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As filed with the Securities and Exchange Commission on April 1, 1996
Securities Act Registration No. 33 -_______________
Investment Company Registration No. 811 -__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ________________ [ ]
Post-Effective Amendment No.________________ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. ______________
(Check appropriate box or boxes)
MEYERS SHEPPARD INVESTMENT TRUST
(A DELAWARE BUSINESS TRUST)
(Exact Name of Registrant as Specified in Charter)
9107 WILSHIRE BOULEVARD, SUITE 700
BEVERLY HILLS, CALIFORNIA 90210
(Address of Principal Executive Offices)
(310) 288-3720
(Registrant's Telephone Number, including Area Code)
SHELLY J. MEYERS
9107 WILSHIRE BOULEVARD, SUITE 700
BEVERLY HILLS, CALIFORNIA 90210
(Name and Address of Agent for Service)
With Copies to:
JOHN M. WOODBURY, JR., ESQ. BETH R. KRAMER, ESQ.
ANDREW F. POLLET, ESQ. MAYER, BROWN & PLATT
POLLET & WOODBURY 1675 BROADWAY, SUITE 1900
10900 WILSHIRE BOULEVARD, SUITE 500 NEW YORK, NEW YORK 10019
LOS ANGELES, CALIFORNIA 90024
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/X/ 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of rule 485
Pursuant to Rule 24f-2(a)(1) under the Investment Company Act of 1940,
Registrant hereby declares that an indefinite number of its Shares of Beneficial
Interest (par value $0.00001 per share) is being registered by this registration
statement.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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MEYERS SHEPPARD PRIDE FUND
CROSS REFERENCE SHEET
Pursuant to Rule 495
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PART A. LOCATION IN PROSPECTUS
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Item 1 Cover Page..................................... Front Cover Page
Item 2. Synopsis....................................... Prospectus Summary; Expense Summary
Item 3. Condensed Financial Information................ Not Applicable
Item 4. General Description of Registrant.............. Front Cover Page; Prospectus Summary; Investment Objective and
Policies
Item 5. Management of the Fund......................... Prospectus Summary; Management; Inside Back Cover Page;
Other Information Concerning Shares of the Fund
Item 5A. Management's Discussion of Fund Performance.... Not Applicable
Item 6. Capital Stock and Other Securities............. Other Information Concerning Shares of the Fund;
Tax Matters
Item 7. Purchase of Securities Being Offered........... Purchases and Redemptions of Shares; Other Information
Concerning Shares of the Fund;
Item 8. Redemption or Repurchase....................... Purchases and Redemption of Shares
Item 9. Pending Legal Proceedings...................... Not Applicable
PART B LOCATION IN STATEMENT OF ADDITIONAL
INFORMATION
Item 10. Cover Page..................................... Front Cover Page
Item 11. Table of Contents.............................. Front Cover Page
Item 12. General Information and History................ The Fund
Item 13. Investment Objective and Policies.............. Investment Objective, Policies and Restrictions
Item 14. Management of the Fund......................... Management of the Trust and the Fund
Item 15. Control Persons and Principal Holders of
Securities..................................... Management of the Trust and the Fund
Item 16. Investment Advisory and Other Services......... Management of the Trust and the Fund; Independent
Auditors
Item 17. Brokerage Allocation and Other Practices....... Fund Transactions and Brokerage Commissions
Item 18. Capital Stock and Other Securities............. Description of Shares, Voting Rights and Liabilities
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered.................................. Determination of Net Asset Value; Valuation of
Fund Securities
Item 20. Tax Status..................................... Taxation
Item 21. Underwriter.................................... Management of the Trust and the Fund -- Distributor
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Item 22. Calculation of Performance Data................. Performance Information
Item 23. Financial Statements........................... Financial Statements*
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PART C.
Information required to be included in Part C is set forth under the
appropriately numbered item in Part C of this registration statement.
* To be supplied by amendment prior to the effective date of this Registration
Statement.
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THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE , 1996
MEYERS SHEPPARD PRIDE FUND
The Meyers Sheppard Pride Fund (the "Fund") is organized as a separate
series of the Meyers Sheppard Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware. The Fund is an open-ended
no-load diversified mutual fund whose overall investment objective is to obtain
greater than average long-term capital appreciation through investing in a
diversified portfolio of equity securities of under-valued but nevertheless
fundamentally sound companies identified as generally having progressive
policies towards gays and lesbians, but at a minimum having in place
specifically stated policies against discrimination in hiring and promotion
based upon sexual orientation. There can be no assurance that the Fund will
achieve its investment objective.
The Investment Manager for the Fund is Meyers, Sheppard & Co., LLC, a
California limited liability company. Furman Selz LLC, a Delaware limited
liability company, provides the Fund with administrative, fund accounting,
dividend disbursing and transfer agency services. Furman Selz LLC also acts as
the Fund's Distributor. The Custodian of the Fund is Wells Fargo Bank, N.A..
This Prospectus sets forth concisely the information concerning the Fund
that a prospective investor should know before investing. Investors should read
this Prospectus and retain it for future reference.
The Fund has filed with the Securities and Exchange Commission a Statement
of Additional Information, dated June , 1996, as amended from time to time,
which contains more detailed information about the Fund and the Trust and is
incorporated into this Prospectus by reference. An investor may obtain a copy of
the Statement of Additional Information without charge by contacting Furman Selz
LLC, the distributor of the Fund (see the inside back cover page of this
Prospectus for address and phone number).
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK OR OTHER DEPOSITORY INSTITUTION, AND THE SHARES ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
FEDERAL, STATE OR OTHER GOVERNMENTAL AGENCY.
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.
June , 1996
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TABLE OF CONTENTS
Page
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Prospectus Summary ....................................................... 3
Expense Summary .......................................................... 5
Investment Objective and Policies......................................... 6
Risk Factors.............................................................. 9
Management................................................................ 10
Purchases and Redemptions of Shares....................................... 13
Tax Matters............................................................... 17
Other Information Concerning Shares of the Fund........................... 18
Performance Information................................................... 19
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PROSPECTUS SUMMARY
WHAT IS THE FUND
The Meyers Sheppard Pride Fund (the "Fund") is organized as a separate
series of the Meyers Sheppard Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware on March 26, 1996. The Fund is
an open-ended no-load diversified management investment company whose overall
investment objective is to obtain greater than average long-term capital
appreciation through investing in a diversified portfolio of equity securities
of under-valued but nevertheless fundamentally sound companies identified by the
Investment Manager as generally having progressive policies towards gays and
lesbians, but at a minimum having in place specifically stated policies against
discrimination in hiring and promotion based upon sexual orientation.
The Fund is the first series to be established under the Trust. As a
diversified fund, the Fund is required, by the Investment Company Act of 1940,
as amended (the "Investment Company Act"), with respect to 75% of its assets, to
invest no more than 5% of its assets into the securities of any one issuer, and
not more than 10% of the outstanding voting securities of an issuer may be
owned.
The Fund's investment objective and policies, including the identification
of publicly-traded companies which have progressive policies towards gays and
lesbians, are determined by the Investment Manager of the Fund, subject to the
Board of Trustees providing broad supervision over the affairs of both the Fund
and the Trust. The determination of which companies have progressive policies
toward gays and lesbians is based upon criteria determined from time-to-time by
the Investment Manager and approved by the Board of Trustees. The Investment
Manager has, to date, identified 225 publicly-traded companies meeting this
criteria. For further information about the Board of Trustees, see "Management
of the Fund" in the Statement of Additional Information. A majority of the Board
of Trustees are not affiliated with the Investment Manager.
WHO IS THE FUND'S INVESTMENT MANAGER
The Investment Manager of the Fund, Meyers, Sheppard & Co. LLC, a
California limited liability company ("Meyers Sheppard") serves as the Fund's
manager and investment adviser pursuant to an Investment Management Agreement.
The Investment Manager supervises (subject to the overall authority of the Board
of Trustees) the overall administration of the Fund, including its various
agents and services providers, including those providing distribution, fund
accounting, dividend disbursement, transfer agent and custodian services. The
Investment Manager also manages the investments of the Fund on a day to day
basis in accordance with the Fund's investment objective and policies, and
social criteria, and determines the composition of the securities in which the
Fund may invest (i.e., those companies identified as having anti-discrimination
policies in place and demonstrating other progressive policies towards gays and
lesbians). For its investment management and advisory services, the Investment
Manager receives from the Fund a monthly fee equal, on an annual basis, to 1% of
the Fund's average daily net assets, which fee is higher than that paid by most
mutual funds. See "Management" herein.
HOW DO YOU PURCHASE AND REDEEM SHARES OF THE FUND
Shares of the Fund are sold continuously by the Distributor of the Fund,
Furman Selz LLC ("Furman Selz"), at the next determined net asset value per
share. The minimum initial investment in the Fund is $1,000, and subsequent
investments are $100. A lower initial investment of $500 is permitted for
Automatic Investment Plans, with subsequent investments allowed at a minimum of
$50. The Trust, on behalf of the Fund, has adopted a Distribution Plan which
permits reimbursement of certain expenses incurred by the Distributor in
connection with the distribution of shares of the Fund, up to a maximum of 0.25%
of net asset value annually. See "Distribution Plan and Agreement" herein.
The Fund offers to redeem shares of the Fund from its shareholders at any
time at next determined net asset value per share. The redemption price may be
more or less than the purchase price.
No sales load is charged with respect to either the purchase or redemption
of Fund shares. An investor should contact the Distributor regarding any
further information describing the procedures under which Fund shares may be
purchased and redeemed. See "Purchases and Redemptions" herein.
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WHEN DOES THE FUND PAY DIVIDENDS AND MAKE DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income and
capital gains annually, generally in December. Dividends or distributions
declared in December but actually paid the following January will be includable
in an investor's income as of the record date (usually in December) of such
dividends or distributions. See "Taxation" herein.
ADMINISTRATIVE SERVICES
Furman Selz also provides administrative, fund accounting, and dividend
disbursing, registrar and transfer agency services to the Fund and, in
connection therewith, is paid the following fees: (i) for administrative
services, per year, 0.15% of the first $100 million in aggregate Fund assets,
0.10% for the next $400 million, 0.07% for the next $500 million, and 0.06% for
aggregate Fund assets in excess of $1 billion; (ii) for fund accounting, $35,000
per year plus reimbursement of out-of-pocket expenses; and (iii) for dividend
disbursing and transfer agency services, $15 per year per each shareholder,
subject to a $12,000 per year minimum. Furman Selz shall receive a minimum of
$150,000 per year for provision of the aforesaid services, which fee is higher
than that paid by most mutual funds. See "Management" herein.
RISK FACTORS
There can be no assurance that the Fund will be able to achieve its
investment objective. Since the Fund will limit its investments to equity
securities of companies which have anti-discrimination policies in place and
demonstrate other progressive policies towards gays and lesbians, such social
policy will tend to limit the availability of investment opportunities to the
Fund compared to that for other investment companies that have a comparable
investment objective to that of the Fund. See "Investment Objective and
Policies" herein.
Common stocks, the most familiar type of equity securities, represent an
equity (ownership) interest in a corporation. Although equity securities have a
history of long-term growth in value, their prices fluctuate based on changes in
a company's financial condition and on overall market, economic and political
conditions. Smaller companies are especially sensitive to these factors.
Investments of the Fund's assets in "illiquid securities," i.e., securities
that are restricted in their transfer or for which market quotations are
otherwise not readily available or repurchase agreements over seven days, may
restrict the ability of the Fund to dispose of its investments in a timely
fashion and for a favorable price. The risks associated with illiquidity are
particularly acute in situations in which the Fund's operations require cash,
such as when the Fund redeems for shares of beneficial interests or pays
distributions, and may result in the Fund borrowing to meet short-term cash
requirements or incurring capital losses on the sale of such investments.
As a recently created entity, the Trust will be subject to all the risks
incident to the creation of a new business, including the absence of a history
of operation, and there can be no guarantee that the investment objective of the
Fund will be attained.
There are market risks inherent in any investment, and there is no
assurance that the primary investment objective of the Fund will be achieved or
that any income will be earned. Moreover, the application of the investment
policies is dependent upon the judgment of the Investment Manager. A prospective
purchaser of shares of the Fund should realize there are risks in any policy
dependent upon such judgment and that no representation is made that the
objective of the Fund will be accomplished or that there may not be substantial
loses in any particular investment. At any time, the value of the Fund's shares
may be more or less than the cost of such shares to the investor.
Some of the stocks included in the Fund may be those of foreign issuers
(provided that the stocks are publicly-traded in the United States in the form
of American Depositary Receipts or similar instruments the market for which is
denominated in United States dollars). Securities of foreign issuers may
represent a greater degree of risk (e.g., as a result of exchange rate
fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers. See "Risk Factors" herein.
4
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EXPENSE SUMMARY
The following table provides a summary of estimated Shareholder
Transaction Expenses relating to purchases and sales of shares of the Fund,
and the aggregate Annual Operating Expenses for the Fund, which an investor
will directly or indirectly incur as a shareholder of the Fund. All of the
Fund's Annual Operating Expenses are paid out of the Fund's assets.
<TABLE>
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SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases............................. None
Sales Load Imposed on Reinvested Dividends ......................... None
Deferred Sales Load Imposed on Redemptions.......................... None
Exchange Fees....................................................... None
----
Total Shareholder Transaction Expenses......................... None
====
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
Investment Management Fees(1)...................................... 1.00%
Distribution 12b-1 Fees(2)......................................... 0.25%
Other Expenses (estimated, after expense reimbursements)(3)........ 0.75%
Total Annual Operating Expenses.................................... 2.00%
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- ----------------------
(1) The Fund will pay the Investment Manager, Meyers Sheppard, a
monthly fee equal, on an annual basis, to 1.0% of the Fund's average daily net
assets, which fee is higher than that paid by most mutual funds. The Investment
Manager reserves the right at any time to reduce and/or waive all or part of
its investment management fee.
(2) Pursuant to the terms of the Distribution Plan, the Fund will pay
its Distributors, Furman Selz, up to 0.25% of the Fund's average daily net
assets in reimbursement of, or in anticipation of, expenses incurred by the
Distributor in connection with the sale of shares of the Fund. A long-term
shareholder in the Fund may, as a result of the Distribution Plan, pay more than
the economic equivalent of the maximum distribution charges permitted by the
rules of the National Association of Securities Dealers, Inc. See "Management"
herein.
(3) As of the date of this Prospectus, the Fund has not commenced
operations. The amount set forth under "Other Expenses" for the Fund is
therefore based on estimates for the first fiscal year. "Other Expenses" include
fees to be paid to Furman Selz for administrative, fund accounting, dividend
disbursing, transfer agency, custodian, and other customary fund expenses are as
follows: (i) for administrative services, per year, 0.15% of the first $100
million in aggregate Fund assets, 0.10% for the next $400 million, 0.07% for the
next $500 million, and 0.06% for aggregate Fund assets in excess of $1 billion;
(ii) for fund accounting, $35,000 per year plus reimbursement of out-of-pocket
expenses; and (iii) for dividend disbursing and transfer agency services, $15
per year per each shareholder, subject to a $12,000 per year minimum. Furman
Selz shall receive a minimum of $150,000 per year for provision of the aforesaid
services, which fee is higher than that paid by most mutual funds. As
compensation for its services as Custodian, the Fund pays Wells Fargo, per year,
an amount equal to 0.10% of the first $10 million in aggregate Fund assets,
0.08% for the next $10 million, 0.06% for the next $55 million, and 0.0 % for
aggregate Fund assets in excess of $75 million. Furman Selz reserves the right
at any time to reduce and/or waive all or part of such fees. See "Management"
herein.
EXAMPLE:
A shareholder of the Fund would pay the following estimated expenses on a
$1,000 investment in the Fund, assuming (i) 5% annual return and (ii) redemption
at the end of each time period:
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1 year ..................................................... $
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3 years..................................................... $
-------
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The Example set forth above is hypothetical and should not be
considered a representation of past or future expenses of the Fund. Moreover,
the Fund's actual performance will vary and may result in actual returns that
are greater or less than 5%. The foregoing table has not been audited by the
Fund's independent accountants. For more information with respect to the
expenses of the Fund, see "Management" herein.
5
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INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE AND SOCIAL OBJECTIVE
The overall investment objective of the Fund (the "Investment Objective")
is to afford greater than average capital appreciation, by investing in a
diversified portfolio of equity securities of undervalued but nevertheless
fundamentally sound companies which have been identified as having met the
Social Objective. The "Social Objective" is defined as companies which, in
general, have been identified as having progressive policies towards gays and
lesbians, but at a minimum have in place specifically stated policies against
discrimination in hiring and promotion based upon sexual orientation (the
"Fundamental Social Criteria").
The Fund believes that enterprises which exhibit a social awareness of gay
and lesbian issues should be better prepared, than those companies that do not,
to meet future social needs for goods and services, and may also be less likely
to incur certain legal liabilities that may be incurred when an enterprise is
found to discriminate against the gay and lesbian community. Such enterprises
should over the longer term be able to generate additional goodwill and
stockholder value as an indirect result of the greater investment in such
enterprises, through the Fund, by the gay and lesbian community, which, per
capita, is one of the wealthiest demographic groups in the United States, and
the supporters of the gay and lesbian community.
INVESTMENT STRATEGY
In order to achieve the Investment Objective, the Fund will use a
value-based investment approach focusing on a longer-term market cycle
(at least three to five years), consistent with moderate levels of risk,
wherein the Investment Manager will identify publicly-traded companies
exhibiting the following investment characteristics: (i) low or inexpensive
current value relative to earnings estimates, cash flow, book value and/or
break-up value, (ii) good management, (iii) strong business fundamentals, and
(iv) positive earnings momentum and price performance.
The equity securities the Fund may invest in include common stocks,
preferred stocks and warrants, and certain debt instruments convertible into
stock. Publicly-traded companies refers to companies whose equity securities
are traded over a national stock exchange or over-the-counter through NASDAQ
or the NASD Electronic Bulletin Board.
Since it is anticipated that most equity securities will be held for the
longer-term using this strategy, the Investment Manager anticipates there will
likely be a low rate of portfolio turnover, and estimates portfolio turnover in
the first year of the Fund will be approximately 20% to 40%.
IDENTIFICATION OF COMPANIES WHICH SATISFY SOCIAL OBJECTIVE
The determination of which companies have satisfied the Social Objective,
and may therefore be considered as appropriate investment vehicles for the Fund,
is based upon recommendations of the Investment Manager and approval by the
Board of Trustees. As of the date of this Prospectus, 225 companies have been
identified as having satisfied the Social Objective.
In making its recommendations, the Investment Manager evaluates companies
based upon (i) the Fundamental Social Criteria and (ii) such additional criteria
and considerations consistent with the Social Objective as are determined
reasonable by the Investment Manager from time-to-time in its sole discretion,
and approved in general by the Board of Trustees. Such methodology is, by its
nature, subjective.
As of the date of this Prospectus, the social criteria (other than the
Fundamental Social Criteria) consists of two separate areas of general focus,
employee relations and corporate citizenship.
In evaluating a company's gay and lesbian employee relations, the
Investment Manager evaluates the company's record and policies with respect to
labor matters affecting gay and lesbian employees, such as: (i) the company's
commitment to equal employment opportunity for gays and lesbians (reflected, for
example, in the number of gays and lesbians employed overall and the number of
gays and lesbians in executive positions) and the scope of the company's
policies against discrimination based upon sexual orientation; (ii) the breadth,
quality and innovation of the company's employee benefit programs and their
positive effect on gay lesbian employees
6
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(including inclusion of gay and lesbian partners and families in employee
benefit programs); and (iii) the company's relationships with gay and lesbian
suppliers, vendors, and customers.
In evaluating a company's corporate citizenship, the Investment Manager
reviews the company's record on gay and lesbian related charitable giving and
other philanthropic activities and its interaction with the gay and lesbian
community, such as advertising in gay and lesbian directed publications or other
media.
It is not necessary that a company satisfy all of the factors and
considerations described above relating to a company's employee relations and
corporate citizenship in order to be identified as having satisfied the Social
Objective. However, every company must satisfy the Fundamental Social Criteria
in order to be included on the list of approved companies.
The Investment Manager uses publicly available information in evaluating
companies, including information provided by the Human Rights Campaign and the
National Gay and Lesbian Task Force. The Investment Manager also directly
reviews company policies and, in certain cases, discusses those policies with
the company's management.
The Investment Manager intends to vote proxies of companies included in the
Fund consistent with the Social Objective. The inclusion of a company on the
Fund's list of approved companies with progressive policies towards gays and
lesbians does not imply that the company has requested it be included on the
list or approved such inclusion, has sought the approval of the Fund with
respect to the development and implementation of the company's employment or
corporate citizenship policies, or is affiliated with the Fund in any manner.
INVESTMENT POLICIES
The Fund will diversify its holdings to reduce the risks of investing. As
a diversified Fund, the Fund is required, by the Investment Company Act with
respect to 75% of its assets, to invest no more than 5% of its assets into the
securities of any one issuer and not more than 10% of the outstanding voting
securities of an issuer may be owned. In addition, the Fund may not invest more
than 25% of its total assets in any one industry.
The Fund may not invest more than 15% of its net assets in securities that
are illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale (including repurchase agreements which have a
maturity of longer than seven days). Securities that have legal or contractual
restrictions on resale but have a readily available market are not considered
illiquid for purposes of this limitation.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
securities which are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the Securities Act are referred to as privately placed or
restricted securities and are purchased directly from the issuer or in the
secondary market. Mutual funds do not typically hold a significant amount of
these restricted or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
Restricted securities include those that are subject to restrictions
contained in the securities laws of other countries. However, securities that
are freely marketable in the country in which they are principally traded would
not be considered illiquid. The Fund will treat any securities that are held in
countries with restrictions on repatriation of more than seven days, as illiquid
securities for purposes of the 15% limitation.
In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.
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Rule 144A under the Securities Act establishes a "safe harbor" from the
registration requirements of the Securities Act for resales to qualified
institutional buyers of certain securities otherwise subject to restriction on
resale to the general public. The Investment Manager anticipates that the market
for certain restricted securities will expand further under Rule 144A as a
result of the development of automated systems for the trading, clearance and
settlement of unregistered securities of domestic and foreign issuers, such as
the PORTAL System sponsored by the National Association of Securities Dealers,
Inc. (the "NASD").
The Investment Manager will monitor the liquidity of restricted securities
in the Fund under the supervision of the Board of Trustees. In reaching
liquidity decisions, the Investment Manager may consider, inter alia, the
following factors: (1) the unregistered nature of the security; (2) the
frequency of trades and quotes for the security; (3) the number of dealers
wishing to purchase or sell the security and the number of other potential
purchasers; (4) dealer undertakings to make a market in the security; and (5)
the nature of the security and the nature of the marketplace trades (e.g., the
time needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer).
The Fund may invest cash reserves in direct obligations and/or short-term
debt securities (i.e., securities having a remaining maturity of one year or
less) issued by agencies or instrumentalities of the United States Government,
bankers' acceptances, commercial paper or certificates of deposit, provided that
the issuer satisfies the Social Objective of the Fund. Although the U.S.
government provides financial support to U.S. government sponsored agencies or
instrumentalities, no assurance can be given that it will always do so. The U.S.
government and its agencies and instrumentalities do not guarantee the market
value of their securities; consequently, the value of such securities will
fluctuate. The Fund's policy is to hold its assets in such securities pending
readjustment of its portfolio holdings of stocks in order to meet anticipated
redemption requests.
The Fund will readjust its securities holdings periodically to the extent
the Investment Manager deems it prudent to do so, and subject to the overall
supervision and approval of the Board of Trustees. The timing and extent of
adjustments in the holdings of the Fund will reflect the Investment Manager's
judgment as to (i) the appropriate portfolio mix to achieve the investment
performance objective of the Fund, (ii) the appropriate balance between the goal
of correlating the holdings of the Fund with its Social Objective, (iii) the
goals of minimizing transaction costs and keeping sufficient reserves available
for anticipated redemptions of shares, and (iv) compliance with certain
restrictions of the Fund imposed by the Fund's investment policies, including
those mandated by the Investment Company Act. See "Fundamental Policies and
Restrictions" herein. There can be no assurance that any portfolio enhancement
strategies will be successful, and the performance of the Fund may as a result
be worse than if such strategies were not undertaken. The Board of Trustees of
the Fund will receive and review, at least quarterly, a report prepared by the
Investment Manager evaluating the performance of the Fund, and will consider
what action, if any, should be taken in the event of a significant change in the
performance of the Fund.
In accordance with the Investment Company Act, the Fund may invest a
maximum of up to 10% of the value of its total assets in securities of other
investment companies, and the Fund may own up to 3% of the total outstanding
voting stock of any one investment company. In addition, up to 5% of the value
of the Fund's total assets may be invested in the securities of any one
investment company.
The Fund may invest up to ___% of its total assets in convertible
securities. A convertible security entitles the holder to receive interest paid
or accrued on debt or the dividend paid on preferred stock until the convertible
security matures or is redeemed, converted or exchanged. Before conversion,
convertible securities have characteristics similar to nonconvertible debt
securities in that they ordinarily provide a stable stream of income with
generally higher yields than those of common stocks of the same or similar
issuers. Convertible securities rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. While no securities investment is completely without risk,
investments in convertible securities generally entail less risk than the
corporation's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income security. Convertible securities have unique
investment characteristics in that they generally (1) have higher yields than
common stocks, but lower yields than comparable non-convertible securities, (2)
are less subject to fluctuation in value than the underlying stock since they
have fixed income characteristics, and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases. The
investment value of a convertible security is influenced by changes in interest
rates, with investment value declining as interest rates increase and increasing
as interest rates decline. The credit standing of the issuer and other factors
also may have an effect on the convertible security's investment value. The
conversion value of a convertible security is
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<PAGE> 12
determined by the market price of the underlying common stock. If the conversion
value is low relative to the investment value, the price of the convertible
security is governed principally by its investment value. Generally, the
conversion value decreases as the convertible security approaches maturity. To
the extent the market price of the underlying common stock approaches or exceeds
the conversion price, the price of the convertible security will be increasingly
influenced by its conversion value. A convertible security generally will sell
at a premium over its conversion value by the extent to which investors place
value on the right to acquire the underlying common stock while holding a fixed
income security. The Fund only intends to invest in convertible securities where
the value of the option is minimal and the convertible security trades on the
basis of its coupon.
The Fund's primary consideration in placing securities transactions with
broker-dealers for execution is to obtain, and maintain the availability of,
execution at the most favorable prices and in the most effective manner
possible. For further discussion regarding securities trading by the Fund, see
the Statement of Additional Information.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Certain of the Fund's investment policies and restrictions are
"fundamental" and, as such, are subject to change only with shareholder
approval. All policies stated throughout this Prospectus, other than those
identified in the section as fundamental, may be changed without shareholder
approval. The Funds' fundamental policies include its Investment Objective,
certain restrictions on its investments under applicable securities laws, and
its Fundamental Social Criteria. Although adherence to the Fundamental Social
Criteria is a fundamental policy, the other factors, and considerations used
by the Investment Manager in making its recommendations consistent with the
overall Social Objective and the Board in approving such recommendations are
discretionary and non-fundamental.
The fundamental policies and restrictions may not be changed without the
approval of the holders of a majority of the Fund's shares (which, as used in
this Prospectus, means the lesser of (i) more than 50% of the outstanding shares
of the Fund, or (ii) 67% or more of the outstanding shares of the Fund present
at a meeting at which holders of more than 50% of the Fund's outstanding shares
are represented in person or by proxy). If there were a change in the Fund's
fundamental policies and restrictions, shareholders should consider whether the
Fund remains an appropriate investment in light of their then-current financial
positions and needs.
The Statement of Additional Information includes a complete discussion of
the foregoing matters as well as other investment policies and a listing of
specific investment restrictions which govern the Fund's investment policies.
RISK FACTORS
INVESTMENT OBJECTIVE
There can be no assurance that the Fund will be able to achieve its
investment objective. It should be noted that the limitation of the Fund's
investments to equity securities of companies identified as meeting the
Social Objective will tend to limit the availability of investment
opportunities to the Fund compared to that for other investment companies that
have a comparable investment objective to that of the Fund.
COMMON STOCKS
Common stocks, the most familiar type of equity securities, represent an
equity (ownership) interest in a corporation. Although equity securities have a
history of long-term growth in value, their prices fluctuate based on changes in
a company's financial condition and on overall market, economic and political
conditions. Smaller companies are especially sensitive to these factors.
ILLIQUID AND RESTRICTED SECURITIES
Investments of the Fund's assets in illiquid securities, (i.e., securities
that are restricted in their transfer or for which market quotations are
otherwise not readily available or repurchase agreements over seven days), may
restrict the ability of the Fund to dispose of its investments in a timely
fashion and for a favorable price. The risks associated with illiquidity are
particularly acute in situations in which the Fund's operations require cash,
such as
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<PAGE> 13
when the Fund redeems for shares of beneficial interests or pays distributions,
and may result in the Fund borrowing to meet short-term cash requirements or
incurring capital losses on the sale of such investments.
SECURITIES OF FOREIGN ISSUERS
Some of the securities included in the Fund may be those of foreign issuers
(provided that the securities are publicly-traded in the United States in the
form of American Depositary Receipts or similar instruments the market for which
is denominated in United States dollars). Securities of foreign issuers may
represent a greater degree of risk (e.g., as a result of exchange rate
fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers.
LOANS OF SECURITIES
The Fund has reserved the authority to lend its securities to brokers,
dealers and financial institutions provided, among other things, that the loan
is secured continuously by collateral consisting of U.S. Government securities
or cash or letters of credit, which is marked to the market daily to ensure that
each loan is fully collateralized at all times. Loans of securities involve a
risk that the borrower may fail to return the securities or may fail to provide
additional collateral.
OPTIONS
The Fund has reserved the authority to enter into certain transactions in
stock options for the purpose of hedging against possible increases in the value
of securities which are expected to be purchased by the Fund or possible
declines in the value of securities which are expected to be sold by the Fund.
Were the Fund to establish an option position for the purpose of hedging against
investment risks, and would do so only if there appears to be a liquid secondary
market therefor, there can be no assurance that such a market will exist for any
particular option contract at any specific time. In that event, it may not be
possible to close out a position held by the Fund, and the Fund could be
required to purchase or sell the instrument underlying an option, make or
receive a cash settlement or meet ongoing variation margin requirements. The
inability to close out option positions also could have an adverse impact on the
Fund's ability effectively to hedge its portfolio.
HISTORY OF OPERATIONS
As a recently created entity, the Trust will be subject to all the risks
incident to the creation of a new business, including the absence of a history
of operation, and there can be no guarantee that the investment objective of the
Fund will be attained.
INVESTMENT RISKS
There are market risks inherent in any investment, and there is no
assurance that the primary investment objective of the Fund will be achieved or
that any income will be earned. Moreover, the application of the investment
policies is basically dependent upon the judgment of the Investment Manager. A
prospective purchaser of shares of the Fund should realize there are risks in
any policy dependent upon such judgment and that no representation is made that
the objective of the Fund will be accomplished or that there may not be
substantial loses in any particular investment. At any time, the value of the
Fund's shares may be more or less than the cost of such shares to the investor.
MANAGEMENT
The Board of Trustees of the Fund provide broad supervision over the
affairs of the Fund. The Fund has engaged Meyers Sheppard to provide management
and investment advisory services to the Fund, Furman Selz to provide
administration, fund accounting, dividend disbursement and transfer agent
services to the Fund, and Wells Fargo to provide custodial services to the Fund.
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<PAGE> 14
BOARD OF TRUSTEES
The Board of Trustees are responsible for the overall management and
supervision of the Fund's business. The Board of Trustees consists of five
individuals, three of whom are not "interested persons" of the Fund as defined
by the Investment Company Act. The Board of Trustees is responsible for deciding
matters of general policy and reviewing actions of the Fund's contractors and
agents, including the actions of the Investment Manager (as the Fund's manager
and investment adviser), the Administrator and the Transfer Agent, Distributor,
and Custodian. The officers of the Trust conduct and supervise the Fund's daily
business operations. The Board of Trustees also has broad supervisory authority
over the Investment Manager's determination of which companies satisfy the
Social Objective, and are therefore eligible to be considered for an investment
by the Fund. The Trustees and the officers are named on the inside back cover of
this Prospectus, and the Statement of Additional Information describes the
general business experience of each Trustee and officer.
INVESTMENT MANAGER
The Fund has engaged the Investment Manager, Meyers Sheppard to serve as
both the manager and the investment adviser for the Fund pursuant to an
Investment Management Agreement approved by the Board of Trustees. The
Investment Manager is a California limited liability company organized on
January 23, 1996. The managers and principal owners of the Investment Manager
are Ms. Shelly J. Meyers and Mr. Leslie C. Sheppard. The officers of the
Investment Manager are Ms. Meyers, President, Mr. Sheppard, Senior Vice
President, and Mr. Philip McKinley, Operations Manager.
As part of its management function, the Investment Manager oversees
(subject to the overall authority of the Board of Trustees) the overall
operations and administration of the Fund, including the supervision of
professional services rendered by others, including the Distributor,
Administrator, Transfer Agent, and Custodian, as well as accounting, auditing,
legal and other services.
As part of its investment advisory function, the Investment Manager
implements the Investment Strategy of the Fund and manages the Fund's
investments subject to the Fund's Investment Objective and Fundamental Social
Criteria and the overall supervision by the Board of Trustees. Specifically, the
Investment Manager determines, from amongst the companies who have been
identified as satisfying the Social Objective, which companies the Fund should
invest in, what the appropriate mix of investments amongst such companies should
be, and the timing and extent of adjustments in the holdings of the Fund to
satisfy the requirements of diversification and the need to maintain sufficient
reserves for anticipated redemptions of shares. The Investment Manager also has
sole discretion to select brokers for purchases and sales. Although the
Investment Manager's activities are subject to general oversight by the Trustees
and officers of the Fund, neither the Trustees nor officers of the Fund evaluate
the merits of the Investment Manager's selection of individual securities from
amongst approved companies.
The Investment Management Agreement provides that the Investment Manager
shall not be liable and shall be indemnified, for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which the Investment Management Agreement relates, except liability
resulting from willful misfeasance, bad faith or gross negligence in the
performance of duties specified in the Investment Management Agreement or from
reckless disregard of the Investment Manager's obligations thereunder.
The Investment Manager has been registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, since March 7, 1996. Ms. Shelly
J. Meyers has been designated by the Investment Manager as its "portfolio
manager" for the Fund, in which capacity she is responsible for providing all
investment advisory services to the Fund on behalf of the Investment Manager.
Ms. Meyers received her Bachelor of Arts Degree from the University of Michigan
and her Masters of Business Administration from Dartmouth College. From July,
1994 through February, 1995, Ms. Meyers was Assistant Vice President,
Institutional Asset Management for The Boston Company Asset Management, Inc., in
which capacity she acted as an equity research analyst and assistant portfolio
manager for the institutional investment group and was the lead equity analyst
for the entertainment, communications, apparel, specialty retail, and energy
industries. In that capacity Ms. Meyers was responsible for analyzing
portfolio's containing investments valued at up to $1.2 billion. From June, 1993
through September, 1993, Ms. Meyers was an Associate with The Boston Company
Asset Management, Inc. From June, 1989 through September, 1992, Ms. Meyers was
Lead Analyst, International Audit, with the Chevron Corporation, in which
capacity, she led the review of various projects and operations throughout the
world and reported her findings to executive management. Ms. Meyers is a
certified public accountant in the State of
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<PAGE> 15
California.
Pursuant to the terms of the Investment Management Agreement, the Fund pays
the Investment Manager for its investment management and advisory services, a
monthly fee equal, on an annual basis, to 1% of the Fund's average daily net
assets. This rate is higher than that paid by most mutual funds.
ADMINISTRATION, FUND ACCOUNTING AND TRANSFER AGENT
The Fund has entered into agreements with Furman Selz to provide the Fund
wi th administrative, fund accounting, and dividend disbursing and transfer
agencyservices, pursuant to an Administration Agreement, Fund Accounting
Agreement, and Services Agreement, respectively. The agreements are each
renewable annually. Although each agreement provides for different methods or
rates of compensation to Furman Selz as discussed below, the Fund has agreed to
pay Furman Selz a minimum payment of $150,000 per year for all of the aforesaid
services, which fee is higher than that paid by most mutual funds.
Pursuant to the Administration Agreement, Furman Selz generally assists the
Fund and the Investment Manager in all aspects of the Fund's administration and
operations including the following: maintaining administrative office facilities
on behalf of the Fund; monitoring the performance and billings of the
independent contractors and agents of the Fund to the extent requested by the
Investment Manager; assisting with the preparation and filing of documents
required for compliance by the Fund with applicable federal and state laws and
regulations and stock exchanges, including financial statements and semi-annual
and annual reports to shareholders and proxy statements; maintaining the books
and records of the Fund as required under the Investment Company Act and other
applicable federal and state laws and regulations; performing secretarial
services such as the preparation of agendas, notices and minutes for meetings of
the Fund's Board of Trustees and its shareholders; and providing advice and
assistance in connection with the preparation of Fund sales literature. Furman
Selz also provides persons satisfactory to the Board of Trustees of the Fund to
serve as officers of the Fund. Such officers, as well as certain other employees
and Trustees of the Fund, may be directors, officers or employees of Furman Selz
or its affiliates. As compensation for these services, the Fund pays Furman
Selz, per year, an amount equal to 0.15% of the first $100 million in aggregate
Fund assets, 0.10% for the next $400 million, 0.07% for the next $500 million,
and 0.06% for aggregate Fund assets in excess of $1 billion.
Pursuant to the Fund Accounting Agreement, Furman Selz calculates the
Fund's net value on a daily basis, in consideration of which the Fund pays
Furman Selz the sum of $35,000 per year, plus reimbursement of out-of-pocket
expenses.
Pursuant to the Services Agreement, Furman Selz provides dividend
disbursement, registrar and transfer agency services to the Fund, in
consideration of which the Fund pays Furman Selz the sum of $15 per year per
each shareholder, subject to a $12,000 per year minimum.
DISTRIBUTION PLAN AND AGREEMENT
The Trustees of the Fund have adopted a Distribution Plan and Agreement
(the "Distribution Plan") with respect to the Fund in accordance with Rule 12b-1
under the Investment Company Act after having concluded that there is a
reasonable likelihood that the Distribution Plan will benefit the Fund and its
shareholders. As contemplated by the Distribution Plan, Furman Selz acts as
agent of the Fund in connection with the offering of shares of the Fund pursuant
to the Distribution Agreement. Pursuant to the Distribution Agreement, Furman
Selz also acts as the Fund's Distributor, and is responsible for facilitating
the continuous sale or redemption of Fund shares. Solely for the purpose of
reimbursing Furman Selz for activities primarily intended to result in the sale
of Fund shares, the Trust has, on behalf of the Fund, adopted the Distribution
Plan wherein, pursuant to Rule 12b-1 of the Investment Company Act, the Fund is
authorized to spend up to 0.25% of net asset value annually for Furman Selz's
services in connection with the distribution of shares of the Fund. The
Distribution Plan was approved by the independent Trustees of the Trust as well
as the Fund's sponsor and initial shareholder, Meyers Sheppard.
Furman Selz acts as the principal underwriter of shares of the Fund and
bears the compensation of personnel necessary to provide such services and all
costs of travel, office expense (including rent and overhead) and equipment.
Under the Distribution Plan, Furman Selz may receive a fee from the Fund at an
annual rate up to but not to exceed 0.25% of the Fund's average daily net assets
in anticipation of, or as reimbursement for, costs and expenses incurred in
connection with the sale of shares of the Fund, such as payments to
broker-dealers who
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<PAGE> 16
advise shareholders regarding the purchase, sale or retention of shares of the
Fund, payments to employees of Furman Selz, advertising expenses and the
expenses of printing and distributing prospectuses and reports used for sales
purposes, expenses of preparing and printing sales literature and other
distribution-related expenses. Furman Selz will provide to the Board of Trustees
a quarterly written report of amounts expended by it under the Distribution Plan
and the purposes for which such expenditures were made.
CUSTODIAN
The Fund has engaged Wells Fargo to act as custodian of the assets of the
Fund, pursuant to a Custody Agreement. The Custodian's responsibilities include
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities, collecting interest on the Fund's
investments, and maintaining books of original entry for fund accounting
purposes. As compensation for its services, the Fund pays Wells Fargo, per year,
an amount equal to 0.10% of the first $10 million in aggregate Fund assets,
0.08% for the next $10 million, 0.06% for the next $55 million, and 0.0 % for
aggregate Fund assets in excess of $75 million.
PURCHASES AND REDEMPTIONS OF SHARES
PURCHASES
Shares of the Fund may be purchased without a sales load at the net asset
value next determined after an order for shares is received and accepted by the
Fund. The minimum initial investment in the Fund is $1,000 (except that the
minimum initial investment when selecting the Automatic Investment Plan is
$500). The minimum subsequent investment is $100 ($50 for the Automatic
Investment Plan).
INITIAL INVESTMENTS BY MAIL
Subject to acceptance by the Fund, investors desiring to purchase shares of
the Fund by mail should complete an Account Application and mail the Application
to the Fund at the address noted below, together with a check in U.S. dollars
($1,000 minimum), payable to "Meyers Sheppard Pride Fund":
The Meyers Sheppard Pride Fund
c/o Furman Selz LLC
237 Park Avenue
New York, New York 10017
Subject to acceptance by the Fund, payment for the purchase of shares
received by mail will be credited to a shareholder's account at the net asset
value per share of the Fund next determined after receipt. Such payment need not
be converted into federal funds (monies credited to the bank of the Fund's
Custodian by a Federal Reserve Bank) before acceptance by the Fund.
INITIAL INVESTMENTS BY WIRE
Subject to acceptance by the Fund, shares of the Fund may be purchased by
wiring federal funds ($1,000 minimum, $500 minimum for Automatic Investment
Plan) to Investors Fiduciary Trust Company (see instructions below). A completed
Account Application should be forwarded to the Fund at the address noted above
under "Initial Investments by Mail" in advance of the wire. Notification must be
given to the Fund at 1-800- prior to 4:00 p.m., New York time, of the wire
date. (Prior notification should also be received from investors with existing
accounts). Funds must be paid in U.S. dollars. Funds should be wired through
the Federal Reserve System to:
Investors Fiduciary Trust Company
Kansas City, MO 64105
ABA # 1010-0362-1
Account #
F/B/O the Meyers Sheppard Pride Fund
Federal funds purchases will be accepted only on days in which the Fund,
the Distributor and the Custodian bank are open for business. Currently, days in
which the Fund, the Distributor and the Custodian are not open are those days on
which the New York Stock Exchange is closed.
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<PAGE> 17
ADDITIONAL INVESTMENTS
Additional investments may be made at any time (minimum investment of $100
{$50 for the Automatic Investment Plan}) by purchasing shares of the Fund at net
asset value by mailing a check to the Fund at the address noted above under
"Initial Investments by Mail" (payable to the "Meyers Sheppard Pride Fund" or by
wiring monies to the custodian bank as outlined above under "Initial Investments
by Wire." For a wire purchase, notification must be given to the Fund at
1-800- prior to 4:00 p.m., New York time, of the wire date.
INVESTMENTS THROUGH SHAREHOLDER ORGANIZATIONS
Shares may also be purchased through a broker, a bank, or other
institutions or investment professionals ("Shareholder Organizations").
Shareholder Organizations may impose minimum customer account and other
requirements in addition to those of the Fund. Investors purchasing or redeeming
shares may be charged a transaction-based fee and other charges for the services
of the Shareholder Organization. Each Shareholder Organization is responsible
for transmitting to its customers a schedule of its fees and information
regarding any additional or different conditions regarding purchases or
redemptions. Customers of Shareholder Organizations should read this Prospectus
in light of the terms governing accounts with their organization. If an Investor
purchases shares through a Shareholder Organization, the Shareholder
Organization must promptly transmit such order to the Fund so that the order
receives the net asset value next determined following receipt of the order. The
Fund does not pay to or receive compensation from Shareholder Organizations for
the sale of Fund shares.
INVESTMENTS THROUGH IRAS AND OTHER QUALIFIED RETIREMENT PLANS
The Fund has available special forms which enable an investor to purchase
Fund shares through his or her Individual Retirement Account (IRA). The Fund may
be used as a qualifying medium for IRAs and other qualified retirement plans
("Plans"). The minimum initial investment for an IRA or a Plan is $2,000. An IRA
may be established through a custodial account with Investors Fiduciary Trust
Company. Completion of a special application is required in order to create such
a account. A $5.00 establishment fee and an annual $12.00 maintenance and
custody fee is payable with respect to each IRA; in addition there will be
charged a $10.00 termination fee when the account is closed. Fund shares may
also be purchased for IRAs and Plans established with other authorized
custodians. Contributions to IRAs are subject to prevailing amount limits set by
the Internal Revenue Service. For more information about IRAs and other Plan
accounts, contact the Fund.
Investors may also, in certain circumstances, be able to invest in the Fund
through other types of retirement plans, such as through simplified employee
pension plans ("SEPs"), qualified pension plans and tax deferred annuity plans
sponsored by their employers. Investors considering investments through an IRA
or other types of retirement plans should write or telephone the Fund for
further information and the appropriate form of application.
INVESTMENTS THROUGH AUTOMATIC INVESTMENT PLAN
The Fund also has available special forms enabling an investor to regularly
invest, through his or her bank, specified dollar amounts in periodic intervals
into the Fund (the "Automatic Investment Plan"). The minimum initial investment
under the Automatic Investment Plan is $500, and minimum subsequent investments
are $50. Payments under the Automatic Investment Plan are automatic and will
continue until such time as the Fund and the investor's bank are notified to
discontinue further investments. Due to the varying procedures to prepare,
process and to forward the bank withdrawal information to the Fund, there may be
a delay between the time of the bank withdrawal and the time the money reaches
the Fund. The investment in the Fund will be made at the next-determined net
asset value per share after receipt of the funds and bank withdrawal data are
received in the form required by the Fund. Investors regarding investments
through the Automatic Investment Plan should write or telephone the Fund for
further information and the appropriate form of application.
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<PAGE> 18
OTHER PURCHASE INFORMATION
The Fund reserves the right, in its sole discretion, to cease offering its
shares for sale at any time or to reject any order for the purchase of its
shares when, in the judgment of management, such suspension or rejection is in
the best interests of the Fund. The Fund and the Distributor also reserve the
right to modify the minimum investment requirement, the subsequent investment
requirement, or the manner in which shares are offered.
For each shareholder of record, the Fund establishes an open account to
which all shares purchased are credited together with any dividends and capital
gain distributions which are paid in additional shares. See "Other Information
Concerning Shares of the Fund - Dividends and Capital Gain Distributions."
Purchases of Fund shares will be made in full and fractional shares of the Fund
calculated to three decimal places. In the interest of economy and convenience,
certificates for shares will not be issued except at the written request of the
shareholder. Certificates for fractional shares, however, will not be issued.
REDEMPTIONS
Shares of the Fund may be redeemed by mail, or, if authorized, by
telephone, subject to certain procedures. The value of the shares redeemed may
be more or less than the shareholder's purchase price, depending on the Fund's
performance during the period the shareholder owned its shares. A shareholder
owing $12,000 or more of shares of the Fund may elect to have periodic
redemptions made from his account to be paid on a monthly, quarterly, semiannual
or annual basis. The maximum payment per year is 12% of the account value at the
time of the election. A sufficient number of shares to make the scheduled
redemption will normally be redeemed on the date selected by the shareholder.
Depending on the size of the payment requested and fluctuation in the net asset
value, if any, of the shares redeemed, redemptions for the purpose of making
such payments may reduce or even exhaust the account. A shareholder may request
that these payments be sent to a predesignated bank or other designated party.
Capital gains and dividend distributions paid to the account will automatically
be reinvested at net asset value on the distribution payment date. Redemptions
of shares are taxable events on which the shareholder may recognize a gain or a
loss.
BY MAIL
The Fund will redeem the shares at the net asset value per share next
determined after a redemptionrequest is received in "good order." The net asset
value per share of the Fund is determined as of 4:00 p.m., New York time, on
each day that the Fund, the Transfer Agent and the New York Stock Exchange are
open for business. Requests should be addressed to:
Meyers Sheppard Pride Fund
c/o Furman Selz LLC
237 Park Avenue
New York, New York 10017
Requests in "good order" must include the following documentation:
(i) the share certificate, if issued (do not sign the certificate and,
for protection, use registered mail);
(ii) a letter of instruction, if required, or a stock assignment
specifying the number of shares or dollar amount to be redeemed, signed by all
registered owners of the shares in the exact names in which they are registered
(if the shares are in street name, the investor may be required to sell the
shares through his or her investment professional);
(iii) any required signature guarantees (see "Signature Guarantees"
below); and
(iv) other supporting legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pension and profit
sharing plans and other organizations.
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<PAGE> 19
SIGNATURE GUARANTEES
To protect shareholder accounts, the Fund and the Transfer Agent from
fraud, signature guarantees are required to enable the Transfer Agent to verify
the identity of the person who has authorized a redemption from an account. The
signature must be guaranteed by a member firm of the New York, American, Boston,
Midwest, Philadelphia or Pacific Stock Exchange or by a commercial bank (not a
savings bank) which is a member of the Federal Deposit Insurance Corporation.
Notarization by a notary public is not acceptable. Signature guarantees are
required for (1) redemptions where proceeds are to be sent to someone other than
the registered shareholder(s) and the registered address, and (2) share transfer
requests. Shareholders may contact the Transfer Agent at 1-800- for
further details.
BY TELEPHONE
Provided the Telephone Redemption Option has been authorized by initialling
the appropriate box in the Account Application, a redemption of shares may be
requested by calling the Transfer Agent at 1-800- and requesting that the
redemption proceeds be mailed to the primary registration address or wired per
the authorized instructions. Shares cannot be redeemed by telephone if shares
certificates for the redeemed shares are issued. If the Telephone Redemption
Option is authorized, the Fund and the Transfer Agent may act on telephone
instructions from the person representing himself or herself to be a shareholder
and believed by the Fund or the Transfer Agent to be genuine. The Transfer
Agent's records of such instructions are binding and the shareholders, not the
Fund or the Transfer Agent, bear the risk of any loss, liability, cost or
expense for acting upon telephone instructions believed to be genuine. The Fund
will employ reasonable procedures to confirm that instructions communicated are
genuine and, if it does not, it may be liable for any losses due to unauthorized
or fraudulent instructions. The procedures employed by the Fund in connection
with transactions initiated by telephone include tape recording of telephone
instructions and requiring some form of personal identification prior to acting
upon instructions received by telephone. The following information must be
supplied by the shareholder or broker at the time a request for a telephone
redemption is made: (1) the shareholder's account number; (2) the shareholder's
social security number: and (3) the name and account number of the shareholder's
designated securities dealer or bank.
PAYMENT
Redemption proceeds for shares of the Fund recently purchased by check may
not be distributed until payment for the purchase has been collected, which may
take up to 15 business days from the purchase date.
Other than described above, payment of the redemption proceeds will be made
by check mailed within seven days after receipt of an order for a redemption.
Investors may request that payment be made by wire transfer to the investor's
designated account at a commercial bank.
A shareholder owing $12,000 or more of shares of the Fund may elect to have
periodic redemptions made from his account to be paid on a monthly, quarterly,
semiannual or annual basis. The maximum payment per year is 12% of the account
value at the time of the election. A sufficient number of shares to make the
scheduled redemption will normally be redeemed on the date selected by the
shareholder. Depending on the size of the payment requested and fluctuation in
the net asset value, if any, of the shares redeemed, redemptions for the purpose
of making such payments may reduce or even exhaust the account. A shareholder
may request that these payments be sent to a predesignated bank or other
designated party. Capital gains and dividend distributions paid to the account
will automatically be reinvested at net asset value on the distribution payment
date.
The right of any shareholder to receive payment with respect to any
redemption may be suspended or the payment of the redemption proceeds postponed
during any period in which the New York Stock Exchange or the Fund or the
Transfer Agent are closed (in addition to weekends or holidays) or trading on
such Exchange is restricted, or under any emergency circumstances as determined
by the Securities and Exchange Commission (the "Commission").
If the Board of Trustees determines that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment wholly
in cash, the Fund may pay the redemption proceeds in whole or in part by a
distribution in-kind of readily marketable securities held by the Fund in lieu
of cash in conformity with applicable rules of the Commission. Investors
generally will incur brokerage charges on the sale of Fund
16
<PAGE> 20
securities so received in payment of redemptions.
OTHER REDEMPTION INFORMATION
The Fund and the Transfer Agent reserve the right, in their sole
discretion, to suspend the right of telephone redemptions in general or to
reject a telephone redemptions with respect to any individual shareholder in
particular, either before, during or after the call, when, in the judgment of
management, such suspension or rejection is in the best interests of the Fund.
The Fund and the Distributor also reserve the right to modify the redemption
procedures from time-to-time including, without limitation, requiring signature
guarantees for all redemption requests.
The Fund reserves the right to redeem involuntary on at least 30 days'
notice the balance in a shareholder's account having a current value of not less
than $500, but not if an account falls below $500 due to a change in the market
value of the Fund's shares.
TAX MATTERS
The Fund intends to qualify and elect to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify as such, the Fund must satisfy certain
requirements relating to its sources of income, diversification of its assets,
and distribution of its income. As a regulated investment company, the Fund will
not be required to pay any federal income or excise taxes on any net investment
income and net realized capital gains that are distributed to its shareholders
in accordance with certain timing requirements imposed by the Code.
Shareholders of the Fund normally will have to pay federal income taxes,
and any state or local taxes, on the dividends and any realized net capital gain
distributions they receive from the Fund. At the end of each calendar year, each
shareholder receives information for tax purposes on the dividends and any
realized net capital gain distributions received during that calendar year
including the portion taxable as ordinary income, the portion taxable as capital
gains, the portion, if any, representing a return of capital (which generally is
free of current taxes but results in a basis reduction) and the amount of
dividends eligible for the dividends-received deduction for corporations.
Distributions of net long-term capital gains (i.e., the excess of net
long-term capital gains over net short- term capital losses) will cause any
short-term capital loss realized on the disposition by a shareholder of Fund
shares held for six or fewer months to be recharacterized, to the extent of
those distributions, as long-term capital loss. Under the back-up withholding
rules of the Code, certain shareholders may be subject to 31% withholding of
federal income tax on distributions and payments made by the Fund. Generally,
shareholders are subject to back-up withholding if they have not provided the
Fund with a correct taxpayer identification number and certain other
certifications. Individuals, corporations and other shareholders who are not
U.S. persons under the Code are generally subject to withholding at the rate of
30% (or lower rate provided by an applicable tax treaty) on dividends from the
Fund.
In addition to federal taxes, a shareholder may be subject to state, local
or foreign taxes on payments received from the Fund.
Under current law, the Fund is not liable for any income or franchise tax
in the State of Delaware as long as the Fund qualifies as a regulated investment
company under the Code. The Fund's fiscal year-end is .
The foregoing discussion is intended for general information only. A
prospective shareholder should consult with its own tax adviser as to the tax
consequences of an investment in the Fund including the status of distributions
from the Fund under applicable state or local law. See "Taxation" in the
Statement of Additional Information for a more detailed discussion of the
federal, state and local income tax consequences of investing in the Fund
shares.
17
<PAGE> 21
OTHER INFORMATION CONCERNING SHARES OF THE FUND
DETERMINATION OF NET ASSET VALUE OF SHARES
The Fund determines the net asset value of the shares of the Fund on each
Fund business day. This determination is made once during each such day as of
4:00 P.M. on regular trading days of the New York Stock Exchange by deducting
the amount of the Fund's liabilities from the value of its assets and dividing
the difference by the number of shares of the Fund outstanding. A share's net
asset value is effective for orders received by the Fund prior to the close of
the Fund business day on which such net asset value is determined.
Equity securities held by the Fund are valued at the last sale price on the
exchange on which they are primarily traded or on the NASDAQ system for unlisted
national market issues, or at the last quoted bid price for securities in which
there were no sales during the day or for unlisted securities not reported on
the NASDAQ system. Short-term obligations with remaining maturities of less than
sixty days are valued at amortized cost, which are valued at fair value as
determined by the Board of Trustees of the Fund. Fund securities (other than
short-term obligations with remaining maturities of less than sixty days) for
which there are no such quotation or valuations are valued at fair value as
determined in good faith by or at the direction of the Fund's Board of Trustees.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Substantially all of the Fund's net income from dividends and interest is
paid to the Fund's shareholders annually as a dividend, usually in December. For
this purpose, the Fund's net income from dividends and interest consists of all
income from dividends and interest accrued on the assets of the Fund, less all
actual and accrued expenses of the Fund determined in accordance with generally
accepted accounting principles.
The Fund also declares a long-term capital gain distribution to its
shareholders on an annual basis, usually in December, if the Fund's profits
during the year from the sale of securities held for longer than the applicable
long-term capital gains holding period exceeds the Fund's losses during such
year from the sale of securities together with the Fund's net capital losses
carried forward from prior years (to the extent not used to offset short-term
capital gains).
The Fund's net short-term capital gains realized during each fiscal year
will also be distributed at that time.
The Fund will also make additional distributions to its shareholders to the
extent necessary to avoid application of the 4% non-deductible excise tax
created by the Tax Reform Act of 1986 on certain undistributed income and net
capital gains of mutual funds.
A shareholder of the Fund may receive dividends and capital gain
distributions either in cash or in additional shares of the Fund.
EXPENSES
All expenses incurred in the operation of the Fund will be borne by the
Fund. These expenses include: organizational costs; taxes; the execution,
recording and settlement of security transactions including brokerage fees and
commissions; fees of members of the Board of Trustees who are not officers,
managers, employees or holders of 5% or more of the membership interests of the
Fund or its affiliates; expenses relating to the issuance, registration and
qualification of shares of the Fund including Commission fees and state Blue Sky
qualification fees and the preparation, printing and mailing of prospectuses for
such purposes; fees to the Investment Manager for its services as investment
adviser and manager; fees to Furman Selz for its administration, fund
accounting, dividend disbursement, registration and transfer agent services, and
fees to Well Fargo for its custodial agent services; reimbursements to Furman
Selz for its distribution expenses; certain insurance premiums; industry
association fees; outside auditing and legal expenses; costs of maintaining the
Fund's existence; costs of independent pricing services; costs attributable to
investor services (other than those arranged by Furman Selz pursuant to
Distribution Agreement); costs of shareholders reports and meetings; costs of
preparing, printing and mailing certain prospectuses, reports, notices, proxy
statements and statements of additional information to shareholders; and any
extraordinary expenses.
18
<PAGE> 22
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust Instrument permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (par value $0.00001 per share)
and to divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests in the Fund. To
date the Fund is the only series of shares issued under the Trust. However, the
Trust reserves the right to create and issue additional series of shares, in
which case the shares of each series would participate equally in the dividends
and assets of the particular series. The Trust may establish additional classes
of any series of shares. For example, the Trust may offer another class of
shares that has lower annual distribution fees or shareholder servicing fees.
Prior to offering another series of shares, the Trust would either issue a new
Prospectus and Statement of Additional information or amend this Prospectus and
the Statement of Additional Information to reflect such issuances.
Each share of the Fund represents an equal proportionate interest in the
Fund with each other share. Shares have no preference, preemptive, conversion or
similar rights. Shares when issued are fully paid and nonassessable, except as
set forth below. Shareholders are entitled to one vote for each share held on
matters on which they are entitled to vote. There is no requirement for the
Trust, and the Board of Trustees has no current intention, of holding annual
meetings of shareholders of the Fund, although the special meetings of Fund
shareholders may be held when, in the judgement of the Board of Trustees, it is
necessary or desirable to submit matters for a shareholder vote. Shares of each
series are entitled to vote separately to approve amendments to the Distribution
Plan or changes in fundamental investment policies or restrictions, but shares
of all series will vote together in the following matters: (i) the removal of
Trustees, (ii) the approval of any investment management or advisory contract,
(iii) any termination of the Trust, (iv) certain amendments of the Trust
Instrument, and (v) on such additional matters relating to the Trust as may be
required or authorized by law, the Trust Instrument or the By-laws. If holders
of 10% or more of the Fund's outstanding shares so request, a meeting of the
Fund shareholders will be called. The Trust will assist in shareholder
communications as required by Section 16(c) of the Investment Company Act.
The Trust is an entity of the type commonly known as a "Delaware Business
Trust". Under Delaware law, shareholders of such a business trust are entitled
to the same limitation of personal liability extended to stockholders of a
corporation. Under the Trust Instrument, no shareholder shall be personally
liable for the debts, liabilities, obligations and expenses incurred by,
contracted for, or otherwise existing with respect to the Trust or any series.
The Trust Instrument contains an express disclaimer of shareholder liability for
acts or obligations of the Trust and provides for indemnification and
reimbursement of expenses out of Fund property for any shareholder held
personally liable for the obligations of a Fund or the Trust solely by reason of
his being or having been a shareholder. The Trust Instrument also provides for
the maintenance, by or on behalf of the Trust and the Fund, of appropriate
insurance (for example, fidelity bond and errors and omissions insurance) for
the protection of the Trust and the Fund, their shareholders, trustees,
officers, employees and agents, covering possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which Delaware law did not
apply, inadequate insurance existed, and the Fund itself was unable to meet its
obligations.
The Fund's Statement of Additional Information contains more detailed
information about the Fund, including information related to (i) Investment
policies and restrictions of the Fund, (ii) the Trustees, officers, investment
adviser, investment manager and administrator of the Fund, (iii) portfolio
transactions, (iv) the Fund's shares, including rights and liabilities of
shareholders, (v) additional performance information, including the method used
to calculate yield and total rate of return quotations of the Fund, (vi)
determination of the net asset value of shares of the Fund, and (vii) the
audited Statements of Assets and Liabilities of the Fund at , 1996.
PERFORMANCE INFORMATION
Performance information concerning the Fund may from time-to-time be used
in advertisements, shareholder reports or other communications to shareholders.
The Fund may provide period and average annualized "total rates of return" with
respect to the Fund. The "total rate of return" of the Fund refers to the change
in the value of an investment in a Fund over a stated period based on any change
in net asset value per share and includes the value of any shares purchasable
with any dividends or capital gain distributions declared during such period.
Period total rates of return may be annualized. An annualized total rate of
return is a compounded total rate of return which assumes that the period total
rate of return is generated over a 52-week
19
<PAGE> 23
period, and that all dividends and capital gain distributions are reinvested. An
annualized total rate of return will be slightly higher than a period total rate
of return if the period is shorter than one year, because of the effect of
compounding.
Historical total return Information for any period or portion thereof prior
to the establishment of the Fund will be that of the Fund, adjusted to assume
that all charges, expenses and fees of the Fund which are presently in effect
were deducted during such periods.
The Fund may provide "yield" quotations with respect to the Fund. The
"yield" of the Fund refers to the income generated by an investment in the Fund
over a 30-day or one-month period (which period shall be stated in any
advertisement or communications with a shareholder). This income is then
"annualized," that is, the amount of income generated by the investment over the
period is assumed to be generated over a 52-week period and is shown as a
percentage of Investment. A "yield" quotation, unlike a total rate of return
quotation, does not reflect changes in net asset value.
From time-to-time the Fund may also quote fund rankings from various
sources, such as Lipper Analytical Services, Inc., and may compare its
performance to that of unmanaged securities indices, such as the Standard &
Poor's 500 Composite Stock Price Index (the "S&P 500") and the Dow Jones
Industrial Average. "Standard & Poors," "S&P" and "Standard & Poor's 500" are
trademarks of Standard & Poor's Corporation. See the Statement of Additional
Information for further information concerning the calculation of yield and any
total rate of return quotations. Since the Fund's yield and total rate of return
quotations are based on historical earnings and since such yield and rates of
return fluctuate over time, such quotations should not be considered as an
indication or representation of the future performance of the Fund.
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<PAGE> 24
MEYERS SHEPPARD INVESTMENT TRUST
MEYERS SHEPPARD PRIDE FUND
OFFICERS AND TRUSTEES INVESTMENT MANAGER
Shelly J. Meyers Meyers, Sheppard & Co., LLC
Chairman of the Board, President 9107 Wilshire Boulevard, Suite 700
and Trustee Beverly Hills, California 90210
Telephone Number: (310) 288-3720
Facsimile Number: (310)
Leslie C. Sheppard ADMINISTRATOR, TRANSFER AND
Executive Vice President and Trustee DIVIDEND DISBURSING AGENT
John J. Pileggi Furman Selz LLC
Vice President and Treasurer 230 Park Avenue
New York, New York 10169
Telephone Number: (212)
Facsimile Number: (212)
Joan V. Fiore DISTRIBUTOR
Vice President and Secretary
Gordon M. Forrester Furman Selz LLC
Assistant Treasurer 230 Park Avenue
New York, New York 10169
Telephone Number: (212)
Facsimile Number: (212)
Sheryl Hirschfeld CUSTODIAN
Assistant Secretary
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
Telephone Number: ( )
Facsimile Number: ( )
LEGAL COUNSEL
Pollet & Woodbury, a Law Corporation
10900 Wilshire Boulevard, Suite 500
Los Angeles, California 90024
Telephone Number (310) 208-1182
Facsimile Number (310) 208-1154
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Telephone Number (212) 506-2500
Facsimile Number (212) 262-1910
INDEPENDENT ACCOUNTANTS
Duitch, Franklin & Co.
11601 Wilshire Boulevard, 23rd Floor
Los Angeles, California 90025
Telephone Number: (310) 268-2000
Facsimile Number: (310) 268-2001
21
<PAGE> 25
PART B
<PAGE> 26
SUBJECT TO COMPLETION, DATED __________, 1996
MEYERS SHEPPARD PRIDE FUND
a separate portfolio of the Meyers Sheppard Investment Trust
9107 Wilshire Boulevard, Suite 700
Beverly Hills, California 90210
Telephone Number: (310) 288-3720
Facsimile Number: (310)______________
STATEMENT OF ADDITIONAL INFORMATION
_________________ 1996
The Meyers Sheppard Pride Fund (the "Fund") is organized as a separate
series of the Meyers Sheppard Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware. The Fund is an open-ended
no-load diversified mutual fund whose overall investment objective is to obtain
greater than average long-term capital appreciation through investing in a
diversified portfolio of equity securities of under-valued but nevertheless
fundamentally sound companies which have been identified as generally
having progressive policies towards gays and lesbians, but at a minimum having
in place specifically stated policies against discrimination in hiring and
promotion based upon sexual orientation.
This Statement of Additional Information sets forth information which
may be of interest to investors but which is not necessarily included in the
Prospectus for the Fund dated , 1996, as amended or supplemented
from time to time. This Statement of Additional Information should be read in
conjunction with the Prospectus dated , 1996, a copy of which may be
obtained by an investor without charge by contacting Furman Selz LLC, the
Fund's Distributor, at 230 Park Avenue, New York, New York 10169, or at
(800) . This Statement of Additional Information has been incorporated
into the Prospectus.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION
WITH SUCH PROSPECTUS.
TABLE OF CONTENTS
Page
The Fund 2
Investment Objective, Policies and Restrictions 2
Tax Sheltered Retirement Plans 9
Investment Programs 11
Performance Information 11
Determination of Net Asset Value; Valuation of Fund Securities 12
Management of the Trust and the Fund 14
Independent Auditors 18
Code of Ethics 18
Taxation 19
Fund Transactions and Brokerage Commissions 20
Description of Shares, Voting Rights and Liabilities 21
Financial Statements __
B-1
<PAGE> 27
THE FUND
The Meyers Sheppard Pride Fund (the "Fund") is organized as a separate
series of the Meyers Sheppard Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware on March 26, 1996. The Fund is
an open-ended no-load diversified management investment company whose overall
investment objective is to obtain greater than average long-term capital
appreciation through investing in a diversified portfolio of equity securities
of under-valued but nevertheless fundamentally sound companies. The Fund will
invest in securities of selected companies which have been identified by the
Fund's Investment Manager, Meyers, Sheppard & Co., LLC, a California limited
liability company ("Meyers Sheppard") as generally having progressive policies
towards gays and lesbians, but at a minimum having in place specifically stated
policies against discrimination in hiring and promotion based upon sexual
orientation. See "Investment Objective, Policies and Restrictions" herein.
The Fund is the first series to be established under the Trust. As a
diversified Fund, the Fund is required, by the Investment Company Act of 1940,
as amended (the "Investment Company Act"), with respect to 75% of its assets, to
invest no more than 5% of its assets into the securities of any one issuer and
not more than 10% of the outstanding voting securities of an issuer may be
owned.
The Fund's investment objective and policies, including the
identification of publicly-traded companies which have progressive policies
towards gays and lesbians, are, with the exception of certain fundamental
policies, determined by the Investment Manager, subject to the Board of Trustees
providing broad supervision over the affairs of both the Fund and the Trust. The
Fund has, to date, identified 225 publicly-traded companies meeting this
criteria. A majority of the Board of Trustees are not affiliated with the
Investment Manager.
The Investment Manager serves as the Fund's manager and investment
adviser pursuant to an Investment Management Agreement. As part of its
management function, the Investment Manager supervises (subject to the overall
authority of the Board of Trustees) the overall administration of the Fund,
including its various agents and service providers, including those providing
distribution, fund accounting, dividend disbursement, transfer agent and
custodian services. As part of its investment advisory function, the Investment
Manager manages the investments of the Fund day-to-day in accordance with the
Fund's investment objective and policies, and determines the composition of the
securities which the Fund may invest (i.e., which companies designated by the
investment advisor as having anti-discrimination policies in place and otherwise
demonstrates progressive policies towards gays and lesbians). For its investment
management and advisory services, the Investment Manager receives from the Fund
a monthly fee equal, on an annual basis, to 1% of the Fund's average daily net
assets, which fee is higher than that paid by most mutual funds. See
"Management" herein.
Shares of the Fund are sold continuously by the Distributor of the
Fund, Furman Selz LLC, a Delaware limited liability company ("Furman Selz"), at
the next determined net asset value per share. The minimum initial investment in
the Fund is generally $1,000, and subsequent investments are generally $100. A
lower initial investment of $500 is permitted for Automatic Investment Plans
with subsequent investments allowed at a minimum of $50. The Trust, on behalf of
the Fund, has adopted a Distribution Plan which permits reimbursement of certain
expenses incurred by the Distributor in connection with the distribution of
shares of the Fund, up to a maximum of 0.25% of net asset value annually.
The Fund offers to redeem shares of the Fund from its shareholders at
any time at next determined net asset value per share. The redemption price may
be more or less than the purchase price.
No sales load is charged with respect to either the purchase or
redemption of Fund shares. An investor should contact the Distributor regarding
any further information describing the procedures under which Fund shares may be
purchased and redeemed. See "Purchases and Redemptions" in the Prospectus.
INVESTMENT OBJECTIVE, POLICIES, AND RESTRICTIONS
INVESTMENT OBJECTIVE AND SOCIAL OBJECTIVE
The overall investment objective of the Fund (the "Investment
Objective") is to afford greater than average capital appreciation, by investing
in a diversified portfolio of equity securities of undervalued but nevertheless
fundamentally sound companies which have been identified as having met the
Social Objective. The "Social
B-2
<PAGE> 28
Objective" is defined as companies which, in general, have been identified as
having progressive policies towards gays and lesbians, but at a minimum have in
place specifically stated policies against discrimination in hiring and
promotion based upon sexual orientation (the "Fundamental Social Criteria").
The Fund believes that enterprises which exhibit a social awareness of
gay and lesbian issues should be better prepared, than those companies that do
not, to meet future social needs for goods and services, and may also be less
likely to incur certain legal liabilities that may be incurred when an
enterprise is found to discriminate against the gay and lesbian community. Such
enterprises should over the longer term be able to generate additional goodwill
and stockholder value as an indirect result of the greater investment in such
enterprises, through the Fund, by the gay and lesbian community, which, per
capita, is one of the wealthiest demographic groups in the United States, and
the supporters of the gay and lesbian community.
INVESTMENT STRATEGY
In order to achieve the Investment Objective, the Fund will use a
value-based investment approach focusing on a longer-term market cycle (at
least three to five years), consistent with moderate levels of risk, wherein
the Investment Manager will identify publicly-traded companies exhibiting the
following investment characteristics: (i) low or inexpensive current value
relative to earnings estimates, cash flow, book value and/or break-up value,
(ii) good management, (iii) strong business fundamentals, and (iv) positive
earnings momentum and price performance.
The equity securities the Fund may invest in include common stocks,
preferred stocks and warrants, and certain debt instruments convertible into
stock. Publicly-traded refers to companies whose equity securities are traded
over a national stock exchange or over-the-counter through NASDAQ or the NASD
Electronic Bulletin Board.
Since it is anticipated that most equity securities will be held for
the longer-term using this strategy, the Investment Manager anticipates there
will likely be a low rate of portfolio turnover, and estimates portfolio
turn-over in the first year of the Fund will be approximately 20% to 40%.
IDENTIFICATION OF COMPANIES WHICH SATISFY SOCIAL OBJECTIVE
The determination of which companies have satisfied the Social
Objective, and may therefore be considered as appropriate investment vehicles
for the Fund, is based upon recommendations of the Investment Manager and
approval by the Board of Trustees. As of the date of this Prospectus, 225
companies have been identified as having satisfied the Social Objective.
In making its recommendations, the Investment Manager evaluates
companies based upon (i) the Fundamental Social Criteria and (ii) such
additional criteria and considerations consistent with the Social Objective as
are determined reasonable by the Investment Manager from time-to-time in its
sole discretion, and approved in general by the Board of Trustees. Such
methodology is, by its nature, subjective.
As of the date of this Prospectus, the social criteria (other than the
Fundamental Social Criteria) consists of two separate areas of general focus,
employee relations and corporate citizenship.
In evaluating a company's gay and lesbian employee relations, the
Investment Manager evaluates the company's record and policies with respect to
labor matters affecting gay and lesbian employees, such as: (i) the company's
commitment to equal employment opportunity for gays and lesbians (reflected, for
example, in the number of gays and lesbians employed overall and the number of
gays and lesbians in executive positions) and the scope of the company's
policies against discrimination based upon sexual orientation; (ii) the breadth,
quality and innovation of the company's employee benefit programs and their
positive effect on gay lesbian employees (including inclusion of gay and lesbian
partners and families in employee benefit programs); and (iii) the company's
relationships with gay and lesbian suppliers, vendors, and customers.
In evaluating a company's corporate citizenship, the Investment Manager
reviews the company's record on gay and lesbian related charitable giving and
other philanthropic activities and its interaction with the gay and lesbian
community, such as advertising in gay and lesbian directed publications or other
media.
B-3
<PAGE> 29
It is not necessary that a company satisfy all of the factors and
considerations described above relating to a company's employee relations and
corporate citizenship in order to be identified as having satisfied the Social
Objective. However, every company must satisfy the Fundamental Social Criteria
in order to be included on the list of approved companies.
The Investment Manager uses publicly available information in
evaluating companies, including information provided by the Human Rights
Campaign and the National Gay and Lesbian Task Force. The Investment Manager
also directly reviews company policies and, in certain cases, discusses those
policies with the company's management.
The Investment Manager intends to vote proxies of companies included in
the Fund consistent with the Social Objective. The inclusion of a company on the
Fund's list of approved companies with progressive policies towards gays and
lesbians does not imply that the company has requested it be included on the
list or approved such inclusion, has sought the approval of the Fund with
respect to the development and implementation of the company's employment or
corporate citizenship policies, or is affiliated with the Fund in any manner.
INVESTMENT POLICIES
The Fund will diversify its holdings to reduce the risks of investing.
See "Fundamental Investment Restrictions" and "Non-Fundamental State and Federal
Restrictions" below relative to the Fund's threshold diversification
requirements. If the Fund were to concentrate its investments in a single
industry, the Fund would be more susceptible to any single economic, political
or regulatory occurrence than would be another investment company which was not
so concentrated. See "Risk Factors" below,
The Fund may purchase a publicly-traded company's "restricted
securities." These securities are not registered for sale to the general public
or are offered in an exempt non-public offering under the Securities Act of
1933, as amended (the "Securities Act"), including securities offered and sold
to "qualified institutional buyers" under Rule 144A under the Securities Act.
See "Fundamental Investment Restrictions" and "Non-Fundamental State and Federal
Restrictions" below relative to the maximum percentage of Funds assets which can
be invested in restricted securities. Also see "Risk Factors" below.
The Fund may invest cash reserves in direct obligations and/or
short-term debt securities (ie., securities having a remaining maturity of one
year or less) issued or guaranteed by agencies or instrumentalities of the
United States Government, bankers' acceptances, commercial paper or certificates
of deposit, provided that the issuer satisfies the Social Criteria of the Fund.
The Fund's policy is to hold its assets in such securities pending readjustment
of its portfolio holdings of stocks in order to meet anticipated redemption
requests. Although the U.S. government provides financial support to U.S.
government sponsored agencies or instrumentalities, no assurance can be given
that it will always do so. The U.S. government and its agencies and
instrumentalities do not guarantee the market value of their securities;
consequently, the value of such securities will fluctuate.
The Fund has reserved the authority to lend its securities to brokers,
dealers and financial institutions, provided that (i) the loan is secured
continuously by collateral consisting of U.S. Government securities or cash or
letters of credit, which is marked to the market daily to ensure that each loan
is fully collateralized at all times, (ii) the Fund may at any time call the
loan and obtain the return of the securities loaned within five business days,
(iii) the Fund will receive any interest or dividends paid on the securities
loaned, and (iv) the aggregate market value of securities loaned will not at any
time exceed 30% of the total assets of the Fund. The Fund will earn income for
lending its securities because cash collateral pursuant to these loans will be
invested in short-term money market instruments. In connection with lending
securities, the Fund may pay reasonable finders, administrative and custodial
fees. No such fees will be paid to any person if it or any of its affiliates is
affiliated with the Fund or the Investment Manager. See "Risk Factors" below.
Although the Fund reserves the right to lend its securities, it has no current
intention of doing so in the foreseeable future.
The Fund has reserved the authority to enter into certain transactions
in stock options for the purpose of hedging against possible increases in the
value of securities which are expected to be purchased by the Fund or possible
declines in the value of securities which are expected to be sold by the Fund.
Generally, the Fund would only enter into such transactions on a short-term
basis pending readjustment of its holdings of underlying stocks. The purchase of
an option on an equity security provides the holder with the right, but not the
obligation, to
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<PAGE> 30
purchase the underlying security, in the case of a call option, or to sell the
underlying security, in the case of a put option, for a fixed price at any time
up to a stated expiration date. The holder is required to pay a non-refundable
premium, which represents the purchase price of the option. The holder of an
option can lose the entire amount of the premium, plus related transaction
costs, but not more. Upon exercise of the option, the holder is required to pay
the purchase price of the underlying security in the case of a call option, or
deliver the security in return for the purchase price in the case of a put
option. Prior to exercise or expiration, an option position may be terminated
only by entering into a closing purchase or sale transaction. This requires a
secondary market on the exchange on which the position was originally
established. Each exchange on which option contracts are traded has established
a number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The Investment
Manager does not believe that these trading and position limits would have an
adverse impact on the possible use of hedging strategies by the Fund. See "Risk
Factors" below. Although the Fund reserves the right to enter into certain
transactions in stock options for the purpose of hedging against investment
risks, it has no current intention of doing so in the foreseeable future.
To the extent practicable, the Fund will attempt to be fully invested.
The ability of the Fund to meet its performance goals will depend to some extent
on the size and timing of cash flows into and out of the Fund as well as the
Fund's expenses. Adjustments in the securities holdings of the Fund to
accommodate cash flows will result in brokerage expenses. There can, of course,
be no assurance that the Fund will achieve its investment objective. The
investment strategies used by the Fund to achieve its investment objective may
be changed without approval by the Fund's shareholders.
The Fund will readjust its securities holdings periodically to the
extent the Investment Manager deems it prudent to do so. The timing and extent
of adjustments in the holdings of the Fund will reflect the Investment Manager's
judgment as to (i) the appropriate portfolio mix to achieve the investment
performance objective of the Fund, (ii) the appropriate balance between the goal
of correlating the holdings of the Fund with the Social Criteria of the Fund,
(iii) the goals of minimizing transaction costs and keeping sufficient reserves
available for anticipated redemptions of shares, and (iv) compliance with
certain restrictions of the Fund imposed by the Fund's investment policies,
including those mandated by the Investment Company Act. See "Fundamental
Investment Restrictions" below. There can be no assurance that any portfolio
enhancement strategies will be successful, and the performance of the Fund may
as a result be worse than if such strategies were not undertaken. The Board of
Trustees of the Fund will receive and review, at least quarterly, a report
prepared by the Investment Manager's evaluating the performance of the Fund, and
will consider what action, if any, should be taken in the event of a significant
change in the performance of the Fund.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment policies
which may not be changed without approval by holders of a majority of the
outstanding shares of the Fund, which as used in this Statement of Additional
Information means the vote of the lesser of (i) 67% or more of the outstanding
"voting securities" of the Fund (as such term is defined in the Investment
Company Act), present at a meeting, if the holders of more than 50% of the
outstanding "voting securities" of the Fund are present or represented by proxy,
or (ii) more than 50% of the outstanding "voting securities" of the Fund. The
Fund will not as a matter of operating policy:
(1) borrow money, except from banks, and except that as a temporary
measure for extraordinary or emergency purposes the Fund may borrow an amount
not to exceed one-third of the current value of the net assets of the Fund
including the amount borrowed, moreover, the Fund may not purchase any
securities at any time at which borrowings exceed 5% of the total assets of the
Fund, taken in each case at market value (it is intended that the Fund would
borrow money only from banks and only to accommodate requests for the withdrawal
of all or a portion of a beneficial interest in the Fund while effecting an
orderly liquidation of securities) (for additional related restrictions, see
clause (i) under the caption "Non-Fundamental State and Federal Restrictions"
below); In the event that the asset coverage for the Fund's borrowings falls
below 300%, the Fund will reduce within three days the amount of its borrowings
in order to provide for 300% asset coverage.
(2) purchase any security or evidence of interest therein on margin,
except that the Fund may obtain such short-term credit as may be necessary for
the clearance of purchases and sales of securities and except that the Fund may
make deposits of initial deposit and variation margin in connection with the
purchase, ownership, holding or sale of options;
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(3) write any put or call option or any combination thereof, provided
that this shall not prevent (i) the purchase, ownership, holding or sale of
warrants where the grantor of the warrants is the issuer of the underlying
securities, or (ii) the purchase, ownership, holding or sale of options on
securities;
(4) underwrite securities issued by other persons, except insofar as
the Fund may technically be deemed an underwriter in selling a security;
(5) make loans to other persons except (i) through the lending of
securities held by the Fund and provided that any such loans not exceed 30% of
its total assets (taken in each case at market value), or (ii) through the use
of repurchase agreements or the purchase of short-term obligations and provided
that not more than 15% of the Fund's net assets will be invested in repurchase
agreements maturing in more than seven days (for additional related
restrictions, see paragraph (6) immediately following);
(6) invest in securities which are subject to legal or contractual
restrictions on resale (other than repurchase agreements maturing in not more
than seven days and other than securities which may be resold pursuant to Rule
144 and/or Rule 144A under the Securities Act of 1933 if the Investment Manager,
determines that a liquid market exists for such securities) if, as a result
thereof, more than 15% of its net assets (taken at market value) would be so
invested (including repurchase agreements maturing in more than seven days);
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Fund reserves the freedom of action to hold
and to sell real estate acquired as a result of the ownership of securities by
the Fund);
(8) make short sales of securities or maintain a short position (except
short sales "against the box") unless at all times when a short position is open
the Fund owns an equal amount to such securities or securities convertible into
or exchangeable, without payment of any further consideration, for securities of
the same issue as, and equal in amount to, the securities sold short, and unless
not more than 5% of the Fund's net assets (taken in each case at market value)
is held as collateral for such sales at any one time (it is the present
intention of the Fund to make such sales only for the purpose of deferring
realization of gain or loss for federal income tax purposes);
(9) issue any senior security (as that term is defined in Section 18(f)
of the Investment Company Act) if such issuance is specifically prohibited by
the Investment Company Act or the rules and regulations promulgated thereunder,
except as appropriate to evidence a debt incurred without violating paragraph
(1) above;
(10) as to 75% of the Fund's assets, purchase securities of any issuer
if such purchase at the time thereof would cause more than 5% of the Fund's
assets (taken at market value) to be invested in the securities of such issuer
(other than securities or obligations issued or guaranteed by the United States
or any agency or instrumentality of the United States), except that for purposes
of this restriction the issuer of an option shall not be deemed to be the issuer
of the security or securities underlying such contract;
(11) invest more than 25% of the Fund's assets in any one industry.
The Fund's fundamental policies also include its Investment Objective
and adherence to the Fundamental Social Criteria. Although adherence to the
Fundamental Social Criteria is a fundamental policy, the other factors and
considerations used by the Investment Manager in making its
recommendations consistent with the overall Social Objective and the Board in
approving such recommendations are discretionary and non-fundamental.
Whenever the Fund is requested to vote on a change in the investment
restrictions of the Fund, or the Investment Objective, the Fund will hold a
meeting of the shareholders of the Fund and will cast its vote as instructed by
the Fund's shareholders.
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<PAGE> 32
NON-FUNDAMENTAL STATE AND FEDERAL RESTRICTIONS
In order to comply with certain state and federal statutes and
regulatory policies, the Fund will not as a matter of operating policy:
(i) borrow money for any purpose in excess of 10% of the total assets
of the Fund (taken in each case at cost) (moreover, the Fund will not purchase
any securities at any time at which borrowings exceed 5% of its total assets
{taken at market value});
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the net assets of the Fund (taken in each case at market value), provided that
collateral arrangements with respect to options, including deposits of initial
deposit and variation margin, are not considered a pledge of assets for purposes
of this restriction;
(iii) sell any security which the Fund does not own unless by virtue of
its ownership of other securities it has at the time of sale a right to obtain
securities, without payment of further consideration, equivalent in kind and
amount to the securities sold, and provided that if such right is conditional
the sale is made upon the same conditions;
(iv) invest for the purpose of exercising control or management;
(v) purchase securities issued by any registered investment company,
except by purchase in the open market where no commission or profit to a sponsor
or dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open market, is
part of a plan of merger or consolidation; provided, however, the Fund will not
purchase the securities of any registered investment company if such purchase at
the time thereof would cause more than 10% of the total assets of the Fund
(taken at the greater of cost or market value) to be invested in the securities
of such issuers or would cause more than 3% of the outstanding voting securities
of any such issuer to be held by the Fund; and provided, further, that the Fund
may also purchase securities issued by any open-end investment company provided,
however, that the Fund will not purchase the securities of any registered
investment company if such purchase at the time thereof would cause more than
10% of the total assets of the Fund (taken at the greater of cost or market
value) to be invested in the securities of such issuers or would cause more than
3% of the outstanding voting securities of any such issuer to be held by the
Fund; and provided, further, that the Fund shall not purchase securities issued
by any open-end investment company;
(vi) invest more than 15% of the net assets of the Fund (taken at the
greater of cost or market value) in securities that are illiquid or not readily
marketable (defined as a security that cannot be sold in the ordinary course of
business within seven days at approximately the value at which the Fund has
valued the security);
(vii) invest more than 10% of the net assets of the Fund (taken at the
greater of cost or market value) in securities that are restricted as to resale
by the Securities Act of 1933, as amended (including Rule 144 and Rule 144A
securities);
(viii) invest more than 10% of the net assets of the Fund (taken at the
greater of cost or market value) in securities that are issued by issuers which
(including the period of operation of any predecessor company or unconditional
guarantor of such issuer) have been in operation less than three years
(including predecessors);
(ix) purchase securities of any issuer if such purchase at the time
thereof would cause it to hold more than 10% of any class of securities of such
issuer, for which purposes all indebtedness of an issuer shall be deemed a
single class and all preferred stock of an issuer shall be deemed a single
class, except that option contracts shall not be subject to this restriction;
(x) purchase or retain any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee of
the Fund, or is an officer or director of the Investment Manager (the investment
adviser and manager of the Fund), if after the purchase of the securities of
such issuer by the Fund one or more of such persons owns beneficially more than
1/2 of 1% of the shares or securities, or both, all taken at market value, of
such issuer, and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or securities,
or both, all taken at market value;
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<PAGE> 33
(xi) invest more than 5% of the Fund's net assets in warrants (valued at
the lower of cost or market), but not more than 2% of the Fund's net assets may
be invested in warrants not listed on the New York Stock Exchange Inc. ("NYSE")
or the American Stock Exchange (notwithstanding the foregoing, warrants attached
to other securities are not subject to this limitation;
(xii) make short sales of securities or maintain a short position, unless
at all times when a short position is open, the Fund owns an equal amount of
such securities or securities convertible into or exchangeable, without payment
of any further consideration, for securities of the same issue and equal in
amount to the securities sold short, and unless not more than 25% of the Fund's
net assets (taken at market value) is represented by such securities, or
securities convertible into or exchangeable for such securities, at any one time
(the Fund does not have any current intention to engage in short selling); or
Restrictions (i) through (xii) are not fundamental and may be changed
with respect to the Fund by the Board of Trustees without approval by the Fund's
shareholders or its other investors. The Fund will comply with the state
securities laws and regulations of all states in which it is registered.
PERCENTAGE RESTRICTIONS
If a percentage restriction on investment or utilization of assets set
forth above or referred to in the Prospectus is adhered to at the time an
investment is made or assets are so utilized, a later change in percentage
resulting from changes in the value of the securities held by the Fund will not
be considered a violation of policy; provided that if at any time the ratio of
borrowings of the Fund to the net asset value of the Fund exceeds the ratio
permitted by Section 18(f) of the Investment Company Act, the Fund will take the
corrective action required by Section 18(f).
RISK FACTORS
There can be no assurance that the Fund will be able to achieve its
investment objective. It should be noted that the limitation of the Fund's
investments to equity securities of companies with progressive policies towards
gays and lesbians will tend to limit the availability of investment
opportunities to the Fund compared to that for other investment companies that
have a comparable investment objective to that of the Fund.
Common stocks, the most familiar type of equity securities, represent
an equity (ownership) interest in a corporation. Although equity securities have
a history of long-term growth in value, their prices fluctuate based on changes
in a company's financial condition and on overall market, economic and political
conditions. Smaller companies are especially sensitive to these factors.
Some of the stocks included in the Fund may be those of foreign issuers
(provided that the stocks are publicly-traded in the United States in the form
of American Depositary Receipts or similar instruments the market for which is
denominated in United States dollars). Securities of foreign issuers may present
a greater degree of risk (e.g., as a result of exchange rate fluctuation, tax
provisions, war or expropriation) than do securities of domestic issuers.
The Fund may purchase a publicly-traded company's "restricted
securities." Restricted securities may not be traded on the public market except
in accordance with Rule 144 under the Securities Act, which mandates certain
holding periods, information dissemination requirements, and certain other
conditions, or Rule 144A to qualified institutional investors. Investing in
restricted securities will impair the liquidity of the Fund's portfolio to the
extent they cannot be publicly traded under Rule 144 or, if applicable,
qualified institutional investors become, for a time, uninterested in purchasing
these securities.
The Fund has reserved the authority to lend its securities to brokers,
dealers and financial institutions provided, among other things, that the loan
is secured continuously by collateral consisting of U.S. Government securities
or cash or letters of credit, which is marked to the market daily to ensure that
each loan is fully collateralized at all times. Loans of securities involve a
risk that the borrower may fail to return the securities or may fail to provide
additional collateral.
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<PAGE> 34
The Fund has reserved the authority to enter into certain transactions
in stock options for the purpose of hedging against possible increases in the
value of securities which are expected to be purchased by the Fund or possible
declines in the value of securities which are expected to be sold by the Fund.
Were the Fund to establish an option position for the purpose of hedging against
investment risks, it would do so only if there appears to be a liquid secondary
market therefor, there can be no assurance that such a market will exist for any
particular option contract at any specific time. In that event, it may not be
possible to close out a position held by the Fund, and the Fund could be
required to purchase or sell the instrument underlying an option, make or
receive a cash settlement or meet ongoing variation margin requirements. The
inability to close out option positions also could have an adverse impact on the
Fund's ability to effectively hedge its portfolio.
TAX-SHELTERED RETIREMENT PLANS
The Trust does not offer a prototype tax-sheltered retirement plan.
However, banks, broker-dealers and other financial intermediaries may offer such
plans through which shares of the Fund may be purchased. These plans are more
fully described below. Persons who wish to establish a tax-sheltered retirement
plan should consult their financial institutions as to availability of such
plans and their own tax advisers or attorneys regarding their eligibility to do
so and the laws applicable thereto, such as the fiduciary responsibility
provisions and diversification requirements and the reporting and disclosure
obligations under the Employee Retirement Income Security Act of 1974. The Trust
is not responsible for compliance with such laws. Further information regarding
the retirement plans, including applications and fee schedules, may be obtained
upon request to the Fund.
INDIVIDUAL RETIREMENT ACCOUNT AND SPOUSAL INDIVIDUAL RETIREMENT ACCOUNT
The IRA is available to all individuals, including self-employed
individuals, who receive compensation for services rendered and wish to purchase
shares of the Fund. An IRA may also be established pursuant to a simplified
employee pension plan ("SEP"). Spousal Individual Retirement Accounts ("SPIRA")
are available to individuals who are otherwise eligible to establish an IRA for
themselves and whose spouses are treated as having no compensation of their own.
In general, the maximum deductible contribution to an IRA which may be
made for any one year is $2,000 or 100% of annual compensation includable in
gross income, whichever is less. If an individual establishes a SPIRA, the
maximum deductible amount that the individual may contribute annually is the
lesser of $2,250 or 100% of such individuals compensation includable in his
gross income for such year; provided, however, that no more than $2,000 per year
for either individual may be contributed to either the IRA or SPIRA.
Contributions to a SEP (discussed below) are excluded from an employee's gross
income and are subject to different limitations.
All taxpayers, including those who are active participants in
employer-sponsored retirement plans, will be able to make fully deductible IRA
contributions at the same levels discussed above, if their adjusted gross income
is less than the following levels: $25,000 for single taxpayers and $40,000 for
married taxpayers who file joint returns.
Married taxpayers who file joint tax returns will generally be deemed
to be active participants if either spouse is an active participant under an
employer-sponsored retirement plan. In the case of taxpayers who are active
participants in employer-sponsored retirement plans and who have adjusted gross
income which exceeds the specified levels, deductible IRA contributions will be
phased out on the basis of adjusted gross income between $25,000 and $35,000 for
single taxpayers adjusted gross income of $10,000 and under for married
taxpayers who file separate returns, and combined adjusted gross income between
$40,000 and $50,000 for married taxpayers who file joint returns. The $2,000 IRA
deduction is reduced by $200 for each $1,000 of adjusted gross income in excess
of the following levels: $25,000 for single taxpayers, $40,000 for married
taxpayers who file joint returns, and $0 for married taxpayers who file separate
returns. In the case of a taxpayer who contributes to an IRA and a SPIRA, the
$2,250 IRA deduction is reduced by $225 for each $1,000 of adjusted gross income
in excess of $40,000.
Individuals who are ineligible to make fully deductible contributions
may make nondeductible contributions up to an aggregate of $2,000 in the case of
contributions (deductible and nondeductible) to an IRA and up to an aggregate of
$2,250 in the case of contributions (deductible and nondeductible) to an IRA and
SPIRA and the income upon all such contributions will accumulate tax free until
distribution.
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<PAGE> 35
In addition, a separate IRA may be established by a "rollover"
contribution, which may permit the tax-free transfer of assets from qualified
retirement plans under specified circumstances. A "rollover contribution"
includes a lump sum distribution received by an individual, because of severance
of employment, from a qualified plan and paid into an individual retirement
account within 60 days after receipt.
Dividends and capital gains earned on amounts invested in either an IRA
or SPIRA are automatically reinvested by the Trustee in shares of the Fund and
accumulate tax-free until distribution. Distributions from either an IRA or
SPIRA prior to age 59-1/2, unless made as a result of disability or death, may
result in adverse tax consequences and penalties. In addition, there is a
penalty on contributions in excess of the contribution limits and other
penalties are imposed on insufficient payouts after age 70-1/2.
SIMPLIFIED EMPLOYEE PENSION PLAN
A SEP may be utilized by employers to provide retirement income to
employees by making contributions to employees SEP IRAs. Owners and partners may
qualify as employees. The employee is always 100% vested in contributions made
under a SEP. The maximum contribution to a SEP-IRA (an IRA established to
receive SEP contributions) is the lesser of $30,000 or 150% of compensation,
excluding contributions made pursuant to a salary reduction arrangement. Subject
to certain limitations, an employer may also make contributions to a SEP-IRA
under a salary reduction arrangement by which the employee elects contributions
to a SEP-IRA in lieu of immediate cash compensation. The maximum amount which
may be contributed to a SEP-IRA (for 1995) under a salary reduction agreement is
the lesser of $30,000 (as adjusted for cost of living increases) or 15% of
compensation up to a current annual compensation limit of $150,000.
Contributions by employers under a SEP arrangement up to the maximum
permissible amounts are deductible for federal income tax purposes.
Contributions up to the maximum permissible amounts are not includable in the
gross income of the employee. Dividends and capital gains on amounts invested in
SEP-IRAs are automatically reinvested in shares of the Fund and accumulate
tax-free until distribution. Contributions in excess of the maximum permissible
amounts may be withdrawn by the employee from the SEP-IRA no later than April 15
of the calendar year following the year in which the contribution is made
without tax penalties. Such amounts will, however, be included in the employee's
gross income. Withdrawals of such amounts after April 15 of the year next
following the year in which the excess contributions is made and withdrawals of
any other amounts prior to age 59 1/2, unless made as a result of disability or
death, may result in adverse tax consequences.
QUALIFIED PENSION PLANS
The Qualified Pension Plan can be utilized by self-employed
individuals, partnerships and corporations and their employees who wish to
purchase shares of a Fund under a retirement program.
The maximum contribution which may be made to a Qualified Pension Plan
in any one year on behalf of a participant is, depending on the benefit formula
selected by the Employer, up to the lesser of $30,000 or 25% of compensation
(net earned income in the case of a self-employed individual). Contributions by
Employers to Qualified Pension Plans up to the maximum permissible amounts are
deductible for Federal income tax purposes. Contributions in excess of
permissible amounts will result in adverse tax consequences and penalties to the
Employer. Dividends and capital gains earned on amounts invested in Qualified
Pension-Plans are automatically reinvested in shares of the Fund and accumulate
tax-free until distribution. Withdrawals of contributions prior to age 59-1/2,
unless made as a result of disability, death or early retirement, may result in
adverse tax consequences and penalties.
403(b)(7) PROGRAM
The Tax-Deferred Annuity Program and Custodial Account offered by the
Fund (the "403(b)(7) Program") allows employees of certain tax exempt
organizations and schools to have a portion of their compensation set aside for
their retirement years in shares held in an investment company custodial
account.
In general, the maximum limit on annual contributions for each employee
is the lesser of $30,000 the year (as adjusted by the IRS for cost-of-living
increases), 25% of the employee's compensation or the employee's exclusion
allowance specified in Section 403(b) of the Code. However, an employee's salary
reduction
B-10
<PAGE> 36
contributions to a 403(b)(7) Program may not exceed $9,500 a year (1995) (as
adjusted for cost of living expenses and may be further adjusted if the employee
participates in another plan). Contributions in excess of permissible amounts
may result in adverse tax consequences and penalties. Dividends and capital
gains on amounts invested in the 403(b)(7) Program are automatically reinvested
in shares of the Fund. It is intended that dividends and capital gains on
amounts invested in the 403(b)(7) Program will accumulate tax-free until
distribution.
Employees will receive distributions from their accounts under the
403(b)(7) Program following termination of employment by retirement or at such
other time as the employer shall designate, but in no case later than an
employee's reaching age 65. Withdrawals of contributions prior to age 59-1/2,
unless made as a result of disability, death or early retirement, may result in
adverse tax consequences and penalties. Employees will also receive
distributions from their accounts under the 403(b)(7) Program in the event they
become disabled.
INVESTMENT PROGRAMS
AUTOMATIC INVESTMENT PLAN
Investors may periodically invest, through banks, broker-dealers and
other financial intermediaries offering automatic payment services, a specified
dollar amounts in periodic intervals into the Fund (the "automatic investment
plan"). The minimum initial investment under the automatic investment plan is
$500, with subsequent minimum investments of $50. Payments under the automatic
investment plan are automatic and will continue until such time as the Fund and
the investor's financial institution are notified to discontinue further
investments. See "Purchases and Redemptions of Shares" in the Prospectus.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Portfolio's Prospectus entitled "Performance
Information."
TOTAL RETURN
For purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to stock or other relevant indices in
advertisements or in reports to shareholders, performance may be stated in terms
of total return. Under the rules of the Commission, funds advertising
performance must include total return quotes calculated according to the
following formula:
P(1 + T)n = ERV
here: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value at the end of the
1, 5 or 10 year periods (or fractional
portion thereof) of a hypothetical $1,000
payment made at the beginning of the 1, 5
or 10 year periods.
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertisement for publication, and
will cover one, five and ten year periods or a shorter period dating from the
effectiveness of the Fund's registration statement. Total return, or "T" in the
formula above, is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value. The
Fund may also from time to time include in such advertising an aggregate total
return figure or a total return figure that is not calculated according to the
formula set forth above in order to compare more accurately the Fund's
performance with other measures of investment return. For example, in comparing
the Fund's total return with data published by Lipper Analytical Services, Inc.,
CDA Investment Technologies, Inc. or Weisenberger Investment Company Service, or
with the performance of
B-11
<PAGE> 37
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average, as
appropriate, the Fund may calculate its aggregate and/or average annual total
return for the specified periods of time by assuming the investment of $1,000 in
Fund shares and assuming the reinvestment of each dividend or other distribution
at net asset value on the reinvestment date. Such alternative total return
information will be given no greater prominence in such advertising than the
information prescribed under the Commission rules, and all advertisements
containing performance data will include a legend disclosing that such
performance data represent past performance and that the investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
YIELD
The Fund may also advertise their yield. Under the rules of the
Commission, the Fund advertising yield must calculate yield using the following
formula:
YIELD = 2[(a-b +1)(6) - 1]
---
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursement).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last
day of the period.
Under the foregoing formula, yield is computed by compounding
semi-annually, the net investment income per share earned during a 30 day period
divided by the maximum offering price per share on the last day of the period.
For the purpose of determining the interest earned (variable "a" in the formula)
on debt obligations that were purchased by the Fund, the formula generally calls
for amortization of the discount or premium; the amortization schedule will be
adjusted monthly to reflect changes in the market values of the debt
obligations.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields will fluctuate, they cannot be compared with
yields on savings account or other investment alternatives that provide an
agreed to or guaranteed fixed yield for a stated period of time. However, yield
information may be useful to an investor considering temporary investments in
money market instruments. In comparing the yield of one money market fund to
another, consideration should be given to each fund's investment policies,
including the types of investments made, lengths of maturities of the Fund
securities (the method used by the Fund to compute the yield methods may differ)
and whether there are any special account charges which may reduce the effective
yield.
The yields on certain obligations are dependent on a variety of
factors, including general money market conditions, conditions in the particular
market for the obligation, the financial condition of the issuer, the size of
the offering, the maturity of the obligation and the ratings of the issue. The
ratings of Moody's and S&P represent their respective opinions as to the quality
of the absolute standards of quality. Consequently, obligations with the same
rating, maturity and interest rate may have different market prices. In
addition, subsequent to its purchase by the Fund, an issue may cease to be rated
or may have its rating reduced below the minimum required for purchase. In such
an event, the Investment Manager will consider whether the Fund should continue
to hold the obligation.
DETERMINATION OF NET ASSET VALUE;
VALUATION OF FUND SECURITIES
The net asset value of each share of the Fund is determined each day on
which the NYSE is open for trading (a "Fund Business Day"). (As of the date of
this Statement of Additional Information, the NYSE is open for trading every
weekday except for the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day). This determination of net asset value of shares of the Fund is
made once during each such day at 4:00 p.m. New York time by dividing the
B-12
<PAGE> 38
value of the Fund's net assets (i.e., the value of its investment in the Fund
and any other assets less its liabilities, including expenses payable or
accrued) by the number of shares outstanding at the time the determination is
made. Purchases and redemptions will be effected at the time of determination of
net asset value next following the receipt of any purchase or redemption order
deemed to be in good order. See "Purchases and Redemptions of Shares" in the
Prospectus.
Equity securities held by the Fund are valued at the last sale price on
the exchange on which they are primarily traded or on the NASDAQ system for
unlisted national market issues, or at the last quoted bid price for securities
in which there were no sales during the day or for unlisted securities not
reported on the NASDAQ system. If the Fund purchases option contracts, such
option contracts which are traded on commodities or securities exchanges are
normally valued at the settlement price on the exchange on which they are
traded. Short-term obligations with remaining maturities of less than sixty days
are valued at amortized cost, which constitutes fair value as determined by the
Board of Trustees of the Fund. Fund securities (other than short-term
obligations with remaining maturities of less than sixty days) for which there
are no such quotations or valuations are valued at fair value as determined in
good faith by or at the direction of the Fund's Board of Trustees.
A determination of value used in calculating net asset value must be a
fair value determination made in good faith utilizing procedures approved by the
Fund's Board of Trustees. While no single standard for determining fair value
exists, as a general rule, the current fair value of a security would appear to
be the amount which the Fund could expect to receive upon its current sale.
Some, but not necessarily all, of the general factors which may be considered in
determining fair value include: (i) the fundamental analytical data relating to
the investment; (ii) the nature and duration of restrictions on disposition of
the securities; and (iii) an evaluation of the forces which influence the market
in which these securities are purchased and sold. Without limiting or including
all of the specific factors which may be considered in determining fair value,
some of the specific factors include: type of security, financial statements of
the issuer, cost at date of purchase, size of holding, discount from market
value, value of unrestricted securities of the same class at the time of
purchase, special reports prepared by analysts, information as to any
transactions or offers with respect to the security, existence of merger
proposals or tender offers affecting the security, price and extent of public
trading in similar securities of the issuer or comparable companies, and other
relevant matters.
Interest income on short-term obligations held by the Fund is
determined on the basis of interest accrued less amortization of premium.
B-13
<PAGE> 39
MANAGEMENT OF THE TRUST AND THE FUND
TRUSTEES AND OFFICERS OF THE FUND
The Trustees and officers of the Fund and their ages and principal
occupations during the past five years are set forth below. Asterisks indicate
that those Trustees and officers are "interested persons" (as defined in the
Investment Company Act) of the Fund. Unless otherwise indicated below, the
address of each Trustee and officer is 9107 Wilshire Boulevard, Suite 700,
Beverly Hills, California 90210.
<TABLE>
<CAPTION>
POSITIONS(S) HELD
NAME AND ADDRESS AGE WITH REGISTRANT OCCUPATION(S) DURING PAST 5 YEARS
- ---------------- --- ----------------- ---------------------------------
<S> <C> <C> <C>
Shelly J. Meyers 36 Chairman of the Chairman of the Board, President and Trustee
Board, President since March, 1996; Manager and President of
and Trustee Meyers, Sheppard & Co., LLC, since February
1996; Assistant Vice President,
Institutional Asset Management for The
Boston Company Asset Management, Inc., from
July, 1994 through February, 1995;
Associate, The Boston Company Asset
Management, Inc., June 1993 to September
1993; Lead Analyst, International Audit,
Chevron Corporation, from June, 1989 through
September, 1992.
Leslie C. Sheppard 42 Executive Vice Executive Vice President and Trustee since
President and March 1996; Manager and Executive Vice
Trustee President of Meyers, Sheppard & Co., LLC,
since February 1996; Marketing
Representative/Asset Manager - Real Estate,
Fannie Mae, from 1993 through February 1996;
Investment Banking Principal and Asset
Manager - Real Estate, Takenaka & Co., from
1989 through 1992.
____________________ __ Trustee ____________________________________________
____________________________________________
____________________________________________
____________________ __ Trustee ____________________________________________
____________________________________________
____________________________________________
____________________ __ Trustee ____________________________________________
____________________________________________
____________________________________________
John J. Pileggi 37 Vice President and Director of Furman Selz LLC since 1994;
Furman Selz LLC Treasurer Senior Managing Director of Furman Selz
230 Park Avenue since 1992; Managing Director of Furman Selz
New York, N.Y. 10169 from 1984 through 1992.
Joan V. Fiore 39 Vice President and Managing Director and Counsel of Furman Selz
Furman Selz LLC Secretary LLC since 1991; Attorney with the U.S.
230 Park Avenue Securities and Exchange Commission, Division
New York, N.Y. 10169 of Investment Management, from 1986 to 1991.
</TABLE>
B-14
<PAGE> 40
<TABLE>
<S> <C> <C> <C>
Gordon M. Forrester 35 Assistant Treasurer Managing Director of Furman Selz LLC since
Furman Selz LLC 1995; Director of Furman Selz LLC from 1994
230 Park Avenue to 1995; Associate Director of Furman Selz
New York, N.Y. 10169 from 19___ to 1994.
Sheryl Hirschfeld 35 Assistant Secretary Director of Corporate Secretary Services of
Furman Selz LLC Furman Selz LLC since 1994; Assistant to the
230 Park Avenue General Corporate Secretary and General
New York, N.Y. 10169 Counsel at The Dreyfus Corporation from 1982
to 1994.
</TABLE>
COMPENSATION TABLE
The following table shows the compensation paid by the Trust to the
Trustees:
<TABLE>
<CAPTION>
PENSION OR RETIREMENT TOTAL COMPENSATION
AGGREGATE BENEFITS ACCRUED AS ESTIMATED ANNUAL FROM TRUST AND FUND
COMPENSATION FROM PART OF FUND BENEFITS UPON COMPLEX PAID TO
NAME OF TRUSTEE THE FUND EXPENSES RETIREMENT TRUSTEES
- --------------- ----------------- ---------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Shelly J. Meyers None None None None
Leslie C. Sheppard None None None None
</TABLE>
The Trust pays $______ in fees per annum to each Trustee who is not a
director, officer, employee or affiliate of the Investment Manager or any Fund
service provider, together with such Trustees' out-of-pocket expenses related to
attendance at meetings of the Board of Trustees. Executive officers of the Trust
receive no compensation from the Trust for their services as such. The Trust
does not have a pension or retirement plan applicable to Trustees or officers of
the Trust.
INVESTMENT MANAGER
The Investment Manager provides its services as the Fund's manager and
investment adviser pursuant to a Investment Management Agreement approved by the
Board of Trustees.
As the Fund's manager, the Investment Manager oversees (subject to the
overall authority of the Board of Trustees) the overall operations and
administration of the Fund, including the supervision of professional services
rendered by others, including the Distributor, Administrator, Transfer Agent,
and Custodian, as well as accounting, auditing and other services.
As the Fund's investment adviser, the Investment Manager implements the
investment strategy of the Fund and manages the Fund's investments subject to
the Fund's Investment Objective and Fundamental Social Criteria and the overall
supervision and approval by the Board of Trustees. Specifically, the Investment
Manager determines, from amongst the universe of companies identified as
satisfying the Social Objective, which companies the Fund should invest in, what
the appropriate mix of investments amongst such companies should be, and the
timing and extent of adjustments in the holdings of the Fund to satisfy the
requirements of diversification and the need to maintain sufficient reserves for
anticipated redemptions of shares. The Investment Manager also has sole
discretion to select brokers for purchases and sales. Although the Investment
Manager's investment advisory activities are subject to general oversight by the
Trustees and officers of the Fund, neither the Trustees nor officers of the Fund
evaluate the merits of the Investment Manager's selection of individual
securities from amongst designated companies with progressive policies towards
gays and lesbians.
B-15
<PAGE> 41
The Investment Manager furnishes at its own expense all facilities and
personnel necessary in connection with providing these services.
The Investment Management Agreement will continue in effect if such
continuance is specifically approved at least annually by the Fund's Board of
Trustees or by a majority vote of the shareholders of the Fund at a meeting
called for the purpose of voting on the Investment Management Agreement (with
the vote of each being in proportion to the amount of their investment), and, in
either case, by a majority of the Fund's Trustees who are not parties to the
Investment Management Agreement or interested persons of any such party at a
meeting called for the purpose of voting on the Investment Management Agreement.
The Investment Management Agreement provides that the Investment
Manager may render both management and investment advisory services to others.
The Investment Management Agreement is terminable without penalty on not more
than 60 days written notice by the Fund when authorized either by majority vote
of the shareholders in the Fund (with the vote of each being in proportion to
the amount of their investment) or by a vote of a majority of its Board of
Trustees, or by the Investment Manager, and will automatically terminate in the
event of its assignment. The Investment Management Agreement provides that
neither the Investment Manager nor its personnel shall be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in its services to the Fund, except for willful
misfeasance, bad faith or gross negligence or reckless disregard of its or their
obligations and duties under the Investment Management Agreement.
Pursuant to the terms of the Investment Management Agreement, the Fund
pays the Investment Manager for its investment management and advisory services,
a monthly fee equal, on an annual basis, to 1% of the Fund's average daily net
assets. This fee is higher than that paid by most mutual funds. The Investment
Manager reserves the right at any time to reduce and/or waive all or part of its
fee. The Investment Manager agrees to reimburse the Fund or make other
arrangements to limit Fund expenses to the extent required by expense
limitations imposed by certain states. The most restrictive expense limitation
imposed by states provide that annual expenses (as defined) may not exceed
2 1/2% of the first $30 million dollars of the average value of the Fund's net
assets, plus 2% of the next $70 million, plus 1 1/2% of such assets in excess of
$100 million. Whether expense limitations apply to the Fund and in what amounts
depends upon the particular regulations of such states.
ADMINISTRATOR AND TRANSFER AGENT
The Fund has entered into agreements with Furman Selz to provide the
Fund with administrative, fund accounting, and registrar, dividend disbursing
and transfer agency services, pursuant to an Administration Agreement, Fund
Accounting Agreement, and Services Agreement. The Administration Agreement and
Distribution Agreement are each renewable annually. Although each agreement
provides for different methods or rates of compensation to Furman Selz, as
hereinbelow discussed, the Fund has agreed to pay Furman Selz a minimum payment
of $150,000 per year for all of the aforesaid services, which fee is higher than
that paid by most mutual funds. These fees are separate from any fees paid to
Furman Selz in its capacity as the Fund's Distributor. Furman Selz reserves the
right at any time to reduce and/or waive all or part of its fees.
ADMINISTRATION AGREEMENT
Pursuant to the Administration Agreement, Furman Selz generally assists
the Fund and the Investment Manager in all aspects of the Fund's administration
and operations including the following: maintaining administrative office
facilities on behalf of the Fund; monitoring the performance and billings of the
independent contractors and agents of the Fund to the extent requested by the
Investment Manager; preparing or assisting in the preparation of, and filing all
documents required for compliance by the Fund with applicable federal and state
laws and regulations and stock exchanges, including financial statements and
semi-annual and annual reports to shareholders and proxy statements; maintaining
the books and records of the Fund as required under the Investment Company Act
and other applicable federal and state laws and regulations; performing
secretarial services such as the preparation of agendas, notices and minutes for
meetings of the Fund's Board of Trustees and its shareholders; and providing
advice and assistance in connection with the preparation of Fund sales
literature.
As compensation for these services, the Fund pays Furman Selz, per
year, an amount equal to 0.15% of the first $100 million in aggregate Fund
assets, 0.10% for the next $400 million, 0.07% for the next $500 million, and
0.06% for aggregate Fund assets in excess of $1 billion.
B-16
<PAGE> 42
Furman Selz will not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters relating
to the Administration Agreement, except a loss from willful misfeasance, bad
faith, or gross negligence on its part in the performance of its duties or from
reckless disregard by Furman Selz of its obligations and duties. Any person,
even though also an officer, director, partner, employee or agent of Furman
Selz, shall be deemed, when rendering services to the Fund, or acting on any
Fund (other than services or business in connection with Furman Selz' duties as
Administrator) to be acting solely for the Fund and not as an officer, director,
partner, employee, or agent of Furman Selz or under its control or discretion.
The Administration Agreement shall continue until terminated by the
Fund or Furman Selz on sixty days written notice.
FUND ACCOUNTING AGREEMENT
Pursuant to the Fund Accounting Agreement, Furman Selz acts as the
Accounting Services Agent of the Fund and maintains in accordance with Rule
31a-1 under the Investment Company Act, the following accounts and records
relating to the business of the Fund: cash receipts journal; cash disbursements
journal; dividends paid record; purchase and sale journal-portfolio securities;
subscription and redemption journals; security ledger; broker-dealer ledger;
general ledger; daily expense accruals; daily interest accruals; securities and
monies borrowed or loaned and collateral therefor; daily trial balances; and
investment income journal. Furman Selz shall promptly supply the Fund with daily
and periodic reports as agreed to by the Fund and Furman Selz.
Furman Selz is also obligated under the Fund Accounting Agreement to
perform the ministerial calculations necessary to calculate the Fund's net asset
value on a daily basis, and shall perform such calculations in accordance with
the Fund's then current prospectus except where the Fund has given other
instructions to utilize a different method of calculation. If quotes are not
available, Furman Selz shall give such portfolio securities values as the Fund
provides to Furman Selz by instruction. The Fund will indemnify Furman Selz for
any inaccurate or incomplete information provided to Furman Selz by the Fund or
its agents, and Furman Selz shall not be liable for any such inaccuracies.
Furman Selz shall incur no liability for, reasonable actions of Furman
Selz taken or omitted to be taken in good faith, and Furman Selz shall be
indemnified and held harmless by the Fund for any loss, liability or expense
arising out of its performance of this agreement except a loss which results
from the negligence or misconduct of its officers, agents and employees in such
performance.
The Fund Accounting Agreement may be terminated by either Furman Selz
or the Fund on sixty days written notice.
In consideration of its services under the Fund Accounting Agreement,
the Fund will pay Furman Selz the sum of $35,000 per year, plus reimbursement of
its out-of-pocket expenses.
SERVICES AGREEMENT (TRANSFER AGENT)
Pursuant to the Services Agreement, Furman Selz provides dividend
disbursement, registrar and transfer agency services to the Fund, in
consideration of which the Fund pays Furman Selz the sum of $15 per year per
each shareholder, subject to a $12,000 per year minimum. Furman Selz shall also
be reimbursed by the Fund for all costs of any forms, including bank checks and
proxies, used to communicate with shareholders of the Trust or its services
under the Services Agreement, as well as costs of postage, telephone, and
telegraph.
The Services Agreement may be terminated by Furman Selz or the Fund on
sixty days written notice.
DISTRIBUTOR
The Fund has entered into a Distribution Agreement with Furman Selz as
the Fund's Distributor. Under the Distribution Agreement, Furman Selz is
responsible for facilitating the continuous sale or redemption of Fund shares.
B-17
<PAGE> 43
Solely for the purpose of reimbursing Furman Selz for activities
primarily intended to result in the sale of Fund shares, the Trust has, on
behalf of the Fund and with the approval of the Board of Trustees, adopted a
Distribution Plan and Agreement (the "Distribution Plan") pursuant to Rule 12b-1
of Investment Company Act. Under the Distribution Plan, the Fund is authorized
to spend up to 0.25% of net asset value annually for Furman Selz's services in
anticipation of, or as reimbursement for, expenses incurred in connection with
the sale of shares of the Fund, such as payments to broker-dealers who advise
shareholders regarding the purchase, sale or retention of shares of the Fund,
payments to employees of the Distributor, advertising expenses and the expenses
of printing and distributing prospectuses and reports used for sales purposes,
expenses of preparing and printing sales literature and other
distribution-related expenses. If the fee received by the Distributor exceeds
its expenses, it may realize a profit from these arrangements. The initial
shareholder of the Fund (the Fund's sponsor, the Investment Manager), approved
the Distribution Plan on _______ , 1996.
The Distribution Plan will continue in effect indefinitely if such
continuance is specifically approved at least annually by a vote of both a
majority of the Fund's Trustees and a majority of the Fund's Trustees who are
not "interested persons of the Fund" and who have no direct or indirect
financial interest in the operation of the Distribution Plan or in any agreement
related to such Plan ("Qualified Trustees"). The Distributor will provide to the
Trustees of the Fund a quarterly written report of amounts expended by it under
the Distribution Plan and the purposes for which such expenditures were made.
The Distribution Plan further provides that the selection and nomination of the
Fund's Qualified Trustees shall be committed to the discretion of the
disinterested Trustees of the Fund. The Distribution Plan may be terminated upon
sixty days written notice by a vote of a majority of the Fund's Qualified
Trustees or by a vote of the shareholders of the Fund on the one hand, or by
sixty days written notice by Furman Selz on the other hand. The Distribution
Plan may not be amended to increase materially the amount of permitted expenses
thereunder without the approval of shareholders and may not be materially
amended in any case without a vote of the majority of both the Fund's Trustees
and the Fund's independent Trustees. The Distributor will preserve copies of any
plan, agreement or report made pursuant to the Distribution Plan for a period of
not less than six (6) years from the date of the Distribution Plan, and for the
first two (2) years the Distributor will preserve such copies in an easily
accessible place.
CUSTODIAN
The Fund has entered into a Custodian Agreement with Wells Fargo Bank,
N.A. ("Wells Fargo") pursuant to which Wells Fargo acts as custodian for the
Fund. The Custodian's responsibilities include safeguarding and controlling the
Fund's cash and securities, handling the receipt and delivery of securities,
collecting interest on the Fund's investments, and maintaining books of original
entry for fund accounting purposes. As compensation for its services, the Fund
pays Wells Fargo, per year, an amount equal to 0.10% of the first $10 million in
aggregate Fund assets, 0.08% for the next $10 million, 0.06% for the next $55
million, and 0.0 % for aggregate Fund assets in excess of $75 million.
INDEPENDENT AUDITORS
Duitch, Franklin & Co. are the independent auditors for the Fund and
the Fund, providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission.
CODE OF ETHICS
The Trust, on behalf of the Fund, adopted a Code of Ethics (the "Code
of Ethics"), which establishes standards by which certain access persons of the
Trust must abide relating to personal securities trading conduct. The Code of
Ethics provides that access persons shall place the interests of the
shareholders of the Fund first, shall avoid potential or actual conflicts of
interest with the Fund, and shall not take unfair advantage of their
relationship with the Fund. Access persons will be required by the Code of
Ethics to file quarterly reports of personal securities investment transactions.
The Code of Ethics provides that certain designated supervisory person(s) will
be appointed by the Trust, and shall supervise implementation and enforcement of
the Code of Ethics and shall, at their sole discretion, grant or deny approval
of transactions required by the Code of Ethics.
B-18
<PAGE> 44
TAXATION
Each year the Fund intends to qualify the Fund and elect to be treated
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), by meeting all applicable requirements of
Subchapter M, as to the nature of the Fund's gross income, the amount of Fund
distributions and the composition and holding period of the Fund's assets.
Because the Fund intends to distribute all of its net investment income and net
realized capital gains to shareholders in accordance with the timing
requirements imposed by the Code, it is not expected that the Fund will be
required to pay any federal income or excise taxes. If the Fund should fail to
qualify as a "regulated investment company" in any year, the Fund would incur a
regular corporate federal income tax upon its taxable income and Fund
distributions would generally be taxable as ordinary dividend income to the
shareholders.
Shareholders of the Fund will have to pay federal income taxes and any
state or local income taxes on the dividends and capital gain distributions they
receive from the Fund. Dividends from ordinary income and any distributions from
net short-term capital gains are taxable to shareholders as ordinary income for
federal income tax purposes, whether the distributions are made in cash or in
additional shares. A portion of the Fund's ordinary income dividends is normally
eligible for the dividends received deduction for corporations if the recipient
otherwise qualifies for that deduction with respect to its holding of Fund
shares. Availability of the deduction for a particular shareholder is subject to
certain limitations, and deducted amounts may be subject to the alternative
minimum tax and result in certain basis adjustments. Distributions of net
capital gains (i.e., the excess of net long-term capital gains over net short
term capital losses), whether made in cash or in additional shares, are taxable
to shareholders as long-term capital gains without regard to the length of time
the shareholders have held their shares.
Amounts not distributed on a timely basis in accordance with the
calendar year distribution requirement are subject to a nondeductible 4% excise
tax. To prevent imposition of the excise tax, the Fund must, and intends to,
distribute during each calendar year substantially all of its ordinary income
for that year and substantially all of its capital gain in excess of its capital
losses for that year, plus any undistributed ordinary income and capital gains
from previous years. Any Fund dividend that is declared in October, November or
December of any calendar year, that is payable to shareholders of record in such
a month, and that is paid the following January will be treated as if received
by the shareholders on December 31 of the year in which the dividend is
declared. The Fund will notify shareholders regarding the federal tax status of
its distributions after the end of each calendar year.
Any Fund distribution will have the effect of reducing the per share
net asset value of shares in the Fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of
shares of the Fund by a shareholder that holds-such shares as a capital asset
will be treated as long-term capital gain or loss if the shares have been held
for more than twelve months and otherwise as a short-term capital gain or loss.
However, any loss realized upon a disposition of shares in the Fund held for six
months or less will be treated as a long-term capital loss to the extent of any
distributions of net capital gain made with respect to those shares. Any loss
realized upon a disposition of shares may also be disallowed under rules
relating to wash sales.
The Fund is organized as a Delaware business trust and, under current
law, is not liable for any income or franchise tax in the State of Delaware as
long as the Fund qualifies as a regulated investment company under the Code. The
Fund's fiscal year-end is__________________.
Fund shareholders may be subject to state and local taxes on Fund
distributions to them. Shareholders are advised to consult with their tax
advisers with respect to the particular tax consequences to them of an
investment in the Fund.
B-19
<PAGE> 45
FUND TRANSACTIONS AND BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Fund are made
by a portfolio manager who is an employee of the Investment Manager and who is
appointed and supervised by its senior officers. Changes in the Fund's
investments are reviewed by its Board of Trustees. The portfolio manager serving
the Fund on behalf of the Investment Manager, may serve other clients of the
Investment Manager in a similar capacity.
The Fund's primary consideration in placing securities transactions
with the broker-dealer for execution is to obtain and maintain the availability
of execution at the most favorable prices and in the most effective manner
possible. The Investment Manager attempts to achieve this result by selecting a
broker-dealer to execute transactions on behalf of the Fund and other clients of
the Investment Manager based upon various relevant factors, including but not
limited to, the size and type of transaction, execution efficiency, the basis of
their professional capability, the value and quality of their brokerage
services, and the reasonableness of their brokerage commissions. In the case of
securities traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), the Investment
Manager normally seeks to deal directly with the primary market makers, unless
in its opinion, best execution is available elsewhere. In the case of securities
purchased from underwriters, the cost of such securities generally includes a
fixed underwriting commission or concession. From time-to-time, soliciting
dealer fees are available to the Investment Manager on the tender of the Fund's
securities in so-called tender or exchange offers. Such soliciting dealer fees
are in effect recaptured for the Fund by the Investment Manager. At present no
other recapture arrangements are in effect. Consistent with the foregoing
primary consideration, the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and such other policies as the Trustees of the Fund may
determine, the Investment Manager may consider sales of shares of the Fund and
of securities of other investors as a factor in the selection of broker-dealers
to execute the Fund's securities transactions.
Under the Investment Management Agreement with the Investment Manager,
and as permitted by Section 28(e) of the Securities Exchange Act of 1934, Meyers
Sheppard may cause the Fund to pay a broker-dealer acting on an agency basis
which provides brokerage and research services to the Investment Manager an
amount of commission for effecting a securities transaction for the Fund in
excess of the amount other broker-dealers would have charged for the transaction
if the Investment Manager determines in good faith that the greater commission
is reasonable in relation to the value of the brokerage and research services
provided by the executing broker-dealer viewed in terms of either a particular
transaction or the Investment Manager's overall responsibilities to the Fund or
to its other clients. Not all of such services are useful or of value in
advising the Fund.
The term "brokerage and research services" includes advice as to the
value of securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or of purchasers or sellers of
securities; furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto such as clearance and settlement.
Although commissions paid on every transaction will, in the judgment of
the Investment Manager, be reasonable in relation to the value of the brokerage
services provided, commissions exceeding those which another broker might charge
may be paid to broker-dealers who were selected to execute transactions on
behalf of the Fund and the Investment Manager's other clients, in part for
providing advice as to the availability of securities or of purchasers or
sellers of securities and services in effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.
Certain broker-dealers may be willing to furnish statistical, research and other
factual information or services to the Investment Manager for no consideration
other than brokerage or underwriting commissions.
The Investment Manager attempts to evaluate the quality of research
provided by brokers. The Investment Manager sometimes uses evaluations resulting
from this effort as a consideration in the selection of brokers to execute
portfolio transactions. However, the Investment Manager is able to quantify the
amount of commissions which are paid as a result of such research because a
substantial number of transactions are effected through brokers which provide
research but which are selected principally because of their execution
capabilities.
B-20
<PAGE> 46
The fees that the Fund pays to the Investment Manager will not be
reduced as a consequence of the Fund's receipt of brokerage and research
services. To the extent the Fund's securities transactions are used to obtain
brokerage and research services, the brokerage commissions paid by the Fund will
exceed those that might otherwise be paid for such portfolio transactions and
research, by an amount which cannot be presently determined. Such services may
be useful and of value to the Investment Manager in serving both the Fund and
other clients and, conversely, such services obtained by the placement of
brokerage business of other clients may be useful to the Investment Manager in
carrying out its obligations to the Fund. While such services are not expected
to reduce the expenses of the Investment Manager, the Investment Manager would,
through use of the services, avoid the additional expenses which would be
incurred if it should attempt to develop comparable information through its own
staff.
The Fund will not engage in brokerage transactions with the Investment
Manager (who is the Fund's investment adviser and the manager) or the
Administrator (Furman Selz) or any of their respective affiliates or any
affiliate of the Fund except to the extent, within the meaning of Rule 17e-1 of
the Investment Company Act, any commissions, fees or other remunerations payable
in connection with such transactions do not exceed the usual and customary
commission or fee of such broker and are reasonable and fair compared to those
which could be obtained by other brokers in comparable transactions.
In certain instances there may be securities which are suitable for the
Fund as well as for one or more of the Investment Manager's other clients.
Investment decisions for the Fund and for the Investment Manager's other clients
are made with a view to achieving their respective investment objectives. It may
develop that a particular security is bought or sold for only one client even
though it might be held by, or bought or sold for, other clients. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling that same security. Some simultaneous transactions are
inevitable when several clients receive investment advice from the same
investment adviser, particularly when the same security is suitable for the
investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could have a detrimental
effect on the price or volume of the security as far as the Fund is concerned.
However, it is believed that the ability of the Fund to participate in volume
transactions will produce better executions for the Fund.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund is a Delaware Business Trust established under a Declaration
of Trust dated as of , 1996. Its authorized capital consists of an
unlimited number of shares of beneficial interest of $0.00001 par value, issued
in separate series. Each share of each series represents an equal proportionate
interest in that series with each other share of that series.
The assets of the Fund received for the issue or sale of the shares of
each fund and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are specifically allocated to such series and
constitute the underlying assets of such series. The underlying assets of each
series are segregated on the books of account, and are to be charged with the
liabilities in respect to such series and with such a share of the general
liabilities of the Fund. If a series was unable to meet its obligations, the
assets of only that series, and no other series, will be available to creditors
for that purpose. General liabilities, expenses, costs, charges or reserves
which are not readily identifiable as belonging to any particular series shall
be allocated and charged by the Trustees between or among any one or more of the
series in such manner as the Trustees deem fair and equitable. In the event of
the dissolution or liquidation of the Fund or any series, the holders of the
shares of any series are entitled to ratably receive, as a class, the value of
the underlying assets of such shares available for distribution to shareholders.
However, the payment to the holders may be reduced by any fees, expenses or
charges allocated to that series.
Shares of the Fund entitle their holder to one vote per share; however,
separate votes are taken by each series on matters affecting an individual
series. For example, a change in investment policy for a series would be voted
upon only by shareholders of the series involved.
B-21
<PAGE> 47
The Trustees of the Fund have the authority to designate additional
series and to designate the relative rights and preferences as between the
different series. There is presently one series so designated. All shares issued
and outstanding will be fully paid and nonassessable by the Fund, and redeemable
as described in this Statement of Additional Information and in the Prospectus.
The Trust Instrument provides that obligations of the Fund are not
binding upon the Trustees individually but only upon the property of the Fund,
that the Trustees and officers will not be liable for errors of judgment or
mistakes of fact or law, and that the Fund will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Fund unless, as
to liability to Fund or Fund shareholders, it is finally adjudicated that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that they did not act in good faith in
the reasonable belief that their actions were in the best interests of the Fund.
In the case of settlement, such indemnification will be provided unless it has
been determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees or in a written
opinion of independent counsel, that such officers or Trustees have engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard of their
duties.
The Trust Instrument contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and provides for indemnification
and reimbursement of expenses out of Fund property for any shareholder held
personally liable for the obligations of a Fund solely by reason of his being or
having been a shareholder. The Trust Instrument also provides for the
maintenance, by or on behalf of the Trust and the Fund, of appropriate insurance
(for example, fidelity bond and errors and omissions insurance) for the
protection of the Trust and the Fund, their shareholders, trustees, officers,
employees and agents, covering possible tort and other liabilities. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which Delaware law did not apply,
inadequate insurance existed and the Fund itself was unable to meet its
obligations
FINANCIAL STATEMENTS
The Statements of Assets and Liabilities of the Fund and the Fund dated
as of _______ , 1996 included herein have been so included in reliance upon the
report of Duitch, Franklin & Co., independent auditors, as experts in accounting
and auditing.
B-22
<PAGE> 48
PART C.
OTHER INFORMATION
MEYERS SHEPPARD PRIDE FUND
ITEM 24. * FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Statement of Assets and Liabilities
Report of Independent Accountants
(b) Exhibits:
Exhibit
Number Description of Exhibit Page
------- ---------------------- ----
* 1 Certificate of Trust
* 2 By-Laws
* 3 None
* 4 Declaration of Trust
* 5 Form of Investment Management Agreement between
Meyers Sheppard Pride Fund and Meyers, Sheppard
& Co., LLC
* 6 Form of Distribution Agreement between the
Registrant and Furman Selz LLC
7 None
* 8 Form of Custody Agreement between Meyers
Sheppard Pride Fund and Wells Fargo Bank, N.A.
* 9(a) Form of Administration Agreement between Meyers
Sheppard Pride Fund and Furman Selz LLC
* 9(b) Form of Fund Accounting Agreement between
Meyers Sheppard Pride Fund and Furman Selz LLC
* 9(c) Form of Services Agreement (for Registrar,
Dividend Disbursement and Transfer Agent)
between Meyers Sheppard Pride Fund and Furman
Selz LLC
* 10 Opinion and Consent of Pollet & Woodbury, a Law
Corporation
1
<PAGE> 49
* 11 Consent of independent accountants
12 None
* 13 Form of Subscription Agreement between Meyers
Sheppard Pride Fund and Meyers, Sheppard & Co.,
LLC
14 None
* 15 Form of Distribution Plan and Agreement
16 None
17 Electronic Data Schedules
18 None
* 19 Powers of Attorney from
* To be provided with subsequent amendment.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Prior to the effectiveness of this Registration Statement, the
Registrant sold ___________ shares of the Fund to Meyers, Sheppard & Co., LLC, a
California limited liability company, which is also the manager and investment
adviser to the Fund. Meyers, Sheppard & Co. is controlled by Ms. Shelly J.
Meyers and Mr. Leslie C. Sheppard.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
TITLE OF CLASS:
SHARES OF BENEFICIAL INTEREST NUMBER OF RECORD HOLDERS
(PAR VALUE $0.00001) AT JUNE , 1996
------------------------------------ ------------------------
<S> <C>
Series 1: Meyers Sheppard Pride Fund 1
</TABLE>
ITEM 27. INDEMNIFICATION.
Reference is made to Section __________ of Registrant's
Declaration of Trust and Article _________ of Registrant's Distribution
Agreement.
Registrant, its Trustees and officers are insured against certain
expenses in connection with the defense of claims, demands, actions, suits, or
proceedings, and certain liabilities that might be imposed as a result of such
actions, suits or proceedings.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act"), may be permitted to
directors, trustees, officers and controlling persons of the Registrant and the
principal underwriter pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, trustee, officer, or controlling person of the
Registrant and the principal underwriter in connection with the successful
defense of any action, suite or proceeding) is asserted against the Registrant
by such director, trustee, officer or controlling person or principal
underwriter in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
2
<PAGE> 50
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The list required by this Item 28 of the managers and officers of
Meyers, Sheppard & Co., LLC, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
managers and officers during the past two years, is incorporated by reference to
Schedules A and D of Form ADV filed by Meyers, Sheppard & Co., LLC, pursuant to
the Advisers Act (SEC File No. 801-51437).
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Furman Selz LLC, is the distributor (the "Distributor") for
the shares of the Registrant. The Distributor also serves as the principal
underwriter or placement agent for the following registered investment
companies:
-------------------------
-------------------------
-------------------------
(b) The following are the directors and officers of the
Distributor. The principal business address of these individuals is 230 Park
Avenue, New York, New York 10169, unless otherwise noted. None of these persons
are an officer or trustee of the Fund.
Edmund A. Hajim Chairman & CEO
Roy L. Furman President
Bernard T. Selz Executive Vice President
Steven D. Blecher Executive Vice President/Secretary
Elizabeth Q. Solazzo Executive Vice President/Assistant Secretary
John Steinhardt Executive Vice President
Michael C. Petrycki Executive Vice President
William Schutzer Executive Vice President
Brian P. Friedman Executive Vice President
Fred Fraenkel Executive Vice President
Michael Weisberg Executive Vice President
William P. Collins Executive Vice President
Thalia Cody Assistant Secretary
Robert J. Miller Treasurer
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the Rules thereunder will be maintained at the
offices of:
(1) Records Relating to Management and Investment Advisement
functions:
Meyers Sheppard Pride Fund
c/o Meyers Sheppard Investment Trust
9107 Wilshire Boulevard, Suite 700
Beverly Hills, California 90210
3
<PAGE> 51
(2) Records Relating to Administration, Fund Accounting,
Distribution and Registrar/Transfer Agency Functions:
Furman Selz LLC
237 Park Avenue
New York, New York 10017
(3) Records Relating to Custodial Functions:
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
ITEM 31. MANAGEMENT SERVICES.
The Registrant is not a party to any management related service
contract not discussed in Part A or Part B of this Registration Statement.
ITEM 32. UNDERTAKINGS.
(a) The Registrant undertakes to file a post-effective
amendment, using financials which need not be certified, within four to six
months following the effective date of this registration statement. The
financial statements included in such amendment will be as of and for the time
period ended on a date reasonably close or as soon as practicable to the date of
the filing of the amendment.
(b) The Registrant undertakes to comply with Section 16(c) of
the Investment Company Act as though such provisions of the Investment Company
Act were applicable to the Registrant, except that the request referred to in
the third full paragraph thereof may only be made by shareholders who hold in
the aggregate at least 10% of the outstanding shares of the Registrant,
regardless of the net asset value of shares held by such requesting
shareholders.
(c) If the information called for by Item 5A is contained in
the latest annual report to shareholders, the Registrant shall furnish each
person to whom a prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant has duly
caused this Registration Statement on Form N-IA (the "Registration Statement")
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Beverly HIlls, State of California, on the 1st day of April, 1996.
MEYERS SHEPPARD INVESTMENT TRUST
(Registrant)
By: /s/ Shelly J. Meyers
-----------------------------------
Name: Shelly J. Meyers
Title: Chairman, Trustee and President
4
<PAGE> 52
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on April 1, 1996.
Signatures Title
- ---------- -----
By: /s/ Shelly J. Meyers Chairman, Trustee and President
----------------------------
Shelly J. Meyers
By: /s/ Leslie C. Sheppard Trustee and Executive Vice President
----------------------------
Leslie C. Sheppard
By: Trustee *
----------------------------
----------------------------
By: Trustee *
----------------------------
----------------------------
By: Trustee *
----------------------------
----------------------------
By: /s/ John J. Pileggi Vice President and Treasurer
----------------------------
John J. Pileggi
* To be designated by amendment prior to the effective date of this
Registration Statement.
5
