Rule 497(c)
Registration No. 333-62893
THE INDUSTRY LEADERS FUND(R)
104 Summit Avenue - Box 80
Summit, New Jersey 07902-0080
Toll Free: (877) 280-1952
[Industry Leaders Fund(R) Logo Graphic]
PROSPECTUS MARCH 12, 1999
THE INDUSTRY LEADERS FUND(R) SERVES DIRECT, ADVISED,
AND INSTITUTIONAL INVESTORS
The Industry Leaders Fund(R) (the "Fund") is an open-end, diversified mutual
fund. The Fund seeks long-term capital appreciation through a proprietary method
of investing in the common stocks of companies having the highest common
stockholders' equity in their respective industries. The Fund is intended for
investors who seek investment through a diversified portfolio comprised of large
capitalization companies.
The Adviser to the Industry Leaders Fund(R) is Claremont Investment Partners(R)
L.L.C.
This prospectus contains important information about investing in the Industry
Leaders Fund(R). Please carefully read the prospectus before you invest and keep
it for future reference. Your investment in the Industry Leaders Fund(R) is
affected by market fluctuations and there is no guarantee that the Fund will
achieve its objectives.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission, nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
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TABLE OF CONTENTS
FOR YOUR CONVENIENCE, A GLOSSARY OF TERMS
USED IN THIS PROSPECTUS MAY BE FOUND
ON THE INSIDE BACK COVER.
Overview of the Industry Leaders Fund(R).......................................3
Risk/Return Summary:
Objective of the Fund.................................................3
Principal Investment Strategy of the Fund.............................3
Principal Risks of Investing in the Fund..............................3
Who May Want to Invest in the Fund....................................4
Fees and Expenses.....................................................5
Principal Investment Objectives................................................7
Investment Strategy............................................................7
Investment Policies...........................................................12
Important Risk Considerations.................................................13
Hypothetical Performance of the Industry Leaders Strategy Model(TM)...........15
Management of the Fund........................................................17
Shareholder Information.......................................................18
Distribution Arrangements.....................................................19
How You Can Invest with the Industry Leaders Fund(R) .........................20
How to Redeem Your Shares.....................................................23
Special Services..............................................................25
Dividends and Distributions ..................................................26
Taxes.........................................................................27
Exhibit A - Industry Leaders Strategy Model(TM)...............................28
Glossary of Terms.............................................................33
Additional Information........................................................34
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OVERVIEW OF THE INDUSTRY LEADERS FUND(R)
RISK/RETURN SUMMARY
OBJECTIVE OF THE FUND
The objective of the Fund is to obtain long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY OF THE FUND
The Fund's approach is to invest in companies with the highest common
stockholders' equity in their respective industries.
o Common stockholders' equity refers to a company's assets minus its
liabilities, preferred stock and minority interests.
o The Fund utilizes the Adviser's proprietary Industry Leaders
Strategy Model(TM) (referred to as the "Strategy Model") to pursue
the principal investment strategy.
o The companies selected by the Strategy Model for Fund investment
are predominantly leaders in their respective industries.
o The Fund anticipates that the investment portfolio will consist of
the common stock of approximately 100 primarily domestic large
capitalization companies from approximately 85 different
industries.
PRINCIPAL RISKS OF INVESTING IN THE FUND
The Fund is subject to the same risks common to all mutual funds that invest in
equity securities. You could lose money by investing in the Fund, if any of the
following occur:
o The stock market goes down (known as a "bear market").
o Fees and expenses are greater than investment returns.
The following risks of loss are particular to investing in the Fund:
o The Strategy Model may not perform as expected.
Large Capitalization stocks may fall out of favor with investors.
A detailed discussion of risks is set forth below under the heading, "Important
Risk Considerations."
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Before investing in the Fund, you should read this Prospectus in its entirety
and keep in mind all of the following:
o Mutual fund shares are subject to risks, including possible loss
of your principal investment.
o Mutual fund shares are not insured by the Federal Deposit
Insurance Corporation (FDIC) or any other government or private
agency.
o Mutual fund shares are not deposit obligations of any bank, nor
are they guaranteed, endorsed, or insured by any bank or other
institution.
WHO MAY WANT TO INVEST IN THE FUND
The Fund may be a suitable investment if you are:
o Seeking investment over the long term
o Seeking investment mainly in U.S. companies
o Seeking a systematic and disciplined large capitalization strategy.
However, the Fund is NOT appropriate if you are:
o Seeking short-term gains or current income
o Seeking absolute predictability and stability of investment principal
o Not willing to take any risk of losing money on an investment.
Two classes of Fund shares (the "Shares") are available for prospective
investors who wish to invest in the Fund:
o Class D Shares - For purchase by advised investors and
self-directed investors
o Class I Shares - For purchase by institutional investors.
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FEES AND EXPENSES OF THE FUND
This table describes 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)
<TABLE>
<CAPTION>
Class D Class I
------------- -------------
<S> <C> <C>
Maximum Sales Charge (Load) on initial purchases (1) None None
Maximum Deferred Sales Charge (Load) None None
Maximum Sales Charge (Load) on Reinvested Dividends None None
Redemption Fees (as a percentage of amount redeemed)(2) 0.75% None
Maximum Annual Account Fees None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
Class D Class I
------------- -------------
<S> <C> <C>
Management Fees 0.70% 0.70%
Distribution Plan (12b-1) Fees (3) 0.25% None
Other Fund Expenses None None
------------- -------------
Total Annual Fund Operating Expenses 0.95% 0.70%
(1) "Load" is another name for a sales charge.
(2) Redemption fees are charged if you redeem Class D Shares held for less
than six months. Redemption fees are paid to the Advisor.
(3) Under the Fund's Rule 12b-1 Distribution Plan, the Fund may charge
Class D Shares up to 0.25% per year for Class D distribution expenses.
See "Distribution Arrangements" below.
</TABLE>
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EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated below and then redeem all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Class D Class I
- ------------------------------------- -----------------------------------
1 year 3 years 1 year 3 years
$97.00 $303.00 $71.00 $224.00
You would pay the same expenses if you did not redeem your Shares (redemption
fees apply only to redemptions occurring within six months of purchase for Class
D Shares).
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PRINCIPAL INVESTMENT OBJECTIVES
The Industry Leaders Fund(R) objective is to obtain long-term capital
appreciation.
INVESTMENT STRATEGY
The Fund's principal investment strategy is to invest in a broad number of
industries and companies with the highest common stockholders' equity in their
respective industries. To implement this investment approach, the Fund utilizes
the Adviser's proprietary Strategy Model. The companies selected by the Strategy
Model for Fund investment are predominantly leaders in their respective
industry. The Fund anticipates that the investment portfolio during most periods
will include approximately 100 primarily domestic companies across approximately
85 different industries.
The Fund investment portfolio is constructed by the Strategy Model
according to the following steps:
The Strategy Model Universe.
1. Companies and industries that are listed in the Value Line Investment
Survey(R) ("Value Line") form the starting point for identifying the
companies included in the Strategy Model universe.
2. Value Line lists approximately 1,700 companies and classifies each
company into an industry category (each, an "Industry").
3. The Strategy Model universe is comprised of all Value Line listed
companies except for the following
exclusions:
(a) The Strategy Model excludes from its universe companies that
are in the following current Industries:
o Canadian Banks
o Canadian Energy
o Foreign Electronics/Entertainment
o Foreign Telecommunications
o Investment Companies (Closed-End Domestic)
o Investment Companies (Foreign Funds)
o Investment Companies (Income)
(b) The Strategy Model excludes from its universe companies
whose shares are not directly traded in the United States
(E.G., American Depository Receipts, commonly referred to as
"ADRs").
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(c) The Strategy Model also excludes from its universe companies
included in Value Line as "recent additions" but which have
not yet been assigned an Industry category.
4. In establishing its universe of stocks, the Strategy Model also
adjusts the Industry category of "Banks" to include "Banks Midwest" so
as to unify the banking Industry analysis.
5. Industries and companies are included in the Strategy Model universe
only for the periods during which they are listed in Value Line.
Portfolio Allocation.
6. The Strategy Model then identifies the common stockholders' equity of
each company included in the Strategy Model universe. Common
stockholders' equity refers to a company's assets minus its
liabilities, preferred stock and minority interests. All of the
foregoing information is obtained from publicly available financial
statements that each company in the Strategy Model universe is
required by law to file with the United States Securities and Exchange
Commission on a quarterly basis. Each financial statement identifies,
as separate line-items, the company's assets, liabilities, preferred
stock and minority interests.
7. The Strategy Model totals the common stockholders' equity of all
companies included in the Strategy Model
universe.
8. The Strategy Model then obtains the subtotal of common stockholders'
equity for each Industry by aggregating the common stockholders'
equity of all companies included within that Industry.
9. By dividing the subtotal of stockholders' equity within each Industry
by the grand total of stockholders' equity of all companies in the
Strategy Model universe, the Strategy Model determines the universe's
percentage of stockholders' equity within each Industry. For example,
if the total Strategy Model universe had $2.7 trillion worth of total
common stockholders' equity and the Industry category of Auto & Truck
companies had aggregate common stockholders' equity of $40.7 billion,
the Auto & Truck Industry would be deemed to contain 1.51% of the
Strategy Model universe.
10. The Strategy Model then allocates a percentage of the Fund's
investment portfolio to each Industry at the same percentage that each
Industry contains of the Strategy Model universe. Continuing the
example above, the Strategy Model would allocate 1.51% of the Fund's
portfolio for investment in the Auto & Truck Industry.
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Specific Portfolio Investments.
11. After the Industry allocation determination, the Strategy Model
determines specific company investments by selecting the leading
company within each Industry. A company is considered to be the
Industry leader if it has the highest common stockholders' equity in
that Industry and no other company in that same Industry has 98% or
more of that Industry leader's amount of common stockholders' equity.
Continuing the above example, if Ford had the highest common
stockholders' equity in the Auto & Truck Industry of $23.54 billion,
98% of that equity would be $23.07 billion. Assuming no other company
in the Auto & Truck Industry had $23.07 billion or more in common
stockholders' equity, the Fund would invest the entire 1.51% of the
portfolio Auto & Truck Industry allocation in Ford Motor Company
common stock.
12. In the event multiple companies are to be included in an Industry, the
portfolio allocation is divided equally between the companies
selected. For example, if the Strategy Model determined that 1.2% of
the portfolio should be allocated to the Railroad Industry and the
analysis showed that Union Pacific had the highest amount of
stockholders' equity in that Industry, but the amount of common
stockholders' equity of Burlington Northern/Santa Fe was within 98% of
the amount of common stockholders' equity of Union Pacific, the Fund
would invest 0.6% of its portfolio in each of the two companies, for a
total 1.2% portfolio investment in the Railroad Industry as per the
Strategy Model allocation.
13. The Strategy Model also has a monthly portfolio allocation limit of
2.25% for any one company. For an Industry with a portfolio allocation
greater than the individual limit of 2.25%, the company with the
next-highest stockholders' equity is added until the percentage
portfolio allocation is complete. The 2.25% individual company
investment rule is maintained with respect to portfolio investments
that are made in multiple companies which are within one Industry. For
example, if the Strategy Model allocates 9% of the portfolio to the
Bank Industry, the maximum that the Fund could invest in any one
banking company would be 2.25% of the Fund's portfolio value, after
which the next leading banking company with the highest stockholders'
equity would be selected for investment, up to 2.25% for each
subsequent company, until the Strategy Model Industry portfolio
allocation percentage of 9% is reached.
14. The 98% leader differentiation rule is also maintained with respect to
portfolio investments that are made in an Industry which has a
portfolio allocation greater than the 2.25%. For example, if the
Electric Utility East Industry portfolio allocation is 3.1% and
Southern Company is the Industry leader, with Duke Energy as the
second Industry leader but not having its common stockholders equity
equal an amount of 98% or more of the common stockholders equity of
Southern Company, the Fund would invest 2.25% in Southern Company and
the balance of the Industry portfolio allocation of 0.85% in Duke
Energy. In the event that Duke Energy had its common stockholders
equity equal 98% or more of the common stockholders equity of Southern
Company, the Fund would divide its 3.1% Electric Utility East Industry
portfolio allocation for equal investment in each of the two
companies.
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15. The Strategy Model is re-calculated and re-balanced after the close of
business on the last business day of each month. The Fund portfolio is
re-balanced on the following business day, which is the first business
day of the next month, by buying and/or selling stocks depending on
changes in total Fund assets and/or changes in accordance with the
Strategy Model universe as described above.
Portfolio Characteristics.
As a result of following the Strategy Model, the Fund portfolio is expected to
have the following general characteristics:
o Be comprised of approximately 100 Industry-leading companies which
represent investments in approximately 85 different Industries;
o Be primarily composed of U.S. common stocks;
o Not have more than 2.25% of Fund portfolio assets in any one company;
o Not have the top 10 holdings exceed 22.5% of the Fund portfolio.
The portfolio constructed by the Strategy Model is expected to be classified as
"Large Value" which generally refers to a portfolio of companies having a median
market capitalization similar to the Standard & Poor's 500 Index but with lower
price-earnings and price-book ratios. Notwithstanding that classification, the
Fund portfolio is also expected to contain a number of stocks that would
traditionally be classified as growth companies. Growth companies add to the
diversity of the Fund portfolio, but are not expected to have a material effect
on overall portfolio statistics. For example, in accordance with the Strategy
Model, the Fund's diversified portfolio will own a stock in the internet
Industry (currently America Online), but only .001% of the portfolio is
currently allocated by the Strategy Model for investment in that Industry. There
is very little common shareholders' equity in the internet Industry, so the Fund
portfolio allocation for investment in that Industry will be correspondingly
small. As with all Fund investments, growth industries and companies are
represented in the Fund portfolio only with reference to their common
shareholders' equity, not their market capitalization. As a result, the Fund
portfolio will hold smaller investments in growth companies than a growth or
blend index fund.
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The Strategy Model, in this way, creates, allocates and maintains a broadly
diversified portfolio of companies which have the highest common stockholders'
equity of their respective Industry.
As noted above, the Strategy Model is re-balanced after the close of business on
the last business day of each month and the Fund portfolio is re-balanced on the
next business day, which is the first business day of the following month. The
Adviser expects to make Fund investments and redemptions between such
re-balancing (due to purchases and redemptions of Fund Shares) on a pro-rata
basis so as to maintain the Strategy Model with respect to the percentage of
each stock held in the portfolio. The Adviser expects the Fund portfolio to
drift marginally from the precise allocation of the Strategy Model between
monthly re-balancing, but will attempt to minimize any differences through
pro-rata apportionment of interim period purchases and sales.
A list of all Industries and companies in the Fund portfolio as of December 31,
1998 is included at the end of this Prospectus as part of Exhibit A, as well as
a list of all Industries analyzed by the Strategy Model from the past 10 years.
Exhibit A also sets forth a list of Industries previously included in the
Strategy Model, with the dates of inclusion, as well as a list of Industries
previously excluded from the Strategy Model which are no longer categorized as
separate Industries by Value Line.
The Strategy Model has been tested by comparing its results to publicly
available data from the past twelve years, however, there can be no assurance of
success with respect to any future performance of the Fund.
The Industry Leaders Fund(R), The Industry Leaders Strategy Model(TM) and
Claremont Investment Partners(R), L.L.C., have no affiliation with The Value
Line Investment Survey(R). The Value Line Investment Survey(R) is a registered
trademark of Value Line Publishing, Inc. The Value Line Investment Survey(R)
makes no representation regarding the advisability of investing in the Industry
Leaders Fund(R).
The Industry Leaders Fund(R) and The Industry Leaders Strategy Model(TM) are
trademarks of Claremont Investment Partners(R), L.L.C.
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INVESTMENT POLICIES
Under normal market conditions, at any given time, the Fund will not:
o Invest in debt securities or preferred stocks
o Hedge investments by engaging in speculative asset management, such as
short sales, puts, calls, warrants or stock option contracts
o Make Fund portfolio decisions based on short-term performance goals
o Invest "defensively" against particular market or economic conditions,
such as shift a substantial portion of Fund portfolio assets to cash
or cash equivalents
o Otherwise make investments that are inconsistent with the Fund's
principal long term strategy.
The Strategy Model is re-balanced after the last business day of each month and
the Advisor re-allocates the Fund portfolio on the basis of any changes in the
Strategy Model on the following business day. Due to cash inflows and outflows
(primarily from purchases and redemptions of Fund Shares), the Adviser expects
the portfolio to drift marginally from the precise allocation of the Strategy
Model between monthly reallocations.
The Fund will attempt to remain fully invested, however, it may not always be
fully invested for several reasons, including, but not limited to, obtaining
economic efficiency with respect to brokerage costs. The Adviser may use short
term cash management instruments to temporarily hold uninvested Fund assets.
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IMPORTANT RISK CONSIDERATIONS
Investing in the Industry Leaders Fund(R) involves risks common to the risks of
investing in any equity mutual fund:
o The Fund invests in common stocks that may decrease in value.
Therefore, the value of your investment in the Fund may also decrease.
o Declines in the market as a whole (i.e., a "bear market"), may cause
you to lose some or all of your investment.
o The Fund could lose money if the stocks selected for the Fund's
portfolio are experiencing financial difficulty, or are out of favor
in the market because of weak performance, poor earnings forecasts,
negative publicity or industry-specific market cycles.
o It can take many months or possibly years to recover a loss.
Historically, some stock market declines have ended quickly while
others have continued for sustained periods of time, as indicated by
the following:
Commencement of Period To Recover Loss
Market Decline From Market High
--------------- ----------------------
July 1990 1 year
October 1987 18 months
1973 10 years
1929 24 years
o It is impossible to predict either the timing or severity of a
downward-trend market.
o Periods of unusually high returns have, historically, increased the
risk of stock investing for subsequent periods. The upward trend
market (i.e., a "bull market") during the past several years has been
an unusual growth period for most major stock market indexes,
producing substantial average annual returns. However, these returns
may not continue in the future as indicated by recent volatility in
most markets.
In addition to risks common to all equity mutual funds, the following risks are
particular to investing in the Fund:
o There can be no assurance that the Strategy Model will perform as
expected or that the Fund will be successful in replicating the
results indicated from comparing its results to publicly available
data from the past twelve years.
o The Fund has no operating history and therefore no actual past
performance record to guide prospective investors in their decision
whether or not to invest in Shares of the Fund.
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o There is also a risk that the Fund, its service providers and/or
exchanges on which stocks of the Fund portfolio trade, could be
disrupted by computer systems that cannot accurately process
date-related information after December 31, 1999. This failure, often
referred to as the "Year 2000 Issue," might adversely affect
securities trades, pricing and account servicing for the Fund. The
Adviser has taken steps that it reasonably believes will address the
Year 2000 Issue. In addition, the Fund's major service providers have
informed the Adviser that they have taken similar steps. However,
neither the Adviser nor the Fund's service providers can assure that
these steps will be sufficient to avoid any adverse effects from the
Year 2000 Issue.
o While the Fund believes that most companies in its portfolio will be
Year 2000 compliant with respect to their material operations, if a
Fund portfolio company's modifications and replaced systems are not
made Year 2000 compliant in a timely manner, it could result in a
material adverse effect on such company. Additionally, a non-compliant
company's products and services as well as the tools it uses to
conduct its Year 2000 evaluation, may be dependent on technological
components, equipment and software that could have been developed by
third parties which may not be Year 2000 compliant. Failure of such
third party components, equipment or software to operate properly with
regard to the Year 2000 could interrupt ongoing operations or require
such company to incur unanticipated expenses to remedy any problems,
which could have a material adverse effect on such company's business
and operations. As a result, the Fund's portfolio could be adversely
affected, thereby reducing the value of an investment in the Fund.
Each prospective investor must assess all of the risks of investing in a
stock-based mutual fund in general, and the risks of investing in the Industry
Leaders Fund(R) in particular. It is important that you understand your
financial-risk tolerance. The impact of a downward-trend market also depends not
only upon the extent of a decline, but also upon your individual time horizon.
For example, a downward-trend market may be harder to tolerate if you are
retired or nearing retirement. Ask yourself these questions: What can you
tolerate to lose? If your investment incurs a loss, how long can you wait for a
market rebound? What are your other financial resources?
Investors should remember that an investment in the Fund is not a deposit
in a bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation (the FDIC) or any other private organization or government agency.
As a result, investment losses are not covered by any kind of insurance.
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HYPOTHETICAL PERFORMANCE OF
THE INDUSTRY LEADERS STRATEGY MODEL(TM)
The following graph and table compares the actual performance of the Standard
and Poor's Barra Value Index(R) ("S&P Barra Value"), with the hypothetical
results of the Strategy Model (minus fees and expenses related to operation of
the Fund) for various historical periods (as indicated in the graph and table
below). Total returns of the Strategy Model are returns on a hypothetical
portfolio composed of stocks selected by the Strategy Model and re-balanced
monthly. Although the Fund will attempt to remain fully invested, the Adviser
expects that up to 2% of Fund assets may at times be held in short term
instruments for cash management purposes. These cash management purposes
primarily address aggregating portfolio purchases to obtain efficiency in
brokerage costs and/or honoring redemption requests without liquidating stock
holdings. As all Fund expenses are paid by the Adviser and not out of Fund
assets (except for the Fund's Rule 12b-1 Distribution Plan and the Management
Fee), the Adviser believes that carrying a maximum of 2% of assets in cash at
any given time will be reasonably sufficient to satisfy the Fund's cash
management needs while maintaining the Fund portfolio's balance with the
Strategy Model. The effects on Strategy Model returns of such cash management
have been taken into account in calculating hypothetical performance of the
Strategy Model in the table below by reference to the federal funds rate for
each period shown, less a discount of 0.001% which is the approximate
commercially available rate of return which the Fund could have expected to
receive during the periods shown and which the Fund reasonably expects to
receive on cash assets in the foreseeable future, however, there can be no
assurance in this regard.
All returns of the Strategy Model contained in the chart below are net of all
deductions for Fund operating expenses (0.95% for Class D Shares and 0.70% for
Class I Shares) which would have been incurred by Shareholders during the
periods presented. The chart reflects continued investment, reinvestment of
dividends and other earnings, without redemptions.
The S&P Barra Value is an index that has no costs or expenses of operation,
however, its total return amounts reflect reinvestment of dividends for purposes
of general comparison to the Strategy Model. Of course, past hypothetical
results of the Strategy Model do not necessarily indicate future performance of
the Strategy Model or earnings of the Fund.
Prospective investors should note that during the periods shown below, large
capitalized stocks in general have experienced substantial price appreciation.
The performance results of the Strategy Model are hypothetical and should not be
considered predictive of the investment expertise of the Adviser. The Adviser
has not managed money according to the Strategy Model during the period shown
and no investments using clients assets were made in connection with the
retroactive application of the back-tested Strategy Model which was developed
with the benefit of retrospective trial and analysis. The performance
information was compiled after the end of the periods depicted and does not
represent actual investment decisions of the Adviser.
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COMPARATIVE HYPOTHETICAL TOTAL RETURN PERFORMANCE OF
THE INDUSTRY LEADERS STRATEGY MODEL(TM)
PLEASE NOTE THAT THE HYPOTHETICAL RETURNS BELOW ARE DERIVED ONLY FROM
TESTING THE STRATEGY MODEL AND DO NOT REPRESENT ACTUAL TRADING OR
ACTUAL RETURNS ON INVESTMENTS
Strategy Model
------------------------------- S&P Barra
Value
Period Class D Class I Index
- ----------------------- --------------- --------------- ----------------
1 Year
12/31/97-12/31/98 21.69% 22.01% 13.83%
3 Years
12/31/95-12/31/98 97.17% 98.64% 76.82%
5 Years
12/31/93-12/31/98 172.17% 175.53% 132.19%
10 Years
12/31/88-12/31/98 409.38% 421.96% 338.27%
12 Years
12/31/86-12/31/98 498.87% 516.66% 452.87%
Please note that past hypothetical results of the Strategy Model do
not necessarily indicate future performance or earnings of the Fund.
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MANAGEMENT OF THE FUND
INVESTMENT ADVISER
Claremont Investments Partners(R) L.L.C. is the Adviser to the Fund. The Adviser
manages the Fund's investments and business affairs subject to the supervision
of the Fund Board of Trustees. The Adviser is a registered investment adviser.
The Adviser offers investment advisory services to clients other than the Fund.
The Adviser began conducting business in 1996. Since then, its principal
business has been the development of the Strategy Model. The Adviser has not
previously advised or managed a mutual fund. The Adviser's principal address is
104 Summit Avenue, P.O. Box 80, Summit, New Jersey 07902-0080.
ADVISORY MANAGEMENT FEES
As an annual management fee, the Fund pays the Adviser 0.70% of the Fund
portfolio's average daily net asset value, computed daily and payable monthly.
Except for management fees and Class D distribution fees which are discussed
under "Distribution Arrangements" below, the Advisor pays for all of the costs
and expenses related to operation of the Fund.
CHIEF EXECUTIVE OFFICER
The CEO of the Adviser and of the Fund is Barry F. Sullivan. Mr. Sullivan
currently serves as Vice Chairman of Sithe Energies, Inc. and also serves on the
Boards of Directors of Merrill Lynch International Bank and The Guardian Life
Insurance Company of America. Mr. Sullivan has served as Chairman and CEO of
First Chicago Corporation, the parent company of First National Bank of Chicago.
Mr. Sullivan served in various executive capacities at Chase Manhattan Bank,
N.A., including Executive Vice President and Member of the Management Committee,
from June 1957 through 1980. Mr. Sullivan served as an active member of the
Board of Trustees of the University of Chicago from August 1980 to June 1995,
and was Chairman of the Board of Trustees from July 1987 to April 1991. Mr.
Sullivan also served as Chief Operating Officer of the New York City Board of
Education from October 1994 to October 1995, and as Deputy Mayor for The City of
New York from May 1992 through December 1993. From January through October 1994,
Mr. Sullivan served as President and Chief Executive Officer of the New York
City Partnership in conjunction with the Chamber of Commerce. Mr. Sullivan
graduated from Columbia University and obtained an M.B.A. from the University of
Chicago Graduate School of Business. Mr. Sullivan is presently a candidate for a
Ph.D. from Fordham University. Mr. Sullivan holds honorary doctoral degrees
awarded by De Paul University and the University of Chicago. Barry F. Sullivan
is the father of the Portfolio Manager, Gerald P. Sullivan.
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PORTFOLIO MANAGER
The Adviser's portfolio manager for the Fund is Gerald P. Sullivan. Mr.
Sullivan, President of the Adviser and the Fund, has been associated with the
Adviser since 1996. Previous to that he was a Vice President of First Fidelity
Bancorporation, a Managing Director of Hilliard Farber & Co., and a Management
Analyst for The Atlanta Committee for the Olympic Games. Mr. Sullivan obtained
his undergraduate degree from Columbia University and holds an M.B.A. from the
University of Chicago Graduate School of Business.
SHAREHOLDER INFORMATION
HOW THE FUND'S SHARES ARE PRICED
The net asset value ("NAV"), multiplied by the number of Fund Shares you own,
gives you the value of your investment.
The Fund calculates the NAV each business day, as of the close of the New York
Stock Exchange, which is normally 4:00 p.m. Eastern Time. Any Shares that you
purchase or redeem are valued at the next share price calculated after the Fund
receives your investment instructions. A business day is a day on which the NYSE
is open for trading.
The Fund calculates the NAV by adding up the total value of the Fund's
investments and other assets, subtracting Fund liabilities, and then dividing
that figure by the number of the Fund's outstanding Shares. The value of an
investment in a mutual fund is based upon the NAV determined by that mutual
fund. The following formula expresses the NAV on a per share basis:
Total Assets Less Liabilities
NAV = -------------------------------------
Number of Shares Outstanding
You can find the NAV of most mutual funds every day in THE WALL STREET JOURNAL
and other newspapers. However, newspapers do not normally publish information
about a particular mutual fund until it has a minimum number of shareholders or
minimum level of assets. In the event you redeem Shares, any applicable
redemption fees are subtracted from your account after calculation of the NAV.
The Fund's investments are valued based on market price. If market quotations
are not readily available, the Fund's investments will be valued based on fair
value as determined in good faith by the Fund's board.
18
<PAGE>
DISTRIBUTION ARRANGEMENTS
DISTRIBUTION PLAN
On behalf of the Class D Shares, the Fund has adopted a distribution plan (the
"Distribution Plan") under Rule 12b-1 of the Investment Company Act of 1940, as
amended. Under the Distribution Plan, the Fund is authorized to pay a fee in an
amount not to exceed on an annual basis 0.25% of the average daily net asset
value of the Class D Shares.
Payments made pursuant to the Distribution Plan will be made to securities
dealers, financial services organizations and/or other parties (each, a
"Distribution Organization") for the following purposes: (i) providing
distribution assistance relating to the sale of Class D Shares and (ii)
paying for promotional activities intended to result in the sale of Class D
Shares, such as the preparation, printing and distribution of prospectuses
to other than current Fund Shareholders. The fee paid to a Distribution
Organization may exceed the actual costs incurred by such organization in
connection with the provision of distribution services. From time to time, a
Distribution Organization may voluntarily reduce all or a portion of its fee
under the Distribution Plan to increase the net income of the Class D Shares
available for distribution as dividends. A Distribution Organization may not
seek reimbursement of such reduced fees after the end of the fiscal year in
which its fees were reduced.
The voluntary reduction of any Distribution Organization's fee will cause the
total return of the Class D Shares to be higher than it would otherwise be in
the absence of such a fee reduction. Because Distribution Plan fees are paid out
of the Fund's assets on an on-going basis, these fees will increase the cost of
Class D share investment and may cost you more than paying other types of sales
charges.
REDEMPTION FEES
The Fund incurs brokerage fees in connection with its portfolio transactions.
Short-term "market timers" who engage in frequent purchases and redemption of
Fund Shares can disrupt the Fund's investment program and create additional
transaction costs that all Shareholders must bear. If you sell your Class D
Shares within six months of purchase, you will pay a redemption fee to the Fund
to help offset such transaction costs. Redemption fees are charged at a
percentage of an amount equal to the lesser of the net asset value at the time
of purchase of the Shares being redeemed or the net asset value of such Shares
at the time of redemption. The redemption fee calculations are made in the
manner that results in the lowest possible charge being assessed. The Fund will
use the "first-in, first-out" method to determine the holding periods. The date
of the redemption will be compared with the earliest purchase date of Shares
held in the account. In this regard, it will be assumed that the redemption is
first of Shares held for more than six months or Shares acquired pursuant to
reinvestment of dividends or distributions. You will pay a redemption fee if
this holding period is less than six months for Class D Shares.
19
<PAGE>
HOW YOU CAN INVEST WITH THE INDUSTRY LEADERS FUND(R)
This section tells you how to open an account and how to buy Shares after your
account is open. Below is a description of the minimum investment requirements
for the Fund, expenses and sales charges applied to each Class of Shares, and
the procedures to follow if you decide to buy Shares of the Fund. Please read
the entire Prospectus carefully before buying Shares of the Fund.
Investors choosing to purchase or redeem their Shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem Shares directly from the Fund will not incur charges on
purchases or redemptions (except for Class D Share redemptions within six months
of the date of purchase).
HOW TO BUY SHARES
o ADVISED AND SELF-DIRECTED PURCHASES: You may invest in Class D
Shares by opening an account directly with the Fund. To do this,
simply complete and return an Industry Leaders Fund(R)
application with proper payment.
o INSTITUTIONAL PURCHASES: Institutions may invest directly in
Class I Shares. To do this, simply complete and return an
Industry Leaders Fund(R)account application. Wire instructions
will be provided to you upon establishment of the account.
o PURCHASES THROUGH MUTUAL FUND VENDORS: You may be able to invest
in the Fund through third-party mutual fund vendors, such as
mutual fund supermarkets or no-transaction fee programs that make
available Fund Shares. To the extent investments of individual
investors are aggregated into an omnibus account established by a
mutual fund vendor, the Fund account minimums apply to the
vendor's omnibus account, not to the account of the individual
investor. As a result, mutual fund vendors may be able to offer
prospective investors lower minimum investment access to the
Fund. Please contact your mutual fund vendor directly for
information on how to invest in the Fund through their services,
or for a referral to a mutual fund vendor, contact the Fund
toll-free at (877) 280-1952.
Minimum Investments
o DIRECT PURCHASE CLASS D SHARES: $10,000 minimum initial
investment ($5,000 for qualified retirement accounts, which are
described below) and minimum subsequent investments of $100.
O DIRECT PURCHASE CLASS I SHARES: $500,000 minimum initial
investment and minimum subsequent investments of $100.
20
<PAGE>
O PURCHASES THROUGH MUTUAL FUND VENDORS: As discussed above, mutual
fund vendors may be able to offer lower minimum investment access
to prospective Fund investors. Please contact your mutual fund
vendor directly for information concerning their respective
minimum investment requirements.
PURCHASE CLASS D SHARES BY MAIL
You can purchase Class D and Class I Shares by mail. For an initial purchase,
please complete a Fund application. Please be sure to indicate the Share Class
into which you intend to invest. Enclose a check for at least the minimum
investment amount of the Class you wish to purchase (Class D: $10,000; Class I
$500,000) made out in the full name of the Fund and the Share Class in which you
are investing (for example, "The Industry Leaders Fund, Class D") and addressed
to the P.O. Box listed below. If you prefer overnight delivery, use the
overnight address listed below.
U.S. Mail: Overnight Delivery Services:
Industry Leaders Fund Industry Leaders Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, IN 46204-6110 Indianapolis, IN 46204
Your purchase of Shares of the Fund will be effected at the next Share price
calculated after receipt of your investment.
For additional share purchases by mail, please make a check payable to the full
name of the Fund and the Share Class in which you are investing. Additional
purchases must be for at least $100. Be sure to write your account number on the
check as well.
PURCHASE SHARES BY WIRE
To open a new account by wire, please call the Fund toll free at (877) 280-1952.
A representative will assist you to obtain an account application by fax (or
mail), which must be completed, signed and faxed (or mailed) to the Fund before
payment by wire may be made.
The order is considered received when the Fund's custodian bank (the
"Custodian") receives payment by wire. However, the signed and completed
original account application must be mailed to the Fund on the same day the wire
payment is made. See "Opening an Account -- By Mail" above. The Fund will not
permit redemptions until the Fund receives the application in proper form. Third
party financial institutions may charge a fee for wire transfers.
21
<PAGE>
Wire orders will be accepted only on a day on which the Fund, Custodian and
Transfer Agent are open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the Fund.
Any delays which may occur in wiring money, including delays which may occur in
processing by the banks, are not the responsibility of the Fund or the Transfer
Agent. There is presently no fee for the receipt of wired funds, but the right
to charge Shareholders for this service is reserved by the Fund.
To purchase additional Class D or Class I Shares by wire transfer, you must have
an existing account which has been previously established. In order to ensure
that wire orders are invested promptly, investors must call the Fund at (877)
280-1952 to obtain instructions regarding the bank account number into which the
funds should be wired and other pertinent information. Be sure to have the
wiring bank include your current account number and the name in which your
account is registered.
INVESTMENT RESTRICTIONS
The Fund reserves the right to reject any order for the purchase of its Shares
in whole or in part, including (a) purchase orders made with foreign checks and
third party checks not originally made payable to the order of the investor and
(b) orders that are reasonably deemed to be disruptive to efficient portfolio
management, either because of the timing of the investment or previous excessive
trading by the investor. Additionally, the Fund reserves the right to suspend
the offering of its Shares. The Fund does not currently provide for exchange
privileges between different classes of the Fund.
22
<PAGE>
HOW TO REDEEM YOUR SHARES
This section explains how you can sell your Fund Shares.
REDEEM BY MAIL
Write a letter to the Fund, stating your account registration, your account
number, the Fund Class you wish to redeem, and the dollar amount ($100 or more)
of the redemption you wish to receive (or write "Full Redemption", if you wish
to sell all of your investment in the Fund). Make sure all the account owners
sign the request. You may request that redemption proceeds be sent to you by
check, by ACH transfer into a bank account, or by wire (a wire requires a $5,000
minimum).
For mailed redemption requests over $5,000 a signature guarantee is required.
You can obtain a signature guarantee from an eligible guarantor institution, as
detailed below under the caption, "Signature Guarantees."
REDEEM BY TELEPHONE
The Fund makes telephone privileges available to you automatically unless you
specifically decline them on your application or subsequently in writing.
Telephone redemptions must be for at least $100. Be prepared to provide your
account number, taxpayer identification number (social security number) and
other personal identification information. Unless you have instructed otherwise,
only one account owner needs to call in redemption requests. You may request
that redemption proceeds be sent electronically directly to a domestic
commercial bank account previously designated by you on the Account Registration
Form or mailed directly to your address of record. A wire transfer requires a
$5,000 minimum. All proceeds from telephone redemptions may be delivered only to
the address of record for such account. The Fund will not be liable for any
losses incurred if it follows telephone instructions which it reasonably
believes are genuine.
The Fund will employ procedures designed to provide reasonable assurance that
instructions by telephone are genuine; if these procedures are not followed, the
Fund or its service providers may be liable for any losses due to unauthorized
or fraudulent instructions. These procedures may include recording all phone
conversations, sending confirmations to Shareholders within 72 hours of the
telephone transaction, verification of account name and account number or tax
identification number, requesting additional personal identification
information, and sending redemption proceeds only to the address of record or to
a previously authorized bank account. If, due to temporary conditions, Fund
Shareholders are unable to effect telephone transactions, Fund Shareholders may
also fax and/or mail the redemption request to the Fund at the address shown on
the front page of this Prospectus.
23
<PAGE>
REDEMPTION PAYMENT POLICIES
Under most circumstances, redemption payments will be transmitted on the next
business day following receipt of a valid request for redemption. Although it is
not the Fund's policy to delay redemption payments, the Fund reserves the right
to delay payment of a redemption for up to five business days. The Fund may also
delay payment of redemptions under extraordinary circumstances or as the
Securities and Exchange Commission permits in order to protect remaining Fund
Shareholders.
Although no fees are currently in effect for wiring funds, the Fund reserves the
right to pass through to Fund Shareholders any third-party surcharges incurred
by the Fund.
The Fund does not provide for waiver of any fees in connection with
re-investments in the Fund after redeeming Shares.
CHANGES IN ACCOUNT ADDRESS OF RECORD
To change an account address of record, the account holder must make a written
request to the Fund. Such request must contain a signature guarantee, as
detailed below.
SIGNATURE GUARANTEES
For purposes of the Fund's policy on signature guarantees, the term "eligible
guarantor institution" shall include banks, brokers, dealers, credit unions,
securities exchanges and associations, clearing agencies and savings
associations as those terms are defined in the Securities Exchange Act of 1934.
The Fund reserves the right to reject any signature guarantee if (1) it has
reason to believe that the signature is not genuine, (2) it has reason to
believe that the transaction would otherwise be improper, or (3) the guarantor
institution is a broker or dealer that is neither a member of a clearing
corporation nor maintains net capital of at least $100,000. The Fund does not
accept notarized signatures.
REDEMPTION THROUGH MUTUAL FUND VENDORS
If you purchased your Fund Shares through a third-party mutual fund vendor,
please contact your vendor directly for information on how to redeem your Fund
Shares.
24
<PAGE>
SPECIAL SERVICES
The Fund has certain programs to help you to purchase or redeem Shares
conveniently each month.
SYSTEMATIC INVESTMENT PROGRAM: You may automatically buy additional Fund Shares
each month with a minimum purchase of at least $100. Money from your linked bank
account can, each month, be automatically transferred to purchase additional
Fund Shares. The Fund will transfer the amount on or about the day you specify,
or on or about the 20th of each month if you have not specified a day. If you
wish to change or add linked accounts, please call the Fund toll-free at (877)
280-1952.
SYSTEMATIC WITHDRAWAL PROGRAM: The Fund can automatically redeem enough Shares
to equal a specified dollar amount of at least $100, on or about the fifth
business day prior to the end of each month, and either send you the proceeds by
check or transfer them into your linked bank account. In order to set up a
Systematic Withdrawal Program, you must:
o Have a Fund account valued at $25,000 or more
o Have distributions reinvested
o Not simultaneously participate in the Fund Systematic Investment Program.
Once the Fund has received your instructions, it generally takes about ten
business days to set up either of the automatic plans. It generally takes the
Fund about five business days to change or cancel participation in either plan.
The Fund automatically cancels your program if the linked account you have
specified is closed.
RETIREMENT PLANS: Since the Fund is oriented to longer term investments, Shares
of 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. Consultation with an attorney or tax professional
regarding these plans is advisable. Custodial fees for an IRA will be paid by
the Shareholder by redemption of sufficient Shares of the Fund from the IRA
unless the fees are paid directly to the IRA custodian. To obtain more
information regarding details about these plans, the IRA custodial fees and
the steps required to roll-over an existing IRA account or open a new retirement
plan account, please call the Fund toll free at (877) 280-1952.
25
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
DIVIDEND AND CAPITAL GAIN DISTRIBUTION OPTIONS
The Fund passes along to your account your share of investment earnings in the
form of dividends. Fund dividend distributions are the net dividends earned on
investments after Fund expenses. The Fund will at least annually declare and pay
dividends from its net investment income and distribute any net capital gains
obtained through Fund investment transactions.
You may select one of the following ways for the Fund to make your
distributions:
o AUTOMATIC REINVESTMENT OPTION: You may automatically buy new Shares of
your Fund class. The new Shares are purchased at NAV generally on the
day the income is paid. This option is implemented automatically for
your Fund account unless you instruct the Fund otherwise.
o DIRECT DEPOSIT OPTION: You may have your dividends and capital gains
deposited into any bank account you link to your Fund account if it is
part of the ACH system. If your specified bank account is closed, the
Fund will automatically reinvest your distributions.
o CHECK PAYMENT OPTION: You may receive checks for distributions mailed
to your address of record or to another name and address which you have
specified in written, signature-guaranteed instructions. If checks
remain uncashed for six months, or the Post Office cannot deliver them,
the Fund will automatically reinvest your distributions.
You may change your distribution option at any time by calling or writing to the
Fund. The Fund must receive any change five business days (ten business days for
electronic fund transfers) prior to a dividend or capital gain distribution
payment date, in order for the change to be effective for that payment.
26
<PAGE>
TAXES
The Fund intends to continue to qualify as a regulated investment company. This
status exempts the Fund from paying federal income tax on the earnings or
capital gains it distributes to its Shareholders.
In general, your investment in the Fund will be subject to the following tax
consequences:
o Ordinary dividends received by the Fund and passed through to
Shareholders are taxable as ordinary income (you are subject to
taxation on automatically reinvested dividends, as well as on dividends
which are distributed in cash).
o Dividends from the Fund's capital gains are taxable as capital gain
(which may be taxed at different rates depending on the length of time
the Fund holds its assets).
o Dividends may also be subject to state and local taxes.
o Certain dividends paid to you in January will be taxable as if
they had been paid the previous December.
o After the end of each calendar year, you will receive a statement (Form
1099) of the federal income tax status of all dividends and other
distributions paid (or deemed paid) during the year.
o When you sell (i.e., redeem) Shares of the Fund, you will be subject to
taxation for any gain or loss.
For the foregoing reasons, you should keep all of your Fund statements for
accurate tax-accounting purposes.
The tax information above is for your general information. A more detailed
discussion of federal income tax considerations may be found in the Fund's
Statement of Additional Information. The foregoing information is not intended
to provide complete tax planning advice. Please consult with your own tax
professional prior to investing in the Fund.
27
<PAGE>
Exhibit A
Industry Leaders Strategy Model(TM)
List of Companies Included in the Strategy Model as of December 31, 1998
<TABLE>
<CAPTION>
Portfolio
Industry Company Percentage
<S> <C> <C>
Advertising Interpublic Group Cos. Inc. 0.141%
Aerospace/Defense Boeing Co. 1.433%
Air Transport AMR Corp/Del 0.976%
Apparel V F Corp. 0.329%
Auto & Truck Ford Motor Company 1.503%
Auto Parts OEM Magna International Inc. 0.563%
Auto Parts Replacement Tenneco Inc. (New) 0.222%
Bank Bank One Corp. 2.250%
Bank BankAmerica Corp. 2.250%
Bank Chase Manhattan Corp. 2.250%
Bank Wells Fargo Company 2.250%
Bank First Union Corp. 0.387%
Beverage (Alcoholic) Seagram Co. Ltd. 0.624%
Beverage (Soft Drinks) Coca-Cola Co. 0.616%
Building Materials Masco Corp. 0.305%
Cable TV Tele-Communications-TCI Group 0.001%
Cement & Aggregates Lafarge Corp. 0.167%
Chemical - Basic Du Pont (E.I.) de Nemours 0.879%
Chemical Diversified Minnesota Mining & MFG Co. 0.868%
Chemical Specialty Praxair Inc. 0.804%
Coal/Alternative Energy AES Corp. 0.093%
Computer and Peripherals Internat'l Business Mach. Corp. 2.250%
Computer and Peripherals Hewlett-Packard CO. 0.933%
Computer Software & Services Microsoft Corp. 2.051%
Diversified Tyco International Ltd. 1.788%
Drug Merck & Co., Inc. 2.250%
28
<PAGE>
Drug American Home Products Corp. 0.500%
Drugstore Rite Aid Corp. 0.169%
Drugstore Walgreen Co. 0.169%
Educational Services Sylvan Learning Systems Inc. 0.034%
Electric Utility Central Texas Utilities Co. 2.250%
Electric Utility Central Entergy Corp. 0.176%
Electric Utility East Southern Co. 2.250%
Electric Utility East Duke Energy Corp. 0.888%
Electric Utility West P G & E Corp. 1.205%
Electrical Equipment General Electric Company 2.170%
Electronics AMP Inc. 0.623%
Entertainment Disney (Walt) 2.191%
Environmental Waste Management Inc. 0.383%
Financial Services Citigroup Inc. 2.250%
Financial Services Loews Corp. 1.438%
Food Processing Unilever N.V. 1.687%
Food Wholesalers Sysco Corp. 0.183%
Furniture/Home Furnishings Leggett & Platt Inc. 0.170%
Gold/Silver Mining Barrick Gold Corp. 0.294%
Grocery Store Safeway Inc. 0.596%
Healthcare Information System HBO & Co. 0.106%
Home Appliance Whirlpool Corp. 0.133%
Homebuilding Centex Corp. 0.218%
Hotel/Gaming Hilton Hotels Corp. 0.469%
Household Products Procter & Gamble Co. 0.814%
Industrial Services Republic Industries Inc. 0.714%
Insurance-Life Equitable Companies Inc. 1.410%
Insurance-Property & Casualty Berkshire Hathaway Inc. 2.250%
29
<PAGE>
Insurance-Property & Casualty Allstate Corp. 2.006%
Insurance Diversified American International Group 2.205%
Internet America Online Inc. 0.098%
Machinery Caterpillar Inc. 1.207%
Manufactured Housing / RV Clayton Homes Inc. 0.109%
Maritime Overseas Shipholding Group 0.065%
Medical Services Aetna Inc. 1.990%
Medical Supplies Johnson & Johnson 1.656%
Metal Fabricating Illinois Tool Works 0.284%
Metals & Mining Alcoa Inc. 0.839%
Natural Gas Distribution Keyspan Energy Corp. 0.464%
Natural Gas Diversified Enron Corp. 1.152%
Newspaper Gannett Co. Inc. 0.551%
Office Equipment & Supply Xerox Corp. 0.582%
Oilfield Services Schlumberger Ltd. 1.139%
Packaging & Container Crown Cork & Seal Co. Inc. 0.363%
Paper & Forest Products International Paper Co. 1.657%
Petroleum Integrated Exxon Corp. 2.250%
Petroleum Integrated Mobil Corp. 2.250%
Petroleum Integrated Royal Dutch Petroleum Company 2.250%
Petroleum Integrated Chevron 0.007%
Petroleum Producting Burlington Resources Inc. 0.347%
Precision Instrument Eastman Kodak Co. 0.391%
Publishing McGraw-Hill Companies Inc. 0.234%
Railroad Burlington Northern/Santa FE 0.614%
Railroad Union Pacific Corp. 0.614%
Recreation Carnival Corp. 0.558%
REIT Equity Residential Props TR 0.620%
30
<PAGE>
Restaurant McDonald's Corp. 0.626%
Retail Building Supply Home Depot Inc. 0.481%
Retail Special Lines Toys R Us Inc. 1.035%
Retail Store Wal-Mart Stores, Inc. 2.250%
Retail Store Penney (J.C.) Co. 0.169%
Securities Brokerage Morgan Stanley Dean Witter & Co. 1.469%
Semiconductor Intel Corp. 2.021%
Semiconductor Capital Equip. Applied Materials Inc. 0.194%
Shoe Nike Inc. 0.201%
Steel (Integrated) USX-U.S. Steel Group Inc. 0.227%
Steel General Nucor Corp. 0.239%
Telecommunications Equipment Hughes Electronics 0.832%
Telecommunications Service AT&T Corp. 2.250%
Telecommunications Service MCI WORLDCOM Inc. 2.250%
Telecommunications Service Bellsouth Corporation 1.787%
Textile Springs Industries Inc. 0.115%
Thrift Fannie MAE 1.593%
Tire & Rubber Goodyear Tire & Rubber Co. 0.203%
Tobacco Philip Morris Companies Inc. 0.993%
Toiletries/Cosmetics Gillette Company 0.244%
Trucking & Transport Leasing Hertz Corp. 0.309%
Water Utility American Water Works Inc. 0.085%
</TABLE>
31
<PAGE>
Exhibit A
Industry Leaders Strategy Model(TM)
(continued)
2. List of Industries Previously Included in the Strategy Model with dates of
inclusion.
Broadcasting Cable TV (December 1986 to June 1996)
Metals & Mining (Industrial) (December 1986 to December 1993)
Real Estate (December 1986 to June 1993)
Toy & School Supplies (December 1986 to November 1993)
Machine Tool (December 1986 to April 1996)
Machinery (Construction & Mining) (December 1986 to January 1997)
Beverage (December 1986 to April 1991)
Specialty Steel (December 1986 to February 1994)
Bank Southwest (December 1986) (aggregated with Strategy Model analysis of
all Banks for December 1986)
Bank Texas (January 1987 to March 1988) (aggregated with Strategy Model
analysis of all Banks for January 1987 to March 1988)
3. List of Industries excluded at all times from the Strategy Model which
no longer exist as separately categorized Industries.
Investment Company
European Diversified
Gold/Diamond (South Africa)
Japanese / Australian Diversified
Japanese Diversified
32
<PAGE>
GLOSSARY OF TERMS
Adviser Claremont Investment Partners, L.L.C.(R)
Bear Market Prolonged period of falling stock prices.
Bull Market Prolonged period of rising stock prices.
Capital Appreciation Growth of an investment.
Common stock Units of ownership of a public corporation,
also referred to as common equity.
Common stockholders' equity A company's total assets minus its total
liabilities (including preferred stock),
also commonly referred to as the "net worth"
of a company.
Defensive Investing Shift of portfolio assets during periods of
market and/or economic uncertainty.
Diversified The spread of risk by investing in more than
one industry category.
Equity securities Units of ownership of a public corporation.
Fund The Industry Leaders Fund(R).
Large Value A portfolio of companies having a
median market capitalization similar to the
Standard & Poor's 500 Index but with lower
price-earnings and price-book ratios.
Minority Interest On the consolidated balance sheets
of companies whose subsidiaries are not
wholly owned, the minority interest is shown
as a separate equity account or as a
liability of indefinite term. On the income
statement, the minority's share of income is
subtracted to arrive at consolidated net
income.
Market Timing Speculative investment strategy based
on prediction of future movement of the
stock market.
NAV Net asset value.
Offering price The price at which Fund Shares are sold.
Open End Mutual Fund A mutual fund which stands ready to redeem
(buy back) its shares from investors.
Portfolio Combined holding of more than one
investment.
SAI Statement of Additional Information.
Strategy Model The Industry Leaders Strategy
Model(TM), a proprietary portfolio
allocation and stock selection model
developed and owned by the Adviser.
Value Line Investment Survey(R) Independent investment advisory service that
analyzes approximately 1700 companies.
Year 2000 Issue Concern that computer systems cannot
accurately process date-related
information after December 31, 1999.
33
<PAGE>
[Prospectus back cover page]
ADDITIONAL INFORMATION
The Industry Leaders Fund(R) is an open-end, diversified mutual fund which
serves direct, advised, and institutional investors. The Industry Leaders
Fund(R) seeks long-term capital appreciation through a proprietary method of
investing in the common stocks of companies having the highest common
stockholders' equity in their respective industries.
To request additional information about the Fund, contact your financial adviser
or contact the Fund by mail, telephone or the internet:
The Industry Leaders Fund(R)
104 Summit Avenue - Box 80
Summit, New Jersey 07902-0080
Toll Free: (877) 280-1952
(http://www.industry-leaders.com)
The Statement of Additional Information (the "SAI") provides a more complete
discussion of certain matters contained in this Prospectus. The Securities and
Exchange Commission (the "SEC") allows the Fund to "incorporate by reference"
information the Fund files with the SEC, which means that the Fund can make
important disclosures by referring you to those documents. The information
incorporated by reference is an important part of this Prospectus, and
information that the Fund later files with the SEC will automatically update and
supersede this information. This Prospectus incorporates by reference the SAI.
Information on how to obtain a copy of the SAI is set forth below.
o You may obtain a free copy of the SAI and the current annual or semi-annual
reports, by contacting the Fund as set forth above.
o You may also obtain copies of the SAI or financial reports for free by
calling or writing your Authorized Securities Dealer.
o You may review the SAI and/or other reports at the Public Reference Room of
the Securities Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C.
o Information on the operation of the Securities Exchange Commission's public
reference room may be obtained by calling the Commission at 1-800-SEC-0330.
o You may obtain copies of the Fund's prospectus, the SAI and the financial
reports for a fee by calling or writing the SEC's Public Reference Room at
the SEC's address or phone number listed above, or without a fee by
visiting the SEC's Worldwide Web site at http://www.sec.gov.
File Nos. 333-62893
811-08989
34
<PAGE>
Rule 497(c)
Registration No. 333-62893
INDUSTRY LEADERS FUND(R)
104 Summit Avenue - Box 80
Summit, New Jersey 07902-0080
Toll Free: (877) 280-1952
STATEMENT OF ADDITIONAL INFORMATION
March 12, 1999
This Statement of Additional Information, which should be kept for future
reference, is not a prospectus and should be read in conjunction with the
Industry Leaders Fund(R) Prospectus, dated March 12, 1999 (the "Prospectus").
The Prospectus can be obtained without cost by contacting your financial
adviser or by calling the Fund toll-free at (877) 280-1952, or by writing
to the Fund at the address referenced above. This Statement of Additional
Information is incorporated by reference in its entirety into the Prospectus.
This Statement of Additional Information is intended to provide
you with further information about the Fund.
INVESTMENT ADVISER
Claremont Investment Partners, L.L.C.
DISTRIBUTOR
Unified Management Corporation
ADMINISTRATOR
AmeriPrime Financial Services, Inc.
TRANSFER AGENT and FUND ACCOUNTING
Unified Fund Services, Inc.
CUSTODIAN
UMB Bank, N.A.
INDEPENDENT ACCOUNTANTS
McCurdy & Associates CPA's, Inc.
COUNSEL
Wuersch & Gering, LLP
TABLE OF CONTENTS
Overview of the Statement of Additional Information............................3
Investment Objectives and Policies.............................................3
Fundamental Investment Restrictions............................................4
Non-Fundamental Investment Restrictions........................................5
Instruments in which the Fund Can Invest.......................................5
Domestic Common Stocks................................................5
Foreign Company Stocks................................................5
Net Asset Valuation............................................................6
Performance Information........................................................7
Average Annual Total Return...........................................7
Cumulative Total Return...............................................8
Comparative Performance Information...................................8
Additional Purchase and Redemption Information................................10
Distributor Concessions and Dealer Reallowances......................11
Additional Dividend And Distribution Information..............................11
Taxes.........................................................................11
Subchapter M.........................................................11
Diversification......................................................12
Excise Tax...........................................................12
Treatment of Capital Gains...........................................13
Taxation of Fund Shareholders........................................13
Distribution of Capital Gains........................................13
Distribution of Foreign Source Income................................13
Distribution of Tax Exempt Interest Income...........................13
Treatment of Distributions...........................................13
Timing of Distributions..............................................14
Shareholder Purchases before a Distribution..........................14
Dividends Received Deduction.........................................14
Alternative Minimum Tax Considerations...............................14
Additional Withholding Requirements..................................14
Sale or Redemption of Shares.........................................15
Foreign Shareholders.................................................15
Additional Tax Considerations........................................15
Trustees and Officers of The Fund.............................................16
Control Persons and Principal Holders of Securities...........................18
Investment Management and Other Services......................................18
Portfolio Transactions and Brokerage..........................................19
Distributor...................................................................20
Administrator.................................................................21
Transfer Agent and Fund Accounting Services...................................22
Distribution Plan.............................................................22
Fund Custodian................................................................24
The Year 2000 Issue...........................................................24
Independent Accountants.......................................................25
Legal Counsel.................................................................25
Fund Expenses.................................................................25
Description of Fund Shares....................................................26
Shareholder and Trustee Liability.............................................27
Financial Statements..........................................................28
Registration Statement........................................................32
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OVERVIEW OF THE STATEMENT OF ADDITIONAL INFORMATION
The Industry Leaders Fund(R) (the "Trust") is a diversified, open-end management
investment company. The Trust is organized as a Delaware business trust which
was formed on December 13, 1995. The Trust consists of a diversified fund (the
"Fund") of units of beneficial interest ("Shares" and the holders thereof,
"Shareholders"). The Fund has two classes of Shares: Class D Shares and Class I
Shares. The outstanding Shares of all classes represent interests in the Fund
investment portfolio. This SAI relates to all Shares of the Fund. Some of the
information contained in this SAI explains in further detail subjects which are
discussed in the Prospectus. Capitalized terms not otherwise defined herein are
used as defined in the Prospectus. You should carefully read the Prospectus
before investing in the Fund.
If you have any questions or comments prior to investing in the Fund, please do
not hesitate to call the Fund toll-free at (877) 280-1952.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives, policies and permitted investments are
described in the Prospectus under the headings "Overview of Industry Leaders
Fund(R)", "Principal Investment Objectives", "Investment Strategy", "Investment
Policies" and "Important Risk Considerations." Set forth below is additional
information with respect to the Fund's investment policies. The Fund's
investment objective is fundamental and may not be changed without a vote of the
holders of a majority of the Fund's outstanding voting securities, as described
below. There can be no assurance that the Fund will achieve its investment
objective. Except for the fundamental investment restrictions set forth below,
the policies of the Fund may be changed without Shareholder approval.
The phrases "Shareholder approval" and "vote of a majority of the outstanding
voting securities", as used in the Prospectus or in this Statement of Additional
Information means the affirmative vote of the lesser of (i) 67% or more of the
Fund's voting securities present at a meeting of Shareholders provided that the
holders of more than 50% of the Fund's outstanding voting securities are present
in person or by proxy, or (ii) more than 50% of the Fund's outstanding voting
securities. Shares of the Fund have voting power based on dollar value and are
thus allocated in proportion to the value of each Shareholder's investment on
the record date.
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Unless otherwise noted, whenever an investment policy or limitation states a
maximum percentage of the Fund's assets that may be invested in any security or
other asset, or sets forth a policy regarding quality standards, such standard
or percentage limitation will be determined immediately after and as a result of
the Fund's acquisition of such security or other asset except in the case of
borrowing (or other activities that may be deemed to result in the issuance of a
"senior security" under the Investment Company Act of 1940, as amended (the
"1940 Act")). Accordingly, any subsequent change in values, net assets, or other
circumstances will not be considered when determining whether the investment
complies with the Fund's investment policies and limitations.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The following policies and limitations supplement the Fund investment policies
set forth in the Prospectus. The first 8 investment restrictions set forth below
are fundamental policies of the Fund. These fundamental restrictions cannot be
changed without approval by a majority of the outstanding voting securities of
the Fund.
The Fund may not:
1. Purchase the securities of any one issuer, if, immediately
after such purchase, more than 2.25% of the value of the Fund's total assets
would be invested in such issuer;
2. Purchase any securities which would cause more than 15% of the
value of the Fund's total assets at the time of purchase to be invested in
securities of one or more issuers conducting their principal business activities
in the same industry;
3. Borrow money in excess of 2% of the Fund's total assets taken
at cost or at market value, whichever is lower, which may not be made in excess
of commercially reasonable rates, and with respect to any borrowings of 1% or
more, then only as a temporary measure for extraordinary or emergency purposes,
and if such borrowings exceed 1% of the Fund's total assets, the Fund will make
no further investments until such borrowing is repaid;
4. Issue senior securities;
5. Act as an underwriter, except that the Fund technically may be
deemed to be an underwriter in a registration under the Securities Act of 1933
to resell restricted securities;
6. Invest in real estate, provided that this limitation shall not
prohibit the purchase of securities issued by companies that invest in real
estate or interests therein, including real estate investment trusts;
7. Make loans from Fund assets; and
8. Purchase or sell physical commodities, commodity futures
contracts,
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commodities futures stock index contracts or options thereon.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
The following investment restrictions and policies are non-fundamental and can
be changed by the Board of Trustees without Shareholder approval.
Currently, the Fund may not:
9. Invest in companies whose stock is not domestically traded
in the United States;
10. Invest in open-end or closed-end mutual funds;
11. Invest in bonds or other debt securities, convertible
securities, warrants, options or repurchase agreements;
12. Maintain a short position or sell securities short;
13. Purchase securities which are not readily marketable, such as
securities subject to legal or contractual restrictions on resale or securities
which are otherwise illiquid;
14. Pledge its assets in an amount greater than 2% of the value
of its total assets, and then only to secure borrowings permitted by Restriction
3;
15. Purchase securities on margin; and
16. Participate in a joint or a joint and several basis in any
trading account in securities (the bunching of orders for the sale or purchase
of portfolio securities of two or more accounts managed by the Adviser or its
affiliates, shall not be considered participation in a joint securities trading
account).
INSTRUMENTS IN WHICH THE FUND CAN INVEST
DOMESTIC COMMON STOCKS. The Fund may invest in the common equity securities of
companies which are domestically traded in the United States. The risks of
investing in equity securities are discussed in detail in the Prospectus under
the caption, "Overview of Industry Leaders Fund(R), Risk Return Summary -
Principal Risks" and also under the caption, "Important Risk Considerations."
FOREIGN COMPANY STOCKS. Under the Fundamental Policy of the Fund, a stock must
be domestically traded in the United States to be eligible for inclusion in the
Fund portfolio. This requirement eliminates foreign companies whose equity is
only traded abroad or traded in the U.S. only as an American Depository Receipt
(commonly referred to as an "ADR"). Other foreign companies, typically through a
U.S. subsidiary, have registered their stock with the Securities and Exchange
Commission (the "Commission" and the
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"SEC") and listed such stock for trading on U.S. exchanges. Therefore, some
foreign companies may be included in the Fund portfolio if they are selected by
the Industry Leaders Strategy Model(TM) (the "Strategy Model"). The Prospectus
contains a complete discussion of the operation of the Strategy Model under the
captions, "Overview of Industry Leaders Fund(R), Risk Return Summary" and "
Investment Strategy."
Although the Adviser believes it unlikely that the Fund portfolio will at any
time be comprised of a statistically significant percentage of foreign stocks,
there are risks inherent in investments in foreign companies that are different
from, and additional to, those related to investments in obligations of U.S.
domestic issuers. For example, the value of dividends from such securities,
which may be denominated in or indexed to foreign currencies, can change
significantly when foreign currencies strengthen or weaken relative to the U.S.
dollar. Foreign companies with substantial operations abroad may also be
affected by actions of foreign governments adverse to the interests of U.S.
investors, including the possibility of expropriation or nationalization of
assets, confiscatory taxation, restrictions on U.S. investment or on the ability
to repatriate assets or convert currency into U.S. dollars, or other government
intervention. Investments in foreign countries also involve a risk of local
political, economic, or social instability, military action or unrest, or
adverse diplomatic developments. There is no assurance that the Adviser will be
able to anticipate these potential events or counter their effects. The
considerations noted above are generally intensified for investments in
developing countries.
NET ASSET VALUATION
The net asset value per share of each class of Shares of the Fund is determined
as of the close of regular trading on the NYSE, on each day that the NYSE is
open. The closed days are set forth below in this SAI under the caption,
"Additional Purchase and Redemption Information."
The Fund subtracts the non-class specific liabilities of the Fund from the
Fund's assets to determine its total net assets. The Fund then determines each
class's proportionate interest in the Fund's net assets. The liabilities
attributable to that class, including its Fund management and Distribution Plan
fees, are then deducted and the resulting amount is divided by the number of
Shares of that class outstanding to produce its net asset value per share.
Stocks are valued at the closing prices reported on recognized securities
exchanges or if no sale was reported, and for unlisted securities, at the mean
between the last-reported bid and asked prices. Although the Fund does not
anticipate holding securities for which market quotations are not readily
available, such securities will be valued at fair value as determined in good
faith by or under the direction of the Board of Trustees.
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<PAGE>
PERFORMANCE INFORMATION
The Fund will include performance data for Class D and Class I Shares of the
Fund in its advertisements, sales literature and other information distributed
to the public that includes performance data of the Fund. Such performance
information will be based on investment "average annual total return" or
"cumulative total return" the Fund. An explanation of how such returns are
calculated for each class is set forth below.
Total return information may be useful to investors in reviewing the Fund's
performance. The Fund's advertisement of its performance must, under applicable
SEC rules, include the average annual total returns for each class of Shares of
the Fund for the 1, 5, and 10-year period (or the life of the class, if less) as
of the most recently ended calendar quarter. This enables an investor to compare
the Fund's performance to the performance of other funds for the same periods.
Investors should also consider other relevant factors before using such
information as a basis for comparison with other investments, such as
comparative risks and investment time horizons.
AVERAGE ANNUAL TOTAL RETURN. Total return represents the average annual
compounded rate of return on an investment of $1,000 at the maximum public
offering price. All data are based on past investment results. Average annual
total return for a given period is computed by finding the average annual
compounded rate of return over the period that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1 + T)[n-exponent] = ERV
Where:
P = a hypothetical initial investment in the Fund of $1,000
T = average annual total return
n = number of years in period
ERV = ending redeemable value, at the end of the period, of a
hypothetical $1,000 investment in the Fund made at the
beginning of the period.
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<PAGE>
The investment results of Shares of the Fund will tend to fluctuate over time,
so that historical yields, current distributions and total returns should not be
considered representations of what an investment may earn in any future period.
Investments in the Fund are not insured and its total return is not guaranteed.
Actual dividends will tend to reflect changes in the market as a whole, and will
also depend upon the level of a class's or the Fund's expenses, realized or
unrealized investment gains and losses, and the results of the Fund's investment
policies. When redeemed, an investor's Shares may be worth more or less than
their original cost. Total return for any given past period are not a prediction
or representation by the Fund of future rates of return on its Shares. Thus, at
any point in time, investment yields, current distributions or total returns may
be either higher or lower than past results.
CUMULATIVE TOTAL RETURN. The cumulative total return calculation (or "total
return") measures the change in value of a hypothetical investment of $1,000
over an entire period of years. Its calculation uses some of the same factors as
average annual total return, but it does not average the rate of return on an
annual basis. Cumulative total return is determined as follows:
ERV - P
------- = Cumulative Total Return
P
Total returns for the Fund are calculated from the initial investment ("P") and
assume that (1) all Fund dividends and net capital gains distributions during
the period are reinvested to buy additional Shares at net asset value per share,
(2) applicable fees are deducted during the total return period and (3) the
investment is redeemed at the end of the period.
COMPARATIVE PERFORMANCE INFORMATION. The total return on an investment made in
the Fund may be compared with the performance for the same period of the
Standard & Poor's Barra Value(R) Index. Other indices may be used from time to
time. The Standard & Poor's Barra Value(R) Index is a capitalization-weighted
index of all the stocks in the Standard & Poor's 500 that have low price-to-book
ratios. The foregoing index is an unmanaged index of securities that does
not reflect reinvestment of capital gains or take investment costs into
consideration, as these items are not applicable to indices generally.
8
<PAGE>
The Fund may also be quoted in and compared to other mutual funds with similar
investment objectives in advertisements, Shareholder reports or other
communications to Shareholders. The Fund may include in these communications
calculations that describe back-testing of the Industry Leaders Strategy
Model(TM) and hypothetical past investment results. These performance examples
are based on an express set of assumptions and are not indicative of future
performance of the Fund. These calculations may include discussions or
illustrations of the effects of compounding. "Compounding" means that, if
dividends or other distributions on the Fund's investment are reinvested by
being paid in additional Fund Shares, any future income or capital appreciation
of the Fund would increase the value, not only of the original Fund investment,
but also of the additional Fund Shares received through reinvestment. As a
result, the value of the Fund investment would increase more quickly than if
dividends or other distributions had been paid in cash. The Fund may also
include discussions or illustrations of the potential investment goals of a
hypothetical investor. These may include, but are not limited to, tax and/or
retirement planning, investment management techniques, policies or investment
suitability of the Fund. The Fund may discuss such factors as general economic
conditions, legislative developments (including pending legislation), the
effects of inflation and historical performance of various types of investments,
including, but not limited to, stocks, bonds and U.S. Government Treasury Bills.
Fund advertisements or other communications to Shareholders may also summarize
certain information contained in Shareholder reports (including portfolio
composition), as well as the Adviser's views as to current economic indicators,
such as overall market performance, economic, trade and interest rate trends,
legislative, regulatory and monetary developments, investment strategies and
related matters believed to be of relevance to Fund investors.
The Fund may also include in advertisements, charts, graphs or drawings which
illustrate the potential risks and rewards of investment in comparative
investment vehicles, including but not limited to stock, bonds, and Treasury
bills, against an investment in Shares of the Fund. The Fund may also include
charts or graphs that illustrate strategies such as dollar cost averaging.
Advertisements or Shareholder communications may also include discussions of
certain beneficial characteristics of an investment in the Fund. Advertisements
and other communications may contain symbols, headlines or other material which
highlight or summarize information which is included in such communication. The
Fund may reprint (in whole or in part) articles reporting on the Fund and, after
obtaining permission from the respective publisher, provide these articles to
current and/or prospective Shareholders. Performance information with respect to
the Fund is generally available by calling toll-free (877) 280-1952.
Advertisements and sales literature may include discussions of the Industry
Leaders Strategy Model(TM), including, but not limited to, descriptions of
security selection and analysis. Advertisements may also include descriptive
information about the Adviser, including, but not limited to, its status within
the industry, other services and products it makes available, total assets under
management, and its investment philosophy.
9
<PAGE>
When comparing total return and investment risk of an investment in Shares of
the Fund with other investments, investors should keep in mind that certain
other investments have very different risk characteristics than an investment in
Shares of the Fund. For example, CDs may have fixed rates of return and may be
insured for both principal and interest by the FDIC, while the Fund's returns
will fluctuate and its share values and returns are not guaranteed. U.S.
Treasury securities are guaranteed as to principal and interest by the full
faith and credit of the U.S. Government.
The Fund also may include in its advertisements data from the American
Association of Retired Persons, American Banker, Barron's, Business Week,
Forbes, Fortune, Institutional Investor, Business Week, Lipper Analytical
Services, Inc., Money, Morningstar Mutual Funds, The New York Times, Smart
Money, USA Today, U.S. News & World Report, The Wall Street Journal, Worth and
other publications. In addition to performance information, general information
about the Fund that appears in a publication, such as those mentioned above, may
also be quoted or reproduced in advertisements or in reports to current or
prospective Shareholders.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Fund does not issue share certificates. Instead, an account is established
for each investor and all Shares purchased or received, including those obtained
through reinvestment of distributions, are credited to such account on the books
of the Fund.
Reference is made to the materials in the Prospectus under the captions,
"Overview of Industry Leaders Fund(R) Risk Return Summary: Who May Want to
Invest in the Fund"; "How You Can Invest With The Industry Leaders Fund(R) "
and "How to Redeem Your Fund Shares", which describe the methods of purchase
and redemption of the Fund's Shares. If you invest through an investment firm,
financial adviser or agent, they may have their own service features,
transaction charges and fees. This SAI and the accompanying Prospectus
should be read in conjunction with such firms' material regarding their fees
and services. If you wish to obtain a referral to an investment professional,
please call the toll-free Fund at (877) 280-1952.
The NYSE is currently scheduled to be closed on New Year's Day, Dr. Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day, or, when one of these
holidays fall on a Saturday or Sunday, the preceding Friday or subsequent
Monday. The closing schedule is subject to change.
When the NYSE is closed, or when trading is restricted for any reason other than
its customary weekend or holiday closings, or under emergency circumstances as
determined by the SEC to warrant such action, the Fund will determine its net
asset value as of the daily NAV valuation time.
The Fund has elected to honor all redemption requests in cash.
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<PAGE>
DISTRIBUTOR CONCESSION AND DEALER REALLOWANCES. The Fund does not pay
distribution concessions or dealer reallowances in connection with the
distribution of the Class D or Class I Shares, except with respect to fees which
thereunder. See the Prospectus, under the captions "Fees and Expenses of the
Fund" and "Distribution Arrangements" for detailed information concerning the
Class D Shares Rule 12b-1 Distribution Plan.
ADDITIONAL DIVIDEND AND DISTRIBUTION INFORMATION
To the extent necessary for the Fund to obtain favorable federal tax treatment,
the Fund distributes net investment income and net capital gains, if any, to
Shareholders within each calendar year as well as on a fiscal year basis. The
Fund intends to distribute any net investment income and any net realized
capital gains at least annually.
The amount of the Fund's distributions may vary from time to time depending on
the composition of the Fund's portfolio, dispositions of portfolio assets and
expenses borne by the Fund.
The net income of the Fund, from the period of the immediately preceding
determination thereof, shall consist primarily of dividend income, if any, and
realized capital gains and losses on Fund's assets, less all expenses and
liabilities of the Fund chargeable against income. To a lesser extent, net
income will include any incidental interest income accrued on the portfolio
assets during periods in which the Adviser has held cash for purposes of, but
not limited to, anticipated redemptions and/or for reasons of minimizing
brokers' commissions by grouping portfolio purchase orders and sales.
Expenses, including the compensation payable to the Adviser, are accrued each
day. The expenses and liabilities of the Fund include those appropriately
allocable to the Fund, as well as general expenses and liabilities of the Trust.
TAXES
The following is only a summary of certain additional federal income tax
considerations generally affecting the Fund and its Shareholders which are not
described in the Prospectus. This summary does not attempt to provide a detailed
explanation of the tax treatment of the Fund or its Shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for legal
and/or professional accounting advice with respect to tax planning. Prospective
Shareholders are urged to consult their own tax professional prior to investing
in the Fund.
SUBCHAPTER M. The Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"
). As a regulated investment company, the Fund will not be subject to federal
income tax on the portion of its investment income (i.e., taxable interest,
dividends, and other taxable ordinary income) and capital gain income (i.e., the
excess of capital gains over capital losses) that it distributes to
Shareholders, provided that it distributes at least 90% of its
11
<PAGE>
investment company taxable income (i.e., net investment income and the excess of
net short-term capital gain over net long-term capital loss) for the taxable
year plus 90% of its net income from tax-exempt obligations (the "Distribution
Requirement"), and satisfies certain other requirements of the Code that are
described below. Distributions by the Fund made with respect to the taxable year
will be considered distributions of income and gains of the taxable year and
will therefore count towards the satisfaction of the Distribution Requirement.
Since the Fund intends to distribute substantially all of its investment company
taxable income and its net capital gain income in compliance with the
Distribution Requirement, the Fund does not expect to be subject to income or
excise taxes otherwise applicable to undistributed income of a regulated
investment company. If the Fund were to fail to distribute all its income and
gains, it would be subject to corporate income tax and, in certain
circumstances, a nondeductible 4% excise tax, as discussed in further detail
below.
DIVERSIFICATION. In addition to satisfying the requirements described above, the
Fund must satisfy an asset diversification test in order to qualify as a
regulated investment company. Under this test, at the close of each quarter of
the Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of securities (as to which the Fund has not invested more than 5% of the
value of the Fund's total assets and does not represent more than 10% of the
outstanding voting securities of any issuer), cash and cash items, U.S.
Government securities, securities of other regulated investment companies. In
addition, no more than 25% of the value of its total assets may be invested in
the securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which the Fund controls (i.e., ownership of 20% or more of the total combined
voting power of all classes of voting stock in a corporation) and which are
engaged in the same or similar trades or businesses.
If for any taxable year the Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to Shareholders, and such distributions will be taxable to the
Shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate Shareholders.
EXCISE TAX. A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to (a)
98% of its ordinary income for such calendar year, (b) 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year, and
(c) the prior year shortfall. (For purposes of the excise tax, the Fund would be
obligated to reduce its capital gain net income (but not below its net capital
gain) by the amount of any net ordinary loss for the calendar year.) The balance
of such income must be distributed during the next calendar year. A regulated
investment company is treated as having distributed any amount on which it is
subject to income tax for any taxable year ending in such calendar year. The
Fund intends to make sufficient distributions of its ordinary taxable income and
capital gain net income prior to the end of each calendar year to avoid
liability for the excise tax. However, investors should keep in mind that the
Fund may, in certain circumstances, be
12
<PAGE>
required to liquidate portfolio investments to make sufficient distributions to
avoid excise tax liability. A regulated investment company, in determining its
investment company taxable income and net capital gain for any taxable year, may
elect to carry over its capital losses for a period of eight taxable years
succeeding the loss year.
TREATMENT OF CAPITAL GAINS. The Fund is taxable by the amount of its net capital
gain over the amount of its deduction for dividends paid, determined with
reference to capital gains dividends only. The Fund must pay tax on its
undistributed net capital gain at the maximum corporate income tax rate,
currently 35%.
TAXATION OF FUND SHAREHOLDERS. Dividends from net investment income and
distributions from short-term capital gains are taxable to Shareholders as
ordinary income. The Fund anticipates distributing substantially all of its
investment company taxable income for each taxable year. Dividend distributions
represent dividends on stocks that the Fund receives. Such distributions are
treated as dividends for federal income tax purposes. Such dividends paid by the
Fund are expected to qualify for the 70% dividends-received deduction for
corporate Shareholders to the extent discussed below.
DISTRIBUTION OF CAPITAL GAINS. The Fund may either retain or distribute to
Shareholders its net long-term capital gain for each taxable year. The Fund
currently intends to distribute all such amounts. Net long-term capital gain
that is distributed and designated as a capital gain dividend will be taxable to
Shareholders as long-term capital gain, regardless of the length of time the
Shareholder has held his or her Fund Shares or whether such gain was recognized
by the Fund prior to the date on which the Shareholder acquired his or her
Shares.
DISTRIBUTION OF FOREIGN SOURCE INCOME. Investment income that may be received by
the Fund from sources within foreign countries may be subject to foreign taxes
that may be withheld at the source. The United States has entered into tax
treaties with many foreign countries which entitle the Fund to a reduced rate
of, or exemption from, taxes on such income. It is impossible to determine the
effective rate of foreign tax in advance since the amount of the Fund's assets
to be invested in various countries is not known.
Under certain circumstances, the Fund may elect to pass through to its
Shareholders the right to take a credit or a deduction for foreign taxes. But
because the Fund does not expect to have more than 50% of the value of its total
assets at the close of its taxable year in the stock or securities of foreign
corporations, the Fund anticipates that it will not elect to pass through to the
Fund's Shareholders the amount of foreign taxes paid by the Fund.
DISTRIBUTION OF TAX-EXEMPT INTEREST INCOME. If certain conditions are met, the
Fund is permitted to pass through to its Shareholders the tax-exempt character
of the Fund's net income from tax-exempt obligations through the payment of
tax-exempt interest dividends, however, the Fund does not anticipate that it
will derive any tax-exempt income during the foreseeable future.
TREATMENT OF DISTRIBUTIONS. The tax implications arising from distributions by
the Fund
13
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will be treated in the manner described above regardless of whether
such distributions are paid in cash or reinvested in additional Shares of the
Fund. Shareholders receiving a distribution in the form of additional Shares
will be treated as receiving a distribution in an amount equal to the fair
market value of the Shares received, determined as of the date the stock is
credited to the Shareholder's account.
TIMING OF DISTRIBUTIONS. Ordinarily, Shareholders are required to take
distributions by the Fund into account in the year in which the distributions
are made. However, dividends declared in October, November or December of any
year and payable to Shareholders of record on a specified date in such a month
will be deemed to have been received by the Shareholders (and made by the Fund)
on December 31 of such calendar year if such dividends are actually paid in
January of the following year. Shareholders will be advised annually as to the
U.S. federal income tax consequences of distributions made (or deemed made)
during the year.
SHAREHOLDER PURCHASES BEFORE A DISTRIBUTION. Investors who purchase Shares
shortly before the record date for a distribution will pay a share price that
includes the value of the anticipated distribution and will be taxed on the
distribution when it is received even though, with respect to themselves, the
distribution in effect represents a return of a return of capital to the
Shareholder.
DIVIDENDS RECEIVED DEDUCTION. Subject to holding period and other limitations,
With respect to each taxable year, ordinary income dividends paid by the Fund
are expected to qualify for the 70% dividends-received deduction generally
available to corporations (other than corporations such as S corporations) to
the extent of the amount of qualifying dividends received by the Fund from
domestic corporations for the taxable year. Since an insignificant portion, if
any, of the Fund's assets will be invested in stock of foreign corporations, the
ordinary dividends distributed by the Fund generally is expected to qualify for
the dividends-received deduction for corporate Shareholders.
ALTERNATIVE MINIMUM TAX CONSIDERATIONS. Alternative minimum tax ("AMT") is
imposed in addition to, but only to the extent it exceeds, the regular tax and
is computed at a maximum marginal rate of 28% for non-corporate taxpayers and
20% for corporate taxpayers on the excess of the taxpayer's alternative minimum
taxable income ("AMTI") over an exemption amount. For purposes of the corporate
AMT, the corporate dividends-received deduction is not itself an item of tax
preference that must be added back to taxable income or is otherwise disallowed
in determining a corporation's AMTI. However, a corporate Shareholder will
generally be required to take the full amount of any dividend received from the
Fund into account, without a dividends-received deduction, in determining its
adjusted current earnings. Adjusted current earnings is used in computing an
additional corporate preference item (i.e., 75% of the excess of a corporate
taxpayer's adjusted current earnings over its AMTI (determined without regard to
this item and the AMT net operating loss deduction)) includable in AMTI.
ADDITIONAL WITHHOLDING REQUIREMENTS. The Fund will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of ordinary income dividends and
capital gain
14
<PAGE>
dividends, and the proceeds of redemption of Shares, paid to any Shareholder who
is subject to backup withholding.
SALE OR REDEMPTION OF SHARES. A Shareholder will recognize gain or loss on the
sale or redemption of Shares of the Fund in an amount equal to the difference
between the proceeds of the sale or redemption and the Shareholder's adjusted
tax basis in the Shares. In general, any gain or loss arising from (or treated
as arising from) the sale or redemption of Shares of the Fund will be considered
capital gain or loss and will be long-term capital gain or loss if the Shares
were held for longer than one year. All or a portion of any loss so recognized
may be disallowed if the Shareholder purchases other Shares of the Fund within
30 days before or after the sale or redemption.
FOREIGN SHAREHOLDERS. Taxation of a Shareholder who, with respect to the United
States government, is a nonresident alien individual, foreign trust or estate,
foreign corporation, or foreign partnership ("foreign shareholder"), depends on
whether the income from the Fund is "effectively connected" with a U.S. trade or
business carried on by such Shareholder.
If the income from the Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income dividends paid to
a foreign shareholder will be subject to U.S. withholding tax at the rate of 30%
(or lower applicable treaty rate) upon the gross amount of the dividend.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of Shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations or as the case may be.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
Shareholders are therefore urged to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
ADDITIONAL TAX CONSIDERATIONS. In addition to the Federal income tax
consequences described above relating to an investment in the Fund, there may be
other Federal, state, local or foreign tax considerations that depend upon the
circumstances of each particular investor. The foregoing general discussion of
U.S. federal income tax consequences is based on the Code and the Treasury
Regulations issued thereunder as in effect on the date of this SAI. Future
legislative or administrative changes or court decisions may significantly alter
the information above, and any such changes or decisions may have a retroactive
effect. Shareholders should maintain contact with their own tax professional
concerning investment in the Fund.
15
<PAGE>
TRUSTEES AND OFFICERS OF THE FUND
Overall responsibility for management of the Trust rests with the Board of
Trustees, who are elected by the Shareholders of the Fund. The Fund is managed
by the Trustees in accordance with the laws of the State of Delaware. There are
currently 7 Trustees, 4 of whom are not "interested persons" of the Trust within
the meaning of that term under the 1940 Act. The Trustees, in turn, elect the
officers of the Trust to supervise actively its day-to-day operations. The
officers and Trustees of the Trust, addresses, and their business affiliations
for the past five years are as follows:
<TABLE>
<CAPTION>
Name, Age and Position(s) With Principal Occupation
Principal Business Address the Trust During Past 5 Years
- -------------------------- --------- -------------------
<S> <C> <C>
Barry F. Sullivan*(1) age 67 Chief Executive Officer Chief Executive Claremont Investment Partners
Claremont Investment Partners and Trustee (9/98 - Present);
104 Summit Ave. - Box 80 Vice Chairman, Sithe Energies, Inc.(independent power
Summit, NJ 07902-0080 producer; 11/95-present);
Chief Operating Officer, New York City Board of Education
(10/94-10/95);
President & CEO, New York City Partnership (Chamber of
Commerce organization; 1/94-10/94);
Deputy Mayor for Finance /Economics, City of New York
(5/92-12/93)
Gerald P. Sullivan*(1) age 38 President and Trustee President, Claremont Investment Partners (2/96 - present);
Claremont Investment Partners Vice President, First Fidelity Bancorp. (6/95-2/96)
104 Summit Ave. Managing Director, Hilliard Farber & Co. (7/93-6/95)
Summit, NJ 07902-0080 Senior Management Analyst, Atlanta Committee for
the Olympic Games (6/92-7/93)
Mark S. Kaufmann* Chairman, Board 1996 - Present: Chairman, Kaufmann and Partners LLC
age 66 of Trustees (Financial Consulting);
Kaufmann and Partners, LLC 1973-1996: Senior Vice President Chase Manhattan
712 Fifth Avenue, Corporation and Chase Manhattan Bank, N.A.
22nd Floor (Corporate Development)
New York, NY 10019
Seth H. Dubin Trustee Partner, Satterlee, Stephens, Burke & Burke LLP
age 65 (Attorneys-at-Law)
Satterlee, Stephens,
Burke & Burke LLP
230 Park Ave
New York, NY 10169
Robert Lichten Trustee Principal, Inter-Atlantic Group
age 59 (Financial Services)
Inter-Atlantic Group
712 Fifth Ave - 22nd Floor
New York, NY 10019
Fred B. Tarter Trustee Advertising Executive, Stage Bill LLC
age 55
210 E. 39th St.
New York, NY 10016
Thomas Volpe Trustee Senior Vice President, The Interpublic Group of
age 63 Companies, Inc.
The Interpublic Group
of Companies, Inc.
1271 Avenue of the Americas
New York, NY 10020
*Designates a Trustee who is an "interested person" of the Trust within the meaning of the 1940 Act.
16
<PAGE>
(1) Mr. Barry F. Sullivan is the father of Gerald P. Sullivan.
</TABLE>
Trustees of the Fund who are officers of the Adviser are not separately
compensated for their services as Trustees of the Fund. The Trustees and
officers of the Fund are not affiliated with the distributor of the Fund's
Shares. The Fund currently pays each of its non-officer Trustees a fee of $5,000
per year for attendance at meetings (including phone meetings) and reimburses
Trustees for expenses incurred for attendance at meetings. As noted below,
all compensation paid to Trustees is paid by the Adviser and not from Trust
assets.
The Trust does not provide pension or retirement benefits to Trustees or Trust
officers.
The following table indicates the compensation each Trustee is expected to
receive from the Trust, in their capacity as a Trustee, for the 12 month period
ending December 31, 1999.
<TABLE>
<CAPTION>
Pension or Retirement Aggregate Total Compensation
Benefits Accrued as Compensation* Paid to Trustees*
Name, Position Portfolio Expenses
<S> <C> <C> <C>
Barry F. Sullivan $0 $0 $0
CEO and Trustee
Gerald P. Sullivan $0 $0 $0
President and Trustee
Mark S. Kaufmann $0 $5,000 $5,000
Chairman, Board of Trustees
Seth H. Dubin, Trustee $0 $5,000 $5,000
Robert Lichten, Trustee $0 $5,000 $5,000
Fred B. Tarter, Trustee $0 $5,000 $5,000
Thomas Volpe, Trustee $0 $5,000 $5,000
</TABLE>
*All compensation paid to Trustees is paid by the Adviser and not from Trust
assets. For further information concerning payments of Trust expenses, see the
Prospectus under the caption, "Management of the Fund", and this Statement of
Additional Information under the caption "Investment Management and Other
Services."
Trustees may be removed from office at any meeting of Shareholders by a vote of
two-thirds of the outstanding Shares of the Trust. Except as set forth above,
the Trustees shall continue to hold office and may appoint their successors.
In addition to the foregoing compensation provided to Fund Trustees, the Trust
provides elimination of Fund fees and minimum purchase thresholds for Trustees
as a form of additional benefit to the Trustees. In addition to the foregoing
waivers, third party dealers,
17
<PAGE>
brokers and/or financial advisors, may, at their sole discretion, waive all or a
portion of their fees derived from the Fund with respect to purchases of Fund
Shares by persons affiliated and/or unaffiliated with the Fund.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Until its initial public offering, all Shares of the Fund will be held by the
Adviser, Claremont Investment Partners, L.L.C. a Delaware limited liability
company, which may be deemed to control the Fund. The Adviser is controlled by
RoadHouse Capital LLC ("RoadHouse Capital"), a Delaware limited liability
company, which is jointly controlled by Gerald P. Sullivan, President and
Trustee of the Fund, and Barry F. Sullivan, CEO and Trustee of the Fund, through
two special purpose family investment entities (as defined below, the "Family
Interests"). The "Family Interests" controlling RoadHouse Capital are RoadHouse
Group LLC, a Delaware limited liability company, and Sullvesco NJ 1998-II LLC, a
New Jersey limited liability company. Each of the Adviser, RoadHouse Capital and
the Family Interests are located at 104 Summit Avenue, Box 80, Summit, New
Jersey 07902-0080.
As of February 28, 1999 there were no holders of more than 5% ownership of Fund
Shares except for the Adviser who owned 100% of outstanding Fund Shares.
As of February 28, 1999, solely through the Family Interests referenced above,
the officers and Trustees of the Fund as a group beneficially owned 100% of
outstanding Fund Shares.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Fund and the Adviser have entered into an investment management agreement,
dated January 20, 1999, (the "Management Agreement" ) pursuant to which the
Adviser manages the portfolio of securities and investments of the Fund in
accordance with the Fund's investment objectives, strategies and policies, and
advises and assists the Fund with respect to the selection, acquisition, holding
or disposal of securities. In addition to managing the investments, the Adviser
also makes recommendations with respect to other aspects and affairs of the
Fund. The Adviser also furnishes the Fund with certain administrative services,
office space and equipment, and permits its officers and employees who may be
elected Trustees or officers of the Fund to serve in the capacities to which
they are elected without additional compensation from the Fund. All expenses
incurred in the operation of the Fund, except for the Management Fee and the
Rule 12b-1 Distribution Plan fees, are borne by the Adviser. For further
information concerning fees payable by the Fund, see the Prospectus under the
caption, "Fees and Expenses of the Fund."
Pursuant to the Management Agreement, the Fund pays the Adviser a fee at the
annual rate of 0.70% of the average daily net assets of the Fund calculated
daily and payable monthly.
18
<PAGE>
The Management Agreement will continue in effect from year to year if
specifically approved annually by a majority of the Board of Trustees who are
not parties to such contract or "interested persons" of any such party. The
Management Agreement may be terminated without penalty by either party on 60
days' written notice and must terminate in the event of its assignment.
The Management Agreement provides that the Adviser is liable only for its acts
or omissions caused by its willful misfeasance, bad faith or gross negligence in
the performance of its duties or reckless disregard of its obligations under the
Management Agreement. The Management Agreement permits the Adviser to render
services to others and to engage in other activities.
The Adviser may draw upon the resources of the Fund distributor and its
qualified affiliates in rendering its services to the Fund. The distributor or
its affiliates may provide the Adviser (without charge to the Fund) with
investment information and recommendations that may serve as the principal basis
for investment decisions with respect to the Fund.
The Adviser has adopted a code of ethics (the "Ethics Code") that requires all
Advisor personnel to pre-clear any proposed non-exempt personal
securities transaction. Permission for any proposed transaction will be granted
provided it is determined that such transaction would not negatively impact
activity in client accounts. In the event that a client of Adviser's affiliates
also owns such security, or it is proposed that such client purchase such
security, available investments or opportunities for sales will be allocated in
a manner deemed to be equitable by the Adviser.
As set forth above under the caption, "Control Persons and Principal Holders of
Securities", the Adviser is controlled jointly through the Family Interests by
Barry F. Sullivan, who serves as CEO and Trustee of the Fund, and as an officer
and director of the Adviser, and Gerald P. Sullivan, who serves as President of
the Fund and as an officer and director of the Adviser. In addition, the
Prospectus, under the caption, "Management of the Fund", provides detailed
business information concerning the Adviser and Messrs. Sullivan and Sullivan.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Officers and Trustees of the Fund and officers of the Adviser are not officers
or directors of the Fund distributor or its affiliates, or any broker which
engages in the purchase and sale of portfolio securities on behalf of the Fund.
The Officers and Trustees of the Fund do not receive any direct or indirect
benefits from the Fund as a result of the usual and customary brokerage
commissions paid by the Adviser in connection with the purchase and sale of
portfolio securities on behalf of the Fund. The Management Agreement does not
provide for a reduction of the advisory fee by any portion of the fees generated
by portfolio transactions of the Fund which the Fund distributor or any broker
may receive. Pursuant to the Management Agreement, the Adviser pays for all
costs and expenses of the Fund related to portfolio transactions and brokerage
commissions.
19
<PAGE>
Allocation of transactions, including their frequency, to various dealers is
determined by the Adviser in its best judgment and in a manner deemed fair and
reasonable to Shareholders. The primary consideration is prompt and efficient
execution of orders in an effective manner at the most favorable price. Subject
to this consideration, dealers who provide supplemental investment research,
statistical or other services to the Adviser may receive orders for transactions
by the Fund. Information so received will enable the Adviser to supplement its
own research and analysis with the views and information of other securities
firms. Such information may be useful and of value to the Adviser and its
affiliates in servicing other clients as well as the Fund; in addition,
information obtained by the Adviser and its affiliates in servicing other
clients may be useful and of value to the Adviser in servicing the Fund. No
principal transactions are effected with any companies affiliated with the
Adviser. Consideration may be given to research provided and payment may be made
of a fee higher than that charged by another broker-dealer which does not
furnish research services or which furnishes research services deemed to be of
lesser value, so long as the criteria of Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") are met. Section 28(e) of the
1934 Act specifies that a person with investment discretion shall not be "deemed
to have acted unlawfully or to have breached a fiduciary duty" solely because
such person has caused the account to pay a higher commission than the lowest
available under certain circumstances. To obtain the benefit of Section 28(e),
the person so exercising investment discretion must make a good faith
determination that the commissions paid are reasonable in relation to the value
of the brokerage and research services provided viewed in terms of either that
particular transaction or his or her overall responsibilities with respect to
the accounts as to which he exercises investment discretion. Currently, it is
not possible to determine the extent to which commissions that reflect an
element of value for research services might exceed commissions that would be
payable for execution alone, nor generally can the value of research services be
measured.
There are no fixed limitations regarding the turnover rates of the Fund's
portfolio. The turnover rate is calculated by dividing (A) the lesser of
purchases or sales of securities in the Fund's long portfolio for the fiscal
year by (B) the monthly average of the value of portfolio securities owned by
the portfolio during the fiscal year. The Adviser expects that Fund portfolio
turnover rates will be relatively low.
DISTRIBUTOR
The Fund has entered into an agreement with Unified Management Corporation ("the
"Distributor"), dated as of January 20, 1999, which provides for the
distribution by the Distributor of the Fund's Shares. The Distribution Agreement
was approved by the vote of the Trustees on January 20, 1999. The adoption of
the Distribution Agreement included approval by more than a majority of the
Board who are neither "interested persons" of the Fund (as defined in the 1940
Act) nor have any direct or indirect financial interest in the operation of the
Distribution Agreement (the "Qualified Trustees"), by vote cast in person at a
meeting called for the purpose of considering the Distribution Agreement. The
Distribution Agreement is subject to annual approval by the Board of Trustees as
a whole and by a majority of the Qualified Trustees. Pursuant to the
Distribution Agreement, the
20
<PAGE>
Distributor shall act as agent for the distribution of Fund Shares and make a
continuous offering of the Fund's Shares during the term of the Distribution
Agreement. The Distributor is obligated to sell shares of the Fund on a best
efforts basis only against purchase orders for the Shares. The Adviser may, at
its own expense, finance additional activities of the Distributor which are
primarily intended to result in the sale of the Fund Shares, including, but not
limited to, advertising, compensation of underwriters, dealers and sales
personnel, printing and mailing of Fund prospectuses to other than current Fund
Shareholders, and printing and mailing of sales literature. On behalf of the
Fund, the Adviser has agreed to pay the Distributor for its services rendered to
the Fund, a minimum of $6,000 per year against which the portion of sales
charges, if any, and/or Rule 12b-1 fees retained by the Distributor after
payment of amounts reallowed to dealers shall be applied against such minimum.
In addition, the Adviser shall promptly reimburse the Distributor for any
distribution expenses not covered by Rule 12b-1 fees. The term of the
Distribution Agreement is for a one year period which may be renewed upon the
annual review and approval by the Board of Trustees and by a majority of
Qualified Trustees by vote cast in person at a meeting called for such purpose.
The Distribution Agreement provides for indemnification by the Fund of the
Distributor against substantially all types of claims and/or other liabilities
incurred in the course of its duties.
ADMINISTRATOR
The Fund has entered into an agreement with AmeriPrime Financial Services Inc.
(the "Administrator"), dated January 20, 1999 (the "Administration Agreement").
Under the Administration Agreement, the Administrator will assist in the Fund's
administration and operation, including providing statistical and research data,
clerical services, internal compliance and various other administrative and
executive services, participating in the updating of the Prospectus,
coordinating the preparation, filing, printing and dissemination of reports to
Shareholders, coordinating the preparation of income tax returns, arranging for
the maintenance of books and records and providing the office facilities
necessary to carry out the duties thereunder. The Administrator assists in
carrying out all operations of the Fund and coordinating with the Fund's other
service providers, subject to the supervision of the Board (other than those
performed by the Adviser under the Investment Adviser Agreement). For services
rendered to the Fund, the Adviser, on behalf of the Fund, shall pay the
Administrator an asset-weighted fee of 0.07% for the first $150 million in total
Fund assets, 0.05% from $150 million to $250 million in total Fund assets, and
0.04% over $250 million in total Fund assets, provided, however, that the
foregoing shall be subject to a $20,000 annual minimum per Share Class plus
$7,500 per additional Share Class. The Adviser shall also promptly pay out-of-
pocket fees, as well as any additional fees and expenses for supplemental
transactions and expenses incurred in connection with the Administration
Agreement.
Unless sooner terminated, the Administration Agreement will continue in effect
for a period of one year and may be renewed for one year periods thereafter,
provided that such renewal is ratified by the Trustees or by vote of a majority
of the outstanding Shares of Fund, and in either case by a majority of Qualified
Trustees who are not parties to the Administration Agreement or interested
persons (as defined in the 1940 Act) of any party
21
<PAGE>
to the Administration Agreement, by votes cast in person at a meeting called for
such purpose.
TRANSFER AGENT AND FUND ACCOUNTING SERVICES
The Fund has entered into a Mutual Fund Services Agreement with Unified Fund
Services, Inc. ("UFS"), dated January 20, 1999, with respect to the provision to
the Fund of transfer agency services, accounting services and dividend
dispersing services (the "Fund Services Agreement"). UFS has agreed (1) to issue
and redeem Shares of the Fund; (2) to address and mail such communications as
instructed from time-to-time by the Trust to its Shareholders, including reports
to Shareholders, dividend and distribution notices, and proxy material for its
meetings of Shareholders; (3) to respond to correspondence or inquiries by
Shareholders and others relating to its duties; (4) to maintain Shareholder
accounts and certain sub-accounts; (5) to make periodic reports to the Trustees
concerning the Fund's operations (6) provide certain Fund accounting services
pursuant to which the Fund Accountant shall maintains all Fund books and
records, performs daily accounting services, and provide additional Fund
reporting and record keeping functions and (7) serve as the Fund's dividend
disbursing agent and prepare and mail checks, place wire transfers of credit
income and capital gain payments to Fund Shareholders. Under the Fund Services
Agreement, in connection with transfer agency services, the Adviser, on behalf
of the Fund, shall pay to UFS a base fee of $15.60 per Fund account with a
minimum fee of $8,333.33 per Share Class per year. In connection with accounting
services, the Adviser, on behalf of the Fund, shall pay to UFS an asset
weighted fee of 0.05% for the first $150 million in total Fund assets, 0.04%
from 150 million to $250 million in total Fund assets, and 0.03% over $250
million in total Fund assets, provided, however, that the
foregoing shall be subject to a $20,000 annual minimum per Share class plus
$7,500 per additional Share Class. The Adviser, on behalf of the Fund, shall
also promptly pay out-of-pocket fees, as well as any additional fees and
expenses for supplemental transactions and expenses incurred in connection with
the Fund Services Agreement.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan with respect to Class D Shares in
accordance with Rule 12b-1 under the 1940 Act (the "Distribution Plan"). Rule
12b-1 mandates that a mutual fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of such mutual fund except pursuant to a plan adopted by the mutual fund
under Rule 12b-1. The purpose of the Distribution Plan is to compensate certain
financial services organizations, broker-dealers and/or other parties (each, a
"Distribution Organization") for activities which are primarily intended to
result in the sale of the Fund's shares, including, but not limited to the
following: (i) providing distribution assistance relating to the sale of Class D
Shares and (ii) paying for promotional activities intended to result in the sale
of Class D Shares, such as the preparation, printing and distribution of
prospectuses to other than current Fund Shareholders. The Class D Shares pay
a distribution fee at a rate of up to 0.25% per annum of the average daily net
assets of such class. A report of the amounts expended under the Distribution
Plan must be made to, and reviewed by, the Board of Trustees at least quarterly.
22
<PAGE>
The Distribution Plan is subject to annual approval by a majority of the Board
of Trustees, including a majority of the Qualified Trustees, by vote cast in
person at a meeting called for the purpose of voting on the Distribution Plan.
The Distribution Plan is severable with respect to the Class D Shares and any
other Class of Shares which may at any time be offered and included in the
Distribution Plan by the Fund. The Distribution Plan is terminable with respect
to any Fund Class at any time by vote of a majority of the Qualified Trustees or
by vote of a majority of the Shares of such terminating class. Pursuant to the
Distribution Plan, any new Trustees who are not "interested persons" must be
nominated by existing Trustees who are not "interested persons." In addition,
the Distribution Plan provides that it may not be amended to increase materially
any costs which a particular Class of the Fund may bear for distribution
pursuant to the Distribution Plan without Shareholder approval and that other
material amendments to the Distribution Plan must be approved by a majority of
the Board, including a majority of the Qualified Trustees, by vote cast in
person at a meeting called for the purpose of considering such amendments.
Some amounts paid pursuant to the Distribution Plan may from time-to-time be
paid to the Adviser and/or its affiliates for legitimate costs or expenses with
respect to Class D Shares distribution activities. The officers, directors and
employees of the Advisor may therefore be deemed to have a direct or indirect
financial interest in the operation of the Distribution Plan. The Trustees who
are not "interested persons" of the Fund do not have any direct or indirect
financial interest in the operation of the Distribution Plan. Any and all
Distribution Plan payments to the Advisor may be made only with the prior
approval of a majority of Qualified Trustees, who must be provided with
reasonable evidence that such payments were used by the Advisor for legitimate
costs and/or expenses authorized under the Distribution Plan.
Benefits from the Distribution Plan may accrue to the Fund and its Class D
Shareholders from the growth in assets due to sales of Shares to the public
pursuant to the Distribution Plan. Increases in the Fund's net assets from sales
pursuant to its Distribution Plan may benefit Shareholders by reducing per Share
expenses, permitting increased investment flexibility and diversification of the
Fund's assets, and facilitating economies of scale in the Fund's costs. Under
its terms, the Distribution Plan will continue from year to year, provided that
such continuance is approved annually by a vote of the Trustees in the manner
described above.
The adoption of the Distribution Plan was approved by the Board of Trustees,
including a majority of the Qualified Trustees, at a meeting called for such
purpose on January 20, 1999. Prior to approving the adoption of the Distribution
Plan, the Board requested and received from the Distributor all the information
which it deemed necessary to arrive at an informed determination as to such
continuance and adoption of the Distribution Plan. In making its determination
to adopt the Plan, the Board considered, among other factors: (1) comparable
plans in similarly situated mutual funds; (2) the benefits the Fund would be
likely to obtain under the Plan; including the fact that the Plan is necessary
to permit the Fund to operate at its contemplated low management overhead; (3)
the services to be provided under the Plan by the Distributor to the Fund and
its Shareholders; and (4) the reasonableness of the fees to be paid to the
Distributor for its services under the Plan.
23
<PAGE>
Based upon their review, the Board, including each of the Qualified Trustees,
determined that the adoption of the Plan would be in the best interest of the
Fund, and that there was a reasonable likelihood that the Plan would benefit the
Fund and its Shareholders. In the Board's quarterly review of the Plan, the
Trustees will consider its continued appropriateness and the level of
compensation provided therein.
The Board of Trustees has the right to terminate the Distribution Plan for the
Class D Shares, and in the event of such termination, no further payments would
be made thereunder. Termination of the Distribution Plan for the Class D Shares
or the Distribution Agreement does not affect the obligation of the Class D
Shareholders to pay other fees and charges. The Adviser may periodically
reimburse the Fund for all or a portion of Distribution Plan fees in order to
increase the net income of the Fund available for distribution to Class D
Shareholders.
The Board of Trustees has also adopted on January 20, 1999, a multi-class share
plan under Rule 18f-3 of the 1940 Act, permitting the issuance of Shares in
multiple classes.
FUND CUSTODIAN
The Fund has appointed UMB Bank, N.A. (the "Custodian"), located at 928 Grand
Blvd., 10th Floor, Kansas City, Missouri, to serve as the custodian for the
Fund, pursuant to an agreement dated February 1, 1999 (the "Custody Agreement").
Under the Custody Agreement, the Custodian (1) maintains a separate account or
accounts in the name of the Fund; (2) makes receipts and disbursements of money
on behalf of the Fund;(3) collects and receives all income and other payments
and distributions on account of portfolio securities; and (4) responds to
correspondence from security brokers and others relating to its duties. The
Custodian may, with the approval of the Fund and at the Custodian's own expense,
open and maintain a sub-custody account or accounts on behalf of the Fund,
provided that the Custodian shall remain liable for the performance of all of
its duties under the Custody Agreement. The initial Custody Agreement was
approved by a majority of the Qualified Trustees and by the Board of Trustees as
a whole, by vote cast in person at a meeting called for the purpose of
considering the Custody Agreement. The Custody Agreement is subject to annual
approval by the Board of Trustees as a whole and by a majority of the Qualified
Trustees.
For custody services rendered to the Fund, the Adviser shall pay the Custodian
an asset-weighted fee of 1.00 basis point on the first $100,000,000, plus 0.75
basis point on the next $100,000,000, plus 0.50 basis point in excess of
$200,000,000, provided, however, that such fees shall be subject to a $300 per
month minimum per Fund portfolio. The Adviser shall also promptly pay
out-of-pocket fees, as well as any additional fees and expenses for supplemental
transactions and expenses incurred in connection with the Custody Agreement.
THE YEAR 2000 ISSUE
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<PAGE>
The Fund and its service providers, including the Adviser with respect to its
operation of the Strategy Model, have a high degree of reliance on various
computer systems in carrying out their respective business activities. In this
regard, the Fund is aware of the "Year 2000 Issue" which refers to potential
problems which may confront users whose own or dependent computer systems cannot
correctly identify the year 2000. Computer systems that fail to properly
identify the year 2000 could fail or cause miscalculations which disrupt Fund
operations. In the case of the Fund and its service providers, such disruptions
could include pricing errors and account maintenance failures. The Fund is
working with its service providers to ensure reasonable steps are being taken to
address the Year 2000 Issue. The Fund has no reason to believe that these steps
will not be sufficient to avoid any material adverse impact on the Funds,
although there can be no assurance in this regard. The costs or consequences of
incomplete or untimely resolution of the Year 2000 Issue are unknown to the Fund
at this time but could have a material adverse impact on the operations of the
Funds and its service providers. See also the discussion of Year 2000 Issues in
the Prospectus under the caption, "Important Risk Considerations."
INDEPENDENT ACCOUNTANTS
The Fund has appointed McCurdy & Associates, 27955 Clemens Road, Westlake, Ohio
44145, as independent accountants for the Fund. In addition to reporting
annually on the Fund's financial statements, the Fund's accountants also review
certain filings of the Fund with the Securities and Exchange Commission.
LEGAL COUNSEL
Wuersch & Gering LLP, 11 Hanover Square, 21st Floor, New York, New York 10005,
is counsel to the Fund. The firm also acts as counsel to the Adviser.
FUND EXPENSES
Except for management fees and Distribution Plan fees, payable by Fund
Shareholders as set forth in the Prospectus under the caption, "Fees and
Expenses of the Fund", the Advisor has assumed responsibility for the following
expenses relating to the operation of the Fund: interest, taxes, fees and
commissions of every kind; expenses of issue, repurchase or redemption of
Shares; SEC fees, state notification and qualification fees, other costs of
registering or qualifying Shares for sale (including printing costs, legal fees
and other expenses relating to the preparation and filing of the Fund's
registration statement with the appropriate regulatory authorities and the
production and filing of the Fund's Prospectus); costs of insurance; association
membership dues; all charges of custodians, including fees as custodian, escrow
agent, and fees for keeping books and performing portfolio valuations; all
charges of transfer agents, registrars, pricing services, fees and expenses of
independent accountants and legal counsel; other advisory and administrative
fees, expenses of preparing, printing and distributing prospectuses and all
proxy materials, reports and notices to Shareholders; expenses of distribution
of Class D Shares over and above amounts which may be paid pursuant to the
Distribution Plan; out-of-pocket expenses of Trustees and fees, costs and
expenses related to meetings of the Trustees; fees
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of Trustees who are not officers of the Fund; costs of Shareholders' reports and
meetings, other costs incident to the Fund's existence as a business trust and
any extraordinary expenses incurred in the Fund's operation.
DESCRIPTION OF FUND SHARES
The Trust is a Delaware business trust that was formed on December 13, 1995. The
Trust Instrument authorizes the Board to issue an unlimited number of Shares,
which are units of beneficial interest, without par value. The Trust presently
has two classes of Shares which represent interests in the Fund.
The Trust Instrument authorizes the Board to divide or redivide any unissued
Shares of the Trust into one or more additional series by setting or changing in
any one or more aspects their respective preferences, conversion or other
rights, voting power, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption. The Fund currently offers two share
classes:
(1) Class D, designed to be sold primarily to advised investors and
self-directed investors; and
(2) Class I, designed to be sold primarily to institutions investing at
least $500,000.
The Fund may, in its discretion, instruct the Distributor to
sell Class I Shares to non-institutional investors who invest at least $500,000,
provided, however, that the Fund's officers may waive the initial and subsequent
investment minimums for certain purchases when they deem it appropriate,
including, but not limited to, purchases by Trustees of the Fund and the
Advisor's officers, directors, employees and agents.
Shares have no subscription or preemptive rights and only such conversion or
exchange rights as the Board may grant in its discretion. When issued for
payment as described in the Prospectus and this SAI, the Trust's Shares will be
fully paid and non-assessable. In the event of a liquidation or dissolution of
the Trust, Shares of the Fund are entitled to receive the assets available for
distribution belonging to the Fund.
Shares of the Trust are entitled to one vote per share (with proportional voting
for fractional Shares) on such matters as Shareholders are entitled to vote.
Shareholders vote as a single class on all matters except (1) when required by
the 1940 Act, Shares shall be voted by individual class, and (2) when the
Trustees have determined that the matter affects only the interests of one or
more classes, then only Shareholders of such class shall be entitled to vote
thereon. There will normally be no meetings of Shareholders for the purpose of
electing Trustees unless and until such time as less than a majority of the
Trustees have been elected by the Shareholders, at which time the Trustees then
in office will call a Shareholders' meeting for the election of Trustees within
60 days. A meeting shall be held for such purpose upon the written request of
the holders of not less than 10% of the outstanding Shares. Upon written request
by ten or more Shareholders meeting the qualifications of Section 16(c) of the
1940 Act (i.e., persons who have been Shareholders
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for at least six months, and who hold Shares having a net asset value of at
least $25,000 or constituting 1% of the outstanding Shares) stating that such
Shareholders wish to communicate with the other Shareholders for the purpose of
obtaining the signatures necessary to demand a meeting to consider removal of a
Trustee, the Trust will provide a list of Shareholders or disseminate
appropriate materials (at the expense of the requesting Shareholders). Except as
set forth above, the Trustees shall continue to hold office and may appoint
their successors.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
to the holders of the outstanding voting securities of an investment company
such as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding Shares of each class
affected by the matter. For purposes of determining whether the approval of a
majority of the outstanding Shares of a class will be required in connection
with a matter, the class will be deemed to be affected by a matter unless it is
clear that the interests of each class in the matter are identical, or that the
matter does not affect any interest of the class. Under Rule 18f-2, the approval
of an investment advisory agreement or any change in investment policy would be
effectively acted upon with respect to a class only if approved by a majority of
the outstanding Shares of such class. Rule 18f-2 also provides that the
ratification of independent accountants, approval of principal underwriting
contracts, and election of Trustees may be effectively acted upon by
Shareholders of the Trust voting without regard to class.
SHAREHOLDER AND TRUSTEE LIABILITY
The Trust is organized as a Delaware business trust. The Delaware Business Trust
Act provides that a Shareholder of a Delaware business trust shall be entitled
to the same limitation of personal liability extended to Shareholders of
Delaware corporations, and the Trust Instrument provides that Shareholders of
the Trust shall not be liable for the obligations of the Trust. The Trust
Instrument also provides for indemnification out of Trust property of any
Shareholder held personally liable solely by reason of his or her being or
having been a Shareholder. The Trust Instrument also provides that the Trust
shall, upon request, assume the defense of any claim made against any
Shareholder for any act or obligation of the Trust, and shall satisfy any
judgment thereon. Therefore, it is unlikely that a Shareholder bears any
significant risk of financial loss with respect to Shareholder liability.
The Trust Instrument states further that no Trustee, officer, or agent of the
Trust shall be personally liable in connection with the administration or
preservation of the assets of the Fund or the conduct of the Trust's business;
nor shall any Trustee, officer, or agent be personally liable to any person for
any action or failure to act except for his or her own bad faith, willful
misfeasance, gross negligence, or reckless disregard of his or her duties. The
Trust Instrument also provides that all persons having any claim against the
Trustees or the Trust shall look solely to the assets of the Trust for payment.
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INDUSTRY LEADERS FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 26, 1999
ASSETS:
Cash in Bank $100,000
Total Assets $100,000
LIABILITIES: $ 0
Total Liabilities $ 0
NET ASSETS $100,000
NET ASSETS CONSIST OF:
Capital Paid In $100,000
OUTSTANDING SHARES
Unlimited Number of Shares
Authorized Without Par Value-Class D 5,000
Authorized Without Par Value-Class I 5,000
NET ASSET VALUE PER SHARE-CLASS D $10
NET ASSET VALUE PER SHARE-CLASS I $10
OFFERING PRICE PER SHARE-CLASS D $10
OFFERING PRICE PER SHARE-CLASS I $10
MAXIMUM REDEMPTION PRICE PER SHARE-CLASS D $ 9.925
MAXIMUM REDEMPTION PRICE PER SHARE-CLASS I $10
See Accountants' Audit Report
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INDUSTRY LEADERS FUND
NOTES TO FINANCIAL STATEMENTS
February 26, 1999
1. ORGANIZATION
Industry Leaders Fund (the "Trust") is an open-end management investment company
organized as a business trust under the laws of the State of Delaware by a
Declaration of Trust dated December 13, 1998. The Declaration of Trust provides
for an unlimited number of authorized shares of beneficial interest without par
value, which may, without shareholder approval, be divided into an unlimited
number of series of such shares, and which presently consist of two series of
shares for the Industry Leaders Fund (the "Fund").
The Fund uses an independent custodian and transfer agent. No transactions other
than those relating to organizational matters and the sale of 10,000 Shares of
the Industry Leaders Fund have taken place to date.
The investment objective of the Fund is long term capital appreciation.
2. RELATED PARTY TRANSACTIONS
As of February 26, 1999, all of the outstanding shares of the Fund were owned by
Claremont Investment Partners, L.L.C. A shareholder who beneficially owns,
directly or indirectly, more than 25% of the Fund's voting securities may be
deemed a "control person" (as defined in the 1940 Act) of the Fund.
Claremont Investment Partners, L.L.C., the Fund's investment adviser and
administrator, is registered as an investment adviser under the Investment
Advisers Act of 1940. Claremont Investment Partners, L.L.C. is controlled by
Gerald P. Sullivan and Barry F. Sullivan who are also officers and trustees of
the Fund.
As adviser, Claremont Investment Partners, L.L.C. receives from the Fund as
compensation for its services to the Fund an annual fee of 0.70% of the Fund's
net assets. The fee is paid monthly and calculated on the average daily closing
net asset value of the Fund.
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All expenses incurred in the operation of the Fund, except for the management
fee and the Rule 12b-1 distribution plan fees are borne by the adviser.
3. DISTRIBUTION PLAN
The Fund has adopted a distribution plan with respect to Class D shares in
accordance with Rule 12b-1 under the 1940 Act. The Class D shares pay a
distribution fee at a rate of up to 0.25% per annum of the average daily net
assets of such class.
4. REDEMPTION FEES
The Class D shares carry a 0.75% redemption fee if sold within six months of
purchase. The redemption fee is charged at a percentage of an amount equal to
the lesser of the net asset value at the time of purchase of the shares being
redeemed or the net asset value of such shares at the time of redemption.
INDUSTRY LEADERS FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 26, 1999
5. CAPITAL STOCK AND DISTRIBUTION at February 26 1999, an unlimited number of
shares were authorized and paid in capital amounted to $100,000 for the Industry
Leaders Fund. Transactions in capital stock were as follows:
Shares Sold:
Industry Leaders Fund-Class D 5,000
Industry Leaders Fund-Class I 5,000
Shares Redeemed:
Industry Leaders Fund-Class D 0
Industry Leaders Fund-Class I 0
Net Increase:
Industry Leaders Fund-Class D 5,000
Industry Leaders Fund-Class I 5,000
Shares Outstanding:
Industry Leaders Fund-Class D 5,000
Industry Leaders Fund-Class I 5,000
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To The Shareholders and Trustees
Industry Leaders Fund:
We have audited the accompanying statement of assets and liabilities of the
Industry Leaders Fund as of February 26, 1999. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. Our procedures included
confirmation of cash held by the custodian as of February 26, 1999, by
correspondence with the custodian. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the
Industry Leaders Fund as of February 26, 1999, in conformity with generally
accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
February 26, 1999
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[BACK COVER OF SAI]
The Trust is registered with the Securities and Exchange Commission (the
"Commission") as an open-end management investment company. The Commission
does not supervise the management or policies of the Trust.
The Prospectus and this SAI do not include certain information contained in the
registration statement filed with the Commission. Copies of such information
may be obtained from the SEC upon payment of the prescribed fee.
THE PROSPECTUS AND THIS SAI DO NOT CONSTITUTE AN OFFERING OF THE SECURITIES
DESCRIBED IN THESE DOCUMENTS IN ANY STATE IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. NO SALESPERSON, DEALER, OR ANY OTHER PERSON IS AUTHORIZED TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN
THE PROSPECTUS AND THIS SAI.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectus do not contain all
the information included in the Registration Statement filed with the Commission
under the 1933 Act with respect to the securities offered by the Prospectus. The
Registration Statement, including the exhibits filed therewith, may be examined
at the office of the Commission in Washington, D.C.
Statements contained in this Statement of Additional Information and the
Prospectus as to the contents of any contract or other document are not complete
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement of which this
Statement of Additional Information and the Prospectus form a part, each such
statement being qualified in all respects by such reference.
