ORCHARD SERIES FUND
8515 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
March 1, 2000
VIA EDGAR TRANSMISSION
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 200549
Re: Orchard Series Fund Submission under Rule 497(e) of the Securities
Act of 1933 File Nos. 333-9217 and 811-07735
Ladies and Gentlemen:
Filed pursuant to Rule 497(e) of the Securities Act of 1933, the form of
Prospectus for the Orchard Series Fund (the "Fund"), Orchard Value Fund Class A
Shares filed herewith varies from that filed as part of Post Effective Amendment
No. 8 to the Fund's registration statement on Form N-1A, the most recent
amendment to the Fund's registration statement filed with the Securities and
Exchange Commission electronically via EDGAR transmission, on February 17, 2000.
The forms of Prospectuses for the Orchard Series Fund for the Orchard Index 500,
Orchard Index 600 and Orchard Money Market Funds, and the Orchard Value Fund
Class B Shares are substantially the same as filed and are or will be certified
as such in the Orchard Series Fund's filing made under Rule 497(j) of the
Securities Act of 1933.
If you should require any additional information regarding the foregoing, please
do not hesitate to contact me at (303) 737-4001.
Sincerely,
/s/ Russell L. Biles
Russell L. Biles
Attorney
<PAGE>
ORCHARD VALUE FUND
Class A Shares
8515 East Orchard Road
Englewood, Colorado 80111
(800) 784-4508
Class A Shares
PROSPECTUS
The Orchard Value Fund (the "Fund") is divided into Class A and Class B shares.
Each Class has different expenses that will affect performance. This Prospectus
covers the Class A shares of the Fund only.
Orchard Value Fund. This Fund seeks long-term capital appreciation by investing
primarily in common stocks issued by U.S. companies when it is believed that
such stocks are undervalued.
GW Capital Management, LLC ("GW Capital Management"), a wholly owned subsidiary
of Great-West Life & Annuity Insurance Company, is the investment adviser to the
Fund. CIC Asset Management, Inc. (the "Sub-Adviser" or "CIC"), as sub-adviser,
manages the Value Fund on a day-to-day basis and makes all the investment
decisions on behalf of the Value Fund, subject to the supervision of GW Capital
Management and the Board of Trustees of the Fund.
The Value Fund is a separate mutual fund of the Orchard Series Fund (the
"Trust"). This Prospectus contains important information about the Value Fund
Class A shares that you should consider before investing. Please read it
carefully and save it for future reference.
This Prospectus does not constitute an offer to sell securities in any state or
other jurisdiction to any person to whom it is unlawful to make such an offer in
such state or other jurisdiction.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
The date of this Prospectus is February 29, 2000.
<PAGE>
CONTENTS
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Page
The Value Fund at a Glance
Brief description of the
Fund......................................................................................... 3
Performance..................................................................................... 4
Fees and Expenses
The Value Fund's annual operating
expenses.................................................................... 5
The Fund in Detail
Investment objectives and
policies................................................................................. 6
More Information About the Fund............................................................. 6
Management of the Fund........................................................................................
9
Important Information About Your Investment..................................................... 10
Investing in the Fund..............................................................................................
11
Financial Highlights
A summary of financial data for the Fund................................................................. 15
</TABLE>
<PAGE>
THE VALUE FUND AT A GLANCE
The following information about Orchard Value Fund Class A shares is only a
summary of important information you should know. More detailed information
about the Fund's investment strategies and risks is included elsewhere in this
Prospectus. Please read this Prospectus carefully before investing in the Fund.
ORCHARD VALUE FUND
The investment objective for this Fund is to:
o Seek long-term capital appreciation by investing primarily in common stocks
issued by U.S. companies when it is believed that such stocks are
undervalued.
The principal investment strategies for this Fund include:
o Investing primarily in common stocks issued by U.S. companies traded on the
various U.S. stock exchanges and in the over-the-counter markets.
o Investing primarily in stocks that the Sub-Adviser believes are undervalued.
o Selling stocks when the Sub-Adviser believes that they are fairly valued.
The principal investment risks for this Fund include:
o Stock markets are volatile and can decline significantly in response to
adverse issuer, political, regulatory, market or economic developments.
Market risk may affect a single company, industry sector of the economy or
the market as a whole.
o The value of an individual security or particular type of security can be
more volatile than the market as a whole and can perform differently than
the value of the market as a whole.
o When you sell your shares of the Fund, they could be worth less than what
you paid for them.
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PERFORMANCE
The bar chart and table below provide an indication of the risk of investment in
the Fund. The bar chart shows the Fund's performance for each calendar year
since inception. The table shows how the Fund's average annual total return for
the one year and since inception compare to a broad based stock market index.
The returns shown are historical and are not an indication of future
performance.
Orchard Value Fund, Class A
Year-By-Year Annual Returns
[OBJECT OMITTED]
1999
During the periods shown in the chart for the Orchard Value Fund, the highest
return for a quarter was 11.24% (quarter ending June 1999) and the lowest return
for a quarter was -12.85% (quarter ending September 1999).
Average Annual Returns
For the periods ended December 31, 1999, the past one year and inception to
date:
Since
1 Year Inception*
------ ---------
Orchard Value Fund -0.17% -2.90% +
Russell 1000 Value Index 7.35% 16.17%
S&P 500 Index 21.04% 18.58%
* The inception date for the Orchard Value Fund was March 2, 1998. + Through
December 31, 1999.
Given the fundamental objectives of the Orchard Value Fund, the investment
adviser and sub-adviser have determined that the Russell 1000 Value Index is the
appropriate index to use as a benchmark for the Fund's performance. The adviser
and sub-adviser decided to use the Russell 1000 Value Index as the Fund's
benchmark index because it more accurately represents the manager's investment
style for the Fund.
Because the Fund has been in existence for a short period of time (less than two
years), very little performance data is available. Historical performance data
of institutional private accounts managed by the Sub-Adviser (the manager of the
Fund) that have investment objectives, policies, strategies and risks
substantially similar to those of the Fund can be found on page 9 of this
prospectus.
The S&P 500 Index is an unmanaged index comprised of 500 stocks chosen for their
general representation of the stock market composition by Standard & Poor's
Corporation. The stocks which make up the S&P 500 trade on the New York Stock
Exchange, the American Stock Exchange, or the NASDAQ National Market System. It
is generally acknowledged that the S&P 500 broadly represents the performance of
publicly traded common stocks in the United States.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "S&P 600(R)," "Standard & Poor's
500", "Standard & Poor's SmallCap 600 Index" and "S&P SmallCap 600 Index" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
Great-West Life & Annuity Insurance Company and its majority-owned subsidiaries
and affiliates. Orchard Series Fund is not sponsored, endorsed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in Orchard Series Fund.
The Russell 1000 Value Index is a subset of the Russell 1000 Index, which in
turn is a subset of the Russell 3000 Index. The Russell 3000 Index represents
approximately 98% of the total market capitalization of all U.S. stocks that
trade on the New York and American Stock Exchanges and in the NASDAQ (National
Association of Securities Dealers Automated Quotations) National Market System
over-the-counter market. The Russell 1000 consists of the 1000 largest stocks
within the Russell 3000 Index, representing approximately 94% of the Russell
3000 Index total market capitalization. The Russell 1000 Value Index is
comprised of stocks from the Russell 1000 Index with greater-than-average value
orientation. A stock is determined to have a greater-than-average value
orientation if it falls in the bottom 50% of the Russell 1000 Index based on
cumulative market capitalization, ranked by descending price-to-book ratio.
Thus, securities in the Russell 1000 Value Index typically have low
price-to-book and price-earnings ratios, higher divided yields and lower
forecasted growth rates than growth-oriented securities.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment)
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Sales Load Imposed on
Purchases....................................................................NONE
Sales Load Imposed on Reinvested
Dividends.................................................NONE
Deferred Sales
Load..........................................................................................NONE
Redemption
Fees...............................................................................................NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees.....................................................................1.00%
Distribution and Service (12b-1) Fees...............................................NONE
Other Expenses.........................................................................0.00%
Total Annual Fund Operating Expenses.......... ...................................1.00%
</TABLE>
Fund Expense Example
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 Year 3 Years5 Years10 Years
$103 $323 $566 $1,289
THE VALUE FUND IN DETAIL
The following questions are designed to help you better understand an investment
in the Orchard Value Fund.
Q: What types of securities does the Fund purchase for investment?
A: The Fund invests primarily in common stocks issued by U.S. companies which
are believed by the Sub-Adviser to be undervalued at the time of
acquisition.
Q: How does the Sub-Adviser determine that a stock is undervalued at the time
of acquisition?
A: In advance of actually purchasing a stock, the Sub-Adviser researches to
identify companies whose stock the Sub-Adviser believes to be undervalued. The
Sub-Adviser uses the S&P 500 index to represent the overall market and the
Russell 1000 Value Index as a benchmark of its investment style. The Sub-Adviser
then uses characteristics of the S&P 500 index for determination of relative
valuation.
Q: Will a security be sold due to short-term earnings disappointment?
A: No. The Sub-Adviser maintains a long-term approach. If the Sub-Adviser
continues to believe the stock is undervalued, the stock will be not be
sold due solely to short-term earnings disappointment.
You should carefully consider your own investment goals, time horizon (the
amount of time you plan to hold your shares of the Fund) and risk tolerance
before investing in the Fund. There is no guarantee that the Fund will meet its
investment objective.
MORE INFORMATION ABOUT THE FUND
The following pages contain more detailed information about the types of
securities in which the Fund may invest, strategies the Sub-Adviser may use to
achieve the Fund's investment objective, and a summary of related risks. A
complete listing of the Fund's investment limitations and more detailed
information about its investment practices are contained in the Statement of
Additional Information. All percentage limitations relating to the Fund's
investment strategies are applied at the time a Fund acquires a security.
1. Money Market Instruments and Temporary Investment Strategies
While it is not a principal investment strategy, the Value Fund may hold cash or
cash equivalents and may invest in short-term, high-quality debt (money market)
instruments as deemed appropriate by GW Capital Management or the Sub-Adviser.
The Value Fund may also invest up to 100% of its assets in money market
instruments as deemed necessary by GW Capital Management or CIC for temporary
defensive purposes to respond to adverse market, economic or political
conditions. Should the Value Fund take this action, it may not achieve its
investment objective.
2. Equity Securities
The Fund pursues investment in equity securities, such as common and preferred
stocks, convertible stocks, and warrants as a principal investment strategy.
Therefore, as an investor in the Fund, the return on your investment will be
based primarily on the risks and rewards of equity securities. Equity prices
fluctuate based on changes in a company's financial condition and overall market
and economic conditions. Equity securities of smaller companies are especially
sensitive to these factors. The value of a company's stock may fall as a result
of factors that directly relate to that company, such as lower demand for the
company's products or services or poor management decisions. A stock's value may
also fall because of economic conditions that affect many companies, such as
increases in production costs. The value of a company's stock may also be
affected by changes in financial market conditions that are not directly related
to the company or its industry, such as changes in interest rates or currency
exchange rates.
3. Derivatives
While it is not a principal investment strategy, the Fund can use various
techniques to increase or decrease its exposure to changing security prices,
currency exchange rates, or other factors that affect security values. These
techniques are also referred to as "derivative" transactions.
Derivatives are financial instruments designed to achieve a certain economic
result when an underlying security, index, interest rate, commodity, or other
financial instrument moves in price. Derivatives can, however, subject the Fund
to various levels of risk. There are four basic derivative products: forward
contracts, futures contracts, options and swaps.
Forward contracts commit the parties to a transaction at a time in the future at
a price determined when the transaction is initiated. They are the predominant
means of hedging currency or commodity exposures. Futures contracts are similar
to forwards but differ in that (1) they are traded through regulated exchanges,
and (2) are "marked to market" daily.
Options differ from forwards and futures in that the buyer has no obligation to
perform under the contract. The buyer pays a fee, called a premium, to the
seller, who is called a writer. The writer gets to keep the premium in any event
but must deliver (in the context of the type of option) at the buyer's demand.
Caps and floors are specialized options which enable floating-rate borrowers and
lenders to reduce their exposure to interest rate swings for a fee.
A swap is an agreement between two parties to exchange certain financial
instruments or components of financial instruments. Parties may exchange streams
of interest rate payments, principal denominated in two different currencies, or
virtually any payment stream as defined by the parties.
Derivatives involve special risks. If the Sub-Adviser judges market conditions
incorrectly or employs a strategy that does not correlate well with the Fund's
investments, these techniques could result in a loss. These techniques may
increase the volatility of the Fund and may involve a small investment of cash
relative to the magnitude of the risk assumed. In addition, these techniques
could result in a loss if the counterparty to the transaction does not perform
as promised.
Derivative transactions may not always be available and/or may be infeasible to
use due to the associated costs.
4. Foreign Investments
While it is not a principal investment strategy, the Fund may, in a manner
consistent with its investment objective and policies, invest in foreign
securities. Securities of foreign companies generally have the same risk
characteristics as those issued by U.S. companies. In addition, foreign
investments present other risks and considerations not presented by U.S.
investments. Investments in foreign securities may cause the Fund to lose money
when converting investments from foreign currencies into U.S. dollars due to
unfavorable currency exchange rates.
Investments in foreign securities also subject the Fund to the adverse political
or economic conditions of the foreign country. Foreign countries may prevent or
delay the Fund from selling its investments and taking money out of the country.
In addition, foreign securities may not be as liquid as U.S. securities which
could result in the Fund being unable to sell its investments in a timely
manner. Foreign countries also have less stringent investor protection,
disclosure and accounting standards than the U.S. As a result, there is
generally less publicly-available information about foreign companies than U.S.
companies. The exposure to foreign securities risk is minimized since this Fund
invests primarily in securities of U.S. issuers.
5. Portfolio Turnover Risk
The portfolio turnover rate for this Fund in 1999 was in excess of 100%. In
order to meet the Fund's investment objectives, the Fund may engage in
short-term trading. Short-term trading may result in a high portfolio turnover
rate, which could produce higher brokerage costs and taxable distributions.
6. Other Risk Factors
As a mutual fund, the Fund is subject to market risk. The value of the Fund's
shares will fluctuate in response to changes in economic conditions, interest
rates, and the market's perception of the securities held by the Fund.
The Fund should not be considered to be a complete investment program by itself.
You should consider your own investment objectives and tolerance for risk, as
well as your other investments when deciding whether to purchase shares of the
Fund.
MANAGEMENT OF THE FUND
The Fund is managed by GW Capital Management. GW Capital Management provides
investment advisory, accounting and administrative services to the Fund. GW
Capital Management's address is 8515 East Orchard Road, Englewood, Colorado
80111. GW Capital Management provides investment management services for mutual
funds and other investment portfolios representing assets of over $6.5 billion.
GW Capital Management and its affiliates have been providing investment
management services since 1969.
The fee paid to GW Capital Management for the fiscal year ending October 31,
1999 is as follows:
Orchard Value Fund Class A 1.00%
GW Capital Management has entered into an agreement with CIC Asset Management,
Inc. to act as a sub-adviser to the Fund. Under this agreement, CIC is
responsible for the daily management of the Fund and for making decisions to
buy, sell or hold portfolio securities. CIC's management activities are subject
to review and supervision by GW Capital Management and the Board of Trustees of
Orchard Series Fund. GW Capital Management is responsible for compensating CIC
for its management services.
The Sub-Adviser is a 100% employee owned and managed firm, registered with the
Securities and Exchange Commission as an investment adviser under the Investment
Advisers Act of 1940. It is a California corporation with its principal business
address at 633 West Fifth Street, Suite 1180, Los Angeles, California 90017. The
Sub-Adviser provides investment management services for the Fund and other
investment portfolios representing assets of $343 million. The Sub-Adviser has
been providing investment management services since 1990.
CIC utilizes a team of portfolio managers and analysts acting together to manage
the assets of the Fund. The team meets regularly to review portfolio holdings
and to discuss purchase and sale activity. The team adjusts holdings in the
Fund's portfolio as it deems appropriate in pursuit of the Fund's investment
objective.
The Fund has only been operating for a short period of time (less than two
years). For that reason the table below has been provided. The table shows
consolidated performance information ("Sub-Adviser Accounts Composite") of the
historical performance of institutional private accounts managed by the
Sub-Adviser that have investment objectives, policies, strategies and risks
substantially similar to those of the Orchard Value Fund. The data is provided
to explain by example the past performance of the Sub-Adviser in managing
substantially similar accounts and does not represent the performance of the
Orchard Value Fund. You should not consider this performance data as an
indication of future performance of the Fund or of the Sub-Adviser.
The Sub-Adviser Accounts Composite returns include all dividends and interest,
accrued income and realized and unrealized gains and losses. All returns reflect
the deduction of investment advisory fees, brokerage commissions and execution
costs paid by the Sub-Adviser's institutional private accounts. The
institutional private account return data includes all actual fee-paying,
discretionary institutional private accounts managed by the Sub-Adviser that
have investment objectives, policies and strategies and risks substantially
similar to those of the Orchard Value Fund.
The institutional private accounts that are included in the Sub-Adviser Accounts
Composite are not subject to the same types of expenses that apply to the
Orchard Value Fund. As a result, in the performance results for the
institutional private accounts listed below, we assumed a total annual operating
expense of 1.00%, which is the same as the Orchard Value Fund Class A Shares. In
addition, the diversification requirements, specific tax restrictions and
investment limitations imposed on the Orchard Value Fund by the Investment
Company Act of 1940 and Subchapter M of the Internal Revenue Code do not apply
to the institutional private accounts. The investment results for the
institutional private accounts presented below are unaudited and are not
intended to predict or suggest the returns that might be experienced by the
Orchard Value Fund or an individual investor investing in the Fund. You should
also be aware that the use of a different method from that used below to
calculate performance could result in different performance data.
The return data provided below is calculated based on the SEC's formula for
"standardized average annual total return" (described in the Statement of
Additional Information), assuming a total annual operating expense of 1.00%,
which is the same as the Orchard Value Fund Class A Shares.
Average Annual Returns
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Since
1 Year 5 Years Inception*
------ ------- ---------
Sub-Adviser Accounts Composite 0.66% 18.6% 13.59% +
Russell 1000 Value Index 7.35% 23.07% 16.17%
S&P 500 Index 21.04% 28.56% 18.58%
</TABLE>
* Commencement of Sub-Adviser's investment operations was May 31, 1990. +
Through December 31, 1999.
Although the Sub-Adviser Accounts Composite is compared to both the S&P 500
Index and the Russell 1000 Value Index, the investment adviser and sub-adviser
have determined that the Russell 1000 Value Index is the appropriate index to
use as a benchmark for the Orchard Value Fund's performance. Total returns for
the S&P 500 Index and the Russell 1000 Value Index assume reinvestment of
dividends, but do not include the effect of taxes, brokerage commissions or
other costs you would pay if you actually invested in those stocks.
IMPORTANT INFORMATION ABOUT YOUR INVESTMENT
Share Price
The transaction price for buying or selling the Fund's shares is the net asset
value of that Fund. The Fund's net asset value is generally calculated as of the
close of trading on the New York Stock Exchange every day the NYSE is open
(generally 4:00 p.m. Eastern Time). If the NYSE closes at any other time, or if
an emergency exists, the time at which the NAV is calculated may differ. To the
extent that the Fund's assets are traded in other markets on days when the NYSE
is closed, the value of the Fund's assets may be affected on days when the Fund
is not open for business. In addition, trading in some of the Fund's assets may
not occur on days when the Fund is open for business. Your share price will be
the net asset value next calculated after we receive your order in good form.
Net asset value is based on the market value of the securities in the Fund.
Short-term securities with a maturity of 60 days or less are valued on the basis
of amortized cost. If market prices are not available or if a security's value
has been materially affected by events occurring after the close of the exchange
or market on which the security is principally traded (for example, a foreign
exchange or market), that security may be valued by another method that the
Board of Trustees of Orchard Series Fund believes accurately reflects fair
value.
We determine net asset value by dividing net assets of the Fund (the value of
its investments, cash, and other assets minus its liabilities) by the number of
the Fund's outstanding shares.
INVESTING IN THE FUND
How to buy shares:
To open an account, mail a completed account application to:
Orchard Series Fund Class A Shares 8515 East Orchard Road Englewood, CO
80111.
With the application form, you must either:
include a check or money order made payable to the Fund in the amount that you
wish to invest, or (2) wire (electronically transfer) such amount to an account
designated by the Transfer
Agent, Financial Administrative Services Corporation.
If you wish to make an initial purchase of shares by wiring your investment, you
must first call 1-800-784-4508 between the hours of 8:00 a.m. and 4:00 p.m.
(Eastern Time) on any day that the NYSE is open for trading to receive an
account number. You will be asked to provide the following information:
o the name in which the account will be established
o the account holder's address
o tax identification number, and
o dividend distribution election
If requested, you will be given the instructions that your bank will need to
complete the wire transfer. Your bank may charge a fee for its wire transfer
services. Presently, there is no charge by the Fund for its wire transfer
services, but the Fund reserves the right to charge for these services.
Once you have established an account, you can purchase shares by mailing a check
or money order made payable to the appropriate Fund. Be sure to include
instructions telling us the name and number of your account. You can also
purchase shares by wiring the amount that you wish to invest to your account.
The price to buy one share of the Fund is the Fund's net asset value next
calculated after your order is received in proper form. Because you pay no
commissions or sales charges when you purchase shares, the Fund's share price is
equal to the Fund's net asset value per share.
Short-term or excessive trading into and out of the Fund may harm performance by
disrupting portfolio management strategies and by increasing expenses.
Accordingly, the Fund may reject any purchase orders, including exchanges,
particularly from market timers or investors who, in GW Capital Management's
opinion, have a pattern of short-term or excessive trading or whose trading has
been or may be disruptive to that Fund.
The Fund may stop offering shares completely or may offer shares only on a
limited basis, for a period of time or permanently.
How to Sell Shares:
The price to sell one share of the Fund is the Fund's net asset value next
calculated after your order is received in proper form.
You can sell some or all your shares out of your account at any time. You can
sell your shares only by mail. No sales may be made by telephone.
You can sell shares by sending a "letter of instruction" by regular or express
mail to:
Orchard Series Fund Class A Shares
8515 East Orchard Road
Englewood, CO 80111
The letter should include:
(1) the name of the account (2) the account number (3) the name of the Fund (4)
the dollar amount or number of shares to be sold (5) any special payment
instructions, and (6) the signature(s) of the person(s) authorized to sell
shares held in the account.
When you place an order to sell shares, please note the following:
o Normally, your request to sell shares will be processed the next business
day, but the Fund may take up to seven days if making immediate payment
would adversely affect the Fund.
o Redemption proceeds may be delayed until investments credited to your
account have been received and collected, which can take up to seven
business days (or longer as permitted by the SEC).
o You will not receive interest on amounts represented by uncashed redemption
checks.
Class A and Class B Shares
In addition to the Class A shares described in this prospectus, the Fund also
offers Class B shares of Orchard Value Fund. Class A and Class B shares
generally have similar operating expenses, except for certain distribution fees.
Class A shares do not have any distribution fees. For additional information on
Class B shares:
o Call 1-800-784-4508; or
o Contact us by mail at:
Orchard Series Fund
8515 East Orchard Road
Englewood, CO 80111
Other Information
o The policies and procedures to request purchases of Fund shares by telephone
may be modified, suspended, or terminated by the Fund at any time.
o If an account has more than one owner of record, the Fund may rely on the
instructions of any one owner.
o Each account owner has telephone transaction privileges unless the Fund
receives cancellation instructions from an account owner.
o The Transfer Agent will record telephone calls and has adopted other
procedures to confirm that telephone instructions are genuine.
o The Fund will not be responsible for losses or expenses arising from
unauthorized telephone transactions, as long as they use reasonable
procedures to verify the identity of the investor.
o During periods of unusual market activity, severe weather, or other unusual,
extreme, or emergency conditions, you may not be able to complete a
telephone transaction and should consider placing your order by mail.
Dividends and Capital Gains Distributions
The Fund earns dividends, interest and other income from its investments, and
distributes this income (less expenses) to shareholders as dividends. The Fund
also realizes capital gains from its investments, and distributes these gains
(less any losses) to shareholders as capital gains distributions.
The Fund ordinarily distributes dividends semi-annually and generally
distributes capital gains, if any, in December.
Distribution Options
You can either receive distributions in cash or reinvest them in additional
shares of the Fund at the net asset value in effect on the reinvestment date.
Unless you elect, by writing to the Trust, to receive your distributions in
cash, they will be automatically reinvested. You can change the manner in which
you receive distributions at any time by writing to:
Orchard Series Fund Class A Shares
8515 East Orchard Road
Englewood, Colorado 80111
Tax Consequences
As with any investment, your investment in the Fund could have tax consequences
for you. If you are not investing through a tax-advantaged retirement account,
you should consider these tax consequences.
Taxes on distributions. Distributions you receive from the Fund, whether
received in cash or reinvested in additional shares of the Fund, are subject to
federal income tax, and may also be subject to state and local taxes. If you
live outside the United States, the country where you reside could also tax your
distributions. Your distributions are taxable when they are paid, whether you
take them in cash or reinvest them in additional shares of the Fund.
Distributions declared in December and paid in January are taxable as if they
were paid on December 31.
For federal income tax purposes, the Fund's dividends and short-term capital
gain distributions are taxable to you as ordinary income. The Fund's long-term
capital gains distributions are taxable to you generally as capital gains at a
rate based on how long the securities were held by the Fund.
If you buy shares when the Fund has realized but not yet distributed income or
capital gains, you will be "buying a dividend" by paying the full price for the
shares and then receiving a portion of the price back in the form of a taxable
distribution.
In January of each year, the Trust will send you and the IRS a statement showing
the taxable distributions paid to you in the previous year.
Taxes on transactions. Your redemptions, including exchanges, may result in a
capital gain or loss for federal tax purposes. A capital gain or loss on your
investment in the Fund is the difference between the cost of your shares and the
price you receive when you sell them.
You will receive a consolidated transaction statement at least quarterly. You
should keep your regular account statements, because the information they
contain will be essential in calculating the amount and character of your gains
and losses. It is your and your tax preparer's responsibility to determine
whether a transaction will result in a taxable gain or loss and the amount of
the tax to be paid, if any.
Effect of Foreign Taxes. Dividends and interest received by the Fund on foreign
securities may be subject to withholding and other taxes imposed by foreign
governments. These taxes will generally reduce the amount of distributions on
foreign securities.
Annual and Semi-Annual Shareholder Reports
The fiscal year of the Fund ends on October 31 of each year. Twice a year,
shareholders of the Fund will receive a report containing a summary of the
Fund's performance and other information.
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the Fund's
financial history for the period of the Fund's operations. Certain information
reflects financial results for a single Fund share. Total returns for each
period include the reinvestment of all dividends and distributions. The
information has been audited by Deloitte & Touche LLP, independent auditors,
whose report, along with the Fund's financial statements, are included in the
Fund's Annual Report. A free copy of the Annual Report is available upon
request.
<PAGE>
ORCHARD VALUE FUND (Class A)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock of the fund for the year ended
October 31, 1999 and the period ended October 31, 1998, are as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Period Ended October 31,
--------------------------------------------
1999 1998
------------------ -----------------
(A)
Net Asset Value, Beginning of Period $ 9.0097 $ 10.0000
Income From Investment Operations
Net investment income 0.1186 0.0730
Net realized and unrealized gain (loss) 0.4667 (1.0275)
--------------- --------------
Total Income (Loss) From Investment Operations 0.5853 (0.9545)
Less Distributions
From net investment income (0.1213) (0.0358)
From net realized gains (0.0651)
--------------- --------------
Total Distributions (0.1864) (0.0358)
--------------- --------------
Net Asset Value, End of Period $ 9.4086 $ 9.0097
=============== ==============
Total Return 6.49% (9.58%)
Net Assets, End of Period $ 2,581,149 $ 1,836,921
Ratio of Expenses to Average Net Assets 1.00% 1.00%*
Ratio of Net Investment Income to Average Net Assets 1.34% 1.15%*
Portfolio Turnover Rate 153.77% 79.58%
</TABLE>
Portfolio turnover is calculated using the lesser of long-term purchases or
sales of portfolio securities for a period, divided by the monthly average of
the market value of the securities (excluding short-term securities) owned
during the period. Purchases and sales of investment securities for the year
ended October 31, 1999 were $4,184,002 and $3,512,270, respectively.
*Annualized
(A) The Fund commenced operations March 2, 1998.
<PAGE>
ADDITIONAL INFORMATION
The Statement of Additional Information ("SAI") contains more details about the
investment policies and techniques of the Fund. A current SAI is on file with
the SEC and is incorporated into this Prospectus by reference. This means that
the SAI is legally considered a part of this Prospectus even though it is not
physically contained within this Prospectus.
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
For a free copy of the SAI or Annual or Semi-Annual Reports or to request other
information or ask questions about the Fund, call 1-800-784-4508.
The SAI and the annual and semi-annual reports are available on the SEC's
Internet Web site (http://www.sec.gov). You can also obtain copies of this
information, upon paying a duplicating fee, by writing the Public Reference
Section of the SEC, Washington, D.C. 20549-6009, or by electronic request at the
following e-mail address: public [email protected]. You can also review and copy
information about the Fund, including the SAI, at the SEC's Public Reference
Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of
the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940 FILE NO. 811-07735
