SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
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Pre-Effective Amendment No. ------- / /
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Post-Effective Amendment No. 43
------ /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
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Amendment No. 42
------ /X/
(Check appropriate box or boxes.)
AmeriPrime Funds - File Nos. 33-96826 and 811-9096
1793 Kingswood Drive, Suite 200, Southlake, Texas 76092
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code: (817) 431-2197
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Kenneth Trumpfheller, 1793 Kingswood Dr., Suite 200, Southlake, TX 76092
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(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering:
-----------------------
It is proposed that this filing will become effective:
/X/ immediately upon filing pursuant to paragraph (b)
/ / on ___________ pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
COLUMBIA PARTNERS EQUITY FUND
PROSPECTUS
AUGUST 1, 2000
INVESTMENT OBJECTIVE:
Long term capital growth
1775 Pennsylvania Ave, N.W.
Washington, D.C. 20006
(888) 696-2733
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
RISK/RETURN SUMMARY ........................................................1
FEES AND EXPENSES OF INVESTING IN THE FUND...................................3
HOW TO BUY SHARES............................................................3
HOW TO REDEEM SHARES.........................................................5
DETERMINATION OF NET ASSET VALUE.............................................6
DIVIDENDS, DISTRIBUTIONS AND TAXES...........................................6
MANAGEMENT OF THE FUND.......................................................6
FINANCIAL HIGHLIGHTS.........................................................7
FOR MORE INFORMATION................................................BACK COVER
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE
The investment objective of the Columbia Partners Equity Fund is to provide
long term growth for its shareholders.
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks of small, medium and large
capitalization U.S. companies. The advisor selects stocks that it believes
offer strong growth prospects and are reasonably valued. The advisor uses
computer analysis and fundamental research to select stocks that have all or
some of the following characteristics:
o strong earnings growth
o improving analysts' expectations for future earnings growth
o reasonable price/earnings ratios relative to their historic ranges
o improving stock price performance and momentum.
The Fund will invest at least 65% of its net assets in common stock. While
it is anticipated that the Fund will diversify its investments across a range
of industry sectors, certain sectors are likely to be overweighted compared to
others because the Fund's advisor seeks the best investment opportunities
regardless of sector. The Fund may, for example, be overweighted at times in
the technology sector. The sectors in which the Fund may be overweighted will
vary at different points in the economic cycle.
The Fund may sell a security if the advisor's price objective has been
realized or if the fundamental analysis indicates that the company's prospects
for growth have deteriorated.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o MANAGEMENT RISK. The advisor's strategy may fail to produce the intended
results.
o SMALLER COMPANY RISK. To the extent the Fund invests in smaller
capitalization companies, the Fund will be subject to additional risks.
These include: o The earnings and prospects of smaller companies are more
volatile than larger companies.
o Smaller companies may experience higher failure rates than do larger
companies.
o The trading volume of securities of smaller companies is normally less
than that of larger companies and, therefore, may disproportionately
affect their market price, tending to make them fall more in response
to selling pressure than is the case with larger companies.
o Smaller companies may have limited markets, product lines or financial
resources and may lack management experience.
o COMPANY RISK. The value of the Fund may decrease in response to the
activities and financial prospects of an individual company in the Fund's
portfolio. The value of an individual company can be more volatile than the
market as a whole.
o MARKET RISK. Overall stock market risks may also affect the value of the
Fund. Factors such as domestic economic growth and market conditions,
interest rate levels, and political events affect the securities markets and
could cause the Fund's share price to fall.
o SECTOR RISK. If the Fund's portfolio is overweighted in a certain sector, any
negative development affecting that sector will have a greater impact on the
Fund than a fund that is not overweighted in that sector. The Fund may have a
greater concentration in technology and/or telecommunications companies and
weakness in either sector could result in significant losses to the Fund.
Technology and telecommunications companies may be significantly affected by
falling prices and profits and intense competition, and their products may be
subject to rapid obsolescence. The telecommunications sector is subject to
changing government regulations that may limit profits and restrict services
offered.
<PAGE>
o VOLATILITY RISK. Common stocks tend to be more volatile than other
investment choices. The value of an individual company can be more volatile
than the market as a whole. This volatility affects the value of the Fund's
shares.
o TURNOVER RISK. The Fund may at times have a portfolio turnover rate that is
higher than other stock funds. Higher portfolio turnover would result in
correspondingly greater brokerage commission expenses (which will lower the
Fund's total return) and may result in the distribution to shareholders of
additional capital gains for tax purposes.
o An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
o The Fund is not a complete investment program. As with any mutual fund
investment, the Fund's returns will vary and you could lose money.
IS THE FUND RIGHT FOR YOU?
The Fund may be suitable for:
o Long-term investors seeking a fund with a growth investment strategy
o Investors who can tolerate the risks associated with common stock
investments, and the greater risks of focusing on certain sectors of the
economy
o Investors willing to accept the greater market price fluctuations of
smaller companies
GENERAL
The investment objective of the Fund may be changed without shareholder
approval.
From time to time, the Fund may take temporary defensive positions which are
inconsistent with the Fund's principal investment strategies, in attempting to
respond to adverse market, economic, political, or other conditions. For
example, the Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load mutual funds or repurchase agreements.
If the 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 Fund may not achieve its investment
objective. The Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
HOW THE FUND HAS 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 Fund is recently organized and has
a limited performance history.
<PAGE>
FEES AND EXPENSES OF INVESTING IN THE FUND
The tables describe the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases .........................NONE
Maximum Deferred Sales Charge (Load)......................................NONE
Redemption Fee............................................................NONE
Exchange Fee..............................................................NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees..........................................................1.20%
Distribution (12b-1) Fees.................................................NONE
Other Expenses ..................................................... 0.02%
Total Annual Fund Operating Expenses ............................... 1.22%
Expense Reimbursement1...................................................0.02%
NET EXPENSES (after expense reimbursement)...............................1.20%
1The Fund's advisor has contractually agreed to permanently reimburse fees and
expenses of the trustees who are not "interested persons" as defined in
the Investment Company Act to maintain the Fund's total operating expenses
at 1.20% of net assets.
Example:
The example below is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example uses the
same assumptions as other mutual fund prospectuses: a $10,000 initial investment
for the time periods indicated, reinvestment of dividends and distributions, 5%
annual total return, constant operating expenses, and sale of all shares at the
end of each time period. Although your actual expenses may be different, based
on these assumptions your costs will be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$123 $383 $663 $1,461
HOW TO BUY SHARES
The minimum initial investment in the Fund is $5,000 ($2,000 for qualified
retirement plans) and minimum subsequent investments are $500. These minimums
may be waived by the advisor for accounts participating in an automatic
investment program. If your investment is aggregated into an omnibus account
established by an investment advisor, broker or other intermediary, the account
minimums apply to the omnibus account, not to your individual investment. If you
purchase or redeem shares through a broker/dealer or another intermediary, you
may be charged a fee by that intermediary.
INITIAL PURCHASE
BY MAIL- To be in proper form, your initial purchase request must include:
o a completed and signed investment application form (which accompanies this
Prospectus); and
o a check (subject to the minimum amounts) made payable to the Fund.
Mail the application and check to:
U.S. Mail: Overnight:
Columbia Partners Equity Fund Columbia Partners Equity Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
BY WIRE- You may also purchase shares of the Fund by wiring federal funds
from your bank, which may charge you a fee for doing so. To wire money, you must
call Unified Fund Services, Inc. the Fund's transfer agent at (888) 696-2733 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: Columbia Partners Equity Fund
Account Name _________________(write in shareholder name)
For the Account # ______________(write in account number)
D.D.A.#823257860
You must mail a signed application to Firstar Bank, N.A, the Fund's
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.
ADDITIONAL INVESTMENTS
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain:
-your name -the name of your account(s)
-your account number(s) -a check made payable to Columbia Partners
Equity Fund
Checks should be sent to the Columbia Partners Equity Fund at the address listed
above. A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in the Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
TAX SHELTERED RETIREMENT PLANS
Since the Fund is oriented to longer-term investments, the Fund may be an
appropriate investment medium for tax-sheltered retirement plans, including:
individual retirement plans (IRAs); simplified employee pensions (SEPs); 401(k)
plans; qualified corporate pension and profit-sharing plans (for employees); tax
deferred investment plans (for employees of public school systems and certain
types of charitable organizations); and other qualified retirement plans. You
should contact the Fund's transfer agent for the procedure to open an IRA or SEP
plan, as well as more specific information regarding these retirement plan
options. Please consult with an 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 Fund's transfer agent about the IRA custodial fees.
OTHER PURCHASE INFORMATION
The 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 Fund. If you are already a shareholder, the Fund can redeem
shares from any identically registered account in the Fund as reimbursement for
any loss incurred. You may be prohibited or restricted from making future
purchases in the Fund.
HOW TO REDEEM SHARES
You may receive redemption payments by check or federal wire transfer. The
proceeds may be more or less than the purchase price of your shares, depending
on the market value of the Fund's securities at the time of your redemption.
Presently there is no charge for wire redemptions; however, the Fund may charge
for this service in the future. Any charges for wire redemptions will be
deducted from your 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 the Fund at no charge
by mail. Your request should be addressed to:
Columbia Partners Equity Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper form,
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. The Fund may 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 Fund or the
Fund's transfer agent, a shareholder, prior to redemption, may be required to
furnish additional legal documents to insure proper authorization.
BY TELEPHONE - You may redeem any part of your account in the Fund by
calling the Fund's transfer agent at (888) 696-2733. 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 Fund or the transfer agent may terminate the telephone redemption
procedures at any time. During periods of extreme market activity, it is
possible that shareholders may encounter some difficulty in telephoning the
Fund, although neither the Fund nor the transfer agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Fund by
telephone, you may request a redemption or exchange by mail.
ADDITIONAL INFORMATION - If you are not certain of the requirements
for a redemption please call the Fund's transfer agent at (888) 696-2733.
Redemptions specifying a certain date or share price cannot be accepted and will
be returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing, or under any emergency circumstances (as
determined by the Securities and Exchange Commission) the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund 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
$5,000 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax advisor concerning the tax consequences of involuntary
redemptions. 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 Fund.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the 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 Fund's 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 by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
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. The 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. The Fund expects that its distributions will consist primarily
of capital gains.
TAXES. In general, selling shares of the 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. You may want to avoid making a
substantial investment when a Fund is about to make a capital gains distribution
because you would be responsible for any taxes on the distribution regardless of
how long you have owned your shares.
Early each year, the Fund 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 advisor about your
investment.
MANAGEMENT OF THE FUND
Columbia Partners, L.L.C., Investment Management, 1775 Pennsylvania Ave.
N.W., Washington, D.C. 20006 serves as investment advisor to the Fund. As of
December 31, 1999 the advisor manages $2.5 billion in assets for pension funds,
endowment funds and individuals in large, medium and small capitalization equity
portfolios and fixed income and balanced portfolios. The advisor was organized
in 1995 and currently has a staff of 25 with average experience of 18 years
among the investment professionals.
The day-to-day management of the Fund will be directed by a team of three
senior professionals: Robert A. von Pentz, Managing Partner; Gary Dickinson,
CFA, Principal; and Rhys H. Williams, CFA, Principal.
Mr. von Pentz has oversight responsibility for all equity investment
activities at the advisor and has primary responsibility for the management of
the firm's large and mid capitalization portfolios. Prior to forming the
advisor, Mr. Von Pentz was chairman of the board and the chief investment
officer at Riggs Investment Management Company (RIMCO) in Washington. Mr. von
Pentz has a BA in economics and an MBA from the University of New Mexico.
Mr. Dickinson has been responsible for equity research and management
since joining the advisor in 1995. Prior to that time, he was a research analyst
at Riggs Investment Management Company. He has a BS in business administration
(summa cum laude) from Georgetown University.
Mr. Williams also has responsibility for equity research and management at
the advisor and primary responsibility for the firm's hedge fund and small
capitalization portfolios. From 1990 to 1997, Mr. Williams was Senior Vice
President at Prudential Securities, where, among his responsibilities, he
managed small and medium capitalization portfolios. He has a BA from Duke
University (magna cum laude) and a MA in international economics from Johns
Hopkins University.
The Fund is authorized to pay the advisor a fee equal to 1.20% of its
average daily net assets. The advisor pays all of the operating expenses of the
Fund except brokerage, taxes, interest, fees and expenses of non-interested
person trustees and extraordinary expenses. In this regard, it should be noted
that most investment companies pay their own operating expenses directly, while
the Fund's expenses, except those specified above, are paid by the advisor. The
advisor (not the Fund) may pay certain financial institutions (which may include
banks, brokers, securities dealers and other industry professionals) a fee for
providing distribution related services and/or for performing certain
administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the year
ended March 31, 2000 is derived from the audited financial statements of the
Fund. The financial statements of the Fund have been audited by McCurdy &
Associates CPA's, Inc., independent public accountants, and are included in the
Fund's Annual Report. The Annual Report contains additional performance
information and is available upon request and without charge.
SELECTED PER SHARE DATA
Net asset value, beginning of period $10.00
------------
Income from investment operations
Net investment loss (0.04)
Net realized and unrealized gain 7.59
------------
Total from investment operations 7.55
------------
Less Distributions
From net investment income 0.00
From net realized gain (0.39)
------------
Total distributions (0.39)
------------
Net asset value, end of period $17.16
============
TOTAL RETURN 76.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000) $ 24,040
Ratio of expenses to average net assets 1.20%
Ratio of expenses to average net assets
before reimbursement 1.22%
Ratio of net investment income (loss) to
average net assets (0.31)%
Ratio of net investment income (loss) to
average net assets before reimbursement (0.34)%
Portfolio turnover rate 215.08%
<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. Annual
and semi-annual reports contain management's discussion of market conditions,
investment strategies and performance results as of the Fund's latest
semi-annual or annual fiscal year end.
Call the Fund at 888-696-2733 to request free copies of the SAI and the
Fund's annual and semi-annual reports, to request other information about the
Fund and to make shareholder inquiries.
You may review and copy information about the Fund (including the SAI and
other reports) at the Securities and Exchange Commission (SEC) Public Reference
Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours and
operation. You may also obtain reports and other information about the Fund on
the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
<PAGE>
COLUMBIA PARTNERS EQUITY FUND
STATEMENT OF ADDITIONAL INFORMATION
August 1, 2000
This Statement of Additional Information ("SAI") is not a prospectus. It
should be read in conjunction with the Prospectus of Columbia Partners Equity
Fund dated August 1, 2000. This SAI incorporates by reference the Fund's Annual
Report to Shareholders for the period ended March 31, 2000 ("Annual Report"). A
free copy of the Prospectus or Annual Report can be obtained by writing the
Transfer Agent at 431 N. Pennsylvania Street, Indianapolis, IN 46204, or by
calling 1-888-696-2733.
TABLE OF CONTENTS PAGE
DESCRIPTION OF THE TRUST AND FUND............................................2
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS........3
INVESTMENT LIMITATIONS.......................................................7
THE INVESTMENT ADVISOR.......................................................9
TRUSTEES AND OFFICERS.......................................................10
PORTFOLIO TRANSACTIONS AND BROKERAGE........................................11
DETERMINATION OF SHARE PRICE................................................12
INVESTMENT PERFORMANCE......................................................12
CUSTODIAN...................................................................13
TRANSFER AGENT and FUND ACCOUNTING..........................................13
ACCOUNTANTS.................................................................14
DISTRIBUTOR.................................................................14
ADMINISTRATOR...............................................................14
FINANCIAL STATEMENTS........................................................14
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
Columbia Partners Equity Fund (the "Fund") was organized as a diversified
series of AmeriPrime Funds (the "Trust") on February 2, 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. The Fund is one of a
series of funds currently authorized by the Trustees.
The Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Fund's transfer
agent for the account of the shareholder. Each share of a series represents an
equal proportionate interest in the assets and liabilities belonging to that
series with each other share of that series and is entitled to such dividends
and distributions out of income belonging to the series as are declared by the
Trustees. The shares do not have cumulative voting rights or any preemptive or
conversion rights, and the Trustees have the authority from time to time to
divide or combine the shares of any series into a greater or lesser number of
shares of that series so long as the proportionate beneficial interest in the
assets belonging to that series and the rights of shares of any other series are
in no way affected. In case of any liquidation of a series, the holders of
shares of the series being liquidated will be entitled to receive as a class a
distribution out of the assets, net of the liabilities, belonging to that
series. Expenses attributable to any series are borne by that series. Any
general expenses of the Trust not readily identifiable as belonging to a
particular series are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. No shareholder
is liable to further calls or to assessment by the Trust without his or her
express consent.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely affects the rights of shareholders must be approved by the
shareholders affected. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion that failure to
so redeem may have materially adverse consequences to all or any of the Fund's
shareholders.
As of July 14, 2000, the following persons may be deemed to beneficially
own or hold of record five percent (5%) or more of the Fund: Michael F. Horn,
Sr., 4667 Kenmore Drive, NW, Washington, DC 20007, 17.03%; Gerald SJ Cassidy,
700 13th Street, NW, #400, Washington, DC 20005, 11.82%; and Landon Butler, Jr.,
700 13th Street, NW, Suite 1150, Washington, DC 20005, 5.98%.
As of July 14, 2000, the officers and trustees as a group owned less than
one percent of the Fund.
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
Fund's Prospectus and this Statement of Additional Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a discussion of some of the investments the Fund may
make and some of the techniques it may use.
A. Equity Securities. Equity securities consist of common stock,
convertible preferred stock, convertible bonds, rights and warrants. Common
stocks, the most familiar type, represent an equity (ownership) interest in a
corporation. Convertible stocks and bonds are securities that can be converted
into common stock pursuant to their terms. Warrants are options to purchase
equity securities at a specified price for a specific time period. Rights are
similar to warrants, but normally have a short duration and are distributed by
the issuer to its shareholders. Although equity securities have a history of
long term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market and economic conditions. The
Fund may not invest more than 5% of its net assets in either convertible
preferred stocks or convertible bonds. The advisor will limit the Fund's
investment in convertible securities to investment grade (those rated BBB or
better by Moody's Investors Service, Inc. or Standard & Poor's Rating Group) or,
if unrated, of comparable quality in the opinion of the advisor.
Equity securities include S&P Depositary Receipts ("SPDRs") and other
similar instruments. SPDRs are shares of a publicly traded unit investment trust
which owns the stock included in the S&P 500 Index, and changes in the price of
the SPDRs track the movement of the Index relatively closely. Similar
instruments may track the movement of other stock indexes.
The Fund may invest up to 20% of its net assets in foreign equity
securities by purchasing American Depositary Receipts (ADRs). ADRs are
certificates evidencing ownership of shares of a foreign-based issuer held in
trust by a bank or similar financial institution. They are alternatives to the
direct purchase of the underlying securities in their national markets and
currencies. To the extent that the Fund does invest in ADRs, such investments
may be subject to special risks. For example, there may be less information
publicly available about a foreign company than about a U.S. company, and
foreign companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
Investments in equity securities are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the advisor. As a result, the return and net asset value
of the Fund will fluctuate. Securities in the Fund's portfolio may decrease in
value or not increase as much as the market as a whole. Although profits in some
Fund holdings may be realized quickly, it is not expected that most investments
will appreciate rapidly.
At times, a small portion of the Fund may be invested in companies with
short operating histories ("new issuers") and in initial public offerings
("IPOs"), and such investments could be considered speculative. New issuers are
relatively unseasoned and may lack sufficient resources, may be unable to
generate internally the funds necessary for growth and may find external
financing to be unavailable on favorable terms or even totally unavailable. New
issuers will often be involved in the development or marketing of a new product
with no established market, which could lead to significant losses. To the
extent the Fund invests in smaller capitalization companies, the Fund will also
be subject to the risks associated with such companies. Smaller capitalization
companies, IPOs and new issuers may experience lower trading volumes than larger
capitalization, established companies and may experience higher growth rates and
higher failure rates than larger capitalization companies. Smaller
capitalization companies, IPOs and new issuers also may have limited product
lines, markets or financial resources and may lack management depth.
The Fund may invest up to 20% of its assets in real estate investment
trusts ("REITs"). A REIT is a corporation or business trust that invests
substantially all of its assets in interests in real estate. Equity REITs are
those which purchase or lease land and buildings and generate income primarily
from rental income. Equity REITs may also realize capital gains (or losses) when
selling property that has appreciated (or depreciated) in value. Mortgage REITs
are those which invest in real estate mortgages and generate income primarily
from interest payments on mortgage loans. Hybrid REITs generally invest in both
real property and mortgages. In addition, REITs are generally subject to risks
associated with direct ownership of real estate, such as decreases in real
estate values or fluctuations in rental income caused by a variety of factors,
including increases in interest rates, increases in property taxes and other
operating costs, casualty or condemnation losses, possible environmental
liabilities and changes in supply and demand for properties. Risks associated
with REIT investments include the fact that equity and mortgage REITs are
dependent upon specialized management skills and are not fully diversified.
These characteristics subject REITs to the risks associated with financing a
limited number of projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, and self-liquidation. Additionally, equity REITs may be
affected by any changes in the value of the underlying property owned by the
trusts, and mortgage REITs may be affected by the quality of any credit
extended.
B. Fixed Income Securities. Although the Fund intends to invest primarily
in U.S. common stocks, the advisor reserves the right, during periods of
unusually high interest rates or unusual market conditions, to invest in fixed
income securities for preservation of capital, total return and capital gain
purposes, if the advisor believes that such a position would best serve the
Fund's investment objective. Fixed income securities include corporate debt
securities and U.S. government securities. Fixed income securities are generally
considered to be interest rate sensitive, which means that their value will
generally decrease when interest rates rise and increase when interest rates
fall. Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer term securities and are less
affected by changes in interest rates.
CORPORATE DEBT SECURITIES - Corporate debt securities are long and
short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The advisor considers
corporate debt securities to be of investment grade quality if they are rated
BBB or higher by Standard & Poor's Corporation, or Baa or higher by Moody's
Investors Services, Inc., or if unrated, determined by the advisor to be of
comparable quality. Investment grade debt securities generally have adequate to
strong protection of principal and interest payments. In the lower end of this
category, credit quality may be more susceptible to potential future changes in
circumstances and the securities have speculative elements.
U.S. GOVERNMENT OBLIGATIONS - U.S. government obligations may be
backed by the credit of the government as a whole or only by the issuing agency.
U.S. Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
C. Convertible Securities. A convertible security is a bond, debenture,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock. The Fund may invest up to 5% of its assets in
convertible securities rated BBB or higher by Standard & Poor's Corporation
("S&P") or by Moody's Investors Services, Inc. ("Moody's"), or if unrated,
determined by the advisor to be of comparable quality. Generally, investments in
securities in the lower rating categories provide higher yields but involve
greater volatility of price and risk of loss of principal and interest than
investments in securities with higher ratings. Securities rated lower than Baa
by Moody's or BBB by S&P are considered speculative. In addition, lower ratings
reflect a greater possibility of an adverse change in the financial conditions
affecting the ability of the issuer to make payments of principal and interest.
The market price of lower rated securities generally responds to short term
corporate and market developments to a greater extent than higher rated
securities which react primarily to fluctuations in the general level of
interest rates. Lower rated securities will also be affected by the market's
perception of their credit quality and the outlook for economic growth.
In the past, economic downturns or an increase in interest rates have
under certain circumstances caused a higher incidence of default by the issuers
of these securities and may do so in the future, especially in the case of
highly leveraged issuers.
The prices for these securities may be affected by legislative and
regulatory developments. For example, new federal rules require that savings and
loan associations gradually reduce their holdings of high-yield securities. An
effect of such legislation may be to significantly depress the prices of
outstanding lower rated securities. The market for lower rated securities may be
less liquid than the market for higher rated securities. Furthermore, the
liquidity of lower rated securities may be affected by the market's perception
of their credit quality. Therefore, judgment may at times play a greater role in
valuing these securities than in the case of higher rated securities, and it
also may be more difficult during certain adverse market conditions to sell
lower rated securities at their fair value to meet redemption requests or to
respond to changes in the market.
If the rating of a security by S&P or Moody's drops below 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. The Advisoradvisor will consider
all factors which it deems appropriate, including ratings, in making investment
decisions for the Fund and will attempt to minimize investment risk through
conditions and trends. While the advisor may refer to ratings, it does not rely
exclusively on ratings, but makes its own independent and ongoing review of
credit quality.
D. Option Transactions. The Fund may write covered call options, and
purchase put or call options, on stocks, bonds, and stock and bond indices
listed on domestic and foreign stock exchanges, in lieu of direct investment in
the underlying securities or for hedging purposes. An option involves either (a)
the right or the obligation to buy or sell a specific instrument at a specific
price until the expiration date of the option, or (b) the right to receive
payments or the obligation to make payments representing the difference between
the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indices. The
purchaser of an option on a security pays the seller (the writer) a premium for
the right granted but is not obligated to buy or sell the underlying security.
The purchaser of an option on a market index pays the seller a premium for the
right granted, and in return the seller of such an option is obligated to make
the payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the-counter
market. Call options on securities which the Fund sells (writes) will be covered
or secured, which means that it will own the underlying security; or (for an
option on a stock index) will hold a portfolio of securities substantially
replicating the movement of the index (or, to the extent it does not hold such a
portfolio, will maintain a segregated account with the Custodiancustodian of
high quality liquid debt obligations equal to the market value of the option,
marked to market daily). When the Fund writes call options, it may be required
to maintain a margin account, to pledge the underlying securities or U.S.
government obligations or to deposit liquid high quality debt obligations in a
separate account with the custodian.
The purchase and writing of options involves certain risks; for example,
the possible inability to effect closing transactions at favorable prices and an
appreciation limit on the securities set aside for settlement, as well as (in
the case of options on a stock index) exposure to an indeterminate liability.
The purchase of options limits the Fund's potential loss to the amount of the
premium paid and can afford the Fund the opportunity to profit from favorable
movements in the price of an underlying security to a greater extent than if
transactions were effected in the security directly. However, the purchase of an
option could result in the Fund losing a greater percentage of its investment
than if the transaction were effected directly. When the Fund writes a covered
call option, it will receive a premium, but it will give up the opportunity to
profit from a price increase in the underlying security above the exercise price
as long as its obligation as a writer continues, and it will retain the risk of
loss should the price of the security decline. When the Fund writes a covered
call option on a stock index, it will assume the risk that the price of the
index will rise above the exercise price, in which case the Fund may be required
to enter into a closing transaction at a loss.
E. Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by obligations of the U.S. Government and its agencies. A
repurchase agreement is a short-term investment in which the purchaser (i.e.,
the Fund) acquires ownership of a U.S. Government or agency obligation (which
may be of any maturity) and the seller agrees to repurchase the obligation at a
future time at a set price, thereby determining the yield during the purchaser's
holding period (usually not more than seven days from the date of purchase). Any
repurchase transaction in which the Fund engages will require full
collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with Firstar Bank, N.A. (the Fund's custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
advisor (subject to review by the Board of Trustees) to be creditworthy. The
advisor monitors the creditworthiness of the banks and securities dealers with
which the Fund engages in repurchase transactions.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted
by the Trust with respect to the Fund and are fundamental ("Fundamental"), i.e.,
they may not be changed without the affirmative vote of a majority of the
outstanding shares of the Fund. As used in the Prospectus and the Statement of
Additional Information, the term "majority" of the outstanding shares of the
Fund means the lesser of (1) 67% or more of the outstanding shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented at such meeting; or (2) more than 50% of
the outstanding shares of the Fund. Other investment practices which may be
changed by the Board of Trustees without the approval of shareholders to the
extent permitted by applicable law, regulation or regulatory policy are
considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Fund will not act as underwriter of securities issued
by other persons. This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
<PAGE>
7. Concentration. The Fund will not invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment company,
whether organized as a trust, association or corporation, or a personal holding
company, may be merged or consolidated with or acquired by the Trust, provided
that if such merger, consolidation or acquisition results in an investment in
the securities of any issuer prohibited by said paragraphs, the Trust shall,
within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or such
portion thereof as shall bring the total investment therein within the
limitations imposed by said paragraphs above as of the date of consummation.
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
i. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. The Fund will generally borrow only for liquidity purposes.
The Fund will not purchase any security while borrowings (including reverse
repurchase agreements) representing more than 5% of its total assets are
outstanding. The Fund will not enter into reverse repurchase agreements.
iii. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. Short Sales. The Fund will not effect short sales of securities.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
vi. Restricted/Illiquid Securities. The Fund will not purchase restricted
or illiquid securities.
<PAGE>
THE INVESTMENT ADVISOR
The Fund's investment advisor is Columbia Partners, L.L.C., Investment
Management, 1775 Pennsylvania Avenue, N.W., Washington, D.C. 20006 (the
"Advisor"). Galway Capital Management, L.L.C., 700 13th Street, N.W., Suite
1169, Washington, D.C. 20005, ("Galway") may be deemed to be a "controlling
person" of the Advisor due to its share of ownership of the Advisor.
However, as Galway is a venture capital firm, the Advisor does not believe
itself to be controlled by Galway.
Under the terms of the management agreement (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage, taxes, interest, fees and
expenses of the non-interested person trustees and extraordinary expenses. As
compensation for its management services and agreement to pay the Fund's
expenses, the Fund is obligated to pay the Advisor a fee computed and accrued
daily and paid monthly at an annual rate of 1.20% of the average daily net
assets of the Fund. The Advisor may waive all or part of its fee, at any time,
and at its sole discretion, but such action shall not obligate the Advisor to
waive any fees in the future. For the fiscal year ended March 31, 2000, the Fund
paid advisory fees of 133,984.
The Advisor retains the right to use the name "Columbia Partners" or any
variation thereof 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 "Columbia Partners" or any variation thereof 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. If a bank
or other financial institution 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 and other financial
institutions 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 and other financial institutions which provide such
services; however, in selecting investments for the Fund, no preference will be
shown for such securities.
The Trust and the Advisor have each adopted a Code of Ethics under Rule
17j-1 of the Investment Company Act of 1940. The Code significantly restricts
the personal investing activities of all employees of the Advisor. The Code
requires that all employees of the Advisor preclear any personal securities
investment. The preclearance requirement and associated procedures are designed
to identify any substantive prohibition or limitation applicable to the proposed
investment. In addition, no employee may purchase or sell any security which at
the time is being purchased or sold, or to the knowledge of the employee is
being considered for purchase or sale, by the Fund. The substantive restrictions
also include a ban on acquiring any securities in an initial public offering and
provides for trading "blackout periods" which prohibit trading by portfolio
managers of the Fund within periods of trading by the Fund in the same (or
equivalent) security. The restrictions and prohibitions apply to most securities
transactions by employees of the Advisor, with limited exceptions for some
securities (such as securities that have a market capitalization and average
daily trading volume above certain minimums).
<PAGE>
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>
<CAPTION>
=====================================================================================
NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
-------------------------------------------------------------------------------------
<S> <C> <C>
*Kenneth D. Trumpfheller President, President, Treasurer and Secretary of
1793 Kingswood Drive Secretary AmeriPrime Financial Services, Inc., the
Suite 200 and Trustee Fund's administrator, and AmeriPrime Financial
Southlake, Texas 76092 Securities, Inc., the Fund's distributor,
Year of Birth: 1958 since 1994; President and Trustee of
AmeriPrime Advisors Trust and AmeriPrime
Insurance Trust; Prior to December, 1994, a
senior client executive with SEI Financial
Services.
-------------------------------------------------------------------------------------
*Robert A. Chopyak Treasurer Manager of AmeriPrime Financial Services,
1793 Kingswood Drive and Chief Inc., the Fund's administrator, from February
Suite 200 Financial 2000 to present. Self-employed, performing
Southlake, Texas 76092 Officer Y2K testing, January 1999 to January 2000.
Year of Birth: 1968 Vice President of Fund Accounting, American
Data Services, Inc., a mutual fund services
company, October 1992 to December 1998.
-------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company,
2001 N. Indianwood L.L.C., oil and gas services company; various
Avenue positions with Carbo Ceramics, Inc., oil field
Broken Arrow, OK 74012 manufacturing/supply company, from 1984 to
Year of Birth: 1957 1997, most recently Vice President of
Marketing.
-------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment
600 Jefferson Street Officer of Legacy Trust Company since 1992;
Suite 350 President and Director of Heritage Trust
Houston, TX 77002 Company from 1994-1996; Vice President and
Year of Birth: 1947 Manager of Investments of Kanaly Trust Company
from 1988 to 1992.
=====================================================================================
</TABLE>
* This person may be deemed an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
The compensation paid to the Trustees of the Trust for the Fund's fiscal
year ended March 31, 2000 is as set forth in the following table. Trustee fees
are Trust expenses and each series of the Trust pays a portion of the Trustee
fees.
=================================================================
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST (THE TRUST
NAME FROM TRUST IS
NOT IN A FUND COMPLEX)
-----------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
-----------------------------------------------------------------
Steve L. Cobb $________ $________
-----------------------------------------------------------------
Gary E. Hippenstiel $________ $________
=================================================================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust, the
Advisor is responsible for the Fund's portfolio decisions and the placing of the
Fund's portfolio transactions. In placing portfolio transactions, the Advisor
seeks the best qualitative execution for the Fund, taking into account such
factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. Consistent with
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 Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and economic
analyses, statistical services and information with respect to the availability
of securities or purchasers or sellers of securities and analyses of reports
concerning performance of accounts. The research services and other information
furnished by brokers through whom the Fund effects securities transactions may
also be used by the Advisor in servicing all of its accounts. Similarly,
research and information provided by brokers or dealers serving other clients
may be useful to the Advisor in connection with its services to the Fund.
Although research services and other information are useful to the Fund and the
Advisor, it is not possible to place a dollar value on the research and other
information received. It is the opinion of the Board of Trustees and the Advisor
that the review and study of the research and other information will not reduce
the overall cost to the Advisor of performing its duties to the Fund under the
Agreement. "Due to research services provided by brokers, the Columbia Partners
Equity Fund directed to brokers $11,499,457 of brokerage transactions (on which
commissions were $10,468) during the fiscal period ended March 31, 2000."
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek to
acquire the same security at about the same time, the Trust may not be able to
acquire as large a position in such security as it desires or it may have to pay
a higher price for the security. Similarly, the Trust may not be able to obtain
as large an execution of an order to sell or as high a price for any particular
portfolio security if the other client desires to sell the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one client, the resulting participation in
volume transactions could produce better executions for the Trust. In the event
that more than one client wants to purchase or sell the same security on a given
date, the purchases and sales will be made on a pro rata basis.
For the fiscal year ended March 31, 2000, the Fund paid brokerage
commissions of $32,049.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as of
4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Fund's advisor's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Fund's advisor determines
the last bid price does not accurately reflect the current value or when
restricted securities are being valued, such securities are valued as determined
in good faith by the Fund's adviser,advisor, subject to review of the Board of
Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Fund's advisor believes such prices accurately reflect the fair market value of
such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's adviser,advisor, subject to review of the Board of
Trustees. Short term investments in fixed income securities with maturities of
less than 60 days when acquired, or which subsequently are within 60 days of
maturity, are valued by using the amortized cost method of valuation, which the
Board has determined will represent fair value.
INVESTMENT PERFORMANCE
The 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 and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the fiscal year
ended March 31, 2000, the Fund's average annual total return was 76.11%.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other groups
of mutual funds tracked by any widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, such as
Lipper Analytical Services, Inc. or Morningstar, Inc. The objectives, policies,
limitations and expenses of other mutual funds in a group may not be the same as
those of the Fund. Performance rankings and ratings reported periodically in
national financial publications such as Barron's and Fortune also may be used.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
custodian of the Fund's investments. The custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT and FUND ACCOUNTING
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other transfer agency and shareholder service functions. For
its services as transfer agent, Unified receives a monthly fee from the Advisor
of $1.20 per shareholder (subject to a minimum monthly fee of $750). For the
fiscal year ended March 31, 2000, Unified received a fee of $15,790.00 from the
Advisor (not the Fund) for transfer agent services. In addition, Unified
provides the Fund with fund accounting services, which includes certain monthly
reports, record-keeping and other management-related services. For its services
as fund accountant, Unified receives an annual fee from the Advisor equal to
0.0275% of the Fund's assets up to $100 million, 0.0250% of the Fund's assets
from $100 million to $300 million and 0.0200% of the Fund's assets over $300
million (subject to various monthly minimum fees, the maximum being $2,000 per
month for assets of $20 to $100 million). For the fiscal year ended March 31,
2000, Unified received $15,600 from the Advisor (not the Fund) for these fund
accounting services.
<PAGE>
ACCOUNTANTS
The firm of McCurdy & Associates CPA's, Inc., 27955 Clemens Road,
Westlake, Ohio 44145, has been selected as independent public accountants for
the Fund for the fiscal year ending March 31, 2001. McCurdy & Associates
performs an annual audit of the Funds' financial statements and provides
financial, tax and accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc. (the "Distributor") 1793 Kingswood
Drive, Suite 200, Southlake, Texas 76092, is the exclusive agent for
distribution of shares of the Fund. 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 Fund on a best efforts basis only against
purchase orders for the shares. Shares of the Fund are offered to the public on
a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. The Administrator receives a monthly fee from the Advisor equal to
an annual rate of 0.10% of the Fund's assets under $50 million, 0.075% of the
Fund's assets from $50 million to $100 million, and 0.050% of the Fund's assets
over $100 million (subject to a minimum fee of $2,500 per month). The
Administrator, the Distributor, and Unified (the Fund's transfer agent) are
controlled by Unified Financial Services, Inc. For the fiscal year ended March
31, 2000, the Administrator received $30,000 from the Advisor (not the Fund) for
these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to be
included in the Statement of Additional Information are incorporated herein by
reference to the Trust's Annual Report to Shareholders for the fiscal year ended
March 31, 2000. The Trust will provide the Annual Report without charge by
calling the Fund at 1-888-696-2733.
<PAGE>
THE MARTIN CAPITAL OPPORTUNITY FUNDS
PROSPECTUS
AUGUST 1, 2000
Martin Capital Austin Opportunity Fund
Martin Capital Texas Opportunity Fund
Martin Capital U.S. Opportunity Fund
Investment Objective: long-term capital appreciation.
816 Congress Avenue
Suite 1540
Austin, Texas 78701
For Information, Shareholder Services and Requests:
Toll Free 1-888-336-9757
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
RISK/RETURN SUMMARY .........................................................3
FEES AND EXPENSES OF INVESTING IN THE FUNDS................................. 7
HOW TO BUY SHARES........................................................... 8
HOW TO REDEEM SHARES........................................................ 10
DETERMINATION OF NET ASSET VALUE........................................... 11
DIVIDENDS, DISTRIBUTIONS AND TAXES......................................... 11
MANAGEMENT OF THE FUNDS.................................................... 12
FINANCIAL HIGHLIGHTS...................................................... 14
FOR MORE INFORMATION................................................BACK COVER
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE
The investment objective of each Martin Capital Fund is long-term capital
appreciation.
PRINCIPAL STRATEGIES COMMON TO THE FUNDS
The Funds invest primarily in common stocks that the Funds' advisor
believes offer superior growth potential. After screening for stocks that meet
certain performance criteria, the advisor uses a variety of quantitative and
qualitative strategies to analyze the growth prospects of each company, focusing
on the company's:
o management strength, based on long-term strategic vision and
operational effectiveness,
o potential for product or service growth, and
o technical and economic cycle considerations.
As the Funds will primarily invest in growth-oriented stocks, it is expected
that each Fund will generate its returns primarily from capital appreciation.
Current income is also expected, but will be incidental. The advisor's security
selection process for each Fund will attempt to reflect the diversification of
the Fund's designated economic market; however the advisor may adjust sector
representation based upon the sector's performance outlook and may at times
focus on one or more sectors (such as the technology sector).
Each Fund may sell a stock if the advisor believes that the long term
growth prospectus for the company are no longer favorable, based on such factors
as changes in management or changes in the potential for product or service
growth.
PRINCIPAL STRATEGIES OF THE AUSTIN OPPORTUNITY FUND In addition to the
strategies described above under "Principal Strategies Common to the Funds," the
Fund's advisor primarily selects common stocks of companies with significant
operations in the city of Austin, Texas (defined as the Austin-San Marcos
Metropolitan Statistical Area, which includes Bastrop, Caldwell, Hays, Travis
and Williamson counties in the State of Texas). Under normal circumstances, at
least 65% of the Fund's assets will be invested in common stock of companies:
o headquartered in Austin, or
o that rank among the 25 largest publicly held employers in Austin (as
determined by the Austin Chamber of Commerce).
The advisor believes that a significant portion of the Fund may be invested in
smaller capitalization companies.
PRINCIPAL RISKS OF INVESTING IN THE AUSTIN OPPORTUNITY FUND In addition to
the risks described below, the Austin Opportunity Fund is subject to various
principal risks that are common to all of the Martin Capital Funds. These
common risks include management risk, company risk, market risk,
non-diversification risk and sector risk, which are described on page 5.
o SMALLER COMPANY RISK. The advisor believes that a significant portion of
the Austin Opportunity Fund will be invested in smaller capitalization
companies, which may include new issues. To the extent the Fund invests in
smaller capitalization companies, the Fund will be subject to additional
risks. These include:
o The earnings and prospects of smaller companies are more volatile
than larger companies.
o Smaller companies may experience higher failure rates than do larger
companies.
o The trading volume of securities of smaller companies is normally
less than that of larger companies and, therefore, may
disproportionately affect their market price, tending to make them
fall more in response to selling pressure than is the case with
larger companies.
o Smaller companies may have limited markets, product lines or
financial resources and may lack management experience.
o NEW ISSUES RISK. The advisor believes that a significant portion of the
Austin Opportunity Fund will be invested in common stock of new issuers.
Investments in relatively new issuers, i.e., those having continuous
operating histories of less than three years, may be more speculative
because such companies are relatively unseasoned.
o New issuers may lack sufficient resources, may be unable to generate
internally the funds necessary for growth and may find external
financing to be unavailable on favorable terms or even totally
unavailable.
o New issuers will often be involved in the development or marketing of a
new product with no established market, which could lead to significant
losses.
PRINCIPAL STRATEGIES OF THE TEXAS OPPORTUNITY FUND In addition to the strategies
described above under "Principal Strategies Common to the Funds," the Fund's
advisor primarily selects common stock of companies with significant operations
in the state of Texas. Under normal circumstances, at least 65% of the Fund's
assets will be invested in common stock of companies:
o headquartered in the state of Texas, or
o that rank among the 25 largest publicly held employers in
Texas (as determined by the State Comptrollers office.)
The advisor believes that a significant portion of the Texas Opportunity Fund
may be invested in smaller capitalization companies.
PRINCIPAL RISKS OF INVESTING IN THE TEXAS OPPORTUNITY FUND In addition to
the risks described below, the Texas Opportunity Fund is subject to various
principal risks that are common to all of the Martin Capital Funds. These
common risks include management risk, company risk, market risk,
non-diversification risk and sector risk, which are described on page 5.
o SMALLER COMPANY RISK. The advisor believes that some portion of the Texas
Opportunity Fund will be invested in smaller capitalization companies,
which may include new issues. To the extent the Fund invests in smaller
capitalization companies, the Fund will be subject to additional risks.
These include:
o The earnings and prospects of smaller companies are more volatile
than larger companies.
o Smaller companies may experience higher failure rates than do
larger companies.
o The trading volume of securities of smaller companies is normally
less than that of larger companies and, therefore, may
disproportionately affect their market price, tending to make them
fall more in response to selling pressure than is the case with
larger companies.
o Smaller companies may have limited markets, product lines or
financial resources and may lack management experience.
o NEW ISSUES RISK. The advisor believes that some portion of the Texas
Opportunity Fund will be invested in common stock of new issuers.
Investments in relatively new issuers, i.e., those having continuous
operating histories of less than three years, may be more speculative
because such companies are relatively unseasoned.
o New issuers may lack sufficient resources, may be unable to generate
internally the funds necessary for growth and may find external
financing to be unavailable on favorable terms or even totally
unavailable.
o New issuers will often be involved in the development or marketing of
a new product with no established market, which could lead to
significant losses.
PRINCIPAL STRATEGIES OF THE U.S. OPPORTUNITY FUND Under normal circumstances, at
least 65% of the U.S. Opportunity Fund's assets will be invested in common stock
of companies headquartered in the United States. This strategy is in addition to
the strategies described above under "Principal Strategies Common to the Funds."
PRINCIPAL RISKS OF INVESTING IN THE U.S. OPPORTUNITY FUND The U.S.
Opportunity Fund is subject to various principal risks that are common to
all of the Martin Capital Funds. These common risks include management risk,
company risk, market risk, non-diversification risk and sector risk, which
are described on page 5.
<PAGE>
PRINCIPAL RISKS COMMON TO THE FUNDS
The following risks are common to all three of the Martin Capital Funds.
o MANAGEMENT RISK. The advisor's growth-oriented approach may fail to
produce the intended results.
o COMPANY RISK. The value of a Fund may decrease in response to the activities
and financial prospects of an individual company in the Fund's portfolio. The
value of an individual company can be more volatile than the market as a
whole.
o MARKET RISK. Overall stock market risks may also affect the value of a Fund.
Factors such as domestic economic growth and market conditions, interest rate
levels, and political events affect the securities markets and could cause a
Fund's share price to fall. Additionally, an investment strategy focused on a
single, albeit large, economy may be subject to greater risk. For example,
changes in the Austin economy may have a disproportionate effect on the
Austin Opportunity Fund and changes in the Texas economy may have a
disproportionate effect on the Texas Opportunity Fund.
o NON-DIVERSIFICATION RISK. As a non-diversified fund, each Fund will be
subject to substantially more investment risk and potential for volatility
than a diversified fund because its portfolio may at times focus on a limited
number of companies.
o SECTOR RISK. If a Fund's portfolio is overweighted in a certain sector, any
negative development affecting that sector will have a greater impact on the
Fund than a fund that is not overweighted in that sector. Texas (including
Austin) has a greater concentration of technology companies than the rest of
the United States and weakness in this sector could result in significant
losses to the Austin Opportunity Fund and the Texas Opportunity Fund. The
U.S. Opportunity Fund may also focus on technology companies. Technology
companies may be significantly affected by falling prices and profits and
intense competition, and their products may be subject to rapid obsolescence.
o An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
o The Fund is not a complete investment program. As with any mutual fund
investment, the Fund's returns will vary and you could lose money.
GENERAL
The investment objective of each Fund may be changed without shareholder
approval.
From time to time, each Fund may 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, each Fund may hold all or a portion of its assets in money market
instruments, securities of other 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, a Fund may not achieve its investment
objective. Each Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
PAST PERFORMANCE
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 each Fund is recently organized and
has a limited performance history.
<PAGE>
FEES AND EXPENSES OF INVESTING IN THE FUNDS
The tables describe the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees (fees paid directly from your investment)
Austin Texas U.S.
Opportunity Opportunity Opportunity
Fund Fund Fund
----------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases NONE NONE NONE
Maximum Deferred Sales Charge (Load) NONE NONE NONE
Redemption Fee (as a % of redemption amount)1 1.00% 1.00% 1.00%
Exchange Fee NONE NONE NONE
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fees 1.25% 1.25% 1.25%
Distribution (12b-1) Fees 2 NONE NONE NONE
Other Expenses 3 0.26% 0.12% 0.12%
Total Annual Fund Operating Expenses 1.51% 1.37% 1.37%
Expense Reimbursement 4 0.26% 0.12% 0.12%
Net Expenses (after expense reimbursement) 1.25% 1.25% 1.25%
1 Each Fund charges a redemption fee of 1% on shares redeemed less than
one year from the date of purchase.
2 Distribution expenses incurred by the Funds under the 12b-1 Distribution
Plan are paid by the advisor.
3 Other expenses for the Texas Fund are estimated.
4 The Funds' advisor has contractually agreed to reimburse expenses to
maintain each Fund's total operating expenses at 1.25% of net assets through
March 1, 2003.
</TABLE>
Example:
The example below is intended to help you compare the cost of investing in
a Fund with the cost of investing in other mutual funds. The example uses the
same assumptions as other mutual fund prospectuses: a $10,000 initial investment
for the time periods indicated, reinvestment of dividends and distributions, 5%
annual total return, constant operating expenses, and sale of all shares at the
end of each time period. Although your actual expenses may be different, based
on these assumptions your costs will be:
<TABLE>
<S> <C> <C> <C> <C>
Martin Capital Austin Opportunity Fund 1 year 3 years 5 years 10 years
$128 $399 $690 $1,518
Martin Capital Texas Opportunity Fund 1 year 3 years
$128 $399
Martin Capital U.S. Opportunity Fund 1 year 3 years 5 years 10 years
$128 $399 $690 $1,518
</TABLE>
HOW TO BUY SHARES
The minimum initial investment in each Fund is $1,000 and minimum
subsequent investments are $100. The advisor may waive these minimums for
accounts participating in an automatic investment program. If your investment is
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the omnibus account, not to
your individual investment. If you purchase or redeem shares through a
broker/dealer or another intermediary, you may be charged a fee by that
intermediary.
<PAGE>
INITIAL PURCHASE
BY MAIL- To be in proper form, your initial purchase request must
include:
o a completed and signed investment application form (which accompanies
this Prospectus); and
o a check (subject to the minimum amounts) made payable to the
appropriate Fund.
Mail the application and check to:
U.S. MAIL: OVERNIGHT:
Martin Capital Opportunity Funds Martin Capital Opportunity Funds
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
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 Fund's transfer agent at 1-888-336-9757 to
set up your account and obtain an account number. You should be prepared at that
time to provide the information on the application. Then, provide your bank with
the following information for purposes of wiring your investment:
Firstar Bank, N.A.
ABA #0420-0001-3
Attn: Martin Capital Opportunity Funds
Fund Portfolio Name _______________________(write in name of fund)
Account Name _________________(write in shareholder name)
For the Account # ______________(write in account number)
D.D.A.#488922444
You must mail a signed application to Unified Fund Services, Inc., the
Fund's transfer agent, 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 that may occur in wiring money, including delays that
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.
ADDITIONAL INVESTMENTS
You may purchase additional shares of each Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain:
-your name -the name of your account(s)
-your account number(s) -the name of the Fund
-a check made payable to Martin Capital Opportunity Funds
Checks should be sent to the Martin Capital Opportunity Funds at the address
listed above. A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
<PAGE>
DISTRIBUTION PLAN
Each plan has adopted a plan under Rule 12b-1 that allows the Fund to pay
distribution fees for the sale and distribution of shares and allows the Fund to
pay for services provided the shareholders. All distribution expenses incurred
by a Fund under its Plan are Fund expenses, but they are paid by the advisor
pursuant to the management agreement.
TAX SHELTERED RETIREMENT PLANS
Since the Funds are oriented to longer-term investments, the Fund may be
an appropriate investment medium for tax-sheltered retirement plans, including:
individual retirement plans (IRAs); simplified employee pensions (SEPs); 401(k)
plans; qualified corporate pension and profit-sharing plans (for employees); tax
deferred investment plans (for employees of public school systems and certain
types of charitable organizations); and other qualified retirement plans. You
should contact the Fund's transfer agent for the procedure to open an IRA or SEP
plan, as well as more specific information regarding these retirement plan
options. Please consult with an 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 Funds' transfer agent about the IRA custodial fees.
OTHER PURCHASE INFORMATION
The Funds 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 Fund as
reimbursement for any loss incurred. You may be prohibited or restricted from
making future purchases in the Fund.
HOW TO REDEEM SHARES
You may receive redemption payments by check or federal wire transfer. The
proceeds may be more or less than the purchase price of your shares, depending
on the market value of the Fund's securities at the time of your redemption.
Presently there is no charge for wire redemptions; however, the Funds may charge
for this service in the future. Any charges for wire redemptions will be
deducted from your 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 the Fund at no charge
by mail. Your request should be addressed to:
Martin Capital Opportunity Funds
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper form,
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. The Funds may 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 the
Funds' transfer agent, a shareholder, prior to redemption, may be required to
furnish additional legal documents to insure proper authorization.
<PAGE>
BY TELEPHONE - You may redeem any part of your account in a Fund by
calling the Funds' transfer agent by calling 1-888-336-9757. You must first
complete the Optional Telephone Redemption and Exchange section of the
investment application to institute this option. The Funds, the transfer agent
and the custodian are not liable for following redemption or exchange
instructions communicated by telephone that they reasonably believe to be
genuine. However, if they do not employ reasonable procedures to confirm that
telephone instructions are genuine, they may be liable for any losses due to
unauthorized or fraudulent instructions. Procedures employed may include
recording telephone instructions and requiring a form of personal identification
from the caller.
The Funds or the transfer agent may terminate the telephone redemption
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.
REDEMPTION FEE - Shares held less than 12 months and redeemed (including
exchanges) from a Fund are subject to a short-term redemption fee equal to 1.0%
of the net asset value of shares redeemed. Solely for purposes of calculating
the one-year holding period, each Fund uses the "first-in, first out" (FIFO)
method. That is, the date of any redemption or exchange will be compared to the
earliest purchase date. If this holding period is less than one year, the fee
will be assessed. The fee will be prorated if a portion of the shares being
redeemed or exchanged has been held for more than one year. Shares acquired
through reinvested dividend or capital gain distributions are exempt from the
fee.
ADDITIONAL INFORMATION - If you are not certain of the requirements for a
redemption please call the Fund's transfer agent at 1-888-336-9757. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen 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, the Funds may require you to redeem all of your shares in a Fund on 30
days' written notice if the value of your shares in the Fund is less than $500
due to redemption, or such other minimum amount as the Fund may determine from
time to time. An involuntary redemption constitutes a sale. You should consult
your tax advisor concerning the tax consequences of involuntary redemptions. 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.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the 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 Fund's 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 by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
Requests to purchase and sell shares are processed at the NAV next
calculated after we receive your order in proper form.
<PAGE>
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. Each Fund expects that its distributions will consist primarily
of capital gains.
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. You may want to avoid making a
substantial investment when a Fund is about to make a capital gains distribution
because you would be responsible for any taxes on the distribution regardless of
how long you have owned your shares.
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 advisor about your
investment.
MANAGEMENT OF THE FUNDS
Martin Capital Advisors, L.L.P., 816 Congress Avenue, Suite 1540, Austin,
Texas 78701, serves as investment advisor to the Funds. As of January 1, 2000,
the firm manages over $80 million for individuals, trusts and pension plans.
Paul Martin is responsible for the day-to-day management of the Martin
Capital Opportunity Funds. Paul Martin is the managing and controlling partner
and Chief Investment Officer of the advisor, a registered investment advisor
managing investment portfolios for long-term income and capital appreciation.
Prior to establishing his advisory firm in 1989, Paul Martin worked four years
as a financial consultant in New York City, managing investment accounts at
Merrill Lynch and Oppenheimer & Company. Paul Martin served seven years active
duty with the U.S. Army and U.S. Navy. He also served thirteen years with the
U.S. Naval Reserve, which included eight years with Naval Special Warfare and a
two year assignment as the Commanding Officer of Naval Reserve SEAL Delivery
Vehicle Team Two. He retired as a commander in October, 1998. Paul Martin has a
B.A. degree in liberal arts from St. John's College in Santa Fe, New Mexico.
During the fiscal period ended March 31, 2000 the Austin Opportunity Fund
and the U.S. Opportunity Fund each paid the advisor a fee equal to 1.25% of its
average daily net assets. The Texas Opportunity Fund is authorized to pay the
advisor a fee equal to 1.25% of its average daily net assets. The advisor (not
the Funds) may pay certain financial institutions (which may include banks,
brokers, securities dealers and other industry professionals) a fee for
providing distribution related services and/or for performing certain
administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
<PAGE>
ADVISOR'S PAST PERFORMANCE - Paul Martin has been managing accounts with
investment objectives, policies and strategies substantially similar to those of
the Martin Capital U.S. Opportunity Fund since 1990 (the "U.S. Composite"). The
performance of the U.S. Composite appears below. The data is provided to
illustrate past performance of the Advisor in managing such accounts, as
compared to the S&P 500 Index. The person responsible for the performance of the
composite is the same person as is responsible for the investment management of
the Martin Capital U.S. Opportunity Fund. As of December 31, 1999 the assets in
the U.S. Composite totaled approximately $56 million.
AVERAGE ANNUAL TOTAL RETURN*
PERIOD U.S. OPPORTUNITY FUND U.S. COMPOSITE S&P 500 INDEX
One Year.....................N/A..............58.2%...........21.0%
Five Years...................N/A..............45.9%...........28.5%
Since Composite Inception
(1-1-91)..................N/A..............32.5%...........20.8%
Since Fund Inception
(4-1-99) ... ............43.6%.............43.0%...........14.6%
SUMMARY OF MARTIN CAPITAL ADVISORS, L.L.P. ANNUAL INVESTMENT RETURNS**
PERIOD U.S. OPPORTUNITY FUND U.S. COMPOSITE S&P 500 INDEX
1991..................N/A....................33.9%..............30.6%
1992..................N/A....................26.8%...............7.7%
1993..................N/A....................14.5%..............10.0%
1994..................N/A....................(2.1)%..............1.3%
1995..................N/A....................27.5%..............37.6%
1996..................N/A....................29.4%..............23.0%
1997..................N/A....................41.4%..............33.4%
1998..................N/A....................78.8%..............28.7%
1999..................N/A....................58.2%..............21.0%
* Average Annual Returns for the periods ended December 31, 1999, using
calculation method of performance, which differ from the standardized SEC
calculations methods.
** U.S. composite performance is the time-weighted average total return
associated with a composite of equity income accounts having objectives
similar to the U.S. Opportunity Fund. Results include the reinvestment of
income on an accrual basis. Performance figures reflected are net of
management fees of the accounts and net of all expenses, including
transaction costs and commissions. Results include the reinvestment of
dividends and capital gains.
The S&P 500 Index is a widely recognized, unmanaged index of market
activity based upon the aggregate performance of a selected portfolio of
publicly traded common stocks, including monthly adjustments to reflect
the reinvestment of dividends and other distributions. The S&P 500 Index
reflects the total return of securities comprising the Index, including
changes in market prices as well as accrued investment income, which is
presumed to be reinvested. Performance figures for the S&P 500 Index do
not reflect deduction of transaction costs or expenses, including
management fees.
The performance of the accounts managed by the advisor should not be
considered indicative of future performance of the Fund. Results may differ
because of, among other things, differences in brokerage commissions, account
expenses (including management fees), the size of positions taken in relation to
account size and diversification of securities, timing of purchases and sales,
and availability of cash for new investments. In addition, the managed accounts
are not subject to certain investment limitations, diversification requirements
and other restrictions imposed by the Investment Company Act and the Internal
Revenue Code, which, if applicable, may have adversely affected the performance
results of the managed accounts composite. The results for different periods may
vary.
<PAGE>
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
periods from the inceptions of the U.S. Opportunity Fund and the Austin
Opportunity Fund (April 1, 1999 and September 1, 1999, respectively) through
March 31, 2000 is derived from the audited financial statements of the Funds.
The financial statements of the Funds have been audited by McCurdy & Associates
CPA's, Inc., independent public accountants, and are included in the Annual
Report. The Annual Report contains additional performance information and is
available upon request and without charge. The Texas Opportunity Fund had not
commenced operations prior to March 31, 2000.
MARTIN CAPITAL AUSTIN OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
FOR THE PERIOD SEPTEMBER 1, 1999
(COMMENCEMENT OF OPERATIONS) TO MARCH 31, 2000
SELECTED PER SHARE DATA
Net asset value, beginning of period $ 10.00
----------
Income from investment operations
Net investment loss (0.04)
Net realized and unrealized gain 4.06
----------
Total from investment operations 4.02
----------
Net asset value, end of period $ 14.02
==========
TOTAL RETURN (b) 40.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000) $1,049
Ratio of expenses to average net assets 1.25% (a)
Ratio of expenses to average net assets before reimbursement 1.51% (a)
Ratio of net investment income (loss) to average net assets (0.55)% (a)
Ratio of net investment income (loss) to
average net assets before reimbursement (0.81)% (a)
Portfolio turnover rate 0.80% (a)
(a) Annualized
(b) For periods of less than a full year, total returns are not
annualized.
<PAGE>
MARTIN CAPITAL U.S. OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
YEAR ENDED MARCH 31, 2000
SELECTED PER SHARE DATA
Net asset value, beginning of period $ 10.00
----------
Income from investment operations
Net investment income (loss) (0.04)
Net realized and unrealized gain 6.23
----------
Total from investment operations 6.19
----------
Net asset value, end of period $ 16.19
==========
TOTAL RETURN 61.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000) $3,713
Ratio of expenses to average net assets 1.25%
Ratio of expenses to average net assets before reimbursement 1.37%
Ratio of net investment income (loss) to average net assets (0.35)%
Ratio of net investment income (loss) to
average net assets before reimbursement (0.47)%
Portfolio turnover rate 0.35%
<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. Annual
and semi-annual 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 1-888-336-9757 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 review and copy information about the Funds (including the SAI and
other reports) at the Securities and Exchange Commission (SEC) Public Reference
Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours and
operation. You may also obtain reports and other information about the Funds on
the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
<PAGE>
THE MARTIN CAPITAL OPPORTUNITY FUNDS
MARTIN CAPITAL AUSTIN OPPORTUNITY FUND
MARTIN CAPITAL TEXAS OPPORTUNITY FUND
MARTIN CAPITAL U.S. OPPORTUNITY FUND
STATEMENT OF ADDITIONAL INFORMATION
August 1, 2000
This Statement of Additional Information ("SAI") is not a prospectus. It
should be read in conjunction with the Prospectus of The Martin Capital
Opportunity Funds dated August 1, 2000. This SAI incorporates by reference the
Austin Opportunity Fund's and the U.S. Opportunity Fund's Annual Report to
Shareholders for the period ended March 31, 2000 ("Annual Report"). A free copy
of the Prospectus or Annual Report can be obtained by writing the Transfer Agent
at 431 North Pennsylvania Street, Indianapolis, Indiana 46204, or by calling
1-888-336-9757.
TABLE OF CONTENTS PAGE
DESCRIPTION OF THE TRUST AND FUNDS...........................................2
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS...............................................................3
INVESTMENT LIMITATIONS..................................................... 13
THE INVESTMENT ADVISOR..................................................... 15
TRUSTEES AND OFFICERS...................................................... 16
PORTFOLIO TRANSACTIONS AND BROKERAGE................................ ...... 17
DISTRIBUTION PLAN.......................................................... 18
DETERMINATION OF SHARE PRICE............................................... 18
INVESTMENT PERFORMANCE..................................................... 19
CUSTODIAN....................................................................20
TRANSFER AGENT and FUND ACCOUNTING...........................................20
ACCOUNTANTS..................................................................21
DISTRIBUTOR..................................................................21
ADMINISTRATOR................................................................21
FINANCIAL STATEMENTS.........................................................21
<PAGE>
DESCRIPTION OF THE TRUST AND FUNDS
The Martin Capital Austin Opportunity Fund, Martin Capital Texas
Opportunity Fund and Martin Capital U.S. Opportunity Fund (each a "Fund", or
collectively, the "Funds", or the "Martin Capital Opportunity Funds") were
organized as non-diversified series of AmeriPrime Funds (the "Trust") on August
14, 1998. 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 Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Fund's transfer
agent for the account of the shareholder. 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.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely effects the rights of shareholders must be approved by the
shareholders affected. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion that failure to
so redeem may have materially adverse consequences to all or any of the Fund's
shareholders.
As of July 14, 2000, the following persons may be deemed to beneficially
own or hold of record five percent (5%) or more of the Austin Opportunity Fund:
National Investor Services Corp., 55 Water Street, 32nd Floor, New York, New
York 10041, 32.95%; Eileen Vanderlee, P.O. Box 24163, Austin, TX 78755, 12.71%,
and Arnold J. Snygg, 6903 Rimner Cove, Austin TX 78759, 5.83%.
As of July 14, 2000, National Investor Services Corp. may be deemed to
control the Austin Opportunity Fund as a result of its beneficial ownership of
the shares of the Fund. As the controlling shareholder, it would control the
outcome of any proposal submitted to the shareholders for approval including
changes to the Fund's fundamental policies or the terms of the management
agreement with the Fund's advisor.
As of July 14, 2000, the following persons may be deemed to beneficially
own or hold of record five percent (5%) or more of the U.S. Opportunity Fund:
National Investor Services Corp., 55 Water Street, 32nd Floor, New York, New
York 10041, 72.45%. As of July 14, 2000, National Investor Services Corp. may be
deemed to control the U.S. Opportunity Fund as a result of its beneficial
ownership of the shares of the Fund. As the controlling shareholder, it would
control the outcome of any proposal submitted to the shareholders for approval
including changes to the Fund's fundamental policies or the terms of the
management agreement with the Fund's advisor.
As of July 14, 2000, the officers and trustees as a group owned less than
one percent of the Funds.
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
Fund's Prospectus and this Statement of Additional Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a discussion of some of the investments the Fund may
make and some of the techniques it may use.
A. Equity Securities. Equity securities consist of common stock,
convertible preferred stock, convertible bonds, rights and warrants. Common
stocks, the most familiar type, represent an equity (ownership) interest in a
corporation. Warrants are options to purchase equity securities at a specified
price for a specific time period. Rights are similar to warrants, but normally
have a short duration and are distributed by the issuer to its shareholders.
Although equity securities have a history of long-term growth in value, their
prices fluctuate based on changes in a company's financial condition and on
overall market and economic conditions.
Equity securities include S&P Depositary Receipts ("SPDRs") and other
similar instruments. SPDRs are shares of a publicly traded unit investment trust
which owns the stocks included in the S&P 500 Index, and changes in the price of
SPDRs track the movement of the Index relatively closely.
Equity securities also include common stocks and common stock equivalents
of domestic real estate investment trusts ("REITS") and other companies which
operate as real estate corporations or which have a significant portion of their
assets in real estate. A Fund will not acquire any direct ownership of real
estate.
Each Fund may invest up to 35% of its assets in foreign equity securities,
including American Depository Receipts ("ADRs"). ADRs are certificates
evidencing ownership of shares of a foreign-based issuer held in trust by a bank
or similar financial institution. They are alternatives to the direct purchase
of the underlying securities in their national markets and currencies. To the
extent that the Fund does invest in foreign securities, such investments may be
subject to special risks. Purchases of foreign securities are usually made in
foreign currencies and, as a result, the Fund may incur currency conversion
costs and may be affected favorably or unfavorably by changes in the value of
foreign currencies against the U.S. dollar. In addition, there may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
Investments in equity securities are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the advisor. As a result, the return and net asset value
of a Fund will fluctuate. Securities in a Fund's portfolio may not increase as
much as the market as a whole and some undervalued securities may continue to be
undervalued for long periods of time. Although profits in some Fund holdings may
be realized quickly, it is not expected that most investments will appreciate
rapidly.
B. Fixed Income Securities. Each Fund may invest in fixed income
securities. Each Fund will limit its investment in fixed income securities to
corporate debt securities and U.S. government securities. Fixed income
securities are generally considered to be interest rate sensitive, which means
that their value will generally decrease when interest rates rise and increase
when interest rates fall. Securities with shorter maturities, while offering
lower yields, generally provide greater price stability than longer term
securities and are less affected by changes in interest rates.
CORPORATE DEBT SECURITIES - Corporate debt securities are long and
short-term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The advisor considers
corporate debt securities to be of investment grade quality if they are rated A
or higher by Standard & Poor's Corporation, or Moody's Investors Services, Inc.,
or if unrated, determined by the advisor to be of comparable quality. Investment
grade dept securities generally have adequate to strong protection of principal
and interest payments. In the lower end of this category, credit quality may be
more susceptible to potential future changes in circumstances and the securities
have speculative elements. Each Fund may invest up to 5% of its assets in
corporate debt rated below investment grade.
U.S. GOVERNMENT OBLIGATIONS - U.S. government obligations may be backed by
the credit of the government as a whole or only by the issuing agency. U.S.
Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
C. When-Issued and Delayed Delivery Securities. Each Fund may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Fund until
settlement takes place. The Fund maintains with the Custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments.
D. Leveraging. Each Fund may borrow up to one-third of the value of its
total assets, from banks or through the use of reverse repurchase agreements, to
increase its holdings of portfolio securities. Under the Investment Company Act
of 1940, as amended, each Fund is required to maintain continuous asset coverage
of 300% with respect to such borrowings and to sell (within three days)
sufficient Fund holdings to restore such coverage if it should decline to less
than 300% due to market fluctuations or otherwise, even if such liquidations of
a Fund's holdings may be disadvantageous from an investment standpoint.
Leveraging a Fund creates an opportunity for increased net income but, at the
same time, creates special risk considerations. For example, leveraging may
exaggerate changes in the net asset value of Fund shares and in the yield on the
Fund's portfolio. Although the principal of such borrowings will be fixed, the
Fund's assets may change in value during the time the borrowing is outstanding.
Leveraging will create interest expenses for the Fund which can exceed the
income from the assets retained. To the extent the income derived from
securities purchased with borrowed funds exceeds the interest the Fund will have
to pay, the Fund's net income will be greater than if leveraging were not used.
Conversely, if the income from the assets retained with borrowed funds is not
sufficient to cover the cost of leveraging, the net income of the Fund will be
less than if leveraging were not used, and therefore the amount available for
distribution to shareholders will be reduced.
E. Short Sales. Each Fund may a sell a security short in anticipation of a
decline in the market value of the security. When a Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security in order to deliver it to the buyer. The Fund
must replace the borrowed security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. The Fund will incur a loss as a result of the short sale if
the price of the security increases between the date of the short sale and the
date on which the Fund replaces the borrowed security. The Fund will realize a
profit if the security declines in price between those dates.
In connection with its short sales, each Fund will be required to maintain
a segregated account with the Custodian of cash or high grade liquid assets
equal to the market value of the securities sold less any collateral deposited
with its broker. Each Fund will limit its short sales so that no more than 20%
of its net assets (less all its liabilities other than obligations under the
short sales) will be deposited as collateral and allocated to the segregated
account. However, the segregated account and deposits will not necessarily limit
the Fund's potential loss on a short sale, which is unlimited.
F. Option Transactions. The Funds may engage in option transactions
involving individual stocks and bonds as well as stock and bond indexes. An
option involves either (a) the right or the obligation to buy or sell a specific
instrument at a specific price until the expiration date of the option, or (b)
the right to receive payments or the obligation to make payments representing
the difference between the closing price of a market index and the exercise
price of the option expressed in dollars times a specified multiple until the
expiration date of the option. Options are sold (written) on securities and
market indexes. The purchaser of an option on a security pays the seller (the
writer) a premium for the right granted but is not obligated to buy or sell the
underlying security. The purchaser of an option on a market index pays the
seller a premium for the right granted, and in return the seller of such an
option is obligated to make the payment. A writer of an option may terminate the
obligation prior to expiration of the option by making an offsetting purchase of
an identical option. Options are traded on organized exchanges and in the
over-the-counter market. Call options on securities which the Funds sell (write)
will be covered or secured, which means that the Fund will own the underlying
security in the case of a call option. The Funds will sell (write) put options
only if the Fund is selling an equivalent amount of the same security short.
When the Funds write options, they may be required to maintain a margin account,
to pledge the underlying securities or U.S. government obligations or to deposit
assets in escrow with the Custodian. The Funds may also utilize spreads and
straddle strategies. A spread is the difference in price resulting from a
combination of put and call options within the same class on the same
underlying security. A straddle strategy consists of an equal number of put and
call options on the same underlying stock, stock index, or commodity future at
the same strike price and maturity date.
The purchase and writing of options involves certain risks. The purchase
of options limits a Fund's potential loss to the amount of the premium paid and
can afford a Fund the opportunity to profit from favorable movements in the
price of an underlying security to a greater extent than if transactions were
effected in the security directly. However, the purchase of an option could
result in a Fund losing a greater percentage of its investment than if the
transaction were effected directly. When a Fund writes a covered call option, it
will receive a premium, but it will give up the opportunity to profit from a
price increase in the underlying security above the exercise price as long as
its obligation as a writer continues, and it will retain the risk of loss should
the price of the security decline. When a Fund writes a put option, it will
assume the risk that the price of the underlying security or instrument will
fall below the exercise price, in which case the Fund may be required to
purchase the security or instrument at a higher price than the market price of
the security or instrument. In addition, there can be no assurance that a Fund
can effect a closing transaction on a particular option it has written. Further,
the total premium paid for any option may be lost if the Fund does not exercise
the option or, in the case of over-the-counter options, the writer does not
perform its obligations.
G. Derivatives. Each Fund may invest in various instruments that are
commonly known as derivatives. Generally, a derivative is a financial
arrangement, the value of which is based on, or "derived" from, a traditional
security, asset, or market index. Some "derivatives" such as mortgage-related
and other asset-backed securities are in many respects like any other
investment, although they may be more volatile or less liquid than more
traditional debt securities. There are, in fact, many different types of
derivatives and many different ways to use them. There are a range of risks
associated with those uses. Futures and options are commonly used for
traditional hedging purposes to attempt to protect a fund from exposure to
changing interest rates, securities prices, or currency exchange rates and as a
low cost method of gaining exposure to a particular securities market without
investing directly in those securities. However, some derivatives are used for
leverage, which tends to magnify the effects of an instrument's price changes as
market conditions change. Leverage involves the use of a small amount of money
to control a large amount of financial assets, and can in some circumstances,
lead to significant losses. The advisor will use derivatives only in
circumstances where they offer the most efficient means of improving the
risk/reward profile of a Fund and when consistent with a Fund's investment
objective and policies. The use of derivatives for non-hedging purposes may be
considered speculative.
H. Futures Contracts on Stock and Bond Indices. Each Fund may enter into
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of domestic or foreign securities
("Futures Contracts"). This investment technique may be used as a low-cost
method of gaining exposure to a particular securities market without investing
directly in those securities or to hedge against anticipated future changes in
general market prices which otherwise might either adversely affect the value of
securities held by the Fund or adversely affect the prices of securities which
are intended to be purchased at a later date for the Fund. A Futures Contract
may also be entered into to close out or offset an existing futures position.
When used for hedging purposes, each transaction in Futures Contracts
involves the establishment of a position which will move in a direction opposite
to that of the investment being hedged. If these hedging transactions are
successful, the futures position taken for the Fund will rise in value by an
amount which approximately offsets the decline in value of the portion of the
Fund's investments that is being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized.
The risks of Futures Contracts also include a potential lack of liquidity
in the secondary market and incorrect assessments of market. Brokerage costs
will be incurred and "margin" will be required to be posted and maintained as a
good faith deposit against performance of obligations under Futures Contracts
written for a Fund. A Fund may not purchase or sell a Futures Contract if
immediately thereafter its margin deposits on its outstanding Futures Contracts,
other than Futures Contracts used for hedging purposes, would exceed 5% of the
market value of the Fund's total assets.
I. Floating Rate, Inverse Floating Rate, and Index Obligations. Each Fund
may invest in debt securities with interest payments or maturity values that are
not fixed, but float in conjunction with (or inversely to) an underlying index
or price. These securities may be backed by U.S. Government or corporate
issuers, or by collateral such as mortgages. The indices and prices upon which
such securities can be based include interest rates, currency rates and
commodities prices. However, the Funds will not invest in any instrument whose
value is computed based on a multiple of the change in price or value of an
asset or an index of or relating to assets in which the Funds cannot or will not
invest.
Floating rate securities pay interest according to a coupon which is reset
periodically. The reset mechanism may be formula based, or reflect the passing
through of floating interest payments on an underlying collateral pool. Inverse
floating rate securities are similar to floating rate securities except that
their coupon payments vary inversely with an underlying index by use of a
formula. Inverse floating rate securities tend to exhibit greater price
volatility than other floating rate securities. No Fund will invest more than 5%
of its total assets in inverse floating rate securities. Floating rate
obligations generally exhibit a low price volatility for a given stated maturity
or average life because their coupons adjust with changes in interest rates.
Interest rate risk and price volatility on inverse floating rate obligations can
be high, especially if leverage is used in the formula. Index securities pay a
fixed rate of interest, but have a maturity value that varies by formula, so
that when the obligation matures a gain or loss may be realized. The risk of
index obligations depends on the volatility of the underlying index, the coupon
payment and the maturity of the obligation.
J. Real Estate Investment Trusts. A real estate investment trust ("REIT")
is a corporation or business trust that invests substantially all of its assets
in interests in real estate. Equity REITs are those which purchase or lease land
and buildings and generate income primarily from rental income. Equity REITs may
also realize capital gains (or losses) when selling property that has
appreciated (or depreciated) in value. Mortgage REITs are those which invest in
real estate mortgages and generate income primarily from interest payments on
mortgage loans. Hybrid REITs generally invest in both real property and
mortgages. In addition, REITs are generally subject to risks associated with
direct ownership of real estate, such as decreases in real estate values or
fluctuations in rental income caused by a variety of factors, including
increases in interest rates, increases in property taxes and other operating
costs, casualty or condemnation losses, possible environmental liabilities and
changes in supply and demand for properties. Risks associated with REIT
investments include the fact that equity and mortgage REITs are dependent upon
specialized management skills and are not fully diversified. These
characteristics subject REITs to the risks associated with financing a limited
number of projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, and self-liquidation. Additionally, equity REITs may be
affected by any changes in the value of the underlying property owned by the
trusts, and mortgage REITs may be affected by the quality of any credit
extended.
K. Zero Coupon Treasuries and Municipal Securities. Zero coupon securities
are (i) notes or debentures which do not pay current interest and are issued at
substantial discounts from par value, or (ii) notes or debentures that pay
current interest until a stated date one or more years into the future, after
which the issuer is obligated to pay interest until maturity, usually at a
higher rate than if interest were payable from the date of issuance.
The Federal Reserve creates zero coupon treasuries, also known as STRIPS
(Separate Trading of Registered Interest and Principal of Securities) by
separating the coupon payments and the principal payment from an outstanding
Treasury security and selling them as individual securities. A broker-dealer
creates a derivative zero by depositing a Treasury security with a custodian for
safekeeping and then selling the coupon payments and principal payment that will
be generated by this security separately. Examples are Certificates of Accrual
on Treasury Securities (CATs), Treasury Investment Growth Receipts (TIGRs) and
generic Treasury Receipts (TRs). These derivative zero coupon obligations are
not considered to be government securities unless they are part of the STRIPS
program. Original issue zeros are zero coupon securities issued directly by the
U.S. Government, a government agency, or by a corporation.
Zero coupon municipal securities are long and short term debt obligations
issued by or on behalf of states, territories and possessions of the United
States, the District of Columbia and their political subdivisions, agencies,
instrumentalities and authorities, as well as other qualifying issuers
(including the U.S. Virgin Islands, Puerto Rico and Guam), the income from which
is exempt from regular federal income tax and exempt from state tax in the state
of issuance. Each Fund will accrue income on such securities for tax and
accounting purposes, in accordance with applicable law. This income will be
distributed to shareholders. Because no cash is received at the time such income
is accrued, the Fund may be required to liquidate other portfolio securities to
satisfy its distribution obligations. Because a zero coupon security does not
pay current income, its price can be very volatile when interest rates change.
In calculating its dividend, the Funds take into account as income a portion of
the difference between a zero coupon security's purchase price and its face
value.
Municipal securities are issued to obtain funds to construct, repair or
improve various public facilities such as airports, bridges, highways,
hospitals, housing, schools, streets and water and sewer works, to pay general
operating expenses or to refinance outstanding debts. They also may be issued to
finance various private activities, including the lending of funds to public or
private institutions for construction of housing, educational or medical
facilities or the financing of privately owned or operated facilities. Municipal
securities consist of tax exempt bonds, tax exempt notes and tax exempt
commercial paper. Tax exempt notes generally are used to provide short term
capital needs and generally have maturities of one year or less. Tax exempt
commercial paper typically represents short term, unsecured, negotiable
promissory notes.
The two principal classifications of municipal securities are "general
obligations" and "revenue" bonds. General obligation bonds are backed by the
issuer's full credit and taxing power. Revenue bonds are backed by the revenues
of a specific project, facility or tax. Industrial development revenue bonds are
a specific type of revenue bond backed by the credit of the private issuer of
the facility, and therefore investments in these bonds have more potential risk
that the issuer will not be able to meet scheduled payments of principal and
interest.
L. Mortgage-Backed Securities. Mortgage-backed securities include
securities representing interests in a pool of mortgages. These securities,
including securities issued by FNMA, GNMA and the Federal Home Loan Mortgage
Corporation, provide investors with payments consisting of both interest and
principal as the mortgages in the underlying mortgage pools are repaid. The
Funds will only invest in pools of mortgage loans assembled for the sale to
investors by agencies or instrumentalities of the U.S. government and will limit
their investment to 5% of net assets. Unscheduled or early payments on the
underlying mortgages may shorten the securities' effective maturities.
Other types of securities representing interests in a pool of mortgage
loans are known as collateralized mortgage obligations (CMOs) and real estate
mortgage investment conduits (REMICs) and multi-class pass-throughs. CMOs and
REMICs are debt instruments collateralized by pools of mortgage loans or other
mortgage-backed securities. Multi-class pass-through securities are equity
interests in a trust composed of mortgage loans or other mortgage-backed
securities. Payments of principal and interest on underlying collateral provides
the funds to pay debt service on the CMO or REMIC or make scheduled
distributions on the multi-class pass-through securities. The Funds will only
invest in CMOs, REMICs and multi-class pass-through securities (collectively
"CMOs" unless the context indicates otherwise) issued by agencies or
instrumentalities of the U.S. government (such as the Federal Home Loan Mortgage
Corporation). None of the Funds will invest in "stripped" CMOs, which represent
only the income portion or the principal portion of the CMO.
CMOs are issued with a variety of classes or "tranches," which have
different maturities and are often retired in sequence. One or more tranches of
a CMO may have coupon rates which reset periodically at a specified increment
over an index such as the London Interbank Offered Rate ("LIBOR"). These
"floating rate CMOs," typically are issued with lifetime "caps" on their coupon
rate, which means that there is a ceiling beyond which the coupon rate may not
be increased. The yield of some floating rate CMOs varies in excess of the
change in the index, which would cause the value of such CMOs to fluctuate
significantly once rates reach the cap.
REMICs, which have elected to be treated as such under the Internal
Revenue Code, are private entities formed for the purpose of holding a fixed
pool of mortgages secured by an interest in real property. REMICs are similar to
CMOs in that they issue multiple classes of securities. As with other CMOs, the
mortgages which collateralize the REMICs in which a Fund may invest include
mortgages backed by GNMA certificates or other mortgage pass-throughs issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
The average life of securities representing interests in pools of mortgage
loans is likely to be substantially less than the original maturity of the
mortgage pools as a result of prepayments or foreclosures of such mortgages.
Prepayments are passed through to the registered holder with the regular monthly
payments of principal and interest, and have the effect of reducing future
payments. To the extent the mortgages underlying a security representing an
interest in a pool of mortgages are prepaid, the Funds may experience a loss (if
the price at which the respective security was acquired by the Fund was at a
premium over par, which represents the price at which the security will be
redeemed upon prepayment). In addition, prepayments of such securities held by
the Funds will reduce the share price of each Fund to the extent the market
value of the securities at the time of prepayment exceeds their par value.
Furthermore, the prices of mortgage-backed securities can be significantly
affected by changes in interest rates. Prepayments may occur with greater
frequency in periods of declining mortgage rates because, among other reasons,
it may be possible for mortgagors to refinance their outstanding mortgages at
lower interest rates. In such periods, it is likely that any prepayment proceeds
would be reinvested by the Funds at lower rates of return.
M. Foreign Currency Exchange Transactions. The Funds may hold foreign
currency deposits from time to time, and may convert dollars and foreign
currencies in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering into
forward contracts to purchase or sell foreign currencies at a future date and
price. Forward contracts generally are traded in an interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. The parties to a forward contract may agree to offset or terminate
the contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.
The Funds may use currency forward contracts to manage currency risks and
to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by any Fund.
In connection with purchases and sales of securities denominated in
foreign currencies, a Fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's settlement
date. This technique is sometimes referred to as a "settlement hedge" or
"transaction hedge." A Fund also could enter into forward contracts to purchase
or sell a foreign currency in anticipation of future purchases or sales of
securities denominated in foreign currency, even if the specific investments
have not yet been selected by the Advisor.advisor.
The Funds also may use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example, if a
Fund owned securities denominated in Deutschemarks, it could enter into a
forward contract to sell Deutschemarks in return for U.S. dollars to hedge
against possible declines in the Deutschemark's value. Such a hedge (sometimes
referred to as a "position hedge") would tend to offset both positive and
negative currency fluctuations, but would not offset changes in security values
caused by other factors. A Fund also could hedge the position by selling another
currency expected to perform similarly to the Deutschemark -- for example, by
entering into a forward contract to sell Deutschemarks or European Currency
Units in return for U.S. dollars. This type of hedge, sometimes referred to as a
"proxy hedge," could offer advantages in terms of cost, yield, or efficiency,
but generally will not hedge currency exposure as effectively as a simple hedge
into U.S. dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedge securities
are denominated.
Under certain conditions, SEC guidelines require mutual funds to segregate
cash and appropriate liquid assets to cover currency forward contracts. As
required by SEC guidelines, the Funds will segregate cash or U.S. Government
securities or other high-grade liquid debt securities to cover currency forward
contracts, if any, whose purpose is essentially speculative. The Funds will not
segregate assets to cover forward contracts entered into for hedging purposes,
including settlement hedges, position hedges, and proxy hedges. In segregating
assets, the Funds' custodian or a designated subcustodian either places such
assets in a segregated account or separately identifies such assets and renders
them unavailable for investment by the Funds.
Successful use of forward currency contracts will depend on the
Advisor'sadvisor's skill in analyzing and predicting currency values. Forward
contracts may change the Funds' currency exchange rates substantially, and could
result in losses to the Funds if currencies do not perform as the advisor
anticipates. For example, if a currency's value rose at a time when the
Advisoradvisor had hedged a Fund by selling currency in exchange for dollars,
the Fund would be unable to participate in the currency's appreciation. If the
Advisoradvisor hedges currency exposure through proxy hedges, the Fund could
realize currency losses from the hedge and the security position at the same
time if the two currencies do not move in tandem. Similarly, if the advisor
increases a Fund's exposure to a foreign currency, and that currency's value
declines, the Fund will realize a loss. There is no assurance that the advisor's
use of forward currency contracts will be advantageous to any of the Funds or
that the advisor will hedge at an appropriate time.
N. Options and Futures on Foreign Currencies. Each Fund may write covered
put and call options and purchase put and call options on foreign currencies for
the purpose of protecting against declines in the U.S. dollar value of Fund
securities and against increases in the U.S. dollar cost of securities to be
acquired. A Fund may use options on foreign currency to cross-hedge, which
involves writing or purchasing options on one currency to hedge against changes
in exchange rates for a different, but related currency. As with other types of
options, however, the writing of an option on a foreign currency will constitute
only a partial hedge up to the amount of the premium received, and a Fund could
be required to purchase or sell a foreign currency at disadvantageous exchange
rates, thereby incurring losses. The purchase of an option on foreign currency
may be used to hedge against fluctuations in exchange rates although, in the
event of exchange rate movements adverse to a Fund's position, it may forfeit
the entire amount of the premium plus related transaction costs. In addition, a
Fund may purchase call options on a foreign currency when the investment advisor
anticipates that the currency will appreciate in value.
There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If a Fund is unable to effect a
closing purchase transaction with respect to covered options it has written, the
Fund will not be able to sell the underlying currency or dispose of assets held
in a segregated account until it closes out the options or the options expire or
are exercised. Similarly, if the Fund is unable to close out options it has
purchased, it would have to exercise the options in order to realize any profit
and will incur transaction costs. The Funds pay brokerage commissions or spreads
in connection with options transactions.
As in the case of forward contracts, certain options on foreign currencies
are traded over-the-counter and involve liquidity and credit risks which may not
be present in the case of exchange-traded currency options. The Funds' ability
to terminate over-the-counter options ("OTC" Options") will be more limited than
with exchange-traded options. It is also possible that broker-dealers
participating in OTC Options transactions will not fulfill their obligations.
Until such time as the staff of the SEC changes its position, the Funds will
treat purchased OTC Options and assets used to cover written OTC Options as
illiquid securities. With respect to options written with primary dealers in
U.S. government securities pursuant to an agreement requiring a closing purchase
transaction at a formula price, the amount of illiquid securities may be
calculated with reference to the repurchase formula.
Currency futures contracts are similar to forward currency exchange
contracts, except that they are traded on exchanges (and have margin
requirements) and are standardized as to contract size and delivery date. Most
currency futures contracts call for payment or delivery in U.S. dollars. Each
Fund may purchase and sell currency futures to increase or decrease its exposure
to different foreign currencies. Currency futures can be expected to correlate
with exchange rates, but may not reflect other factors that affect the value of
a Fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a Fund
against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a Fund's foreign-denominated investments
change in response to many factors other than exchange rates, it may not be
possible to match the amount of currency futures to the value of the Fund's
investments exactly over time.
O. Repurchase Agreements. Each Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, each Fund
intends to enter into repurchase agreements only with Firstar Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the advisor (subject to review by the Board of
Trustees) to be creditworthy. The advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.
P. Reverse Repurchase Agreements. Each Fund may invest in reverse
repurchase agreements. Reverse repurchase agreements involve sales of portfolio
securities by a Fund to member banks of the Federal Reserve System, or
recognized dealers, concurrently with an agreement by the Fund to repurchase the
same securities at a later date at a fixed price, which is generally equal to
the original sales price plus interest. The Fund retains record ownership and
the right to receive interest and principal payments on the portfolio security
involved. The Fund's objective in such a transaction would be to obtain funds to
pursue additional investment opportunities whose yield would exceed the cost of
the reverse repurchase transaction. Generally, the use of reverse repurchase
agreements should reduce portfolio turnover and increase yield. In the event of
bankruptcy or other default by the purchaser, the Fund could experience both
delays in repurchasing the portfolio securities and losses.
Q. Illiquid Securities. Illiquid securities generally include securities
which cannot be disposed of promptly and in the ordinary course of business
without taking a reduced price. Securities may be illiquid due to contractual or
legal restrictions on resale or lack of a ready market. The following securities
are considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. Restricted
securities are securities the resale of which is subject to legal or contractual
restrictions. Restricted securities may be sold only in privately negotiated
transactions, in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 or pursuant to Rule 144
or Rule 144A promulgated under such Act. Where registration is required, the
Fund may be obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision to sell and the
time such security may be sold under an effective registration statement. If
during such a period adverse market conditions were to develop, the Fund might
obtain a less favorable price than the price it could have obtained when it
decided to sell.
R. Futures Contracts. When a Fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date. When a
Fund sells a futures contract, it agrees to sell the underlying instrument at a
specified future date. The price at which the purchase and sale will take place
is fixed when the Fund enters into the contract. Futures can be held until their
delivery dates, or can be closed out before then if a liquid secondary market is
available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument or precious metal. Therefore,
purchasing futures contracts will tend to increase a Fund's exposure to positive
and negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a Fund sells a futures
contract, by contrast, the value of its futures position will tend to move in a
direction contrary to the market. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much as if the
underlying instrument or precious metal had been sold.
S. Debt Securities. Lower quality corporate debt securities (commonly
called "junk bonds") often are considered to be speculative and involve greater
risk of default or price change due to changes in the issuer's creditworthiness
or changes in economic conditions. The market prices of these securities will
fluctuate over time, may fluctuate more than higher quality securities and may
decline significantly in periods of general economic difficulty, which may
follow periods of rising interest rates. The market for lower quality securities
may be less liquid than the market for securities of higher quality.
Furthermore, the liquidity of lower quality securities may be affected by the
market's perception of their credit quality. Therefore, judgment may at times
play a greater role in valuing these securities than in the case of higher
quality securities, and it also may be more difficult during certain adverse
market conditions to sell lower quality securities at their fair value to meet
redemption requests or to respond to changes in the market. No Fund will invest
more than 5% of the value of its net assets in junk bonds.
<PAGE>
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted
by the Trust with respect to each Fund and are fundamental ("Fundamental"),
i.e., they may not be changed without the affirmative vote of a majority of the
outstanding shares of each Fund. As used in the Prospectus and the Statement of
Additional Information, the term "majority" of the outstanding shares of the
Fund means the lesser of (1) 67% or more of the outstanding shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented at such meeting; or (2) more than 50% of
the outstanding shares of the Fund. Other investment practices which may be
changed by the Board of Trustees without the approval of shareholders to the
extent permitted by applicable law, regulation or regulatory policy are
considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Funds will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. No Fund will invest 25% or more of its total assets in a
particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment company,
whether organized as a trust, association or corporation, or a personal holding
company, may be merged or consolidated with or acquired by the Trust, provided
that if such merger, consolidation or acquisition results in an investment in
the securities of any issuer prohibited by said paragraphs, the Trust shall,
within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or such
portion thereof as shall bring the total investment therein within the
limitations imposed by said paragraphs above as of the date of consummation.
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
1. Pledging. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. No Fund will purchase any security while borrowings
(including reverse repurchase agreements) representing more than one third of
its total assets are outstanding.
3. Margin Purchases. No Fund will purchase securities or evidences of
interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.
4. Options. No Fund will purchase or sell puts, calls, options or
straddles except as described in the Funds' Prospectus and Statement of
Additional Information.
5. Illiquid Investments. No Fund will invest more than 5% of its net
assets in securities for which there are legal or contractual restrictions on
resale and other illiquid securities.
6. Loans of Portfolio Securities. No Fund will make loans of portfolio
securities.
<PAGE>
THE INVESTMENT ADVISOR
The investment advisor to each Fund is Martin Capital Advisors, L.L.P., a
Texas limited liability partnership formed on January 29, 1999, 816 Congress
Avenue, Suite 1540, Austin, TX 78701 (the "Advisor"). As the managing partner
and majority owner, Paul Martin may be deemed to control the Advisor.
Under the terms of the management agreement (the "Agreement"), the Advisor
manages each Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of each Fund except brokerage, taxes, interest, fees
and expenses of the non-interested person trustees and extraordinary expenses.
As compensation for its management services and agreement to pay the Fund's
expenses, each Fund is obligated to pay the Advisor a fee computed and accrued
daily and paid monthly at an annual rate of 1.25% of the average daily net
assets of the Fund. The Advisor may waive all or part of its fee, at any time,
and at its sole discretion, but such action shall not obligate the Advisor to
waive any fees in the future.
For the fiscal periods indicated, the Funds paid the following advisory
fees to the Advisor:
----------------------------------------------------------
PERIOD ENDED AUSTIN TEXAS U.S.
MARCH 31ST OPPORTUNITY OPPORTUNITY OPPORTUNITY
FUND FUND FUND
----------------------------------------------------------
2000 $ 4,479 N/A $ 22,038
----------------------------------------------------------
The Advisor retains the right to use the names "Austin Opportunity,"
"Texas Opportunity" and "U.S. Opportunity" in connection with another investment
company or business enterprise with which the Advisor is or may become
associated. The Trust's right to use the names "Austin Opportunity," "Texas
Opportunity" and "U.S. Opportunity" automatically ceases ninety days after
termination of the Agreement and may be withdrawn by the Advisor on ninety days
written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. If a bank
or other financial institution 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 and other financial
institutions 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 and other financial institutions which provide such
services; however, in selecting investments for the Fund, no preference will be
shown for such securities.
The Trust and the Advisor have each adopted a Code of Ethics under Rule
17j-1 of the Investment Company Act of 1940. The Code significantly restricts
the personal investing activities of all employees of the Advisor. The Code
requires that all employees of the Advisor preclear any personal securities
investment. The preclearance requirement and associated procedures are designed
to identify any substantive prohibition or limitation applicable to the proposed
investment. In addition, no employee may purchase or sell any security which at
the time is being purchased or sold, or to the knowledge of the employee is
being considered for purchase or sale, by the Fund. The substantive restrictions
also include a ban on acquiring any securities in an initial public offering and
provides for trading "blackout periods" which prohibit trading by portfolio
managers of the Fund within periods of trading by the Fund in the same (or
equivalent) security. The restrictions and prohibitions apply to most securities
transactions by employees of the Advisor, with limited exceptions for some
securities (such as securities that have a market capitalization and average
daily trading volume above certain minimums).
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>
<CAPTION>
=====================================================================================
NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
-------------------------------------------------------------------------------------
<S> <C> <C>
*Kenneth D. Trumpfheller President, President, Treasurer and Secretary of
1793 Kingswood Drive Secretary AmeriPrime Financial Services, Inc., the
Suite 200 and Trustee Fund's administrator, and AmeriPrime Financial
Southlake, Texas 76092 Securities, Inc., the Fund's distributor,
Year of Birth: 1958 since 1994; President and Trustee of
AmeriPrime Advisors Trust and AmeriPrime
Insurance Trust; Prior to December, 1994, a
senior client executive with SEI Financial
Services.
-------------------------------------------------------------------------------------
*Robert A. Chopyak Treasurer Manager of AmeriPrime Financial Services,
1793 Kingswood Drive and Chief Inc., the Fund's administrator, from February
Suite 200 Financial 2000 to present. Self-employed, performing
Southlake, Texas 76092 Officer Y2K testing, January 1999 to January 2000.
Year of Birth: 1968 Vice President of Fund Accounting, American
Data Services, Inc., a mutual fund services
company, October 1992 to December 1998.
-------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company,
2001 N. Indianwood L.L.C., oil and gas services company; various
Avenue positions with Carbo Ceramics, Inc., oil field
Broken Arrow, OK 74012 manufacturing/supply company, from 1984 to
Year of Birth: 1957 1997, most recently Vice President of
Marketing.
-------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment
600 Jefferson Street Officer of Legacy Trust Company since 1992;
Suite 350 President and Director of Heritage Trust
Houston, TX 77002 Company from 1994-1996; Vice President and
Year of Birth: 1947 Manager of Investments of Kanaly Trust Company
from 1988 to 1992.
=====================================================================================
</TABLE>
* This person may be deemed an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
The compensation paid to the Trustees of the Trust for the Funds' fiscal
year ended March 31, 2000 is as set forth in the following table. Trustee fees
are Trust expenses and each series of the Trust pays a portion of the Trustee
fees.
=================================================================
AGGREGATE TOTAL COMPENSATION
NAME COMPENSATION FROM TRUST (THE TRUST
FROM TRUST IS
NOT IN A FUND COMPLEX)
-----------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
-----------------------------------------------------------------
Steve L. Cobb $_________ $_________
=================================================================
<PAGE>
-----------------------------------------------------------------
Gary E. Hippenstiel $_________ $_________
=================================================================
<PAGE>
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.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek to
acquire the same security at about the same time, the Trust may not be able to
acquire as large a position in such security as it desires or it may have to pay
a higher price for the security. Similarly, the Trust may not be able to obtain
as large an execution of an order to sell or as high a price for any particular
portfolio security if the other client desires to sell the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one client, the resulting participation in
volume transactions could produce better executions for the Trust. In the event
that more than one client wants to purchase or sell the same security on a given
date, the purchases and sales will normally be made by random client selection.
<PAGE>
For the fiscal periods indicated, the Funds paid the following in
brokerage commissions:
----------------------------------------------------------
PERIOD ENDED AUSTIN TEXAS U.S.
MARCH 31ST OPPORTUNITY OPPORTUNITY OPPORTUNITY
FUND FUND FUND
----------------------------------------------------------
2000 $ 3,271 N/A $ 7,706
----------------------------------------------------------
DISTRIBUTION PLAN
Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plan") under which each Fund is authorized
to incur distribution expenses at an annual rate of 0.25% of the average daily
net assets of the Fund. All distribution expenses incurred by a Fund under its
Plan are Fund expenses, but they are paid by the Advisor pursuant to the
management agreement. The expenses may include payments to securities dealers
and others that are engaged in the sale of shares of the Fund or advising
shareholders regarding the purchase or retention of shares of the Fund; overhead
and telephone expenses; printing and distribution of prospectuses and reports
used in connection with the offering of the Fund's shares to prospective
investors; and preparation, printing and distribution of sales literature and
advertising materials. In addition, each Fund may, under its Plan, make payments
to selected dealers and others which have entered into Service Agreements for
services provided to shareholders of the Fund. The services provided by selected
dealers and others pursuant to each Plan are designed to promote the sale of
shares of the Fund and include the furnishing of office space and equipment,
telephone facilities, personnel and assistance to the Fund in servicing such
shareholders. The services provided pursuant to each Plan also may include
support services to the Fund such as establishing and maintaining shareholders'
accounts and records, processing purchase and redemption transactions, answering
routine client inquiries regarding the Fund, and providing such other services
to the Fund as the Fund may reasonably request. The Advisor may also compensate
such dealers and administrators out of its own assets.
The Plan has been approved by the Fund's Board of Trustees, including a
majority of the Trustees who are not "interested persons" of the Fund and who
have no direct or indirect financial interest in the Plan or any related
agreement, by a vote cast in person. Continuation of the Plan and the related
agreements must be approved by the Trustees annually, in the same manner, and
the Plan or any related agreement may be terminated at any time without penalty
by a majority of such independent Trustees or by a majority of the outstanding
shares of the Fund. Any amendment increasing the maximum percentage payable
under the Plan must be approved by a majority of the outstanding shares of the
Fund, and all other material amendments to the Plan or any related agreement
must be approved by a majority of the independent Trustees. As an executive
officer of the Fund's Distributor, Kenneth Trumpfheller, a Trustee of the Trust,
may benefit indirectly from payments received by the Fund's Distributor.
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 Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Fund's adviser'sadvisor's opinion, the last bid price does not accurately
reflect the current value of the security. All other securities for which
over-the-counter market quotations are readily available are valued at their
last bid price. When market quotations are not readily available, when the
Fund's advisor determines the last bid price does not accurately reflect the
current value or when restricted securities are being valued, such securities
are valued as determined in good faith by the Fund's advisor, subject to review
of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Fund's advisor believes such prices accurately reflect the fair market value of
such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's advisor, subject to review of the Board of Trustees.
Short term investments in fixed income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity, are
valued by using the amortized cost method of valuation, which the Board has
determined will represent fair value.
INVESTMENT PERFORMANCE
The 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 and that a complete redemption
occurs at the end of the applicable period.
For the fiscal periods indicated, the Fund's average annual total return
was as follows:
----------------------------------------------------------
PERIOD ENDED AUSTIN TEXAS U.S.
MARCH 31ST OPPORTUNITY OPPORTUNITY OPPORTUNITY
FUND FUND FUND
----------------------------------------------------------
----------------------------------------------------------
2000 N/A N/A 61.69%
----------------------------------------------------------
In addition to providing average annual total return, the Funds may also
provide non-standardized quotations of total return for differing periods and
may provide the value of a $10,000 investment (made on the date of the initial
public offering of the Funds' shares) as of the end of a specified period.
Each Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with each Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of any of the
Funds may be compared to indices of broad groups of unmanaged securities
considered to be representative of or similar to the portfolio holdings of the
Funds or considered to be representative of the stock market in general. The
Funds may use the Standard & Poor's 500 Stock Index, the NASDAQ Composite Index
or the Dow Jones Industrial Average.
In addition, the performance of any of the Funds may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of any of the Funds. Performance rankings and
ratings reported periodically in national financial publications such as
Barron's and Fortune also may be used.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT AND FUND ACCOUNTING
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other transfer agency and shareholder service functions. For
its services as transfer agent, Unified receives a monthly fee from the Advisor
of $1.20 per shareholder (subject to a minimum monthly fee of $750). In
addition, Unified provides the Fund with fund accounting services, which
includes certain monthly reports, record-keeping and other management-related
services. For its services as fund accountant, Unified receives an annual fee
from the Advisor equal to 0.0275% of the Fund's assets up to $100 million, and
0.0250% of the Fund's assets from $100 million to $300 million, and 0.0200% of
the Fund's assets over $300 million (subject to various monthly minimum fees,
the maximum being $2,000 per month for assets of $20 to $100 million).
The following chart discloses the fees paid by the Advisor (not the Funds) to
Unified for these Transfer agent services:
----------------------------------------------------------
PERIOD ENDED AUSTIN TEXAS U.S.
MARCH 31ST OPPORTUNITY OPPORTUNITY OPPORTUNITY
FUND FUND FUND
----------------------------------------------------------
2000 $6,465 N/A $17,935
----------------------------------------------------------
The following chart discloses the fees paid by the Advisor (not the Funds) to
Unified for these Fund accounting services:
----------------------------------------------------------
PERIOD ENDED AUSTIN TEXAS U.S.
MARCH 31ST OPPORTUNITY OPPORTUNITY OPPORTUNITY
FUND FUND FUND
----------------------------------------------------------
2000 $ 4,258 N/A $ 9,600
----------------------------------------------------------
ACCOUNTANTS
The firm of McCurdy & Associates CPA's, Inc., 27955 Clemens Road,
Westlake, Ohio 44145, has been selected as independent public accountants for
the Fund for the fiscal year ending October 31, 2000. McCurdy & Associates
performs an annual audit of the Funds' financial statements and provides
financial, tax and accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., (the "Distributor") 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 each
Fund's 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 Advisor equal to
an annual rate of 0.10% of the Fund's assets under $50 million, 0.075% of the
Fund's assets from $50 million to $100 million, and 0.050% of the Fund's assets
over $100 million (subject to a minimum fee of $2,500 per month). The
Administrator, the Distributor, and Unified (the Fund's transfer agent) are
controlled by Unified Financial Services, Inc.
The following chart discloses the fees paid by the Advisor (not the Fund)
to the Administrator for these services:
----------------------------------------------------------
PERIOD ENDED AUSTIN TEXAS U.S.
MARCH 31ST OPPORTUNITY OPPORTUNITY OPPORTUNITY
FUND FUND FUND
----------------------------------------------------------
2000 $ 10,000 N/A $ 18,333
----------------------------------------------------------
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to be
included in the Statement of Additional Information are incorporated herein by
reference to the Austin Opportunity Fund's and U.S. Opportunity Fund's Annual
Report to Shareholders for the periods from each Fund's inception through March
31, 2000. The Funds will provide the Annual Report without charge by calling the
Funds at 1-888-336-9757. As of March 31, 2000, the Texas Opportunity Fund had
not yet commenced operations.
<PAGE>
AMERIPRIME FUNDS
PART C. OTHER INFORMATION
-----------------
Item 23. Exhibits
(a) Articles of Incorporation.
(i) Copy of Registrant's Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 11, is hereby
incorporated by reference.
(ii) Copy of Amendment No. 1 to Registrant's Declaration of Trust, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 11, is
hereby incorporated by reference.
(iii) Copy of Amendment No. 2 to Registrant's Declaration of Trust, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 1, is hereby
incorporated by reference.
(iv) Copy of Amendment No. 3 to Registrant's Declaration of Trust, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 4, is hereby
incorporated by reference.
(v) Copy of Amendment No. 4 to Registrant's Declaration of Trust, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 4, is hereby
incorporated by reference.
(vi) Copy of Amendment No. 5 and Amendment No. 6 to Registrant's Declaration
of Trust, which were filed as an Exhibit to Registrant's Post-Effective
Amendment No. 8, are hereby incorporated by reference.
(viii) Copy of Amendment No. 7 to Registrant's Declaration of Trust,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
11, is hereby incorporated by reference.
(ix) Copy of Amendment No. 8 to Registrant's Declaration of Trust, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 12, is
hereby incorporated by reference.
(x) Copy of Amendment No. 9 to Registrant's Declaration of Trust which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 15, is
hereby incorporated by reference.
(xi) Copy of Amendment No. 10 to Registrant's Declaration of Trust, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 16, is
hereby incorporated by reference.
(xii) Copy of Amendment No. 11 to Registrant's Declaration of Trust, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 17, is
hereby incorporated by reference.
(xiii) Copy of Amendment No. 12 to Registrant's Declaration of Trust,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
23, is hereby incorporated by reference.
(xiv) Copy of Amendment No. 13 to Registrant's Declaration of Trust, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 23, is
hereby incorporated by reference.
(xv) Copy of Amendments No. 14-17 to Registrant's Declaration of Trust,
which were filed as Exhibits to Registrant's Post-Effective Amendment No. 27,
are hereby incorporated by reference.
(xvi) Copy of Amendments No. 18-19 to Registrant's Declaration of Trust,
which were filed as Exhibits to Registrant's Post-Effective Amendment No. 30,
are hereby incorporated by reference.
(xvii) Copy of Amendment No. 20 to Registrant's Declaration of Trust,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
40, is hereby incorporated by reference.
(b) By-Laws. Copy of Registrant's By-Laws, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 11, is hereby incorporated by
reference.
(c) Instruments Defining Rights of Security Holders. None other than in the
Declaration of Trust, as amended, and By-Laws of the Registrant.
(d) Investment Advisory Contracts.
(i) Copy of Registrant's Management Agreement with Carl Domino Associates,
L.P., advisor to Carl Domino Equity Income Fund, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 11, is hereby
incorporated by reference.
(ii) Copy of Registrant's Management Agreement with Jenswold, King &
Associates, advisor to Fountainhead Special Value Fund, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 8, is hereby
incorporated by reference.
(iii) Copy of Registrant's Management Agreement with GLOBALT, Inc., advisor
to GLOBALT Growth Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 11, is hereby incorporated by reference.
(iv) Copy of Registrant's Management Agreement with IMS Capital Management,
Inc., advisor to the IMS Capital Value Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 2, is hereby incorporated by
reference.
(v) Copy of Registrant's Management Agreement with Commonwealth Advisors,
Inc., advisor to Florida Street Bond Fund and Florida Street Growth Fund,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 8,
is hereby incorporated by reference.
(vi) Copy of Registrant's Management Agreement with Corbin & Company, advisor to
Corbin Small-Cap Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 8, is hereby incorporated by reference.
(vii) Copy of Registrant's Management Agreement with Spectrum Advisory
Services, Inc., advisor to the Marathon Value Portfolio, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 42, is hereby
incorporated by reference.
(viii) Copy of Registrant's Management Agreement with The Jumper Group,
Inc., advisor to the Jumper Strategic Advantage Fund, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 23, is hereby
incorporated by reference.
(ix) Copy of Registrant's Management Agreement with Appalachian Asset
Management, Inc., advisor to the AAM Equity Fund, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 17, is hereby
incorporated by reference.
(x) Copy of Registrant's Management Agreement with Martin Capital Advisors,
L.L.P., advisor to the Austin Opportunity Fund, which was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 23, is hereby incorporated by
reference.
(xi) Copy of Registrant's proposed Management Agreement with Paul B. Martin,
Jr. d/b/a Martin Capital Advisors, advisor to the Texas Opportunity Fund,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
17, is hereby incorporated by reference.
(xii) Copy of Registrant's Management Agreement with Martin Capital Advisors
L.L.P., advisor to the U.S. Opportunity Fund, which was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 29, is hereby incorporated by
reference.
(xiii) Copy of Registrant's Management Agreement with Gamble, Jones, Morphy &
Bent, advisor to the GJMB Growth Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 23, is hereby incorporated by
reference.
(xiv) Copy of Registrant's Management Agreement with Carl Domino Associates,
L.P., advisor to the Carl Domino Growth Fund, which was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 23, is hereby incorporated by
reference.
(xv) Copy of Registrant's Management Agreement with Carl Domino Associates,
L.P., advisor to the Carl Domino Global Equity Income Fund, which was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 23, is hereby
incorporated by reference.
(xvi) Copy of Registrant's Management Agreement with Dobson Capital
Management, Inc., advisor to the Dobson Covered Call Fund, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 25, is hereby
incorporated by reference.
(xvii) Registrant's Management Agreement with Auxier Asset Management, LLC,
advisor to the Auxier Focus Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 31, is hereby incorporated by reference.
(xviii) Copy of Registrant's Management Agreement with Shepherd Advisory
Services, Inc., advisor to the Shepherd Values Market Neutral Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 42, is
hereby incorporated by reference.
(xix) Copy of Registrant's Management Agreement with Shepherd Advisory
Services, Inc., advisor to the Shepherd Values Growth Fund, which was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 42, is hereby
incorporated by reference.
(xx) Copy of Registrant's Management Agreement with Columbia Partners,
L.L.C., Investment Management, advisor to the Columbia Partners Equity Fund,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
31, is hereby incorporated by reference.
(xxi) Registrant's Management Agreement with Cash Management Systems, Inc.
("CMS"), advisor to The Cash Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 31, is hereby incorporated by
reference.
(xxii) Copy of Registrant's Management Agreement with Ariston Capital
Management Corporation, advisor to the Ariston Convertible Securities Fund,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
27, is hereby incorporated by reference.
(xxiii) Copy of Registrant's Management Agreement with Leader Capital
Corp., advisor to the Leader Converted Mutual Bank Fund, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 29, is hereby
incorporated by reference.
(xxiv) Registrant's Management Agreement with Shepherd Advisory
Services, Inc., advisor to the Shepherd Values VIF Equity Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 31, is
hereby incorporated by reference.
(xxv) Registrant's Management Agreement with Shepherd Advisory Services,
Inc., advisor to the Shepherd Values Small-Cap Fund, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 31, is hereby
incorporated by reference.
(xxvi) Registrant's Management Agreement with Shepherd Advisory
Services, Inc., advisor to the Shepherd Values International Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 31, is
hereby incorporated by reference.
(xxvii) Registrant's Management Agreement with Shepherd Advisory
Services, Inc., advisor to the Shepherd Values Fixed Income Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 31, is
hereby incorporated by reference.
(xxviii) Sub-Advisory Agreement between Shepherd Advisory Services, Inc.
and Cornerstone Capital Management, Inc., sub-advisor to the Shepherd Values
VIF Equity Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 34, is hereby incorporated by reference.
(xxix) Sub-Advisory Agreement between Shepherd Advisory Services, Inc.
and Templeton Portfolio Advisory, sub-advisor to the Shepherd Values
International Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 34, is hereby incorporated by reference.
(xxx) Sub-Advisory Agreement between Shepherd Advisory Services, Inc. and
Nicholas-Applegate Capital Management, sub-advisor to the Shepherd Values
Small-Cap Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 34, is hereby incorporated by reference.
(xxxi) Sub-Advisory Agreement between Shepherd Advisory Services, Inc.
and Potomac Asset Management Company, Inc., sub-advisor to the Shepherd
Values Fixed Income Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 34, is hereby incorporated by reference.
(xxxii) Sub-Advisory Agreement between Shepherd Advisory Services, Inc. and
Cornerstone Capital Management, Inc., sub-advisor to the Shepherd Values
Market Neutral Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 42, is hereby incorporated by reference.
(xxxiii) Sub-Advisory Agreement between Shepherd Advisory Services, Inc.
and Cornerstone Capital Management, Inc., sub-advisor to the Shepherd Values
Growth Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 42, is hereby incorporated by reference.
(xxxiv) Copy of Registrant's Management Agreement with Aegis Asset
Management, Inc., advisor to the Westcott Nothing But Net Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 39, is
hereby incorporated by reference.
(xxxv) Copy of Registrant's Management Agreement with Aegis Asset Management,
Inc., advisor to the Westcott Large-Cap Fund, which was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 39, is hereby incorporated by
reference.
(xxxvi) Copy of Registrant's Management Agreement with Aegis Asset
Management, Inc., advisor to the Westcott Fixed Income Fund, which was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 39, is hereby
incorporated by reference.
(xxxvii) Copy of Registrant's Management Agreement with Jenswold, King &
Associates, advisor to the Fountainhead Kaleidoscope Fund, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 38, is hereby
incorporated by reference.
(xxxviii) Copy of Registrant's Proposed Management Agreement with Ariston
Capital Management Corporation, advisor to the Ariston Internet Convertible
Fund, which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
41, is hereby incorporated by reference.
(e) Underwriting Contracts.
(i) Copy of Registrant's Amended and Restated Underwriting Agreement with
AmeriPrime Financial Securities, Inc., which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 8, is hereby incorporated by
reference.
(ii) Copy of Registrant's Exhibit A to the Amended and Restated Underwriting
Agreement, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 40, is hereby incorporated by reference.
(f) Bonus or Profit Sharing Contracts. None.
(g) Custodian Agreements.
(i) Copy of Registrant's Agreement with the Custodian, Firstar Bank, N.A.
(formerly Star Bank), which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 11, is hereby incorporated by reference.
(ii) Copy of Registrant's Appendix B to the Agreement with the Custodian,
Firstar Bank, N.A., is filed herewith.
(iii) Copy of Registrant's Agreement with UMB Bank, N.A., Custodian to the
Dobson Covered Call Fund and the Florida Street Funds, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 28, is hereby
incorporated by reference.
(h) Other Material Contracts. Copy of Registrant's Agreement with the
Administrator, AmeriPrime Financial Services, Inc., which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 11, is hereby
incorporated by reference.
(i) Legal Opinion.
(i) Opinion of Brown, Cummins & Brown Co., L.P.A., which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 9, is hereby
incorporated by reference.
(ii) Opinion of Brown, Cummins & Brown Co., L.P.A., which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 29, is hereby
incorporated by reference.
(iii) Opinion of Brown, Cummins & Brown Co., L.P.A., which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 41, is hereby
incorporated by reference.
(iv) Consent of Brown, Cummins & Brown Co., L.P.A. is filed herewith.
(j) Other Opinions.
(i) Consent of McCurdy & Associates CPA's, Inc. is filed herewith.
(k) Omitted Financial Statements. None.
(l) Initial Capital Agreements. Copy of Letter of Initial Stockholders,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
11, is hereby incorporated by reference.
(m) Rule 12b-1 Plan.
(i) Form of Registrant's Rule 12b-1 Service Agreement, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1, is hereby
incorporated by reference.
(ii) Copy of Registrant's Rule 12b-1 Distribution Plan for the Austin
Opportunity Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 17, is hereby incorporated by reference.
(iii) Copy of Registrant's Rule 12b-1 Distribution Plan for the Texas
Opportunity Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 17, is hereby incorporated by reference.
(iv) Copy of Registrant's Rule 12b-1 Distribution Plan for the U.S.
Opportunity Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 17, is hereby incorporated by reference.
(v) Copy of Registrant's Rule 12b-1 Distribution Plan for the Jumper
Strategic Advantage Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 24, is hereby incorporated by reference.
(vi) Copy of Registrant's Rule 12b-1 Distribution Plan for the Dobson
Covered Call Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 24, is hereby incorporated by reference.
(vii) Copy of Registrant's Rule 12b-1 Distribution Plan for the Ariston
Convertible Securities Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 27, is hereby incorporated by reference.
(viii) Copy of Registrant's Rule 12b-1 Distribution Plan for the Leader
Converted Mutual Bank Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 27, is hereby incorporated by reference.
(ix) Copy of Registrant's Rule 12b-1 Distribution Plan for the Westcott
Nothing But Net Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 28, is hereby incorporated by reference.
(x) Copy of Registrant's Rule 12b-1 Distribution Plan for the Westcott Large-Cap
Fund, which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
28, is hereby incorporated by reference.
(xi) Copy of Registrant's Rule 12b-1 Distribution Plan for the Westcott
Fixed Income Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 28, is hereby incorporated by reference.
(xii) Copy of Registrant's Rule 12b-1 Distribution Plan for the Ariston
Internet Convertible Fund which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 41, is hereby incorporated by reference.
(xiii) Copy of Registrant's Rule 12b-1 Distribution Plan for the Florida
Street Growth Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 42, is hereby incorporated by reference.
(xiv) Copy of Registrant's Rule 12b-1 Distribution Plan for the Florida
Street Bond Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 42, is hereby incorporated by reference.
(xv) Copy of Registrant's Shareholder Servicing Plan for the Florida Street
Growth Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 42, is hereby incorporated by reference.
(xvi) Copy of Registrant's Shareholder Servicing Plan for the Florida Street
Bond Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 42, is hereby incorporated by reference.
(n) Rule 18f-3 Plan.
(i) Rule 18f-3 Plan for the Carl Domino Equity Income Fund, which was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 16, is hereby
incorporated by reference.
(ii) Rule 18f-3 Plan for the Jumper Strategic Advantage Fund, which was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 21, is hereby
incorporated by reference.
(iii) Rule 18f-3 Plan for the Westcott Funds, which was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 28, is hereby incorporated by
reference.
(iv) Rule 18f-3 Plan for the Ariston Internet Convertible Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 41, is
hereby incorporated by reference.
(v) Rule 18f-3 Plan for the Florida Street Bond Fund, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 42, is hereby
incorporated by reference.
(vi) Rule 18f-3 Plan for the Florida Street Growth Fund, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 42, is hereby
incorporated by reference.
(o) Reserved.
(p) Codes of Ethics.
(i) Copy of Registrant's Code of Ethics, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 40, is hereby incorporated by
reference.
(ii) Copy of Registrant's Code of Ethics Type J, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 40, is hereby
incorporated by reference.
(iii) Copy of Registrant's Code of Ethics Type D, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 40, is hereby
incorporated by reference.
(q) Powers of Attorney
(i) Power of Attorney for Registrant and Certificate with respect thereto,
which were filed as an Exhibit to Registrant's Post-Effective Amendment No.
5, are hereby incorporated by reference.
(ii) Powers of Attorney for Trustees of the Trust, which were filed as an
Exhibit to Registrant's Post-Effective Amendment No. 5, are hereby
incorporated by reference.
(iii) Power of Attorney for the President (and a Trustee) of the Trust, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 35, is
hereby incorporated by reference.
(iv) Power of Attorney for the Treasurer of the Trust is filed herewith.
Item 24. Persons Controlled by or Under Common Control with the Registrant
-------- --------------------------------------------------------------------
(As of July 14, 2000)
---------------------
(a) Carl Domino may be deemed to control the Carl Domino Equity Income Fund as a
result of his beneficial ownership of the Fund (29.88%). Carl Domino may be
deemed to control the Domino Global Equity Income Fund as a result of his
beneficial ownership of the Fund (75.96%). Carl Domino may be deemed to
control the Domino Growth Fund as a result of his beneficial ownership of
the Fund (68.04%). Carl Domino controls Carl Domino Associates, L.P. (a
Florida limited partnership) because he controls the general partner. As a
result, Carl Domino Associates, L.P., the Domino Equity Income Fund, the
Domino Growth Fund and the Domino Global Equity Income Fund may be deemed to
be under the common control of Carl Domino.
(b) Charles L. Dobson, may be deemed to control the Dobson Covered Call
Fund as a result of his beneficial ownership of the Fund (72.84%).
Charles L. Dobson controls Dobson Capital Management, Inc. (a California
corporation) because he owns 100% of its shares. As a result, Dobson
Capital Management, Inc. and the Fund may be deemed to be under the
common control of Charles L. Dobson.
(c) J. Jeffrey Auxier may be deemed to control the Auxier Focus Fund as a
result of his beneficial ownership of the Fund (48.83%). J. Jeffrey
Auxier controls Auxier Asset Management, LLC (an Oregon limited liability
company) because he owns a majority of its shares. As a result, Auxier
Asset Management, LLC and the Fund may be deemed to be under the common
control of J. Jeffrey Auxier.
(d) Roger E. King may be deemed to control the Fountainhead Kaleidoscope
Fund as a result of his beneficial ownership of the Fund (29.50%). Roger
E. King controls King Investment Advisors, Inc. (a Texas corporation)
because he owns a majority of its shares. As a result, King Investment
Advisors, Inc. and the Fund may be deemed to be under the common control
of Roger E. King.
(e) T. Layng Guerriero may be deemed to control the Westcott Nothing But
Net Fund as a result of his beneficial ownership of the Fund (95.43%).
T. Layng Guerriero controls Aegis Asset Management, Inc. (a Texas
Corporation) because he owns a majority of its shares. As a result,
Aegis Asset Management, Inc. and the Fund may be deemed to be under the
common control of T. Layng Guerriero.
Item 25. Indemnification
(a) Article VI of the Registrant's Declaration of Trust provides for
indemnification of officers and Trustees as follows:
Section 6.4 Indemnification of Trustees, Officers, etc. Subject to and
except as otherwise provided in the Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered Person") against
all liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, and except that no Covered
Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Section 6.5 Advances of Expenses. The Trust shall advance attorneys' fees
or other expenses incurred by a Covered Person in defending a proceeding to the
full extent permitted by the Securities Act of 1933, as amended, the 1940 Act,
and Ohio Revised Code Chapter 1707, as amended. In the event any of these laws
conflict with Ohio Revised Code Section 1701.13(E), as amended, these laws, and
not Ohio Revised Code Section 1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
The Registrant may not pay for insurance which protects the Trustees and
officers against liabilities rising from action involving willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of their offices.
(b) The Registrant may maintain a standard mutual fund and investment advisory
professional and directors and officers liability policy. The policy, if
maintained, would provide coverage to the Registrant, its Trustees and officers,
and could cover its advisors, among others. Coverage under the policy would
include losses by reason of any act, error, omission, misstatement, misleading
statement, neglect or breach of duty.
(c) Pursuant to the Underwriting Agreement, the Trust shall indemnify
Underwriter and each of Underwriter's Employees (hereinafter referred to as a
"Covered Person") against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such person may be or
may have been threatened, while serving as the underwriter for the Trust or as
one of Underwriter's Employees, or thereafter, by reason of being or having been
the underwriter for the Trust or one of Underwriter's Employees, including but
not limited to liabilities arising due to any misrepresentation or misstatement
in the Trust's prospectus, other regulatory filings, and amendments thereto, or
in other documents originating from the Trust. In no case shall a Covered Person
be indemnified against any liability to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties of such Covered Person.
(d) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the provisions of Ohio law and the Agreement and
Declaration of the Registrant or the By-Laws of the Registrant, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Trust in the successful defense of any action, suit or proceeding)
is asserted by such trustee, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 26. Business and Other Connections of Investment Advisor
A. Carl Domino Associates, L.P., 580 Village Boulevard, Suite 225, West
Palm Beach, Florida 33409, ("CDA"), Advisor to the Carl Domino Equity Income
Fund, the Carl Domino Growth Fund and the Carl Domino International Global
Equity Income Fund, is a registered investment advisor.
(1) CDA has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
partners and officers of CDA during the past two years:
(a) Lawrence Katz, a partner in CDA, is an orthopedic surgeon in private
practice.
(b) Saltzman Partners, a partner in CDA, is a limited partnership that invests
in companies and businesses.
(c) Cango Inversiones, SA, a partner in CDA, is a foreign business entity
that invests in U.S. companies and businesses.
B. King Investment Advisors Inc., 1980 Post Oak Boulevard, Suite 2400,
Houston, Texas 77056-3898 ("King "), Advisor to the Fountainhead Special
Value Fund and the Fountainhead Kaleidoscope Fund, is a registered investment
advisor.
(1) King has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of King during the past two years:
(a) John Servis, a director of JKA King, is a licensed real estate broker.
C. GLOBALT, Inc., 3060 Peachtree Road, N.W., One Buckhead Plaza, Suite
225, Atlanta, Georgia 30305 ("GLOBALT"), Advisor to GLOBALT Growth Fund, is a
registered investment advisor.
(1) GLOBALT has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth other substantial business activities of the
officers and directors of GLOBALT during the past two years:
(a) Gregory S. Paulette, an officer of GLOBALT, is the president of GLOBALT
Capital Management, a division of GLOBALT.
D. IMS Capital Management, Inc., 10159 S.E. Sunnyside Road, Suite 330,
Portland, Oregon 97015, ("IMS"), Advisor to the IMS Capital Value Fund, is a
registered investment advisor.
(1) IMS has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of
the directors and officers of IMS during the past two years: None.
E. CommonWealth Advisors, Inc., 929 Government Street, Baton Rouge,
Louisiana 70802, ("CommonWealth"), Advisor to the Florida Street Bond Fund
and the Florida Street Growth Fund, is a registered investment advisor.
(1) CommonWealth has engaged in no other business during the past two
fiscal years.
(2) The following list sets forth other substantial business activities of the
directors and officers of CommonWealth during the past two years:
(a) Walter A. Morales, President/Chief Investment Officer of CommonWealth was
the Director of an insurance/broadcasting corporation, Guaranty Corporation, 929
Government Street, Baton Rouge, Louisiana 70802 from August 1994 to February
1996. From September 1994 through the present, a registered representative of a
Broker/Dealer company, Securities Service Network, 2225 Peters Road, Knoxville,
Tennessee 37923. Beginning August 1995 through the present, an instructor at the
University of Southwestern Louisiana in Lafayette, Louisiana.
F. Corbin & Company, 1320 S. University Drive, Suite 406, Fort Worth,
Texas 76107, ("Corbin"), Advisor to the Corbin Small-Cap Value Fund, is a
registered investment advisor.
(1) Corbin has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth other substantial business activities of
the directors and officers of Corbin during the past two years: None.
G. Spectrum Advisory Services, Inc. ("Spectrum"), 1050 Crown Pointe
Parkway, Suite 950, Atlanta, Georgia 30338, Advisor to the Marathon Value
Portfolio, is a registered investment advisor.
(1) Spectrum has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth other substantial business activities of
the directors and officers of Spectrum during the past two years: None.
H. The Jumper Group, Inc., 1 Union Square, Suite 505, Chattanooga,
Tennessee 37402, ("Jumper"), Advisor to the Jumper Strategic Advantage Fund,
is a registered investment advisor.
(1) Jumper has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth other substantial business activities of
the directors and officers of Jumper during the past two years: None.
I. Appalachian Asset Management, Inc., 1018 Kanawha Blvd., East, Suite
209, Charleston, WV 25301 ("AAM"), Advisor to AAM Equity Fund, is a
registered investment advisor.
(1) AAM has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of
the directors and officers of AAM during the past two years: None.
J. Martin Capital Advisors, L.L.P. ("Martin"), 816 Congress Avenue, Suite
1540, Austin, TX 78701 ("Martin"), Advisor to Austin Opportunity Fund, Texas
Opportunity Fund, and U.S. Opportunity Fund, is a registered investment
advisor.
(1) Martin has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth other substantial business activities of
the directors and officers of Martin during the past two years: None.
K. Gamble, Jones, Morphy & Bent, Inc., 301 East Colorado Boulevard, Suite
802, Pasadena, California 91101 ("GJMB"), Advisor to the GJMB Fund, is a
registered investment advisor.
(1) GJMB has engaged in no other business during the past two fiscal years.
(2) The following list sets forth other substantial business activities of
the directors and officers of GJMB during the past two years: None.
L. Dobson Capital Management, Inc., 1422 Van Ness Street., Santa Ana, CA
92707 ("Dobson"), Advisor to the Dobson Covered Call Fund, is a registered
investment advisor.
(1) Dobson has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth other substantial business activities of the
directors and officers of Dobson during the past two years:
(a) Charles L. Dobson, President of Dobson, was the Director of Trading with
Analytic/TSA Global Asset Management, 700 S. Flower Street, Suite 2400, Los
Angeles CA, from 1996 to 1998.
M. Auxier Asset Management, LLC, 8050 S.W. Warm Springs, Suite 130, Tualatin, OR
97062 ("Auxier"), Advisor to the Auxier Focus Fund, is registered investment
advisor.
(1) Auxier has engaged in no other business during the past two fiscal
years.
(1) The following list sets forth other substantial business activities of the
directors and officers of Auxier during the past two years:
(a) Jeffrey Auxier, Managing Member of Auxier, was a Senior Portfolio
Management Director with Smith Barney, Inc. until 1998.
N. Shepherd Advisory Services, Inc., 2505 21st Avenue, Suite 204,
Nashville, Tennessee 37212 ("Shepherd"), Advisor to the Shepherd Values
Funds, is a registered investment advisor.
(1) Shepherd has engaged in no other business during the past two fiscal
years.
(2) Information with respect to each officer and director of Shepherd is
incorporated by reference to Schedule D of Form ADV filed by it under the
Investment Advisors Act (File No. 801-56708).
O. Columbia Partners, L.L.C., Investment Management, 1775 Pennsylvania
Avenue, N.W., Washington, DC 20006 ("Columbia"), Advisor to the Columbia
Partners Equity Fund, is a registered investment advisor.
(1) Columbia has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth other substantial business activities of the
directors and officers of Columbia during the past two years:
(a) Rhys H. Williams, a principal of Columbia, has been a portfolio manager at
Columbia since late 1997. Prior to that time, Mr. Williams was the Senior Vice
President at Prudential Securities in Philadelphia, PA since 1987.
P. Legacy Investment Group, LLC, d/b/a Cash Management Systems, 290
Turnpike Road, #338, Westborough, Massachusetts ("CMS), Advisor to The Cash
Fund, is a registered investment advisor.
1. CMS has engaged in no other business during the past two years.
2. The following list sets forth other substantial business activities of the
directors and officers of CMS during the past two years:
(a) David W. Reavill, Member of CMS, was a Vice President with Fixed Income
Discount Advisory Corp., Shrewsbury, MA, a money market firm, from 1997 to 1998
and a Vice President of Reich & Tang, LLC, Westlake Village, CA, a money market
firm, from 1996 to 1997.
Q. Ariston Capital Management Corporation, 40 Lake Bellevue Drive, Suite 220,
Bellevue, Washington 98005 ("Ariston"), Advisor to the Ariston Convertible
Securities Fund and the Ariston Internet Convertible Fund, is a registered
investment advisor.
1. Ariston has engaged in no other business during the past two years.
2. The following list sets forth other substantial business activities of
the directors and officers of Ariston during the past two years: None.
R. Leader Capital Corp., 121 S.W. Morrison St., Ste. 450, Portland, OR
97204 ("Leader"), Advisor to the Leader Converted Mutual Bank Fund, is a
registered investment advisor.
1. Leader has engaged in no other business during the past two fiscal
years.
2. The following list sets forth other substantial business activities of the
directors and officers of Leader during the past two years:
(a) John Lekas, President of Leader, was a registered representative with
Smith Barney from July 1993 to November 1997.
(b) Jason McMillen, Vice President of Leader, was a research assistant with
Smith Barney from December 1996 to December 1997.
(c) Carey Guenther, Secretary of Leader, was a customer account representative
with Columbia Funds from July 1997 to January, 1998.
S. Aegis Asset Management, Inc. ("Aegis"), 230 Westcott, Suite 1,
Houston, Texas 77007, Advisor to Westcott Nothing But Net Fund, Westcott
Large-Cap Fund and Westcott Fixed Income Fund, is a registered investment
advisor.
1. Aegis has engaged in no other business during the past two fiscal years.
2. The following list sets forth other substantial business activities of the
directors and officers of Aegis during the past two years:
(a) Thomas Layng Guerriero, President of Aegis, has been the President of
Westcott Securities, L.L.C., a broker/dealer, from April 1998 to the present.
Item 27. Principal Underwriters
A. AmeriPrime Financial Securities, Inc., is the Registrant's principal
underwriter. Kenneth D. Trumpfheller, 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the President, Secretary and Treasurer of
the underwriter and the President, Treasurer and Secretary and a
Trustee of the Registrant. It is also the underwriter for the
AmeriPrime Insurance Trust, AmeriPrime Advisors Trust, the Kenwood
Funds, the Rockland Funds Trust, the 10K SmartTrust and the TANAKA
Funds, Inc.
B. Information with respect to each director and officer of AmeriPrime
Financial Securities, Inc. is incorporated by reference to Schedule A
of Form BD filed by it under the Securities Exchange Act of 1934 (File
No. 8-48143).
C. Not applicable.
Item 28. Location of Accounts and Records
Accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder
will be maintained by the Registrant at 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092; and/or by the Registrant's Custodians, Firstar Bank,
N.A., 425 Walnut Street, Cincinnati, Ohio 45202; and UMB Bank, N.A., Securities
Administration Dept., 928 Grand Blvd., 10th Floor, Kansas City, MO 64106; and/or
transfer and shareholder service agent, Unified Fund Services, Inc., 431
Pennsylvania Street, Indianapolis, IN 46204.
Item 29. Management Services Not Discussed in Parts A or B
-------- -------------------------------------------------
None.
Item 30. Undertakings
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement under Rule
485(b) under the Securities Act and has duly caused this Registration Statement
to be signed on its behalf by the undersigned, duly authorized, in the City of
Cincinnati, State of Ohio, on the 31st day of July, 2000.
AmeriPrime Funds
By: __/s/_________________________________
Donald S. Mendelsohn,
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Kenneth D. Trumpfheller,*
President, Treasurer and Trustee
*By: __/s/________________________________
Donald S. Mendelsohn,
Gary E. Hippensteil,* Trustee Attorney-in-Fact
Steve L. Cobb,* Trustee July 31, 2000
<PAGE>
EXHIBIT INDEX
1. Appendix to Custodian Agreement with Firstar Bank, N.A........EX-99.23.g
2. Consent of Counsel............................................EX-99.23.i
3. Consent of Auditors..............................................EX-99.23.j
4. Power of Attorney for Treasurer..................................EX-99.23.q