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. 38 /X/
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
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Amendment No. 39 /X /
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(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:
/ / 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)
/X/ 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.
7982
Ariston Convertible Securities Fund
Ariston Internet Convertible Fund - Elite Shares
Prospectus
________________, 2000
INVESTMENT OBJECTIVE:
Total return
40 Lake Bellevue Drive, Suite 220
Bellevue, Washington 98005
For Information, Shareholder Services and Requests:
Toll Free (888)-387-2273
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.
TABLE OF CONTENTS
PAGE
ABOUT THE FUNDS
FEES AND EXPENSES OF INVESTING IN THE FUNDS
HOW TO BUY SHARES
HOW TO REDEEM SHARES
DETERMINATION OF NET ASSET VALUE
DIVIDENDS, DISTRIBUTIONS AND TAXES
MANAGEMENT OF THE FUNDS
OTHER INVESTMENT INFORMATION
FINANCIAL HIGHLIGHTS
FOR MORE INFORMATION BACK COVER
ABOUT THE FUNDS
Ariston Convertible Securities Fund
Investment Objective
The investment objective of the Ariston Convertible Securities Fund is
total return.
Principal Strategies
Under normal circumstances, the Fund will invest at least 65% of its
total assets in a diversified portfolio of convertible securities (i.e.,
convertible into shares of common stock). Types of convertible securities
include convertible bonds, convertible preferred stocks, exchangeable bonds,
zero coupon bonds and warrants. The convertible securities acquired by the Fund
may include a significant amount of high yield securities (commonly known as
"junk bonds") rated as low as B by Moody's Investors Service, Inc. ("Moody's")
or Standard and Poor's Corporation ("S&P") or, if unrated, of comparable quality
in the opinion of the advisor.
Convertible securities are considered by the advisor to be an attractive
investment vehicle for the Fund because they combine the benefits of higher and
more stable income than the underlying common stock generally provides, with the
potential of profiting from an appreciation in the value of the underlying
security. While convertible securities generally offer lower interest or
dividend yields than non-convertible debt securities of similar quality, they do
enable the investor to benefit from the increase in the market price of the
underlying common stock. The Fund's advisor selects convertible securities based
on the business fundamentals (such as earnings growth and revenue growth) of the
underlying company and its industry, overall portfolio diversification goals,
and creditworthiness of the underlying company. Common stock received upon
conversion or exchange of such securities will either be sold in an orderly
manner or held by the Fund.
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 Fund's advisor believes that the
business fundamentals of the underlying common stock and its convertible
security are deteriorating, the convertible security is called, there are more
attractive alternative issues, general market conditions are adverse, or to
maintain portfolio diversification.
Principal Risks of Investing in the Fund
* Management Risk. The advisor's strategy may fail to produce the intended
results.
* Company Risk. When the market price of a common stock underlying a
convertible security decreases in response to the activities and financial
prospects of the company, the value of the convertible security will also
decrease. The value of an individual company can be more volatile than the
market as a whole.
* 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.
* 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 companies and weakness in
this sector could result in significant losses to the Fund. Technology
companies may be significantly affected by falling prices and profits and
intense competition, and their products may be subject to rapid
obsolescence.
* Interest Rate Risk. The value of your investment may decrease when interest
rates rise. Convertible securities with longer effective maturities are
more sensitive to interest rate changes than those with shorter effective
maturities.
* High Yield Risk. The Fund may be subject to greater levels of interest
rate, credit and liquidity risk than funds that do not invest in junk
bonds. Junk bonds are considered predominantly speculative with respect to
the issuer's continuing ability to make principal and interest payments. An
economic downturn or period of rising interest rates could adversely affect
the market for junk bonds and reduce the Fund's ability to sell its junk
bonds (liquidity risk). See "High Yield Debt Securities" on page 8 for a
more detailed discussion of these lower rated securities.
* Credit Risk. The issuer of the convertible security may not be able to make
interest and principal payments when due. Generally, the lower the credit
rating of a security, the greater the risk that the issuer will default on
its obligation.
* 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.
* 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:
* Long-term investors seeking a fund with a total return strategy
* Investors who can tolerate the greater risks associated with junk bonds
How the Fund has Performed
On April 30, 1999, the Fund acquired the assets and liabilities of the
Lexington Convertible Securities Fund in a tax-free reorganization. The Fund is
a continuation of the Lexington fund and, therefore, the bar chart shows changes
in the Fund's returns since the inception of the Lexington fund. The table shows
how the Fund's average annual total returns (which include the Lexington fund)
compare over time to those of a broad-based securities market index.
1990 -3.39%
1991 45.05%
1992 12.82%
1993 6.53%
1994 1.30%
1995 18.63%
1996 4.89%
1997 13.16%
1998 2.09%
1999 94.61%
During the period shown, the highest return for a quarter was 67.46%
(Q4, 1999); and the lowest return was -16.04% (Q3, 1998).
Average Annual Total Returns:
One Year Five Year Ten Year
The Fund 94.61% 22.84% 16.29%
Russell 2000 Index 20.93% 16.62% 13.38%
Lehman Brothers Government/Corp Bond Index -2.16% 7.60% 7.65%
Ariston Internet Convertible Fund
Investment Objective
The investment objective of the Ariston Internet Convertible Fund is
total return.
Principal Strategies
Under normal circumstances, the Fund will invest at least 65% of its
total assets in a diversified portfolio of convertible securities (i.e.,
convertible into shares of common stock) of internet companies. Types of
convertible securities include convertible bonds, convertible preferred stocks,
exchangeable bonds, zero coupon bonds and warrants. The convertible securities
acquired by the Fund may include a significant amount of high yield securities
(commonly known as "junk bonds") rated as low as Caa by Moody's Investors
Service, Inc. ("Moody's") or CCC by Standard and Poor's Corporation ("S&P") or,
if unrated, of comparable quality in the opinion of the advisor. Iinternet
companies are defined as those companies engaged to a significant extent in
research, design, development, manufacturing or distribution of products,
processes or services for use with the internet or the intranet and related
businesses. The adviser focuses on companies it believes will experience long
term growth based on participation in the internet industry.
Convertible securities are considered by the advisor to be an attractive
investment vehicle for the Fund because they combine the benefits of higher and
more stable income than the underlying common stock generally provides, with the
potential of profiting from an appreciation in the value of the underlying
security. While convertible securities generally offer lower interest or
dividend yields than non-convertible debt securities of similar quality, they do
enable the investor to benefit from the increase in the market price of the
underlying common stock. The Fund's advisor selects convertible securities based
on the business fundamentals (such as earnings growth and revenue growth) of the
underlying company and its industry, overall portfolio diversification goals,
and creditworthiness of the underlying company. Common stock received upon
conversion or exchange of such securities will either be sold in an orderly
manner or held by the Fund.
The Fund may sell a security if the Fund's advisor believes that the
business fundamentals of the underlying common stock and its convertible
security are deteriorating, the convertible security is called, there are more
attractive alternative issues, general market conditions are adverse, or to
maintain portfolio diversification.
Principal Risks of Investing in the Fund
* Management Risk. The advisor's strategy may fail to produce the intended
results.
* Company Risk. When the market price of a common stock underlying a
convertible security decreases in response to the activities and financial
prospects of the company, the value of the convertible security will also
decrease. The value of an individual company can be more volatile than the
market as a whole.
* 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.
* Internet Concentration Risk. Your investment in the Fund is subject to
special risks because the Fund concentrates its investments in internet
companies. Internet companies are subject to competitive pressures and
changing demands that may have a significant effect on the financial
condition of internet companies. Changes in governmental policies, such as
telephone and cable regulations and anti-trust enforcement, may have a
material effect on the products and services of these companies. In
addition, the rate of technological change is generally higher than other
companies, often requiring extensive and sustained investment in research
and development, and exposing such companies to the risk of rapid product
obsolescence. It is likely that some of today's public internet companies
will not exist in the future. The price of many internet stocks has risen
based on projections of future earnings and company growth. If a company
does not perform as expected, the price of the stock could decline
significantly. Many internet companies are currently operating at a loss
and may never be profitable. * Volatility Risk. Common stocks of internet
companies tend to be more volatile than other investment choices. Because
of its narrow focus, the Fund's performance is closely tied to any factors
which may affect internet companies and, as a result, is more likely to
fluctuate than that of a fund which is invested in a broader range of
companies.
* Interest Rate Risk. The value of your investment may decrease when interest
rates rise. Convertible securities with longer effective maturities are
more sensitive to interest rate changes than those with shorter effective
maturities.
* High Yield Risk. The Fund may be subject to greater levels of interest
rate, credit and liquidity risk than funds that do not invest in junk
bonds. Junk bonds are considered predominantly speculative with respect to
the issuer's continuing ability to make principal and interest payments. An
economic downturn or period of rising interest rates could adversely affect
the market for junk bonds and reduce the Fund's ability to sell its junk
bonds (liquidity risk). See "High Yield Debt Securities" on page __ for a
more detailed discussion of these lower rated securities.
* Credit Risk. The issuer of the convertible security may not be able to make
interest and principal payments when due. Generally, the lower the credit
rating of a security, the greater the risk that the issuer will default on
its obligation.
* 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.
* 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:
* Long-term investors seeking to diversify into internet securities
* Investors willing to accept significant price fluctuations in their
investment
* Investors who can tolerate the greater risks associated with internet
investments
* Investors who can tolerate the greater risks associated with junk bonds
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 annual returns of less than one year.
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>
<S> <C> <C>
Shareholder Fees (fees paid directly from your investment) Convertible Internet
Securities Fund Convertible Fund
Maximum Sales Charge (Load) Imposed on Purchases NONE NONE
Maximum Deferred Sales Charge (Load) NONE NONE
Redemption Fee NONE NONE
Exchange Fee NONE NONE
Annual Fund Operating Expenses (expenses that are deducted from Fund assets) 1
Management Fees 2.22% 2.22%
Distribution (12b-1) Fees 0.00%2 0.00%
Other Expenses 0.03% 0.03%
Total Annual Fund Operating Expenses 2.25% 2.25%
1 Estimated.
2 12b-1 fees may not exceed 0.25% annually.
</TABLE>
Example:
The example below is intended to help you compare the cost of investing in the
Funds 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
Ariston Convertible Securities Fund $_____ $_____
Ariston Internet Convertible Fund $_____ $_____
HOW TO BUY SHARES
The minimum initial investment in each Fund is $1,000 and minimum
subsequent investments are $50. Either Fund 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.
Initial Purchase
By Mail- To be in proper form, your initial purchase request must include:
* a completed and signed investment application form (which accompanies this
Prospectus); and
* a check (subject to the minimum amounts) made payable to the appropriate
Fund.
Mail the application and check to:
U.S. Mail: Overnight:
Ariston Funds Ariston 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 Funds' transfer agent at 888-387-2273 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: Ariston Funds
Account Name _________________(write in shareholder name) For the
Account # ______________(write in account number) D.D.A.#821601382
You must mail a signed application to Firstar Bank, N.A, the Funds'
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 any Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain:
-your name -the name of your account(s)
-your account number(s) -a check made payable to
-the name of the Fund Ariston Convertible Securities Fund
Checks should be sent to the Ariston Funds at the address listed above. A bank
wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Funds 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.
Distribution Plan
The Convertible Securities Fund has adopted a plan under Rule 12b-1 that
allows the Fund to pay distribution fees for the sale and distribution of its
shares and allows the Fund to pay for services provided to shareholders.
Shareholders of each Fund pay annual 12b-1 expenses of up to 0.25%. Because
these fees are paid out of each Fund's assets on an on-going basis, over time
these fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
Tax Sheltered Retirement Plans
Since the Funds are is oriented to longer-term investments, the Funds
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 Funds' 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
Each Fund may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred by the Funds. If you are already a shareholder, the Funds can
redeem shares from any identically registered account in the Funds as
reimbursement for any loss incurred. You may be prohibited or restricted from
making future purchases in the Funds.
Description of Classes
The Internet Convertible Fund currently offers two classes of shares: Elite
Shares and Premier shares. Each Class is subject to different expenses and a
different sales charge structure When purchasing shares of the Internet
Convertible Fund, specify which Class you are purchasing. All purchase orders
that fail to specify a Class will automatically be invested in ______ Shares.
The differing expenses applicable to the different Classes of the Fund's shares
may affect the performance of those Classes. Broker/dealers and others entitled
to receive compensation for selling or servicing Fund shares may receive more
with respect to one Class than another.
EXCHANGE PRIVILEGE
By telephoning the Funds at (888)-387-2273 or writing the Funds at P.O.
Box 6110 , Indianapolis, Indiana 46206-6110, you may exchange, without charge,
any or all of your no-load shares in a Fund for no-load shares of the other
Ariston Fund. Exchanges may be made only if the fund in which you wish to invest
is registered in your state of residence.
You may make up to one exchange out of each Fund during a calendar month and
four exchanges out of each Fund during a calendar year. This limit helps keep
each Fund's net asset base stable and reduces the Fund's administrative
expenses. In times of extreme economic or market conditions, exchanging Fund
shares by telephone may be difficult.
Redemptions of shares in connection with exchanges into or out of a Fund
are made at the net asset value per share next determined after the exchange
request is received. To receive a specific day's price, your letter or call must
be received before that day's close of the New York Stock Exchange. Each
exchange represents the sale of shares from one fund and the purchase of shares
in another, which may produce a gain or loss for Federal income tax purposes.
All exchanges out of a Fund into Fund are subject to the minimum and
subsequent investment requirements of the fund in which you are investing.
Exchanges may be made through a third party which maintains an omnibus account
with the money market fund for all shareholders of the Funds. The Funds assume
responsibility for the authenticity of exchange instructions communicated by
telephone or in writing which are believed to be genuine.
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 a Fund at no charge by
mail. Your request should be addressed to:
U.S. Mail: Overnight:
Ariston Funds Ariston 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
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 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 a Fund by
calling the Funds' transfer agent at 888-387-2273. 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.
Additional Information - If you are not certain of the
requirements for a redemption please call the Funds' transfer agent at
888-387-2273. 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 incurs certain fixed costs in maintaining shareholder
accounts, each Fund may require you to redeem all of your shares in the Fund on
30 days' written notice if the value of your shares in the Fund is less than
$1,000 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax advisor concerning the tax consequences of involuntary
redemptions. You may increase the value of your shares in the Fund to the
minimum amount within the 30-day period. Your shares are subject to redemption
at any time if the Board of Trustees determines in its sole discretion that
failure to so redeem may have materially adverse consequences to all or any of
the shareholders of the Funds.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the applicable Fund's net
asset value per share (NAV). The NAV is calculated at the close of trading
(normally 4:00 p.m. Eastern time) on each day the New York Stock Exchange is
open for business (the Stock Exchange is closed on weekends, Federal holidays
and Good Friday). The NAV is calculated by dividing the value of the Fund's
total assets (including interest and dividends accrued but not yet received)
minus liabilities (including accrued expenses) by the total number of shares
outstanding.
The Funds' assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued by the Funds'
advisor at their fair value, according to procedures approved by the Funds'
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. 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 applicable 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
Ariston Capital Management, Corporation, 40 Lake Bellevue Drive, Suite
220, Bellevue, Washington 98005 serves as investment advisor to the Funds. The
advisor was founded in 1977 and provides investment management to client
portfolios that include individuals, corporations, pension and profit sharing
plans and other qualified retirement plan accounts, and as of December 31, 1999
manages over $45 million in assets.
Richard B. Russell, President and controlling shareholder of the advisor, has
been primarily responsible for the day-to-day management of each Fund's
portfolio since its inception. Mr. Russell is a graduate of the School of
Business at the University of Washington and has completed additional training
at the New York Institute of Finance. He has spent his entire professional
career as an independent money manager, dating from 1972. Before founding
Ariston in 1977, he was a full-time manager of private family assets.
The Convertible Securities Fund is authorized to pay the advisor a fee equal to
an annual average rate of 2.25% of its average daily net assets, less the amount
of its 12b-1 expenses and fees and expenses of non-interested person trustees.
The Convertible Internet Fund is authorized to pay the advisor a fee equal to an
annual average rate of 2.25 % of its average daily net assets, less the amount
of its fees and expenses of non-interested person trustees. 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.
OTHER INVESTMENT INFORMATION
General
The investment objective of each Fund may be changed without shareholder
approval.
From time to time, each 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, a Fund may hold all or a portion of its assets in money
market instruments, U.S. government 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.
Convertible Securities
Convertible securities are securities that may be exchanged or converted into a
predetermined number of the issuer's underlying common shares, the common shares
of another company or that are indexed to an unmanaged market index at the
option of the holder during a specified time period. Convertible securities may
take the form of convertible preferred stock, convertible bonds or debentures,
stock purchase warrants, zero-coupon bonds or liquid-yield option notes,
Eurodollar convertible securities, convertible securities of foreign issuers,
stock index notes, or a combination of the features of these securities. Prior
to conversion, convertible securities have the same general characteristics as
non-convertible debt securities and provide a stable stream of income with
generally higher yields than those of equity securities of the same or similar
issuers. When the market price of a common stock underlying a convertible
security increases, the price of the convertible security increasingly reflects
the value of the underlying common stock and may rise accordingly. As the market
price of the underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis and thus may not depreciate to the same
extent as the underlying common stock. Convertible securities are ranked senior
to common stock on an issuer's capital structure and they are usually of higher
quality and normally entail less risk than the issuer's common stock, although
the extent to which risk is reduced depends in large measure to the degree to
which convertible securities sell above their value as fixed income securities.
High Yield Debt Securities
High yield debt securities in which a Fund may invest are commonly referred to
as "junk bonds." The economy and interest rates affect junk bonds differently
from other securities. The prices of junk bonds have been found to be more
sensitive to interest rate changes than higher-rated investments, and more
sensitive to adverse economic changes or individual corporate developments.
Also, during an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
adversely affect their ability to service their principal and interest payment
obligations to meet projected business goals, and to obtain additional
financing. If the issuer of a security defaulted, a Fund may incur additional
expenses to seek recovery. In addition, periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices of
junk bonds and each Fund's net asset value. To the extent that there is no
established retail secondary market, there may be thin trading of junk bonds,
and this may have an impact on the advisor's ability to accurately value junk
bonds and on each Fund's ability to dispose of the securities. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of junk bonds, especially in a thinly traded
market.
There are risks involved in applying credit ratings as a method for evaluating
junk bonds. For example, credit ratings evaluate the safety of principal and
interest payments, not market value of junk bonds. Also, since credit rating
agencies may fail to timely change the credit ratings to reflect subsequent
events, the advisor will continuously monitor the issuers of junk bonds in the
Funds to determine if the issuers will have sufficient cash flow and profits to
meet required principal and interest payments, and to assure the securities'
liquidity.
FINANCIAL HIGHLIGHTS
Ariston Convertible Securities Fund - to be supplied.
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 888-387-2273 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>
Ariston Internet Convertible Fund
Premier Shares
Prospectus
________________, 2000
INVESTMENT OBJECTIVE:
Total return
40 Lake Bellevue Drive, Suite 220
Bellevue, Washington 98005
For Information, Shareholder Services and Requests:
Toll Free (888)-387-2273
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.
11141 02/10/2000 11:18 AM
TABLE OF CONTENTS
PAGE
ABOUT THE FUND
FEES AND EXPENSES OF INVESTING IN THE FUND
HOW TO BUY SHARES
HOW TO REDEEM SHARES
DETERMINATION OF NET ASSET VALUE
DIVIDENDS, DISTRIBUTIONS AND TAXES
MANAGEMENT OF THE FUND
OTHER INVESTMENT INFORMATION
FOR MORE INFORMATION BACK COVER
ABOUT THE FUND
Investment Objective
The investment objective of the Ariston Internet Convertible Fund is
total return.
Principal Strategies
Under normal circumstances, the Fund will invest at least 65% of its
total assets in a diversified portfolio of convertible securities (i.e.,
convertible into shares of common stock) of internet companies. Types of
convertible securities include convertible bonds, convertible preferred stocks,
exchangeable bonds, zero coupon bonds and warrants. The convertible securities
acquired by the Fund may include a significant amount of high yield securities
(commonly known as "junk bonds") rated as low as Caa by Moody's Investors
Service, Inc. ("Moody's") or CCC by Standard and Poor's Corporation ("S&P") or,
if unrated, of comparable quality in the opinion of the advisor. Internet
companies is defined as those companies engaged to a significant extent in
research, design, development, manufacturing or distribution of products,
processes or services for use with the internet or the intranet and related
businesses. The adviser focuses on companies it believes will experience long
term growth based on participation in the internet industry.
Convertible securities are considered by the advisor to be an attractive
investment vehicle for the Fund because they combine the benefits of higher and
more stable income than the underlying common stock generally provides, with the
potential of profiting from an appreciation in the value of the underlying
security. While convertible securities generally offer lower interest or
dividend yields than non-convertible debt securities of similar quality, they do
enable the investor to benefit from the increase in the market price of the
underlying common stock. The Fund's advisor selects convertible securities based
on the business fundamentals (such as earnings growth and revenue growth) of the
underlying company and its industry, overall portfolio diversification goals,
and creditworthiness of the underlying company. Common stock received upon
conversion or exchange of such securities will either be sold in an orderly
manner or held by the Fund.
The Fund may sell a security if the Fund's advisor believes that the
business fundamentals of the underlying common stock and its convertible
security are deteriorating, the convertible security is called, there are more
attractive alternative issues, general market conditions are adverse, or to
maintain portfolio diversification.
Principal Risks of Investing in the Fund
* Management Risk. The advisor's strategy may fail to produce the intended
results.
* Company Risk. When the market price of a common stock underlying a
convertible security decreases in response to the activities and financial
prospects of the company, the value of the convertible security will also
decrease. The value of an individual company can be more volatile than the
market as a whole.
* 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.
* Internet Concentration Risk. Your investment in the Fund is subject to
special risks because the Fund concentrates its investments in internet
companies. Internet companies are subject to competitive pressures and
changing demands that may have a significant effect on the financial
condition of internet companies. Changes in governmental policies, such as
telephone and cable regulations and anti-trust enforcement, may have a
material effect on the products and services of these companies. In
addition, the rate of technological change is generally higher than other
companies, often requiring extensive and sustained investment in research
and development, and exposing such companies to the risk of rapid product
obsolescence. It is likely that some of today's public internet companies
will not exist in the future. The price of many internet stocks has risen
based on projections of future earnings and company growth. If a company
does not perform as expected, the price of the stock could decline
significantly. Many internet companies are currently operating at a loss
and may never be profitable.
* Volatility Risk. Common stocks of internet companies tend to be more
volatile than other investment choices. Because of its narrow focus, the
Fund's performance is closely tied to any factors which may affect internet
companies and, as a result, is more likely to fluctuate than that of a fund
which is invested in a broader range of companies.
* Interest Rate Risk. The value of your investment may decrease when interest
rates rise. Convertible securities with longer effective maturities are
more sensitive to interest rate changes than those with shorter effective
maturities.
* High Yield Risk. The Fund may be subject to greater levels of interest
rate, credit and liquidity risk than funds that do not invest in junk
bonds. Junk bonds are considered predominantly speculative with respect to
the issuer's continuing ability to make principal and interest payments. An
economic downturn or period of rising interest rates could adversely affect
the market for junk bonds and reduce the Fund's ability to sell its junk
bonds (liquidity risk). See "High Yield Debt Securities" on page __ for a
more detailed discussion of these lower rated securities.
* Credit Risk. The issuer of the convertible security may not be able to make
interest and principal payments when due. Generally, the lower the credit
rating of a security, the greater the risk that the issuer will default on
its obligation.
* 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.
* 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:
* Long-term investors seeking to diversify into internet securities
* Investors willing to accept significant price fluctuations in their
investment
* Investors who can tolerate the greater risks associated with internet
investments
* Investors who can tolerate the greater risks associated with junk bonds
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 annual returns of less than one year.
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 Purchases1 4.00% Maximum Deferred Sales Charge (Load) NONE
Redemption Fee NONE Exchange Fee NONE
Annual Fund Operating Expenses (expenses that are deducted from Fund assets) 2
Management Fees 2.22% Distribution (12b-1) Fees 0.70% Other Expenses 0.03% Total
Annual Fund Operating Expenses 2.95%
1 The sales load is 4.00% for purchases less than $25,000, declining to
0.75% for purchases of $500,000 or more.
2 Estimated.
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
$----- $-----
HOW TO BUY SHARES
The minimum initial investment in the Fund is $1,000 and minimum
subsequent investments are $50. The Fund may waive these minimums may 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:
* a completed and signed investment application form (which accompanies this
Prospectus); and
* a check (subject to the minimum amounts) made payable to the Fund.
Mail the application and check to:
U.S. Mail: Overnight:
Ariston Internet Convertible Ariston Internet Convertible
Fund - Premier Shares Fund - Premier Shares
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
Shares of the Fund are purchased at the public offering price. The public
offering price is the next determined net asset value per share plus a sales
load as shown in the following table.
<TABLE>
<S> <C> <C> <C>
Sales Load as of % of:
Public Net
Offering Amount Dealer Reallowance as %
Amount of Investment Price Invested of Public Offering Price
Less Than $25,000 4.00% ____% 3.75%
$25,000 but less than $50,000 3.00% ____% 2.75%
$50,000 but less than $100,000 2.50% ____% 2.25%
$100,000 but less than $250,000 2.00% ____% 1.85%
$250,000 but less than $500,000 1.50% ____% 1.40%
$500,000 or more 0.75% ____% 0.70%
</TABLE>
Under certain circumstances, the Distributor may change the reallowance
to Dealers. For the initial three months of the Fund's operations, the dealer
reallowance will equal 100% of the sales load. Dealers engaged in the sale of
shares of the Fund may be deemed to be underwriters under the Securities Act of
1933. The Distributor retains the entire sales load on all direct initial
investments in the Fund and on all investments in accounts with no designated
dealer of record.
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
888-387-2273 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: Ariston Internet Convertible Fund - Premier Shares
Account Name _________________(write in shareholder name)
For the Account # ______________(write in account number)
D.D.A.#821601382
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.
Reduced Sales Load
You may use the Right of Accumulation to combine the cost or current net
asset value (whichever is higher) of your shares of the Fund with the amount of
your current purchases in order to take advance of the reduced sales load set
forth in the table above. Purchases made pursuant to a Letter of Intent may also
be eligible for the reduced sales loads. The minimum initial investment under a
Letter of Intent is $25,000. Shareholders should contact the Transfer Agent for
information about the Right of Accumulation and Letter of Intent.
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 Ariston Internet
Convertible Fund - Premier Shares
Checks should be sent to the Ariston Internet Convertible 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 $50 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Distribution Plan
The Fund has adopted a plan under Rule 12b-1 that allows the Fund to pay
distribution fees for the sale and distribution of its Premier Shares and allows
the Fund to pay for services provided to shareholders of Premier Shares.
Shareholders of the Premier Shares pay annual 12b-1 expenses of 0.70%. Because
these fees are paid out of the Fund's assets on an on-going basis, over time
these fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
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.
Description of Classes
The Fund currently offers two classes of shares: Elite Shares and Premier
Shares. Each Class is subject to different expenses and a different sales charge
structure When purchasing shares, specify which Class you are purchasing. All
purchase orders that fail to specify a Class will automatically be invested in
______ shares. The differing expenses applicable to the different Classes of the
Fund's shares may affect the performance of those Classes. Broker/dealers and
others entitled to receive compensation for selling or servicing Fund shares may
receive more with respect to one Class than another.
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:
U.S. Mail: Overnight:
Ariston Internet Convertible Ariston Internet Convertible
Fund - Premier Shares Fund - Premier Shares
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
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 888-387-2273. 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
888-387-2273. 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
$1,000 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax advisor concerning the tax consequences of involuntary
redemptions. You may increase the value of your shares in the Fund to the
minimum amount within the 30-day period. Your shares are subject to redemption
at any time if the Board of Trustees determines in its sole discretion that
failure to so redeem may have materially adverse consequences to all or any of
the shareholders of the 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
Ariston Capital Management, Corporation, 40 Lake Bellevue Drive, Suite
220, Bellevue, Washington 98005 serves as investment advisor to the Fund. The
advisor was founded in 1977 and provides investment management to client
portfolios that include individuals, corporations, pension and profit sharing
plans and other qualified retirement plan accounts, and as of December 31, 1999
manages over $45 million in assets.
Richard B. Russell, President and controlling shareholder of the advisor, has
been primarily responsible for the day-to-day management of the Fund's portfolio
since its inception. Mr. Russell is a graduate of the School of Business at the
University of Washington and has completed additional training at the New York
Institute of Finance. He has spent his entire professional career as an
independent money manager, dating from 1972. Before founding Ariston in 1977, he
was a full-time manager of private family assets.
The Convertible Internet Fund is authorized to pay the advisor a fee equal to an
annual average rate of 2.25 % of its average daily net assets, less the amount
of its fees and expenses of non-interested person trustees. 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.
OTHER INVESTMENT INFORMATION
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, U.S. government 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.
Convertible Securities
Convertible securities are securities that may be exchanged or converted into a
predetermined number of the issuer's underlying common shares, the common shares
of another company or that are indexed to an unmanaged market index at the
option of the holder during a specified time period. Convertible securities may
take the form of convertible preferred stock, convertible bonds or debentures,
stock purchase warrants, zero-coupon bonds or liquid-yield option notes,
Eurodollar convertible securities, convertible securities of foreign issuers,
stock index notes, or a combination of the features of these securities. Prior
to conversion, convertible securities have the same general characteristics as
non-convertible debt securities and provide a stable stream of income with
generally higher yields than those of equity securities of the same or similar
issuers. When the market price of a common stock underlying a convertible
security increases, the price of the convertible security increasingly reflects
the value of the underlying common stock and may rise accordingly. As the market
price of the underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis and thus may not depreciate to the same
extent as the underlying common stock. Convertible securities are ranked senior
to common stock on an issuer's capital structure and they are usually of higher
quality and normally entail less risk than the issuer's common stock, although
the extent to which risk is reduced depends in large measure to the degree to
which convertible securities sell above their value as fixed income securities.
High Yield Debt Securities
High yield debt securities in which the Fund may invest are commonly referred to
as "junk bonds." The economy and interest rates affect junk bonds differently
from other securities. The prices of junk bonds have been found to be more
sensitive to interest rate changes than higher-rated investments, and more
sensitive to adverse economic changes or individual corporate developments.
Also, during an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
adversely affect their ability to service their principal and interest payment
obligations to meet projected business goals, and to obtain additional
financing. If the issuer of a security defaulted, the Fund may incur additional
expenses to seek recovery. In addition, periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices of
junk bonds and the Fund's net asset value. To the extent that there is no
established retail secondary market, there may be thin trading of junk bonds,
and this may have an impact on the advisor's ability to accurately value junk
bonds and on the Fund's ability to dispose of the securities. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of junk bonds, especially in a thinly traded
market. There are risks involved in applying credit ratings as a method for
evaluating junk bonds. For example, credit ratings evaluate the safety of
principal and interest payments, not market value of junk bonds. Also, since
credit rating agencies may fail to timely change the credit ratings to reflect
subsequent events, the advisor will continuously monitor the issuers of junk
bonds in the Fund to determine if the issuers will have sufficient cash flow and
profits to meet required principal and interest payments, and to assure the
securities' liquidity.
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 888-387-2273 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>
ARISTON FUNDS
ARISTON CONVERTIBLE SECURITIES FUND
ARISTON INTERNET CONVERTIBLE FUND
STATEMENT OF ADDITIONAL INFORMATION
________________, 2000
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Prospectus of Ariston Funds dated
___________, 2000. [This SAI incorporates by reference the Funds' Annual Report
to Shareholders for the year ended December 31, 1999. 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
1-888-387-2273.
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST AND FUNDS.............................................1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS................................................................2
INVESTMENT LIMITATIONS.........................................................5
THE INVESTMENT ADVISOR.........................................................7
DISTRIBUTION PLAN..............................................................8
TRUSTEES AND OFFICERS..........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
INVESTMENT
PERFORMANCE...................................................................10
CUSTODIAN.....................................................................11
TRANSFER AGENT................................................................12
ACCOUNTANTS...................................................................12
DISTRIBUTOR...................................................................12
ADMINISTRATOR.................................................................13
FINANCIAL STATEMENTS..........................................................13
7981 02/10/2000 12:12 PM
<PAGE>
DESCRIPTION OF THE TRUST AND FUNDS
The Ariston Convertible Securities Fund was organized as a diversified
series of AmeriPrime Funds (the "Trust") February 24, 1999. On April 30, 1999,
the Fund acquired the assets and assumed the liabilities of the Lexington
Convertible Securities Fund in a tax-free reorganization. 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
Ariston Convertible Internet Fund was organized as a diversified series of the
Trust on __________, 2000. 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 Funds do not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Funds' transfer
agent for the account of the shareholders. 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 Funds 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 Funds 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 Funds'
shareholders.
As of December 31, 1999, the following persons may be deemed to
beneficially own or hold of record five percent (5%) or more of the Ariston
Covertible Securities Fund: Charles Schwab & Co., 101 Montgomery Street, San
Francisco, CA - 24.66%; Joseph B. Mohr, 2157 LaPaz Way, Palm Springs, CA 92264 -
12.26%; Richard B. Russell, 40 Lake Bellevue Drive, Suite 220, Bellevue, WA,
98005 - 8.64%.
As of _____________, the following persons may be deemed to beneficially own or
hold or record five percent (5%) or more of the Ariston Internet Convertible
Fund: [________].
As of December 31, 1999, the officers and trustees as a group owned less than
one percent of each Fund.
For information concerning the purchase and redemption of shares of the
Funds, see "How to Buy Shares" and "How to Redeem Shares" in the Funds'
Prospectus. For a description of the methods used to determine the share price
and value of each Fund's assets, see "Determination of Net Asset Value" in the
Funds' Prospectus and this Statement of Additional Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
AND RISK CONSIDERATIONS
This section contains a detailed discussion of some of the investments the
Funds may make and some of the techniques it may use.
A. High Yield Debt Securities ("Junk Bonds"). The widespread expansion
of government, consumer and corporate debt within our economy has made the
corporate sector, especially cyclically sensitive industries, more vulnerable to
economic downturns or increased interest rates. An economic downturn could
severely disrupt the market for high yield securities and adversely affect the
value of outstanding securities and the ability of the issuers to repay
principal and interest.
The prices of high yield securities have been found to be more
sensitive to interest rate changes than higher-rated investments, and more
sensitive to adverse economic changes or individual corporate developments.
Also, during an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
adversely affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a security owned by the Funds defaulted, the Funds
could incur additional expenses to seek recovery. In addition, periods of
economic uncertainty and changes can be expected to result in increased
volatility of market prices of high yield securities and each Fund's net asset
value. Furthermore, in the case of high yield securities structured as zero
coupon or pay-in-kind securities, their market prices are affected to a greater
extent by interest rate changes and thereby tend to be more volatile than
securities which pay interest periodically and in cash. High yield securities
also present risks based on payment expectations. For example, high yield
securities may contain redemption of call provisions. If an issuer exercises
these provisions in a declining interest rate market, the Funds would have to
replace the security with a lower yielding security, resulting in a decreased
return for investors. Conversely, a high yield securities value will decrease in
a rising interest rate market, as will the value of the Fund's assets. If a Fund
experiences unexpected net redemptions, this may force it to sell its high yield
securities without regard to their investment merits, thereby decreasing the
asset based upon which the Fund's expenses can be spread and possibly reducing
the Fund's rate of return.
In addition, to the extent that there is no established retail
secondary market, there may be thin trading of high yield securities, and this
may have an impact on each Fund's ability to accurately value high yield
securities and the Fund's assets and on the Fund's ability to dispose of the
securities. Adverse publicity and investor perception, whether or not based on
fundamental analysis, may decrease the values and liquidity of high yield
securities especially in a thinly traded market.
New laws and proposed new laws may have an impact on the market for
high yield securities. For example, new legislation requiring federally-insured
savings and loan associations to divest their investments in high yield
securities and pending proposals designed to limit the use, or tax and other
advantages of high yield securities which, if enacted, could have a material
effect on each Fund's net asset value and investment practices.
There are also special tax considerations associated with investing in
high yield securities structured as zero coupon or pay-in-kind securities. For
example, each Fund reports the interest on these securities as income even
though it receives no cash interest until the security's maturity or payment
date. Also, the shareholders are taxed on this interest event if the Funds do
not distribute cash to them. Therefore, in order to pay taxes on this interest,
shareholders may have to redeem some of their shares to pay the tax or the Funds
may sell some of its assets to distribute cash to shareholders. These actions
are likely to reduce each Fund's assets and may thereby increase its expense
ratio and decrease its rate of return.
Finally, there are risks involved in applying credit ratings as method
for evaluating high yield securities. For example, credit ratings evaluate the
safety of principal and interest payments, not market value risk of high yield
securities. Also, since credit rating agencies may fail to timely change the
credit ratings to reflect subsequent events, each Fund (in conjunction with its
investment advisor) will continuously monitor the issuers of high yield
securities to determine if the issuers will have sufficient cash flow and
profits to meet required principal and interest payments, and to assure the
securities liquidity so each Fund can meet redemption requests.
A description of the rating categories is contained in the Appendix.
B. Warrants. Each Fund may invest up to 5% of its total assets at the
time of purchase in warrants (not including those acquired in units or attached
to other securities). A warrant is a right to purchase common stock at a
specific price during a specified period of time. The value of a warrant does
not necessarily change with the value of the underlying security. Warrants do
not represent any rights to the assets of the issuing company. A warrant becomes
worthless unless it is exercised or sold before expiration. Warrants have no
voting rights and pay no dividends.
C. Options Transactions. Each Fund may write (sell) covered call
options and may purchase put and call options on individual securities and
securities indices. A covered call option on a security is an agreement to sell
a particular portfolio security if the option is exercised at a specified price,
or before a set date. Options are sold (written) on securities and market
indices. The purchaser of an option on a security pays the seller (the writer) a
premium for the right granted but is not obligated to buy or sell the underlying
security. The purchaser of an option on a market index pays the seller a premium
for the right granted, and in return the seller of such an option is obligated
to make the payment. A writer of an option may terminate the obligation prior to
the expiration of the option by making an offsetting purchase of an identical
option. Options on securities which each Fund sells (writes) will be covered or
secured, which means that it will own the underlying security (for a call
option) or (for an option on a stock index) will hold a portfolio of securities
substantially replicating the movement of the index (or, to the extent it does
not hold such a portfolio, will maintain a segregated account with the Custodian
of high quality liquid debt obligations equal to the market value of the option,
marked to market daily). When a Fund writes options, it may be required to
maintain a margin account, to pledge the underlying security or to deposit
liquid high quality debt obligations in a separate account with the Custodian.
When a Fund writes an option, the Fund profits from the sale of the option, but
gives up the opportunity to profit from any increase in the price of the stock
above the option price, and may incur a loss if the stock price falls. Risks
associated with writing covered call options include the possible inability to
effect closing transactions at favorable prices and an appreciation limit on the
securities set aside for settlement. When a Fund writes a covered call option,
it will receive a premium, but will assume the risk of loss should the price of
the underlying security fall below the exercise price.
D. Collateralized Short SalesEach Fund may make short sales of common
stocks, provided they are "against the box," i.e., each Fund owns an equal
amount of such securities or owns securities that are convertible or
exchangeable without payment of further consideration into an equal or greater
amount of such common stock. Each Fund may make a short sale when the Fund
manager believes the price of the stock may decline and for tax or other
reasons, the Fund manager does not want to sell currently the stock or
convertible security it owns. In such case, any decline in the value of the
portfolio would be reduced by a gain in the short sale transaction. Conversely,
any increase in the value of the portfolio would be reduced by a loss in the
short sale transaction. A Fund may not make short sales or maintain a short
position unless at all times when a short position is open, not more than 10% of
its total assets (taken at current value) is held as collateral for such sales
at any one time. Short sales against the box are used to defer recognition of
capital gains and losses, although the short-term or long-term nature of such
gains or losses could be altered by certain provisions of the Internal Revenue
Code.
E. U.S. Government SecuritiesEach Fund may invest in securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities (U.S.
Government Securities"). U.S. Government Securities may be backed by the credit
of the government as a whole or only by the issuing agency. U.S. Treasury bonds,
notes, and bills and some agency securities, such as those issued by the Federal
Housing Administration and the Government National Mortgage Association (GNMA),
are backed by the full faith and credit of the U.S. government as to payment of
principal and interest and are the highest quality government securities. Other
securities issued by U.S. government agencies or instrumentalities, such as
securities issued by the Federal Home Loan Banks and the Federal Home Loan
Mortgage Corporation, are supported only by the credit of the agency that issued
them, and not by the U.S. government. Securities issued by the Federal Farm
Credit System, the Federal Land Banks, and the Federal National Mortgage
Association (FNMA) are supported by the agency's right to borrow money from the
U.S. Treasury under certain circumstances, but are not backed by the full faith
and credit of the U.S. government.
F. 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., a 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
a Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, a Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Funds
intend to enter into repurchase agreements only with Firstar Bank, N.A. (the
Funds' 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 Funds engage in repurchase
transactions.
H. Illiquid Securities. The portfolio of each Fund may contain 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, a 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. No Fund will invest more than 10% of its net assets in illiquid
securities.
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
this Statement of Additional Information, the term "majority" of the outstanding
shares of a 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. Neither Fund will 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 a 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. Neither Fund will 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. Neither Fund will 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), a Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. Neither Fund will 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 a 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. Neither Fund will purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude a 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. Neither Fund will make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. Neither Fund will invest 25% or more of its total assets
in a particular industry except that Ariston Internet Convertible Fund may
invest more than 25% of its assets in the internet industry. This limitation is
not applicable to investments in obligations issued or guaranteed by the U.S.
government, its agencies and instrumentalities or repurchase agreements with
respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to each Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. Pledging. Neither Fund will mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. Neither Fund will engage in borrowing.
3. Margin Purchases. Neither Fund will purchase securities or evidences of
interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.
4. Short Sales. Neither Fund will effect short sales of securities except
as described in the
Prospectus or Statement of Additional Information.
5. Options. Neither Fund will purchase or sell puts, calls, options or
straddles except as described in the Prospectus or Statement of Additional
Information.
6. Illiquid Investments. Neither Fund will invest more than 10% of its
total assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
7. Loans of Portfolio Securities. Neither Fund will make loans of portfolio
securities.
THE INVESTMENT ADVISOR
The Funds' investment advisor is Ariston Capital Management Corporation
(the "Advisor"), 40 Lake Bellevue Drive, Suite 220, Bellevue, Washington 98005.
As sole shareholder of the Advisor, Richard B. Russell, may be deemed to be a
controlling person of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Funds' investments subject to approval of the Board of
Trustees. As compensation for its management services, each Fund is obligated to
pay the Advisor a fee computed and accrued daily and paid monthly at an annual
rate of 2.25% of the average daily net assets of the Fund less the amount of the
fees and expenses of the non-interested person trustees, and with respect to the
Ariston Convertible Securities Fund only, less the amount of the Fund's 12b-1
expenses. For the period __________, 1999 (commencement of operations) through
December 31, 1999, the Ariston Convertible Securities Fund paid advisory fees of
$_________.
The Advisor retains the right to use the name "Ariston" 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 "Ariston"
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 Funds believes that there would be no
material impact on either 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. Each 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 Funds, no preference will be
shown for such securities.
DISTRIBUTION PLAN
[Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act (each, a "Plan"). The Plan for the Ariston Convertible Securities
Fund permits the Fund to pay directly, or reimburse the Advisor or Distributor,
for distribution expenses in an amount not to exceed 0.25% of the average daily
net assets of the Fund. The Plan for the Ariston Internet Convertible Fund,
which relates only to the Premier class of shares, permits the Fund to pay
directly, or reimburse the Advisor or Distributor, for distribution expenses in
an amount not to exceed 0.70% of the average daily net assets of the Premier
class of shares. The Trustees expect that the Plan will significantly enhance
each Fund's ability to distribute its shares.]
Under each Plan, the Trust may engage in any activities related to the
distribution of each Fund's shares (with respect to the Ariston Internet
Convertible Fund, only the shares of the Premier class), including without
limitation the following: (a) payments, including incentive compensation, to
securities dealers or other financial intermediaries, financial institutions,
investment advisors and others that are engaged in the sale of shares, or that
may be advising shareholders of the Fund regarding the purchase, sale or
retention of shares, or that hold shares for shareholders in omnibus accounts or
as shareholders of record or provide shareholder support or administrative
services to the Fund and its shareholders; (b) expenses of maintaining personnel
who engage in or support distribution of shares or who render shareholder
support services, including, allocated overhead, office space and equipment,
telephone facilities and expenses, answering routine inquiries regarding the
Fund, processing shareholder transactions, and providing such other shareholder
services as the Trust may reasonably request; (c) costs of preparing, printing
and distributing prospectuses and statements of additional information and
reports of the Fund for recipients other than existing shareholders of the Fund;
(d) costs of formulating and implementing marketing and promotional activities,
including, sales seminars, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (e) costs of preparing,
printing and distributing sales literature; (f) costs of obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may deem advisable; and (g) costs of implementing and
operating the Plan.
Each Plan has been approved by the 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 a Plan and the related
agreements must be approved by the Trustees annually, in the same manner, and
either 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 (with respect to the Ariston Internet Convertible
Fund, only the shares of the Premier class). Any amendment increasing the
maximum percentage payable under a Plan must be approved by a majority of the
outstanding shares of the Fund (with respect to the Ariston Internet Convertible
Fund, only the shares of the Premier class), 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 Funds' Distributor, Kenneth
Trumpfheller, a Trustee of the Trust, may benefit indirectly from payments
received by each Fund's Distributor.
<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>
<S> <C> <C>
==================================== ================ ======================================================================
NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ------------------------------------ ---------------- ----------------------------------------------------------------------
*Kenneth D. Trumpfheller President, President, Treasurer and Secretary of AmeriPrime Financial Services,
1793 Kingswood Drive Secretary, Inc., the Fund's administrator, and AmeriPrime Financial Securities,
Suite 200 Treasurer, and Inc., the Fund's distributor, since 1994; President and Trustee of
Southlake, Texas 76092 Trustee AmeriPrime Advisors Trust and AmeriPrime Insurance Trust; prior to
Year of Birth: 1958 December, 1994, a senior client executive with SEI Financial
Services.
- ------------------------------------ ---------------- ----------------------------------------------------------------------
- ------------------------------------ ---------------- ----------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
2001 N. Indianwood Avenue services company; various positions with Carbo Ceramics, Inc., oil
Broken Arrow, OK 74012 field manufacturing/supply company, from 1984 to 1997, most recently
Year of Birth: 1957 Vice President of Marketing
- ------------------------------------ ---------------- ----------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
600 Jefferson Street Trust Company since 1992; President and Director of Heritage Trust
Suite 350 Company from 1994-1996; Vice President and Manager of Investments of
Houston, TX 77002 Kanaly Trust Company from 1988 to 1992.
Year of Birth: 1947
==================================== ================ ======================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for each Fund's
fiscal year ended December 31, 1999 is set forth in the following table. Trustee
fees are Trust expenses and each series of the Trust pays a portion of the
Trustee fees.
<TABLE>
<S> <C> <C>
====================================== ========================== =======================================
NAME AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST (THE TRUST IS
FROM TRUST NOT IN A FUND COMPLEX)
- -------------------------------------- -------------------------- ---------------------------------------
Kenneth D. Trumpfheller 0 0
- -------------------------------------- -------------------------- ---------------------------------------
Steve L. Cobb $_____ $_____
- -------------------------------------- -------------------------- ---------------------------------------
Gary E. Hippenstiel $_____ $_____
====================================== ========================== =======================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for each Fund's portfolio decisions and the placing
of each Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for each Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. Consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and subject to its obligation of seeking best qualitative execution, each
Fund's 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 Funds 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 Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
When a Fund and another of the Advisor's clients seek to purchase or
sell the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for a Fund because of the increased volume of the transaction.
If the entire blocked order is not filled, the Fund may not be able to acquire
as large a position in such security as it desires or it may have to pay a
higher price for the security. Similarly, the Fund may not be able to obtain as
large an execution of an order to sell or as high a price for any particular
portfolio security if the other client desires to sell the same portfolio
security at the same time. In the event that the entire blocked order is not
filled, the purchase or sale will normally be allocated on a pro rata basis. The
allocation may be adjusted by the Advisor, taking into account such factors as
the size of the individual orders and transaction costs, when the Advisor
believes adjustment is reasonable. For the period ______, 1999 (commencement of
operations) through December 31, 1999, the Ariston Convertible Securities Fund
paid brokerage fees of $_____.
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 each Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Determination of Net
Asset Value" in the Prospectus.
Common stocks which are traded on any exchange are valued at the last
quoted sale price. Lacking a last sale price, a security is valued at the mean
between the last bid and ask price except when, in the Advisor's opinion, the
mean price does not accurately reflect the current value of the security. When
market quotations are not readily available, when the Advisor determines the
mean price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review and oversight of the Board of Trustees
of the Trust.
All other securities generally are valued at the mean between the last
bid and ask price. As authorized by the Trustees, securities are valued on the
basis of valuations furnished by a pricing service which determines valuations
based upon market transactions for normal institutional-size trading units of
such securities. When prices are not readily available from a pricing service,
or when restricted or illiquid securities are being valued, securities are
valued at fair value as determined in good faith by the Advisor, subject to
review and oversight 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 Funds may periodically advertise "average annual total returns".
"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
for the period indicated that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end
of the applicable period of the
hypothetical $1,000 investment made
at the beginning of the applicable
period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
In addition to providing average annual total return, the Funds may
also provide non-standardized quotations of total return for differing periods
and may provide the value of a $10,000 investment (made on the date of the
initial public offering of each Fund's shares) as of the end of a specified
period.
Each Fund's investment performance will vary depending upon market
conditions, the composition of that Fund's portfolio and operating expenses of
each Fund. These factors and possible differences in the methods and time
periods used in calculating non-standardized investment performance should be
considered when comparing each 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.
For the period _________, 1999 (commencement of operations) through December 31,
1999, the Ariston Convertible Securities Fund's average annual total return was
_____%.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of each 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 Funds may
use indices such as the Standard & Poor's 500 Stock Index or the Dow Jones
Industrial Average.
In addition, the performance 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 the Funds. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
custodian of the Funds' investments. The custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Funds' transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Funds' shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. 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 Funds with fund accounting services, which includes certain
monthly reports, record-keeping and other management-related services. For its
services as fund accountant, Unified receives an annual fee from the Advisor
equal to 0.0275% of the 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). For the period _____,
1999 (commencement of operations) through December 31, 1999, Unified received
$_____, from the Advisor (not the Ariston Convertible Securities Fund) for these
fund accounting services.
ACCOUNTANTS
The firm of McCurdy & Associates CPA's, Inc., 27955 Clemens Road,
Westlake, Ohio 44145, has been selected as independent public accountants for
the Funds for the fiscal year ending December 31, 2000. McCurdy & Associates
performs an annual audit of each Fund's 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 Fund retain AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Funds' business affairs and provide the Funds with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. The Administrator receives a monthly fee from the 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 Funds' transfer agent) are
controlled by Unified Financial Services, Inc. For the period _______, 1999
(commencement of operations) through December 31, 1999, the Administrator
received $_____, from the Advisor (not the Ariston Convertible Securities Fund)
for these services.
>
FINANCIAL STATEMENTS
The financial statements required to be included in the Statement of
Additional Information will be incorporated herein by subsequent amendment.
<PAGE>
APPENDIX
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS SERVICES
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform any audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obliger as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature and provisions of the obligation.
III. Protection afforded by, and relative position of the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC", and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rate "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB" rating.
B - Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.
CC - The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C - The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 - The rating "C1" is reserved for income bonds on which no interest is
being paid.
D - Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which make the long-term risk appear somewhat greater than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements:
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers: 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category, the modifier 2 indicates a mid-range ranking, and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
<PAGE>
<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.
(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.,
Adviser 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,
Adviser 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., Adviser 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., Adviser 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.,
Adviser 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, Adviser 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 Burroughs & Hutchinson,
Inc., Advisor to the Marathon Value Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 15, is hereby incorporated by
reference.
(viii) Copy of Registrant's Management Agreement with The Jumper Group, Inc.,
Adviser 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
Registrants 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 Cornerstone Investment
Management, Advisor to the Cornerstone MVP Fund, which was filed as an Exhibit
to Registrants Post-Effective Amendment No. 29, is hereby incorporated by
reference.
(xv) 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.
(xvi) 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.
(xvii) 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.
(xviii) 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.
(xix) Copy of Registrant's Management Agreement with Cornerstone Capital
Management, Inc., Advisor to the Shepherd Values Market Neutral Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 27, is hereby
incorporated by reference.
(xx) Copy of Registrant's Management Agreement with Cornerstone Capital
Management, Inc., Advisor to the Shepherd Values Growth Fund, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 27, is hereby
incorporated by reference.
(xxi) 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.
(xxii) Registrant's Management Agreement with Cash Management Systems , Inc.
("CMS"), Adviser to The Cash Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 31, is hereby incorporated by reference.
(xxiii) Copy of Sub-Advisory Agreement between Cash Management Systems, Inc. and
Milestone Capital Management, L.P., Sub-Advisor to The Cash Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 30, is hereby
incorporated by reference.
(xxiv) 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.
(xxv) 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.
(xxvi) 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.
(xxvii) 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.
(xxviii) 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.
(xxix) 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.
(xxx) 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.
(xxxi) 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.
(xxxii) 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.
(xxxiii) 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.
(xxxiv) Copy of Registrant's Proposed 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. 27, is hereby
incorporated by reference.
(xxxv) Copy of Registrant's Proposed 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. 27, is hereby incorporated
by reference.
(xxxvi) Copy of Registrant's Proposed 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. 27, is hereby
incorporated by reference.
(xxxvii) Copy of Registrant's Management Agreement with Jenswold, King &
Associates, Adviser to the Fountainhead Kaleidoscope Fund is filed herewith.
(xxxviii) Copy of Registrant's Management Agreement with Ariston Capital
Management Corporation, Adviser to the Ariston Convertible Internet Fund - to be
supplied.
(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 proposed Underwriting Agreement with AmeriPrime
Financial Securities, Inc. and OMNI Financial Group, LLC, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 12, is hereby incorporated
by reference.
(f) Bonus or Profit Sharing Contracts.- None.
(g) Custodial 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., which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 8, is hereby incorporated by reference.
(iii) Copy of Registrant's Agreement with UMB Bank, N.A., Custodian to the
Dobson Covered Call Fund, 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) Consent of Brown, Cummins & Brown Co., L.P.A is filed herewith.
(j) Other Opinions.
(i) Consent of McCurdy & Associates CPA's, Inc. - to be supplied.
(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
Convertible Internet Fund - to be supplied.
(n) Financial Data Schedule - None.
(o) 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 Convertible Internet Fund - to be supplied.
(p) Power 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 Treasurer and President (and a Trustee) of the
Trust, which were filed as an Exhibit to Registrant's Post-Effective Amendment
No. 35, are hereby incorporated by reference.
Item 24. Persons Controlled by or Under Common Control with the Registrant (As
of December 31, 1999) --------
- --------------------------------------------------------------------------------
(a) Each ofCarl Carl Domino and Carl Domino Associates, L.P., may be deemed to
control the Domino Global Equity Income Fund as a result of their
respective beneficial ownership of the Fund (62.1% and 37.9% respectively).
Carl Carl Domino may be deemed to control the Domino Growth Fund as a
result of his beneficial ownership of the Fund (66.82%). 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 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 (58.59%). 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 (65.95%). 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 (63.01%). 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.
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 Advisers, 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) 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 Adviser
A. Carl Domino Associates, L.P., 580 Village Boulevard, Suite 225, West Palm
Beach, Florida 33409, ("CDA"), adviser 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 adviser.
(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 King"), adviser to the Fountainhead Special Value Fund
and the Fountainhead Kaleidoscope Fund, is a registered investment adviser.
(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"), adviser to GLOBALT Growth Fund, is a
registered investment adviser.
(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"), Adviser to the IMS Capital Value Fund, is a registered
investment adviser.
(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"), Adviser to the Florida Street Bond Fund and the Florida
Street Growth Fund, is a registered investment adviser.
(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"), Adviser to the Corbin Small-Cap Value Fund, is a registered
investment adviser.
(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. Burroughs & Hutchinson, Inc., 702 West Idaho Street, Suite 810, Boise, Idaho
("B&H"), advisor to Marathon Value Fund, is a registered investment adviser.
(1) B&H 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 B&H during the past two years.
Mark R. Matsko, Vice President and Director of B&H, was broker with D.A.
Davidson & Co., a broker/dealer in Boise, Idaho, from 1994 to 1996.
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 set 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 Ave., 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 GJMB 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. Cornerstone Investment Management, L.L.C. 132 West Main Street, Aspen,
Colorado 81611 ("Cornerstone"), Advisor to the Cornerstone MVP Fund, is a
registered investment advisor.
(1) Cornerstone 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 Cornerstone during the past two years:
Christopher Shawn Ryan, managing member of Cornerstone, was Vice
President-Portfolio Manager at NationsBank in Dallas, Texas from January 1994 to
October 1997.
M. 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: 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.
N. 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.
(2) The following list sets forth other substantial business activities of the
directors and officers of Auxier during the past two years: Jeffrey Auxier,
Managing Member of Auxier, was a Senior Portfolio Management Director with Smith
Barney, Inc. until 1998.
O. Cornerstone Capital Management, Inc., 6760 Corporate Drive, Suite 230,
Colorado Springs, CO 80919 ("CCM"), Adviser to the Shepherd Value Market Fund
and the Shepherd Value Growth Fund, is a registered investment advisor.
(1) CCM 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 CCM during the past two years:
a) Darrel Uselton, Director of CCM, is the Chairman of The National Capital
Companies, an investment banking firm.
b) Joseph Cerbone, Director of CCM, is the President of The National Capital
Companies, an investment banking firm.
c) Jason D. Huntley, Director of CCM, was Director of Institutional Services
with First Affirmative/Walnut Street Advisers, Colorado Springs, CO, an
investment advisory firm, from 1996 to 1997.
d) Colleen Helm, Director of CCM, was a portfolio manager with Angell Financial,
an investment adviser, from January 1998 to November 1999. Prior to that, she
was a portfolio manager with Pinnacle Financial Advisory Group, an investment
adviser.
e) Donald Ellsworth, Director of CCM, was the President of Ellsworth Advisory
Group, Inc., an investment counseling firm, from June 1987 until June 1999.
P. 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:
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.
Q. Legacy Investment Group, LLC, d/b/a Cash Management Systems, 290 Turnpike
Road, #338, Westborogh, 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:
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.
R. Ariston Capital Management Corporation, 40 Lake Bellevue Drive, Suite 220,
Bellevue, Washington 98005 ("Ariston"), Advisor to the Ariston Convertible
Securities 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.
S. Leader Capital Corp., 121 S.W. Morrison St., Ste. 450, Portland, OR 97204
("Leader"), Adviser 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.
T. Aegis Asset Management, Inc. ("Aegis"), 230 Westcott, Suite 1, Houston, Texas
77007, Adviser to Westcott Nothing But Net Fund, Westcott Large-Cap Fund and
Westcott Fixed Income Fund, is a registered investment adviser.
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 and a Trustee of the Registrant. It is also
the underwriter for the AmeriPrime Insurance Trust, the Kenwood Funds, the
Rockland Funds Trust 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, Bank of New York, 1 Wall
Street, New York, NY 10286, and United Missouri Bank, N.A., Securities
Administration Dept., 928 Grand Blvd., 10th Floor, Kansas City, MO 64106, and/or
transfer and shareholder service agents, American Data Services, Inc., Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, New York 11760 and 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 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 11th day of February, 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 February 11, 2000
<PAGE>
EXHIBIT INDEX
1. Fountainhead Kaleidoscope Management Agreement...................EX-99.23.d
2. Consent of Counsel...............................................EX-99.23.i
<PAGE>
MANAGEMENT AGREEMENT
TO: King Investment Advisors, Inc.
Two Post Oak Central
1980 Post Oak Blvd. Suite 2400
Houston, Texas 77056-3898
Dear Sirs:
AmeriPrime Funds (the "Trust") herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is Fountainhead Kaleidoscope Fund (the "Fund").
You have been selected to act as the sole investment adviser of the Fund
and to provide certain other services, as more fully set forth below, and you
are willing to act as such investment adviser and to perform such services under
the terms and conditions hereinafter set forth. Accordingly, the Trust agrees
with you as follows effective upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice
as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, including expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholder the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's current and prospective
shareholders; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; expenses of shareholders'
meetings and proxy solicitations; advertising, promotion and other expenses
incurred directly or indirectly in connection with the sale or distribution of
the Fund's shares (excluding expenses which the Fund is authorized to pay
pursuant to Rule 12b-1 under the Investment Company Act of 1940, (the"1940 Act")
as amended); and all other operating expenses not specifically assumed by the
Fund.
The Fund will pay all brokerage fees and commissions, taxes,
borrowing costs (such as (a) interest and (b) dividend expenses on securities
sold short), interest, fees and expenses of the non-interested person trustees
and such extraordinary or non-recurring expenses as may arise, including
litigation to which the Fund may be a party and indemnification of the Trust's
trustees and officers with respect thereto. The Fund will also pay expenses
which it is authorized to pay pursuant to Rule 12b-1 under the 1940 Act. You may
obtain reimbursement from the Fund, at such time or times as you may determine
in your sole discretion, for any of the expenses advanced by you, which the Fund
is obligated to pay, and such reimbursement shall not be considered to be part
of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
Fund will pay you a fee at the annual rate of 1.75% of the average value of its
daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
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.
You should generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the 1940 Act, and other applicable
law, you, any of your affiliates or any affiliates of your affiliates may retain
compensation in connection with effecting the Fund's portfolio transactions,
including transactions effected through others. If any occasion should arise in
which you give any advice to clients of yours concerning the shares of the Fund,
you will act solely as investment counsel for such client and not in any way on
behalf of the Fund. Your services to the Fund pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that you may render investment
advice, management and other services to others, including other registered
investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the 1940 Act or
the rules thereunder, neither you nor your shareholders, members, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee,
member, shareholder or agent of you, who may be or become an officer, director,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with your duties hereunder), to be rendering
such services to or acting solely for the Trust and not as a director, officer,
employee, member, shareholder or agent of you, or one under your control or
direction, even though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority of the outstanding voting securities of
the Fund, provided that in either event continuance is also approved by a
majority of the trustees who are not interested persons of you or the Trust, by
a vote cast in person at a meeting called for the purpose of voting such
approval.
If the shareholders of the Fund fail to approve the Agreement in
the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be terminated
with respect to the Fund, at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the Fund,
or by you. This Agreement shall automatically terminate in the event of its
assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name
"Fountainhead," "Kaleidoscope" or any variation thereof belong to you, and that
the Trust is being granted a limited license to use such words in its Fund name
or in any class name. In the event you cease to be the adviser to the Fund, the
Trust's right to the use of the name "Fountainhead Kaleidoscope" shall
automatically cease on the ninetieth day following the termination of this
Agreement. The right to the name may also be withdrawn by you during the term of
this Agreement upon ninety (90) days' written notice by you to the Trust.
Nothing contained herein shall impair or diminish in any respect, your right to
use the name "Fountainhead Kaleidoscope" in the name of, or in connection with,
any other business enterprises with which you are or may become associated.
There is no charge to the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of t Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or in the absence of any controlling decision of any such court,
by the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing, addressed
and delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust is 1793 Kingswood
Drive, Suite 200, Southlake, Texas 76092, and your address for this purpose
shall be Two Post Oak Central, 1980 Post Oak Blvd., Suite 2400, Houston, Texas
77056-3898.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the form
of acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
ATTEST:
AmeriPrime Funds
By: ____/s/__Monta B. Henry_________ By: ___/s/_____________________
Name/Title Kenneth D. Trumpfheller, President
Dated: ___________, 1999
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
King Investment Advisors, Inc.
By: ______/s/_Jane D. Lightfoot________ By: _______/s/_____________
Name/Title Roger E. King, President
Dated: ___________, 1999
9246 7/26/99 9:27
BROWN, CUMMINS & BROWN CO., L.P.A.
ATTORNEYS AND COUNSELORS AT LAW
3500 CAREW TOWER
J. W. BROWN (1911-1995) 441 VINE STREET JOANN M. STRASSER
JAMES R. CUMMINS CINCINNATI, OHIO 45202 AARON A. VANDERLAAN
ROBERT S BROWN TELEPHONE (513) 381-2121
DONALD S. MENDELSOHN TELECOPIER (513) 381-2125 OF COUNSEL
LYNNE SKILKEN GILBERT BETTMAN
AMY G. APPLEGATE
KATHRYN KNUE PRZYWARA
MELANIE S. CORWIN
February 11, 2000
AmeriPrime Funds
1793 Kingswood Drive
Southlake, Texas 76092
RE: AmeriPrime Funds, File Nos. 33-96826 and 811-9096
Gentlemen:
Legal opinions that we prepared were filed with Post-Effective
Amendment No. 9 and Post-Effective Amendment No. 29 (the "Legal Opinions") to
the Registration Statement. We hereby give you our consent to incorporate by
reference the Legal Opinions into Post-Effective Amendment No. 38 to your
Registration Statement (the "Amendment"), and consent to all references to us in
the Amendment.
Very truly yours,
_________/s/_______________________
Brown, Cummins & Brown Co., L.P.A.