptions or postpone payment dates.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund may require you to redeem all of your shares in the Fund on
30 days' written notice if the value of your shares in the Fund is less than
$1,000 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax advisor concerning the tax consequences of involuntary
redemptions. You may increase the value of your shares in the Fund to the
minimum amount within the 30 day period. Your shares are subject to redemption
at any time if the Board of Trustees determines in its sole discretion that
failure to so redeem may have materially adverse consequences to all or any of
the shareholders of the Funds.
HOW TO EXCHANGE SHARES
You may exchange any or all of your shares in a Fund for shares of another
Westcott Fund or The Cash Fund, a separately managed money market fund. The
exchange is made without charge unless you exchange Class A shares of the Fixed
Income Fund for Class A shares of another Westcott Fund with a higher sales
load. In that case, you would pay the incremental amount of the sales load. For
exchanges between Westcott Funds, shares of a particular class may be exchanged
only for shares of the same class.
You may request the exchange by telephoning the Transfer Agent at (800)
998-6658 or writing the Transfer Agent at P.O. Box 6110, Indianapolis, Indiana
46206-6110. Shares of the fund selected must be registered for sale in your
state of residence. The exchange privilege with The Cash Fund does not
constitute an offering or recommendation of The Cash Fund. It is your
responsibility to obtain and read a prospectus of The Cash Fund before you make
an exchange.
o You may make up to one exchange out of each Fund during a calendar month
and four exchanges out of each Fund during a calendar year. This limit
helps keep each Fund's net asset base stable and reduces the Fund's
administrative expenses.
o If you exchange shares into or out of a Fund, the exchange is made at the
net asset value per share of each fund next determined after the exchange
request is received, plus any applicable sales load.
o If you exchange Class B shares of a Fund for The Cash Fund , the time you
own The Cash Fund shares will not be included when the holding period for
the CDSC is calculated.
o If you exchange Class B shares of a Westcott Fund for another Westcott Fund
(or Class A shares of a Westcott Fund that were subject to a CDSC because
of a sales load waiver), the holding periods are combined, however the
highest applicable CDSC will be charged if the shares are redeemed.
o If you exchange only a portion of your Class B shares, shares not subject
to a CDSC are exchanged first.
o If you redeem shares from The Cash Fund that were previously Class B shares
of a Westcott Fund (or Class A shares of a Westcott Fund that were subject
to a CDSC because of a sales load waiver), the redemption is made at the
net asset value per share next determined after the redemption request is
received, less any CDSC that applied to the Westcott Fund shares.
In times of extreme economic or market conditions, exchanging Fund or The
Cash Fund shares by telephone may be difficult. To receive a specific day's
price, your letter or call must be received before that day's close of the New
York Stock Exchange. A day or more delay may be experienced prior to the
investment of the redemption proceeds into The Cash Fund. Each exchange
represents the sale of shares from one fund and the purchase of shares in
another, which may produce a gain or loss for Federal income tax purposes.
All exchanges out of a Westcott Fund into The Cash Fund are subject to the
minimum and subsequent investment requirements of The Cash Fund. No exchange
will be accepted unless the registration of the two accounts is identical.
Neither the Funds, The Cash Fund, nor the Transfer Agent assume responsibility
for the authenticity of exchange instructions communicated by telephone or in
writing which are believed to be genuine. They will use reasonable procedures to
confirm that telephone instructions are genuine.
<PAGE>
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the applicable Fund's net
asset value per share (NAV). The NAV is calculated at the close of trading
(normally 4:00 p.m. Eastern time) on each day the New York Stock Exchange is
open for business (the Stock Exchange is closed on weekends, Federal holidays
and Good Friday). The NAV is calculated by dividing the value of the Fund's
total assets (including interest and dividends accrued but not yet received)
minus liabilities (including accrued expenses) by the total number of shares
outstanding.
The Funds' assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued at their fair
value.
Requests to purchase and sell shares are processed at the NAV next
calculated after we receive your order in proper form.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. Each Fund typically distributes
substantially all of its net investment income in the form of dividends and
taxable capital gains to its shareholders. These distributions are automatically
reinvested in the Fund unless you request cash distributions on your application
or through a written request. Dividends paid by the Funds may be eligible in
part for the dividends received deduction for corporations.
TAXES. In general, selling shares of a Fund and receiving distributions
(whether reinvested or taken in cash) are taxable events. Depending on the
purchase price and the sale price, you may have a gain or a loss on any shares
sold. Any tax liabilities generated by your transactions or by receiving
distributions are your responsibility. Because distributions of long term
capital gains are subject to capital gains taxes, regardless of how long you
have owned your shares, you may want to avoid making a substantial investment
when a Fund is about to make a long term capital gains distribution.
Early each year, the Funds will mail to you a statement setting forth
the federal income tax information for all distributions made during the
previous year. If you do not provide your taxpayer identification number, your
account will be subject to backup withholding.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult with your tax adviser about your
investment.
MANAGEMENT OF THE FUNDS
Aegis Asset Management, Inc., 230 Westcott, Suite 1, Houston, Texas 77007
("Aegis") serves as investment advisor to the Funds. In this capacity, Aegis is
responsible for the selection and on-going monitoring of the securities in each
Fund's investment portfolio and managing the Funds' business affairs. Aegis was
formed in 1993 and registered with the Securities and Exchange Commission in
1996. Aegis has approximately $100 million of assets under management, and the
majority of its clients are high net worth individuals.
Each Fund is authorized to pay Aegis a fee equal to an annual average
rate as follows: Nothing But Net Fund, 1.70%, Large-Cap Fund, 1.00%, Fixed
Income Fund, 0.75%. Aegis pays all of the operating expenses of each Fund except
brokerage, taxes, borrowing costs, 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 each
Fund's expenses, except those specified above, are paid by Aegis.
Layng Guerriero and Fred Mecklenburg are primarily responsible for the
day-to-day management of the portfolio of the Large-Cap Fund and the Fixed
Income Fund. Layng Guerriero is primarily responsible for the day-to-day
management of the portfolio of the Nothing But Net Fund.
Mr. Guerriero has served as the President of Aegis since he founded the
company in 1993. He has also served as the President of American Southwest
Holding Co., an insurance holding company, and Westcott Securities, L.L.C., a
broker/dealer, since founding those companies in 1998. Mr. Guerriero founded
Aegis Risk Management, L.L.C., a corporate general insurance agency, in March
1999 and also serves as its President. From 1993 until 1996, he was a registered
representative of First Associated Securities, Inc., a broker/dealer.
Mr. Mecklenburg has served as Senior Investment Manager of Aegis since he
joined the company in January 1998. He was Director of Investor Services of
McFarland Grossman & Company, an investment banking firm from August 1994 until
January 1998.
OTHER INFORMATION ABOUT INVESTMENTS
THE NOTHING BUT NET FUND invests in internet companies. The internet is a
global network of computers that allows users to quickly and easily share
information and conduct business. Users of the internet include commercial and
professional organizations, educational institutions, government agencies, and
consumers; they use the internet to communicate electronically, access and share
information, and conduct business. Internet and internet related companies
include internet access providers; companies that develop software tools to
access the internet and facilitate secure internet transactions; companies that
manufacture personal computers and other hardware used in conjunction with the
internet; companies that manufacture software and other technologies used in
conjunction with the internet; companies engaging in electronic commerce;
companies publishing information about the internet; companies that develop or
provide communication systems or other infrastructure for the internet;
companies that supply information, such as games, music and video, on the
internet; companies that consult on the design and implementation of internet
strategies; and other internet and intranet related businesses and technologies.
The types of companies that are considered "internet" and "internet related"
companies will change as technology and applications change.
THE FIXED INCOME FUND invests primarily in investment grade fixed income
securities. The Fund may also invest in fixed income securities which are
unrated if the Fund's advisor determines that they are of comparable quality to
securities rated investment grade. Investment grade debt securities generally
have adequate to strong protection of principal and interest payments. In the
lower end of this category, credit quality may be more susceptible to potential
future changes in circumstances and the securities have speculative elements. In
addition, changes in economic conditions or other circumstances are more likely
to lead to a weakened capacity to make principal and interest payments than with
higher grade securities. If the rating of an investment grade security drops
below investment grade, the Fund's advisor will dispose of the security as soon
as practicable (depending on market conditions) unless the advisor determines
based on its own credit analysis that the security provides the opportunity of
meeting the Fund's objective without presenting excessive risk.
THE NOTHING BUT NET FUND AND THE LARGE-CAP FUND are each expected under
normal circumstances to invest no more than 15% of its net assets in American
Depository Receipts (ADRs). An ADR is a certificate of ownership issued by an
U.S. bank as a convenience to investors instead of the underlying foreign
security, which the bank holds in custody. In general, foreign investments
involve higher risks than U.S. investments. Foreign markets tend to be more
volatile than those of the U.S. and bring increased exposure to foreign
economic, political and other events that can have a negative effect on the
value of issuers in a particular foreign country.
EACH FUND may from time to time take temporary defensive positions that
are inconsistent with the Fund's principal investment strategies in attempting
to respond to adverse market, economic, political, or other conditions. For
example, any Fund may hold all or a portion of its assets in money market
instruments, securities of no-load mutual funds or repurchase agreements. If a
Fund invests in shares of another mutual fund, the shareholders of the Fund
generally will be subject to duplicative management fees. As a result of
engaging in these temporary measures, the Funds may not achieve their investment
objectives.
The investment objectives and strategies of any Fund may be changed
without shareholder approval.
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 Funds' advisor or the Funds' various service
providers 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 Funds' advisor has taken steps that it believes 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 Funds' 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.
<PAGE>
FOR MORE INFORMATION
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated into this prospectus by
reference, contains detailed information on Fund policies and operations.
Shareholder reports contain management's discussion of market conditions,
investment strategies and performance results as of the Funds' latest
semi-annual or annual fiscal year end.
Call the Funds at 800-998-6658 to request free copies of the SAI and
the Funds' annual and semi-annual reports, to request other information about
the Funds and to make shareholder inquiries.
You may also obtain information about the fund (including the SAI and
other reports) from the Securities and Exchange Commission on their Internet
site at http://www.sec.gov or at their Public Reference Room in Washington, D.C.
Call the SEC at 800-SEC-0330 for room hours and operation. You may also obtain
fund information by sending a written request and duplicating fee to the Public
Reference Section of the SEC, Washington, D.C. 20549-6609.
Investment Company Act #811-9096
WESTCOTT FUNDS
Westcott Nothing But Net Fund
Westcott Multi-National Large-Cap Fund
Westcott Fixed Income Fund
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Westcott Funds dated November 1,
1999. A free copy of the Prospectus can be obtained by writing the Transfer
Agent at 431 North Pennsylvania Street, Indianapolis, Indiana 46204, or by
calling (800) 998-6658.
TABLE OF CONTENTS PAGE
DESCRIPTION OF THE TRUST AND THE FUND..........................................1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS.................................................................2
INVESTMENT LIMITATIONS.........................................................8
THE INVESTMENT ADVISOR........................................................10
TRUSTEES AND OFFICERS.........................................................11
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................12
DETERMINATION OF SHARE PRICE..................................................14
INVESTMENT PERFORMANCE........................................................14
CUSTODIAN.....................................................................16
TRANSFER AGENT................................................................16
ACCOUNTANTS...................................................................16
DISTRIBUTOR...................................................................17
ADMINISTRATOR.................................................................17
<PAGE>
DESCRIPTION OF THE TRUST AND THE FUND
The Westcott Nothing But Net Fund, Westcott Multi-National Large-Cap
Fund, and Westcott Fixed Income Fund (each a "Fund" or collectively, the
"Funds") were organized as diversified series of AmeriPrime Funds (the "Trust")
on September 29, 1999. The Trust is an open-end investment company established
under the laws of Ohio by an Agreement and Declaration of Trust dated August 8,
1995 (the "Trust Agreement"). The Trust Agreement permits the Trustees to issue
an unlimited number of shares of beneficial interest of separate series without
par value. Each Fund is one of a series of funds currently authorized by the
Trustees. The investment advisor to each Fund is Aegis Asset Management, Inc.
(the "Advisor").
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.
Prior to the public offering of the Funds, AmeriPrime Financial
Securities, Inc. (the Fund's distributor), 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, purchased all of the outstanding shares of each Fund and
may be deemed to control the Funds. After the public offering commences, it is
anticipated that AmeriPrime Financial Securities, Inc. will no longer control
the Funds. As the controlling shareholder, AmeriPrime Financial Securities, Inc.
would control the outcome of any proposal submitted to the shareholders for
approval, including changes to a Fund's fundamental policies or the terms of the
management agreement with the Fund's advisor.
For information concerning the purchase and redemption of shares of the
Fund, see "How to Buy Shares" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Determination of Net Asset Value" in the
Funds' 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. The Funds have no present intention to invest in
unsponsored ADRs.
B. Fixed Income Securities. The Fixed Income Fund may invest in a broad
range of fixed income securities, including corporate debt securities, U.S.
government securities, mortgage-backed securities, zero coupon bonds,
asset-backed and receivable-backed securities and participation interests in
such securities. Preferred stock and certain common stock equivalents may also
be considered to be fixed income securities. Fixed income securities are
generally considered to be interest rate sensitive, which means that their value
will generally decrease when interest rates rise and increase when interest
rates fall. Securities with shorter maturities, while offering lower yields,
generally provide greater price stability than longer term securities and are
less affected by changes in interest rates.
CORPORATE DEBT SECURITIES are bonds or notes issued by corporations and
other business organizations, including business trusts, in order to finance
their credit needs. Corporate debt securities include commercial paper which
consists of short term (usually from one to two hundred seventy days) unsecured
promissory notes issued by corporations in order to finance their current
operations. The Advisor considers corporate debt securities to be of investment
grade quality if they are rated BBB or higher by Standard & Poor's Corporation
("S&P"), Baa or higher by Moody's Investors Services, Inc. ("Moody's"), or if
unrated, determined by the Advisor to be of comparable quality. Investment grade
debt securities generally have adequate to strong protection of principal and
interest payments. In the lower end of this category, credit quality may be more
susceptible to potential future changes in circumstances and the securities have
speculative elements. If the rating of a security by S&P or Moody's drops below
investment grade, the Advisor will dispose of the security as soon as
practicable (depending on market conditions) unless the Advisor determines based
on its own credit analysis that the security provides the opportunity of meeting
the Fund's objective without presenting excessive risk.
CONVERTIBLE BONDS may be converted into or exchanged for a prescribed
amount of common stock of the same or a different issuer within a particular
period of time at a specified price or formula. A convertible security entitles
the holder to receive interest generally paid or accrued on debt or the dividend
paid on preferred stock until the convertible security matures or is redeemed,
converted or exchanged. Convertible securities have several unique investment
characteristics, such as (a) higher yields than common stocks, but lower yields
than comparable nonconvertible securities, (b) a lesser degree of fluctuation in
value than the underlying stock since they have fixed income characteristics,
and (c) the potential for capital appreciation if the market price of the
underlying common stock increases. A convertible security might be subject to
redemption at the option of the issuer at a price established in the convertible
security's governing instrument. If a convertible security held by the Fund is
called for redemption, the Fund may be required to permit the issuer to redeem
the security.
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. 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. Municipal notes, which are generally used to provide short
term capital needs and have maturities of one year of less, include tax
anticipation notes, revenue anticipation notes, bond anticipation notes and
construction loan notes. Tax exempt commercial paper typically represents short
term, unsecured, negotiable promissory notes. The Fund may invest in other
municipal securities such as variable rate demand instruments.
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.
The Advisor considers municipal securities to be of
investment grade quality if they are rated BBB or higher by S&P, Baa or higher
by Moody's, or if unrated, determined by the Advisor to be of comparable
quality. Investment grade debt securities generally have adequate to strong
protection of principal and interest payments. In the lower end of this
category, credit quality may be more susceptible to potential future changes in
circumstances and the securities have speculative elements. If the rating of a
security by S&P or Moody's drops below investment grade, the Advisor will
dispose of the security as soon as practicable (depending on market conditions)
unless the Advisor determines based on its own credit analysis that the security
provides the opportunity of meeting the Fund's objective without presenting
excessive risk.
U.S. GOVERNMENT SECURITIES may be backed by the credit of the
government as a whole or only by the issuing agency. U.S. Treasury bonds, notes,
and bills and some agency securities, such as those issued by the Federal
Housing Administration and the Government National Mortgage Association (GNMA),
are backed by the full faith and credit of the U.S. government as to payment of
principal and interest and are the highest quality government securities. Other
securities issued by U.S. government agencies or instrumentalities, such as
securities issued by the Federal Home Loan Banks and the Federal Home Loan
Mortgage Corporation, are supported only by the credit of the agency that issued
them, and not by the U.S. government. Securities issued by the Federal Farm
Credit System, the Federal Land Banks, and the Federal National Mortgage
Association (FNMA) are supported by the agency's right to borrow money from the
U.S. Treasury under certain circumstances, but are not backed by the full faith
and credit of the U.S. government.
MORTGAGE-BACKED SECURITIES represent an interest in a pool of
mortgages. These securities, including securities issued by FNMA and GNMA,
provide investors with payments consisting of both interest and principal as the
mortgages in the underlying mortgage pools are repaid. Unscheduled or early
payments on the underlying mortgages may shorten the securities' effective
maturities. 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 Fixed Income Fund may
experience a loss (if the price at which the respective security was acquired by
the Fund was at a premium over par, which represents the price at which the
security will be sold upon prepayment). In addition, prepayments of such
securities held by the Fund will reduce the share price of the Fund to the
extent the market value of the securities at the time of prepayment exceeds
their par value. Furthermore, the prices of mortgage-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 Fund at lower rates of return.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOs) are securities
collateralized by mortgages or mortgage-backed securities. CMOs are issued with
a variety of classes or series, which have different maturities and are often
retired in sequence. CMOs may be issued by governmental or non-governmental
entities such as banks and other mortgage lenders. Non-government securities may
offer a higher yield but also may be subject to greater price fluctuation than
government securities. Investments in CMOs are subject to the same risks as
direct investments in the underlying mortgage and mortgage-backed securities. In
addition, in the event of a bankruptcy or other default of an entity who issued
the CMO held by the Fund, the Fund could experience both delays in liquidating
its position and losses.
FINANCIAL SERVICES INDUSTRY OBLIGATIONS consist of certificates of
deposit, time deposits and bankers' acceptance certificates. Certificates of
deposit are negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it for a
definite period of time (usually from fourteen days to one year) at a stated or
variable interest rate. Time deposits are non-negotiable deposits maintained in
a banking institution or a savings and loan association for a specified period
of time at a stated interest rate. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft which has been drawn on it by
a customer, which instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity.
ZERO COUPON SECURITIES are debt securities issued or sold at a discount
from their face value which do not entitle the holder to any periodic payment of
interest prior to maturity or a specified redemption date (or cash payment
date). These involve risks that are similar to those of other debt securities,
although they may be more volatile, and certain zero coupon securities move in
the same direction as interest rates. The amount of the discount varies
depending on the time remaining until maturity or cash payment date, prevailing
interest rates, liquidity of the security and perceived credit quality of the
issuer. Zero coupon securities also may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons themselves
and receipts or certificates representing interests in such stripped debt
obligations and coupons. The market prices of zero coupon securities generally
are more volatile than the market prices of interest-bearing securities and are
likely to respond to a greater degree to changes in interest rates than
interest-bearing securities having similar maturities and credit qualities.
C. Foreign Securities. The Fixed Income Fund may invest in foreign
corporate and foreign government securities. Foreign government obligations
generally consist of debt securities supported by national, state or provincial
governments or similar political units or governmental agencies. Such
obligations may or may not be backed by the national government's full faith and
credit and general taxing powers. Investments in foreign securities also include
obligations issued by international organizations. International organizations
include entities designated or supported by governmental entities to promote
economic reconstruction or development as well as international banking
institutions and related government agencies. Examples are the International
Bank for Reconstruction and Development (the World Bank), the European Coal and
Steel Community, the Asian Development Bank and the InterAmerican Development
Bank. In addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.
Purchases of foreign securities are usually made in foreign currencies
and, as a result, a Fund may incur currency conversion costs and may be affected
favorably or unfavorably by changes in the value of foreign currencies against
the U.S. dollar. In addition, there may be less information publicly available
about a foreign company then about a U.S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. Other risks associated with
investments in foreign securities include changes in restrictions on foreign
currency transactions and rates of exchanges, changes in the administrations or
economic and monetary policies of foreign governments, the imposition of
exchange control regulations, the possibility of expropriation decrees and other
adverse foreign governmental action, the imposition of foreign taxes, less
liquid markets, less government supervision of exchanges, brokers and issuers,
difficulty in enforcing contractual obligations, delays in settlement of
securities transactions and greater price volatility. In addition, investing in
foreign securities will generally result in higher commissions than investing in
similar domestic securities.
D. Floating Rate, Inverse Floating Rate, and Index Obligations. The
Fixed Income Fund may invest in debt securities with interest payments or
maturity values that are not fixed, but float in conjunction with (or inversely
to) an underlying index or price. These securities may be backed by U.S.
Government or corporate issuers, or by collateral such as mortgages. The indices
and prices upon which such securities can be based include interest rates,
currency rates and commodities prices. However, the Funds will not invest in any
instrument whose value is computed based on a multiple of the change in price or
value of an asset or an index of or relating to assets in which the Fund cannot
or will not invest.
Floating rate securities pay interest according to a coupon which is
reset periodically. The reset mechanism may be formula based, or reflect the
passing through of floating interest payments on an underlying collateral pool.
The coupon is usually reset daily, weekly, monthly, quarterly or semi-annually,
but other schedules are possible. Floating rate obligations generally exhibit a
low price volatility for a given stated maturity or average life because their
coupons adjust with changes in interest rates. If their underlying index is not
an interest rate, or the reset mechanism lags the movement of rates in the
current market, greater price volatility may be experienced.
Inverse floating rate securities are similar to floating rate
securities except that their coupon payments vary inversely with an underlying
index by use of a formula. Inverse floating rate securities tend to exhibit
greater price volatility than other floating rate securities. Because the
changes in the coupon are usually negatively correlated with changes in overall
interest rates, interest rate risk and price volatility on inverse floating rate
obligations can be high, especially if leverage is used in the formula. Index
securities pay a fixed rate of interest, but have a maturity value that varies
by formula, so that when the obligation matures, a gain or loss is realized. The
risk of index obligations depends on the volatility of the underlying index, the
coupon payment and the maturity of the obligation.
E. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., a Fund) acquires ownership of an
obligation issued by the U.S. Government or by an agency of the U.S. Government
(a "U.S. Government obligation") (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
a Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, a Fund could experience both delays in
liquidating the underlying security and losses in value. However, each Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Advisor to be creditworthy. The Advisor monitors the creditworthiness of
the banks and securities dealers with which a Fund engages in repurchase
transactions.
F. Reverse Repurchase Agreements. The Fixed Income Fund may enter into
reverse repurchase agreements. Reverse repurchase agreements involve sales of
portfolio securities by the Fund to member banks of the Federal Reserve System
or recognized securities dealers, concurrently with an agreement by the Fund to
repurchase the same securities at a later date at a fixed price, which is
generally equal to the original sales price plus interest. The Fund retains
record ownership and the right to receive interest and principal payments on the
portfolio security involved. The Fund's objective in such a transaction would be
to obtain funds to pursue additional investment opportunities whose yield would
exceed the cost of the reverse repurchase transaction. Generally, the use of
reverse repurchase agreements should reduce portfolio turnover and increase
yield. In connection with each reverse repurchase agreement, the Fund will
direct its Custodian to place cash or U.S. government obligations in a separate
account in an amount equal to the repurchase price. In the event of bankruptcy
or other default by the purchaser, the Fund could experience both delays in
repurchasing the portfolio securities and losses.
When a separate account is maintained in connection with reverse
repurchase agreements, the securities deposited in the separate account will be
valued daily at market for the purpose of determining the adequacy of the
securities in the account. If the market value of such securities declines,
additional cash, U.S. government obligations or liquid high grade debt
obligations will be placed in the account on a daily basis so that the market
value of the account will equal the amount of the Fund's commitments to
repurchase securities. To the extent funds are in a separate account, they will
not be available for new investment or to meet redemptions. Reverse repurchase
agreements constitute a borrowing by the Fund and, together with all other
borrowings, will not represent more than [5%] of the net assets of the Fund.
Securities subject to reverse repurchase agreements and the securities
held in the Fund's portfolio are subject to changes in market value based upon
the public's perception of the creditworthiness of the issuer and changes in the
level of interest rates (which will generally result in all of those securities
changing in value in the same way, i.e., all those securities experiencing
appreciation when interest rates decline and depreciation when interest rates
rise). Therefore, if in order to achieve a higher level of income, the Fund
remains substantially fully invested at the same time that it has entered into
reverse repurchase transactions, there will be a possibility that the market
value of the Fund's assets will have greater fluctuation.
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. Neither the Large-Cap Fund nor the Fixed Income Fund
will invest 25% or more of its total assets in a particular industry. The
Nothing But Net Fund will invest 25% or more of its total assets in a particular
industry, other than the internet 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. The Funds will not purchase or sell puts, calls, options or
straddles.
5. Illiquid Investments. The Funds will invest in securities for which
there are legal or contractual restrictions on resale and other illiquid
securities.
6. Loans of Portfolio Securities. The Funds will not make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The investment advisor to the Westcott Funds is Aegis Asset Management,
Inc., 230 Westcott, Suite 1, Houston, Texas 77007(the "Advisor"). [T. Layng
Guerriero and William S. Kilroy, Jr. are the controlling shareholders of the
Advisor.]
Under the terms of the management agreement (the "Agreement"), the
Advisor manages each Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of each Fund except brokerage, taxes,
borrowing costs (such as (a) interest and (b) dividend expenses on securities
sold short), fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, each Fund is obligated to pay the Advisor
a fee (based on average daily net assets) computed and accrued daily and paid
monthly at the following annual rates: Nothing But Net Fund, 1.70%;
Multi-National Large-Cap Fund, 1.00%%; Fixed Income Fund, 0.75%.
The Advisor retains the right to use the name "Westcott" in connection
with another investment company or business enterprise with which the Advisor is
or may become associated. The Trust's right to use the name "Westcott"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Trust.
The names of the Trustees and executive officers of the Trust are shown below.
Each Trustee who is an "interested person" of the Trust, as defined in the
Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
==================================== ---------------- ======================================================================
NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
==================================== ---------------- ======================================================================
*Kenneth D. Trumpfheller President and President, Treasurer and Secretary of AmeriPrime Financial Services,
Age: 40 Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
1793 Kingswood Drive Inc., the Fund's distributor, since 1994. President and Trustee of
Suite 200 AmeriPrime Advisors Trust and AmeriPrime Insurance Trust; Prior to
Southlake, Texas 76092 December, 1994, a senior client executive with SEI Financial
Services.
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
Age: 40 Treasurer Financial Services, Inc. and AmeriPrime Financial Securities, Inc.;
1793 Kingswood Drive Secretary and Treasurer of AmeriPrime Advisors Trust and AmeriPrime
Suite 200 Insurance Trust; various positions with Fidelity Investments from
Southlake, Texas 76092 1987 to 1998; most recently Fund Reporting Unit Manager.
==================================== ---------------- ======================================================================
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 N. Indianwood Ave. field manufacturing/supply company, from 1984 to 1997, most recently
Broken Arrow, OK 74012 Vice President of Marketing.
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
Age: 51 Trust Company since 1992; President and Director of Heritage Trust
600 Jefferson Street Company from 1994-1996; Vice President and Manager of Investments of
Suite 350 Kanaly Trust Company from 1988 to 1992.
Houston, TX 77063
==================================== ================ ======================================================================
</TABLE>
<PAGE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<S> <C> <C>
==================================== ----------------------- ==================================
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST (THE TRUST IS
NAME FROM TRUST NOT IN A FUND COMPLEX)
==================================== ----------------------- ==================================
Kenneth D. Trumpfheller 0 0
==================================== ----------------------- ==================================
Steve L. Cobb $4,000 $4,000
==================================== ======================= ==================================
Gary E. Hippenstiel $4,000 $4,000
==================================== ======================= ==================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for each Fund's portfolio decisions and the placing
of each Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for each Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. Consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and subject to its obligation of seeking best qualitative execution, the
Advisor may give consideration to sales of shares of the Trust as a factor in
the selection of brokers and dealers to execute portfolio transactions.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the 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.
While The Fund does not deem it practicable and in its best interests
to solicit competitive bids for commission rates on each transaction,
consideration is regularly given to posted commission rates as well as other
information concerning the level of commissions charged on comparable
transactions by qualified brokers.
The Fund has no obligation to deal with any broker or dealer in the
execution of its transactions. However, it is contemplated that Westcott
Securities, L.L.C., in its capacity as a registered broker-dealer, will effect
substantially all securities transactions which are executed on a national
securities exchange and over-the-counter transactions conducted on an agency
basis. Such transactions will be executed at competitive commission rates
through Pershing, Inc.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
Under the Investment Company Act of 1940, persons affiliated with an
affiliate of the Advisor (such as Westcott Securities, L.L.C.) may be prohibited
from dealing with the Fund as a principal in the purchase and sale of
securities. Therefore, Westcott Securities, L.L.C. will not serve as the Fund's
dealer in connection with over-the-counter transactions. However, Westcott
Securities, L.L.C. may serve as the Fund's broker in over-the-counter
transactions conducted on an agency basis and will receive brokerage commissions
in connection with such transactions. Such agency transactions will be executed
through Pershing, Inc.
The Fund will not effect any brokerage transactions in its portfolio
securities with Westcott Securities, L.L.C. if such transactions would be unfair
or unreasonable to Fund shareholders, and the commissions will be paid solely
for the execution of trades and not for any other services. The Agreement
provides that affiliates of affiliates of the Advisor may receive brokerage
commissions in connection with effecting such transactions for the Fund. In
determining the commissions to be paid to Westcott Securities, L.L.C., it is the
policy of the Fund that such commissions will, in the judgment of the Trust's
Board of Trustees, be (a) at least as favorable to the Fund as those which would
be charged by other qualified brokers having comparable execution capability and
(b) at least as favorable to the Fund as commissions contemporaneously charged
by Westcott Securities, L.L.C. on comparable transactions for its most favored
unaffiliated customers, except for customers of Westcott Securities, L.L.C.
considered by a majority of the Trust's disinterested Trustees not to be
comparable to the Fund. The disinterested Trustees from time to time review,
among other things, information relating to the commissions charged by Westcott
Securities, L.L.C. to the Fund and its other customers, and rates and other
information concerning the commissions charged by other qualified brokers.
The Agreement does not provide for a reduction of the Advisor's fee by
the amount of any profits earned by Westcott Securities, L.L.C. from brokerage
commissions generated from portfolio transactions of the Fund.
While the Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to other
firms. Westcott Securities, L.L.C. will not receive reciprocal brokerage
business as a result of the brokerage business placed by the Fund with others.
When a Portfolio and another of the Advisor's clients seek to purchase
or sell the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Portfolios because of the increased volume of the
transaction. If the entire blocked order is not filled, the Portfolio may not be
able to acquire as large a position in such security as it desires or it may
have to pay a higher price for the security. Similarly, the Portfolio may not be
able to obtain as large an execution of an order to sell or as high a price for
any particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. The allocation may be adjusted by the Advisor, taking into account such
factors as the size of the individual orders and transaction costs, when the
Advisor believes an adjustment is reasonable.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
Each Fund may periodically advertise "average annual total return."
"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
for the period indicated that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates that the maximum sales load is
deducted from the initial $1,000 and that a complete redemption occurs at the
end of the applicable period. If the Fund has been in existence less than one,
five or ten years, the time period since the date of the initial public offering
of shares will be substituted for the periods stated.
A Fund's "yield" is determined in accordance with the method defined by
the Securities and Exchange Commission. A yield quotation is based on a 30 day
(or one month) period and is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
Yield = 2[(a-b/cd+1)6-1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Solely for the purpose of computing yield, dividend income recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day prior
to the start of the 30-day (or one month) period for which yield is being
calculated, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest). With respect to the treatment of
discount and premium on mortgage or other receivable-backed obligations which
are expected to be subject to monthly paydowns of principal and interest, gain
or loss attributable to actual monthly paydowns is accounted for as an increase
or decrease to interest income during the period and discount or premium on the
remaining security is not amortized.
Each Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from average
annual total return. A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for average annual total return. In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. These non-standardized quotations do not include the effect of
the applicable sales load which, if included, would reduce the quoted
performance. A non-standardized quotation of total return will always be
accompanied by the Fund's average annual total return as described above.
Each Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with each Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of any of the
Funds may be compared to indices of broad groups of unmanaged securities
considered to be representative of or similar to the portfolio holdings of the
Funds or considered to be representative of the stock market in general. The
Funds may use the Standard & Poor's 500 Stock Index, the NASDAQ Composite Index
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 M.L 6118, Cincinnati, Ohio 45202,
is Custodian of the Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Funds' transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Funds' shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Funds with fund accounting services, which
includes certain monthly reports, record-keeping and other management-related
services. For its services as fund accountant, Unified receives an annual fee
from the Advisor equal to 0.0275% of the Funds' assets up to $100 million
(subject to various monthly minimum fees, the maximum being $2,000 per month for
assets of $20 to $100 million).
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1999. McCurdy & Associates performs an
annual audit of the Funds' financial statements and provides financial, tax and
accounting consulting services as requested.
<PAGE>
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Funds. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the Distributor. The Distributor is obligated to sell the shares of
the Funds on a best efforts basis only against purchase orders for the shares.
Shares of the Funds are offered to the public on a continuous basis.
ADMINISTRATOR
The Funds retain AmeriPrime Financial Services, Inc., 1793
Kingswood Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage
the Funds' business affairs and provide the Funds with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. The Administrator receives a monthly fee from the Adviser equal to
an annual average rate of 0.10% of 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.
