File No.333-17391
811-07959
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 21 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
Amendment No. 23 [X]
ADVISORS SERIES TRUST
(Exact name of registrant as specified in charter)
4455 E. Camelback Road, Suite 261E
Phoenix, AZ 85018
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (including area code): (602) 952-1100
ROBERT H. WADSWORTH
Advisors Series Trust
4455 E. Camelback Road, Suite 261E
Phoenix, AZ 85018
(Name and address of agent for service of process)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
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)(i)
[ ] on (date) pursuant to paragraph (a)(i)
|X| 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 495)
<TABLE>
<CAPTION>
NA Item No. Location
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<S> <C> <C>
Part A -- Prospectus of Liberty Freedom Fund Class A Shares
Item 1. Cover Page.................................. Cover Page
Item 2. Synopsis.................................... Expense Table
Item 3. Condensed Financial Information............. General Information
Item 4. General Description of Registrant........... Investment Objective and
Policies; General
Information
Item 5. Management of Fund ......................... Management of the Fund;
Investor Guide
Item 5A. Management's Discussion of Fund Performance. Not applicable
Item 6. Capital Stock and Other Securities.......... Distributions and Taxes;
General Information
Item 7. Purchase of Securities Being Offered........ Investor Guide
Item 8. Redemption or Repurchase.................... How to Redeem Your Shares
Item 9. Pending Legal Proceedings................... Not Applicable
Part A -- Prospectus of Liberty Freedom Fund Class I Shares
Item 1. Cover Page.................................. Cover Page
Item 2. Synopsis.................................... Expense Table
Item 3. Condensed Financial Information............. General Information
Item 4. General Description of Registrant........... Investment Objective and
Policies; General
Information
Item 5. Management of Fund ......................... Management of the Fund;
Investor Guide
Item 5A. Management's Discussion of Fund Performance. Not applicable
Item 6. Capital Stock and Other Securities.......... Distributions and Taxes;
General Information
Item 7. Purchase of Securities Being Offered........ Investor Guide
Item 8. Redemption or Repurchase.................... How to Redeem Your Shares
Item 9. Pending Legal Proceedings................... Not Applicable
Part B - Statement of Additional Information of Liberty Freedom Fund
Item 10. Cover Page...................................Cover Page
Item 11. Table of Contents...........................Table of Contents
Item 12. General Information and History..............Not Applicable
Item 13. Investment Objectives and Policies...........Investment Objectives and
Policies
Item 14. Management of the Fund.......................Management of the Fund
Item 15. Control Persons and Principal
Holders of Securities........................General Information
Item 16. Investment Advisory and Other Services.......Management; General
Information
Item 17. Brokerage Allocation and Other Practices.....Portfolio Transactions
and Brokerage
Item 18. Capital Stock and Other Practices............General Information
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered..................Net Asset Value
Item 20. Tax Status...................................Taxation
Item 21. Underwriters.................................Not Applicable
Item 22. Calculation of Performance Data.............Performance Information
Item 23. Financial Statements.........................Not Applicable
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to the Registration Statement.
<PAGE>
Preliminary Prospectus dated June , 1998
SUBJECT TO COMPLETION
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. Information
contained herein is subject to completion or amendment. 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 jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such jurisdiction.
Class A Shares
Liberty Freedom Fund
3801 Canal Street
New Orleans, Louisiana 70019
(888) 888-8888
PROSPECTUS
The Liberty Freedom Fund (the "Fund") is a mutual fund with the
investment objective of growth of capital and a secondary objective of providing
income. The Fund attempts to achieve its objectives by investing in equity
securities. See "Investment Objectives and Policies." There can be no assurance
that the Fund will achieve its investment objectives.
This Prospectus sets forth basic information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. The Fund is a separate series of Advisors Series
Trust (the "Trust"), an open-end registered management investment company. A
Statement of Additional Information (the "SAI") dated ____________, 1998 has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. This SAI is available without charge upon request to the
Fund at the address given above. The SEC maintains an internet site
(http://www.sec.gov) that contains the SAI, other material incorporated by
reference and other information about companies that file electronically with
the SEC.
Table of Contents
Expense Table ................................................... 2
Investment Objective and Policies ............................... 3
Management of the Fund .......................................... 4
Investor Guide .................................................. 7
Services Available to Shareholders .............................. 10
How to Redeem Your Shares ....................................... 11
Distributions and Taxes ......................................... 14
General Information ............................................. 14
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
Expense Table
Expenses are one of several factors to consider when investing in the Fund.
There are two types of expenses involved: shareholder transaction expenses, such
as sales loads, and annual operating expenses, such as investment advisory fees.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases................................ 3.50%
Maximum Sales Load Imposed on Reinvested Dividends..................... None
Deferred Sales Load.................................................... None
Redemption Fees........................................................ None
Exchange Fees.......................................................... None
Annual Operating Expenses
(As a percentage of average net assets)
Investment Advisory Fees................................................0.85%
12b-1 Fees(1)...........................................................0.50%
Other Expenses (net of fee waivers and expense reimbursements) (2)......0.75%
----
Shareholder Service Fees.........................0.25%
Other Operating Expenses.........................0.50%
Total Fund Operating Expenses (3) ......................................2.10%
====
(1) A long-term shareholder may pay more, directly and indirectly, in sales
charges and fees than the maximum sales charge permitted under the Rules of the
National Association of Securities Dealers (NASD). This is recognized and
permitted by the NASD.
(2) Other Expenses are estimated for the first fiscal year of the Fund.
(3) Total Operating Expenses are not expected to exceed 2.10% of average net
assets annually, but in the event that they do, the Manager and Sub-Advisor have
agreed to reduce their fees and/or pay expenses of the Fund to insure that the
Fund's expenses will not exceed 2.10%. If the Manager and Sub-Advisor did not
limit the Fund's expenses, it is expected that "Other Expenses" in the above
table would be 1.00% and "Total Operating Expenses" would be 2.35%. If the
Manager and Sub-Advisor waive fees or pay Fund expenses, the Fund may reimburse
them within the following three years. See "Management of the Fund."
The purpose of the above fee table is to provide an understanding of the
various annual operating expenses which may be borne directly or indirectly by
an investment in the Fund. Actual expenses may be more or less than those shown.
Example
This table illustrates the net operating expenses that would be incurred by
an investment in the
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Fund over different time periods assuming a $1,000 investment, a 5% annual
return, and redemption at the end of each time period.
1 Year 3 Years
$56 $133
The Example shown above should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown. In
addition, federal regulations require the Example to assume a 5% annual return,
but the Fund's actual return may be higher or lower. See "Management of the
Fund."
The minimum initial investment in the Fund is $1,000, with subsequent minimum
investments of $50 or more ($250 and $50, respectively, for retirement plans).
Shares will be redeemed at their net asset value.
Investment Objectives and Policies
What are the Fund's investment objectives?
The investment objective of the Fund is to seek growth of capital, with a
secondary objective of providing income. There can be no assurance that the Fund
will achieve its objectives.
How does the Fund seek to achieve its objectives?
The Fund's Manager, Liberty Bank and Trust Company, has contracted with The
Edgar Lomax Company to provide day to day investment decisions for the Fund. The
Edgar Lomax Company (the "Sub-Advisor") uses a disciplined approach to select
equity securities for the Fund's portfolio that it believes are undervalued,
reasonably priced and have prospects for continued consistent growth. The
Sub-Advisor uses fundamental analysis of financial statements to select stocks
of issuers which have low price/earnings and price/book ratios as well as strong
balance sheet ratios and high and/or stable dividend yields.
The Fund will invest primarily in large, well-recognized companies. Currently,
the Manager and Sub-Advisor expect the Fund's portfolio to hold at least 20% of
the stocks comprising the Standard & Poor's 100 Index, a capitalization-weighted
index of 100 stocks from a broad range of industries. It is not expected that
the Fund's annual turnover rate will exceed 50%.
There is, of course, no assurance that the Fund's objectives will be achieved.
Because prices of common stocks and other securities fluctuate, the value of an
investment in the Fund will vary as the market value of its investment portfolio
changes.
Other securities the Fund might purchase.
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Under normal market conditions, the Fund will invest at least 85% of its total
assets in equity securities, consisting of common stocks and securities having
the characteristics of common stocks, such as convertible securities, rights and
warrants. If market conditions warrant a temporary defensive posture, the Fund
may invest without limit in high quality, short-term debt securities and money
market instruments. These short-term debt securities and money market
instruments include commercial paper, certificates of deposit, bankers'
acceptances, U.S. Government securities and repurchase agreements.
Investment restrictions.
The Fund has adopted certain investment restrictions, which are described fully
in the SAI. Like the Fund's investment objective, certain of these restrictions
are fundamental and may be changed only by a majority vote of the Fund's
outstanding shares. As a fundamental policy, the Fund is a diversified fund.
Management of the Fund
The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund.
The Manager
The Manager, Liberty Bank and Trust Company ("Liberty"), 3801 Canal Street, New
Orleans, Louisiana 70019, (a subsidiary of Liberty Financial Services, Inc.) has
provided banking services to the greater New Orleans community since 1972.
Liberty's assets have grown to over $150 million and has risen to become one of
the top ten African American owned banks in the United States. Liberty has
overall responsibility for the assets under management and will be responsible
for monitoring the day-to-day activity of the Sub-Advisor. Liberty together with
the Sub-Advisor is responsible for formulating and implementing the Fund's
investments. Liberty furnishes the Fund with office space and certain
administrative services, and provides most of the personnel needed by the Fund.
Each portfolio pays the Manager a monthly fee pursuant to an investment advisory
agreement. As compensation for the services it receives, the Fund pays Liberty a
monthly management fee based upon the average daily net assets of the Fund at
the annual rate of 0.25%.
The Sub-Advisor
The Fund's Sub-Advisor, The Edgar Lomax Company, 6564 Loisdale Court, Suite 310,
Springfield, Virginia 22150, has provided asset management services to
individuals and institutional investors since 1986. Randall R. Eley is
principally responsible for the management of the Fund's portfolio. Mr. Eley
(who controls the Sub-Advisor) is the President and Chief Investment Officer of
the Sub-Advisor and has been active in the investment field professionally since
the firm was founded.
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The Sub-Advisor provides the Fund with advice on buying and selling securities,
manages the investments of the Fund. As compensation, the Fund pays the
Sub-Advisor a monthly management fee based upon the average daily net assets of
the Fund at the annual rate of 0.60%.
Prior Performance of the Sub-Advisor.
The following table sets forth composite performance data relating to the
historical performance of private accounts, each of which exceeds $1 million in
market value, managed by the Sub- Advisor for the periods indicated, that have
investment objectives, policies, strategies and risks substantially similar to
those of the Fund. The data is provided to illustrate the past performance of
the Sub-Advisor in managing substantially similar accounts as measured against a
market index and does not represent the performance of the Fund. You should not
consider this performance data as an indication of future performance of the
Fund or of the Sub-Advisor.
The composite performance data shown below were calculated in accordance with
recommended standards of the Association for Investment Management and Research
(AIMR*), retroactively applied to all time periods. All returns presented were
calculated on a total return basis and 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 private accounts of the Sub-Advisor without provision for federal
or state income taxes. Custodial fees, if any, were generally not included in
the calculation. The Sub- Advisor's composite includes all actual, fee-paying,
discretionary private accounts with assets in excess of $1 million managed by
the Sub-Advisor that have investment objectives, policies, strategies and risks
substantially similar to those of the Fund. Securities transactions are
accounted for on the trade date and accrual accounting is used. Cash and
equivalents are included in performance returns. The monthly returns of the
Sub-Advisor's composite combine the individual accounts' returns (calculated on
a time-weighted rate of return that is revalued whenever cash flows exceed 10%
of an account's current value) by asset-weighting each individual account's
asset value as of the beginning of the month. Quarterly and yearly returns are
calculated by geometrically linking the monthly and quarterly returns,
respectively.
The private accounts that are included in the Sub-Advisor's composite are not
subject to the same types of expenses to which the Fund is subject nor to the
diversification requirements, specific tax restrictions and investment
limitations imposed on the Fund by the Investment Company Act or the Internal
Revenue Code. Consequently, the performance results for the Sub-Advisor's
composite could have been adversely affected if the private accounts included in
the composite had been regulated as investment companies.
The investment results of the Sub-Advisor's composite presented below have been
reviewed and verified (for an AIMR Level II examination) by the independent
auditing firm, Deloitte & Touche LLP, to be computed in accordance with
Performance Presentation Standards of AIMR, but these results are not intended
to predict or suggest the returns that might be experienced by the Fund or an
individual investing in the Fund. Investors should also be aware that the use of
a
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methodology different from that used below to calculate performance could result
in different performance data.
*AIMR is a non-profit membership and education organization with more than
60,000 members worldwide that, among other things, has formulated a set of
performance presentation standards for investment advisors. These AIMR
performance presentation standards are intended to (i) promote full and fair
presentations by investment advisors of their performance results, and (ii)
ensure uniformity in reporting so that performance results of investment
advisors are directly comparable.
Annualized Total Return:
For Year ended Sub-Advisor's Composite S&P 500*
December 31, 1994 3.38% 1.30%
December 31, 1995 45.74% 37.53%
December 31, 1996 22.04% 22.99%
December 31, 1997 ______ _______
For the period
January 1, 1994 - December 31, 1997
Annualized Return __.__% __.__%
Cumulative __.__% __.__%
* The Standard & Poor's 500 Composite Stock Price Index, known as the S&P 500,
is an un- managed market value-weighted index consisting of representative
samples of stocks within important industry groups within the U.S. economy. It
includes dividends and distributions, but does not reflect fees, brokerage
commissions or other expenses of investing.
The Administrator
Investment Company Administration Corporation (the "Administrator") prepares
various federal and state regulatory filings, reports and returns for the Fund,
prepares reports and materials to be supplied to the Trustees, monitors the
activities of the Fund's custodian, shareholder servicing agent and accountants,
and coordinates the preparation and payment of Fund expenses and reviews the
Fund's expense accruals. For its services, the Administrator receives a monthly
fee at the annual rate of 0.20% of average total net assets, subject to a
$30,000 annual minimum.
Other operating expenses
The Fund is responsible for its own operating expenses, including but not
limited to, the advisory and administration fees, custody and shareholder
servicing agent fees, legal and auditing
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expenses, federal and state registration fees, and fees to the Trust's
disinterested Trustees. The Manager and Sub-Advisor have voluntarily undertaken
currently to limit the Fund's operating expenses to no more than 2.25% annually.
The Manager and Sub-Advisor may reduce their fees or reimburse the Fund for
expenses at any time in order to reduce the Fund's expenses. Reductions made by
the Manager and Sub-Advisor in their fees or payments or reimbursements of
expenses which are the Fund's obligation are subject to reimbursement by the
Fund within three subsequent years provided the Fund is able to do so and remain
in compliance with any applicable expense limitations then in effect.
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 with respect to
its Class A shares. The Plan provides that the Fund will pay for distribution
and related expenses (such as payments for advertising and sales material and to
personnel involved in selling the Class A shares) at an annual rate of 0.50% of
the Fund's average net assets.
Brokerage Transactions
The Manager and Sub-Advisor consider a number of factors in determining which
brokers or dealers to use for the Fund's portfolio transactions. While these are
more fully discussed in the SAI, the factors include, but are not limited to,
the reasonableness of commissions, quality of services and execution, and the
availability of research which the Sub-Advisor may lawfully and appropriately
use in its investment advisory capacities. Provided the Fund receives prompt
execution at competitive prices, the sale of Fund shares also may be considered
as a factor in selecting broker-dealers for the Fund's portfolio transactions.
Investor Guide
How to purchase shares of the Fund.
Class A shares are offered at the public offering price. First Fund
Distributors, Inc., 4455 E. Camelback Road, Suite 261E, Phoenix, AZ 85018, (the
"Distributor"), acts as Distributor and may, at its discretion, waive the
minimum investment requirements. The Fund also offers Class I shares. The other
Class has a different sales charge and other expenses which may result in
performance for that Class which is different from that of Class A shares.
Shares of the Fund are offered continuously for the purchase at the public
offering price next determined after a purchase order is received. The public
offering price is effective for orders received by the Fund or investment
dealers prior to the time of the next determination of the Fund's net asset
value and, in the case of orders placed with dealers, transmitted promptly to
the Transfer Agent. Orders received after the time of the next determination of
the applicable fund's net asset value will be entered at the next calculated
public offering price.
The public offering price per share is equal to the net asset value per share,
plus a sales charge, which is reduced on purchases involving amounts of $50,000
or more, as set forth in the table below. The reduced sales charges apply to
quantity purchases made at one time by a "person",
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which means (i) an individual, (ii) members of a family (i.e., an individual,
spouse, children under age 21), or (iii) a trustee or fiduciary of a single
trust estate or a single fiduciary account. In addition, purchases of shares
made during a thirteen month period pursuant to a written Letter of Intent are
eligible for a reduced sales charge. Reduced sales charges are also applicable
to subsequent purchases by a "person", based on the aggregate of the amount
being purchased and the value, at offering price, of shares owned at the time of
investment.
Sales Charge as percent of: Portion of sales
Offering net asset charge retained
Amount of Purchase price value by dealers
Less than $50,000 3.50% 3.63% 3.00%
$50,000 but less than $100,000 3.00% 3.09% 2.60%
$100,000 but less than $250,000 2.50% 2.56% 2.20%
$250,000 but less than $500,000 2.00% 2.04% 1.80%
$500,000 but less than $750,000 1.50% 1.52% 1.30%
$750,000 but less than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 or more None None None
Purchase Order Placed with Investment Dealers
Dealers who have a sales agreement with the Distributor may place orders for
shares of the Fund on behalf of clients at the offering price next determined
after receipt of the client's order by calling the Distributor. If the order is
placed by the client with the dealer by 4:00 p.m. Eastern time and forwarded to
the Transfer Agent any day that the New York Stock Exchange is open for trading,
it will be confirmed at the applicable offering price on that day. The dealer is
responsible for placing orders promptly with the Transfer Agent and for
forwarding payment promptly.
You may send money to the Fund by mail
If you wish to invest by mail, simply complete the Application Form and mail it
with a check (made payable to Liberty Freedom Fund) to the Fund's Shareholder
Servicing Agent, American Data Services, Inc. at the following address:
Liberty Freedom Fund
P.O. Box 640947
Cincinnati, OH 45264-0947
If you wish to send your Application Form and check via an overnight delivery
services (such as Fed Ex), delivery cannot be made to a post office box. In that
case, you should use the following address:
Liberty Freedom Fund
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c/o Star Bank, N.A.
Mutual Fund Custody Department
425 Walnut Street, M/L 6118,
Sixth Floor
Cincinnati, OH 45202
You may wire money to the Fund
Before sending a wire, you should call the Fund at (888) 888-8888 between 9:00
a.m. and 5:00 p.m., Eastern time, on a day when the New York Stock Exchange
("NYSE") is open for trading, in order to receive an account number. It is
important to call and receive this account number, because if your wire is sent
without it or without the name of the Fund, there may be a delay in investing
the money you wire. You should then ask your bank to wire money to:
Star Bank, N.A. Cinti/Trust
ABA # 0420-0001-3
for credit to Liberty Freedom Fund
DDA # 488840257
for further credit to [your name and account number]
Your bank may charge you a fee for sending a wire to the Fund.
Minimum investments
The minimum initial investment in the Fund is $1,000. The minimum subsequent
investment is $50. However, if you are investing in an Individual Retirement
Account ("IRA"), or you are starting an Automatic Investment Plan (see below),
the minimum initial and subsequent investments are $250 and $50, respectively.
Subsequent investments
You may purchase additional shares of the Fund by sending a check, with the stub
from an account statement, to the Fund at the address above. Please also write
your account number on the check. If you do not have a stub from an account
statement, you can write your name, address and account number on a separate
piece of paper and enclose it with your check. If you want to send additional
money for investment by wire, it is important for you to call the Fund at
(888)888-8888. You may also make additional purchases through an investment
dealer, as described above.
When is money invested in the Fund?
Any money received for investment in the Fund from an investor, whether sent by
check or by wire, is invested at the net asset value of the Fund which is next
calculated after the money is
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received (assuming the check or wire correctly identifies the Fund and account).
Orders received from dealers are invested at the net asset value next calculated
after the order is received. The net asset value is calculated at the close of
regular trading of the NYSE, currently 4:00 p.m., Eastern time. A check or wire
received after the NYSE closes is invested as of the next calculation of the
Fund's net asset value.
What is the net asset value of the Fund?
The Fund's net asset value per share for the Class A shares is calculated by
dividing the value of the Fund's total assets, less its liabilities, by the
number of its shares outstanding. In calculating the net asset value, portfolio
securities are valued using current market values, if available. Securities for
which market quotations are not readily available are valued at fair values
determined in good faith by or under the supervision of the Board of Trustees of
the Trust. The fair value of short-term obligations with remaining maturities of
60 days or less is considered to be their amortized cost.
Other information
The Distributor may waive the minimum investment requirements for purchases by
certain group or retirement plans. All investments must be made in U.S. dollars,
and checks must be drawn on U.S. banks. Third party checks will not be accepted.
A charge may be imposed if a check used to make an investment does not clear.
The Fund and the Distributor reserve the right to reject any investment, in
whole or in part. Federal tax law requires that investors provide a certified
taxpayer identification number and other certifications on opening an account in
order to avoid backup withholding of taxes. See the Application Form for more
information about backup withholding. The Fund is not required to issue share
certificates; all shares are normally held in non-certificated form on the books
of the Fund, for the account of the shareholder. The Fund, under certain
circumstances, may accept investments of securities appropriate for the Fund's
portfolio, in lieu of cash. Prior to making such a purchase, you should call the
Sub-Advisor to determine if such an investment may be made.
Services Available to Shareholders
Retirement Plans
You may invest in the Fund various retirement plans, including IRAs, Simplified
Employee Plan (SEP) IRAs, and all qualified retirement plans. For further
information about any of the plans, agreements, applications and annual fees
contact the Distributor, your financial representative or plan sponsor. To
determine which retirement plan is appropriate for you, consult your tax
adviser.
Automatic investing by check
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You may make regular monthly investments in the Fund using the "Automatic
Investment Plan." A check is automatically drawn on your personal checking
account each month for a predetermined amount (but not less than $100), as if
you had written it directly. Upon receipt of the withdrawn funds, the Fund
automatically invests the money in additional shares of the Fund at the current
net asset value. Applications for this service are available from the Fund.
There is no charge by the Fund for this service. The Fund may terminate or
modify this privilege at any time, and shareholders may terminate their
participation by notifying the Shareholder Servicing Agent in writing,
sufficiently in advance of the next withdrawal.
Automatic withdrawals
The Fund offers a Systematic Withdrawal Program whereby shareholders may request
that a check drawn in a predetermined amount be sent to them each month or
calendar quarter. To start this Program, your account must have Fund shares with
a value of at least $10,000, and the minimum amount that may be withdrawn each
month or quarter is $50. This Program may be terminated or modified by a
shareholder or the Fund at any time without charge or penalty. A withdrawal
under the Systematic Withdrawal Program involves a redemption of shares of the
Fund, and may result in a gain or loss for federal income tax purposes. In
addition, if the amount withdrawn exceeds the dividends credited to your
account, the account ultimately may be depleted.
How to Redeem Your Shares
You have the right to redeem all or any portion of your shares of the Fund at
their net asset value on each day the NYSE is open for trading.
Redemption in writing
You may redeem your shares by simply sending a written request to the Fund. You
should give your account number and state whether you want all or part of your
shares redeemed. The letter should be signed by all of the shareholders whose
names appear in the account registration. You should send your redemption
request to:
Liberty Freedom Fund
150 Motor Parkway, Suite 109
Hauppauge, NY 11788-0132
Signature guarantee
If the value of the shares you wish to redeem exceeds $5,000, the signatures on
the redemption request must be guaranteed by an "eligible guarantor
institution." These institutions include banks, broker-dealers, credit unions
and savings institutions. A broker-dealer guaranteeing a signature must be a
member of a clearing corporation or maintain net capital of at least $100,000.
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Credit unions must be authorized to issue signature guarantees. Signature
guarantees will be accepted from any eligible guarantor institution which
participates in a signature guarantee program. A notary public is not an
acceptable guarantor.
Redemption by telephone
If you complete the Redemption by Telephone portion of the Fund's Application
Form, you may redeem shares on any business day the NYSE is open by calling the
Fund's Shareholder Servicing Agent at (888) 888-8888 before 4:00 p.m. Eastern
time. Redemption proceeds will be mailed or wired, at your direction, on the
next business day to the bank account you designated on the Application Form.
The minimum amount that may be wired is $1,000 (wire charges, if any, will be
deducted from redemption proceeds). Telephone redemptions cannot be made for IRA
accounts.
By establishing telephone redemption privileges, you authorize the Fund and its
Shareholder Servicing Agent to act upon the instruction of any person who makes
the telephone call to redeem shares from your account and transfer the proceeds
to the bank account designated in the Application Form. The Fund and the
Shareholder Servicing Agent will use procedures to confirm that redemption
instructions received by telephone are genuine, including recording of telephone
instructions and requiring a form of personal identification before acting on
these instructions. If these normal identification procedures are followed,
neither the Fund nor the Shareholder Servicing Agent will be liable for any
loss, liability, or cost which results from acting upon instructions of a person
believed to be a shareholder with respect to the telephone redemption privilege.
The Fund may change, modify, or terminate these privileges at any time upon at
least 60 days' notice to shareholders.
You may request telephone redemption privileges after your account is opened;
however, the authorization form will require a separate signature guarantee.
Shareholders may experience delays in exercising telephone redemption privileges
during periods of abnormal market activity.
What price is used for a redemption?
The redemption price is the net asset value of the Fund's shares, next
determined after shares are validly tendered for redemption. All signatures of
account holders must be included in the request, and a signature guarantee, if
required, must also be included for the request to be valid.
When are redemption payments made?
As noted above, redemption payments for telephone redemptions are sent on the
day after the telephone call is received. Payments for redemptions sent in
writing are normally made promptly, but no later than seven days after the
receipt of a request that meets requirements described above. However, the Fund
may suspend the right of redemption under certain extraordinary circumstances in
accordance with rules of the Securities and Exchange Commission.
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If shares were purchased by wire, they cannot be redeemed until the day after
the Application Form is received. If shares were purchased by check and then
redeemed shortly after the check is received, the Fund may delay sending the
redemption proceeds until it has been notified that the check used to purchase
the shares has been collected, a process which may take up to 15 days. This
delay may be avoided by investing by wire or by using a certified or official
bank check to make the purchase.
Repurchases from dealers
The Fund may accept orders to repurchase shares from an investment dealer on
behalf of a dealer's customers. The net asset value for a repurchase is that
next calculated after receipt of the order from the dealer.
Distribution Agreement
The Distributor is the principal underwriter of shares of the Fund. The
Distributor makes a continuous offering of the Fund's shares and bears the costs
and expenses of printing and distributing to selected dealers and prospective
investors any copies of any prospectuses, statements of additional information
and annual and interim reports of the Fund other than to existing shareholders
(after such items have been prepared and set in type by the Fund) which are used
in connection with the offering of shares, and the costs and expenses of
preparing, printing and distributing any other literature used by the
Distributor and furnished by it for use by selected dealers in connection with
the offering of the shares for sale to the public. All or a part of the expenses
borne by the Distributor may be reimbursed pursuant to the Distribution and
Shareholder Servicing Plan discussed below.
Distribution Plan
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plan") under which with respect to the
Class A shares, the Fund pays the Distributor an amount which is accrued daily
and paid monthly, at an annual rate up to 0.50% of the average daily net assets
of the Class A shares of the Fund. Amounts paid under the Plan by the Fund are
paid to the Distributor for services it provides including printing and
distribution of prospectuses and shareholder reports, performance reports and
newsletters, sales literature and other promotional material to prospective
investors, direct mail solicitation, advertising, public relations, compensation
of sales personnel, advisors or other third parties for their assistance with
respect to the distribution of the Fund's shares, payments to financial
intermediaries for shareholder support, administrative and accounting services
with respect to Fund shareholders and such other expenses related to the
distribution of the Fund's shares.
Plan payments will be reviewed by the Trustees. However, it is possible at times
that the amount of the Distributor's compensation could exceed its distribution
expenses, resulting in a profit to the Distributor. If the Plan is terminated,
the Fund will not be required to make payments for
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expenses incurred after the termination.
Distributions and Taxes
Dividends and other distributions
Dividends from net investment income, if any, are normally declared and paid by
the Fund in December. Capital gains distributions, if any, are also normally
made in December, but the Fund may make an additional payment of dividends or
distributions if it deems it desirable at another time during any year.
Dividends and capital gain distributions (net of any required tax withholding)
are automatically reinvested in additional shares of the Fund at the net asset
value per share on the reinvestment date unless you have previously requested in
writing to the Shareholder Servicing Agent that payment be made in cash.
Any dividend or distribution paid by the Fund has the effect of reducing the net
asset value per share on the record date by the amount of the dividend or
distribution. You should note that a dividend or distribution paid on shares
purchased shortly before that dividend or distribution was declared will be
subject to income taxes even though the dividend or distribution represents, in
substance, a partial return to you.
Taxes
The Fund intends to qualify and elect to be treated as a regulated investment
company under Subchapter M of the Code. As long as the Fund continues to
qualify, and as long as the Fund distributes all of its income each year to the
shareholders, the Fund will not be subject to any federal income or excise
taxes. Distributions made by the Fund will be taxable to shareholders whether
received in shares (through dividend reinvestment) or in cash. Distributions
derived from net investment income, including net short-term capital gains, are
taxable to shareholders as ordinary income. A portion of these distributions may
qualify for the intercorporate dividends-received deduction. Distributions
designated as capital gains dividends are taxable as capital gains regardless of
the length of time shares of the Fund have been held. Although distributions are
generally taxable when received, certain distributions made in January are
taxable as if received the prior December. You will be informed annually of the
amount and nature of the Fund's distributions. Additional information about
taxes is set forth in the SAI. You should consult your own advisors concerning
federal, state and local taxation of distributions from the Fund.
General Information
The Trust
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The Trust was organized as a Delaware business trust on October 3, 1996. The
Agreement and Declaration of Trust permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, without
par value, which may be issued in any number of series. The Board of Trustees
may from time to time issue other series, the assets and liabilities of which
will be separate and distinct from any other series.
Shareholder Rights
Shares issued by the Fund have no preemptive, conversion or subscription rights.
Shareholders have equal and exclusive rights as to dividends and distributions
as declared by the Fund and to the net assets of the Fund upon liquidation or
dissolution. The Fund, as a separate series of the Trust, votes separately on
matters affecting only the Fund (e.g., approval of the Investment Advisory
Agreement); all series of the trust vote as a single class on matters affecting
all series jointly or the Trust as whole (e.g., election or removal of
Trustees). Voting rights are not cumulative, so that the holders of more than
50% of the shares voting in any election of Trustees can, if they so choose,
elect all of the Trustees. While the Trust is not required and does not intend
to hold annual meetings of shareholders, such meetings may be called by the
Trustees in their discretion, or upon demand by the holders of 10% or more of
the outstanding shares of the Trust for the purpose of electing or removing
Trustees.
Performance Information
From time to time, the Fund may publish its total return in advertisements and
communications to investors. Total return information will include the Fund's
average annual compounded rate of return over the most recent four calendar
quarters and over the period from the Fund's inception of operations. The Fund
may also advertise aggregate and average total return information over different
periods of time. The Fund's total return will be based upon the value of the
shares acquired through a hypothetical $1,000 investment at the beginning of the
specified period and the net asset value of those shares at the end of the
period, assuming reinvestment of all distributions. Total return figures will
reflect all recurring charges against Fund income. You should note that the
investment results of the Fund will fluctuate over time, and any presentation of
the Fund's total return for any prior period should not be considered as a
representation of what an investor's total return may be in any future period.
Shareholder Inquiries
Shareholder inquiries should be directed to the Shareholder Servicing Agent at
(888) 888-8888.
Multiple Classes
Under the Trust's charter documents, the Board of Trustees has the power to
classify or reclassify any unissued shares of a Fund into one or more additional
classes by setting or changing in any one or more respects their relative
rights, voting powers, restrictions, limitations as to dividends,
15
<PAGE>
qualifications of redemption. The Board of Trustees of a Fund may similarly
classify or reclassify any class of its shares into one or more series and,
without shareholder approval, may increase the number of authorized shares of
the Fund.
Year 2000 Risk.
Like other business organizations around the world, the Fund could be adversely
affected if the computer systems used by its Manager, Sub-Advisor and other
service providers do not properly process and calculate information related to
dates beginning January 1, 2000. This is commonly known as the "Year 2000
Issue." The Fund's Manager is taking steps that it believes are reasonably
designed to address the Year 2000 Issue with respect to its own computer
systems, and assurances are being obtained from the Fund's other service
providers that they are taking comparable steps. However, there can be no
assurance that these actions will be sufficient to avoid any adverse impact on
the Funds.
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Preliminary Prospectus dated June , 1998
SUBJECT TO COMPLETION
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. Information
contained herein is subject to completion or amendment. 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 jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such jurisdiction.
Class I Shares
Liberty Freedom Fund
3801 Canal Street
New Orleans, Louisiana 70019
(888) 888-8888
PROSPECTUS
The Liberty Freedom Fund (the "Fund") is a mutual fund with the investment
objective of growth of capital and a secondary objective of providing income.
The Fund attempts to achieve its objectives by investing in equity securities.
See "Investment Objectives and Policies." There can be no assurance that the
Fund will achieve its investment objectives.
This Prospectus sets forth basic information about the Fund that prospective
investors should know before investing. It should be read and retained for
future reference. The Fund is a separate series of Advisors Series Trust (the
"Trust"), an open-end registered management investment company. A Statement of
Additional Information (the "SAI") dated ____________, 1998 has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
This SAI is available without charge upon request to the Fund at the address
given above. The SEC maintains an internet site (http://www.sec.gov) that
contains the SAI, other material incorporated by reference and other information
about companies that file electronically with the SEC.
Expense Table ................................................. 2
Investment Objective and Policies ............................. 3
Management of the Fund ........................................ 4
Investor Guide ................................................ 7
Services Available to Shareholders ............................ 9
How to Redeem Your Shares ..................................... 9
Distributions and Taxes ....................................... 11
General Information ........................................... 12
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
Expense Table
Expenses are one of several factors to consider when investing in the Fund.
There are two types of expenses involved: shareholder transaction expenses, such
as sales loads, and annual operating expenses, such as investment advisory fees.
The Fund is a no-load mutual fund and has no shareholder transaction expenses.
Annual Operating Expenses
(As a percentage of average net assets)
Investment Advisory Fees................................................ 0.85%
Other Expenses (net of fee waivers and expense reimbursements) (1)...... 0.45%
----
Total Fund Operating Expenses (2) .......................................1.30%
====
(1) Other Expenses are estimated for the first fiscal year of the Fund.
(2) Total Operating Expenses are not expected to exceed 1.30% of average net
assets annually, but in the event that they do, the Manager and Sub-Advisor have
agreed to reduce their fees and/or pay expenses of the Fund to insure that the
Fund's expenses will not exceed 1.30%. If the Manager and Sub-Advisor did not
limit the Fund's expenses, it is expected that "Other Expenses" in the above
table would be 1.00% and "Total Operating Expenses" would be 1.85%. If the
Manager and Sub-Advisor waive fees or pay Fund expenses, the Fund may reimburse
them within the following three years. See "Management of the Fund."
The purpose of the above fee table is to provide an understanding of the various
annual operating expenses which may be borne directly or indirectly by an
investment in the Fund. Actual expenses may be more or less than those shown.
Example
This table illustrates the net operating expenses that would be incurred by an
investment in the Fund over different time periods assuming a $1,000 investment,
a 5% annual return, and redemption at the end of each time period.
1 Year 3 Years
$13 $41
The Example shown above should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown. In
addition, federal regulations require the Example to assume a 5% annual return,
but the Fund's actual return may be higher or lower. See "Management of the
Fund."
The minimum initial investment in the Fund is $250,000 with subsequent minimum
investments of $25,000 or more. Shares will be redeemed at their net asset
value.
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<PAGE>
Investment Objectives and Policies
What are the Fund's investment objectives?
The investment objective of the Fund is to seek growth of capital, with a
secondary objective of providing income. There can be no assurance that the Fund
will achieve its objectives.
How does the Fund seek to achieve its objectives?
The Fund's Manager, Liberty Bank and Trust Company, has contracted with The
Edgar Lomax Company to provide day to day investment decisions for the Fund. The
Edgar Lomax Company (the "Sub-Advisor") uses a disciplined approach to select
equity securities for the Fund's portfolio that it believes are undervalued,
reasonably priced and have prospects for continued consistent growth. The
Sub-Advisor uses fundamental analysis of financial statements to select stocks
of issuers which have low price/earnings and price/book ratios as well as strong
balance sheet ratios and high and/or stable dividend yields.
The Fund will invest primarily in large, well-recognized companies. Currently,
the Manager and Sub-Advisor expect the Fund's portfolio to hold at least 20% of
the stocks comprising the Standard & Poor's 100 Index, a capitalization-weighted
index of 100 stocks from a broad range of industries. It is not expected that
the Fund's annual turnover rate will exceed 50%.
There is, of course, no assurance that the Fund's objectives will be achieved.
Because prices of common stocks and other securities fluctuate, the value of an
investment in the Fund will vary as the market value of its investment portfolio
changes.
Other securities the Fund might purchase.
Under normal market conditions, the Fund will invest at least 85% of its total
assets in equity securities, consisting of common stocks and securities having
the characteristics of common stocks, such as convertible securities, rights and
warrants. If market conditions warrant a temporary defensive posture, the Fund
may invest without limit in high quality, short-term debt securities and money
market instruments. These short-term debt securities and money market
instruments include commercial paper, certificates of deposit, bankers'
acceptances, U.S. Government securities and repurchase agreements.
Investment restrictions.
The Fund has adopted certain investment restrictions, which are described fully
in the SAI. Like the Fund's investment objective, certain of these restrictions
are fundamental and may be changed only by a majority vote of the Fund's
outstanding shares. As a fundamental policy, the Fund is a diversified fund.
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<PAGE>
Management of The Fund
The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund.
The Manager
The Manager, Liberty Bank and Trust Company ("Liberty"), 3801 Canal Street, New
Orleans, Louisiana 70019, (a subsidiary of Liberty Financial Services, Inc.) has
provided banking services to the greater New Orleans community since 1972.
Liberty's assets have grown to over $150 million and has risen to become one of
the top ten African American owned banks in the United States. Liberty has
overall responsibility for the assets under management and will be responsible
for monitoring the day-to-day activity of the Sub-Advisor. Liberty together with
the Sub-Advisor is responsible for formulating and implementing the Fund's
investments. Liberty furnishes the Fund with office space and certain
administrative services, and provides most of the personnel needed by the Fund.
Each portfolio pays the Manager a monthly fee pursuant to an investment advisory
agreement. As compensation for the services it receives, the Fund pays Liberty a
monthly management fee based upon the average daily net assets of the Fund at
the annual rate of 0.25%.
The Sub-Advisor
The Fund's Sub-Advisor, The Edgar Lomax Company, 6564 Loisdale Court, Suite 310,
Springfield, Virginia 22150, has provided asset management services to
individuals and institutional investors since 1986. Randall R. Eley is
principally responsible for the management of the Fund's portfolio. Mr. Eley
(who controls the Sub-Advisor) is the President and Chief Investment Officer of
the Sub-Advisor and has been active in the investment field professionally since
the firm was founded.
The Sub-Advisor provides the Fund with advice on buying and selling securities,
manages the investments of the Fund. As compensation, the Fund pays the
Sub-Advisor a monthly management fee based upon the average daily net assets of
the Fund at the annual rate of 0.60%.
Prior Performance of the Sub-Advisor
The following table sets forth composite performance data relating to the
historical performance of private accounts, each of which exceeds $1 million in
market value, managed by the Sub- Advisor for the periods indicated, that have
investment objectives, policies, strategies and risks substantially similar to
those of the Fund. The data is provided to illustrate the past performance of
the Sub-Advisor in managing substantially similar accounts as measured against a
market index and does not represent the performance of the Fund. You should not
consider this performance data as an indication of future performance of the
Fund or of the Sub-Advisor.
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<PAGE>
The composite performance data shown below were calculated in accordance with
recommended standards of the Association for Investment Management and Research
(AIMR*), retroactively applied to all time periods. All returns presented were
calculated on a total return basis and 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 private accounts of the Sub-Advisor without provision for federal
or state income taxes. Custodial fees, if any, were generally not included in
the calculation. The Sub- Advisor's composite includes all actual, fee-paying,
discretionary private accounts with assets in excess of $1 million managed by
the Sub-Advisor that have investment objectives, policies, strategies and risks
substantially similar to those of the Fund. Securities transactions are
accounted for on the trade date and accrual accounting is used. Cash and
equivalents are included in performance returns. The monthly returns of the
Sub-Advisor's composite combine the individual accounts' returns (calculated on
a time-weighted rate of return that is revalued whenever cash flows exceed 10%
of an account's current value) by asset-weighting each individual account's
asset value as of the beginning of the month. Quarterly and yearly returns are
calculated by geometrically linking the monthly and quarterly returns,
respectively.
The private accounts that are included in the Sub-Advisor's composite are not
subject to the same types of expenses to which the Fund is subject nor to the
diversification requirements, specific tax restrictions and investment
limitations imposed on the Fund by the Investment Company Act or the Internal
Revenue Code. Consequently, the performance results for the Sub-Advisor's
composite could have been adversely affected if the private accounts included in
the composite had been regulated as investment companies.
The investment results of the Sub-Advisor's composite presented below have been
reviewed and verified (for an AIMR Level II examination) by the independent
auditing firm, Deloitte & Touche LLP, to be computed in accordance with
Performance Presentation Standards of AIMR, but these results are not intended
to predict or suggest the returns that might be experienced by the Fund or an
individual investing in the Fund. Investors should also be aware that the use of
a methodology different from that used below to calculate performance could
result in different performance data.
*AIMR is a non-profit membership and education organization with more than
60,000 members worldwide that, among other things, has formulated a set of
performance presentation standards for investment advisors. These AIMR
performance presentation standards are intended to (i) promote full and fair
presentations by investment advisors of their performance results, and (ii)
ensure uniformity in reporting so that performance results of investment
advisors are directly comparable.
Annualized Total Return:
For Year ended Sub-Advisor's Composite S&P 500*
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December 31, 1994 3.38% 1.30%
December 31, 1995 45.74% 37.53%
December 31, 1996 22.04% 22.99%
December 31, 1997 ______ _______
For the period
January 1, 1994 - December 31, 1997
Annualized Return __.__% __.__%
Cumulative __.__% __.__%
* The Standard & Poor's 500 Composite Stock Price Index, known as the S&P 500,
is an un- managed market value-weighted index consisting of representative
samples of stocks within important industry groups within the U.S. economy. It
includes dividends and distributions, but does not reflect fees, brokerage
commissions or other expenses of investing.
The Administrator
Investment Company Administration Corporation (the "Administrator") prepares
various federal and state regulatory filings, reports and returns for the Fund,
prepares reports and materials to be supplied to the Trustees, monitors the
activities of the Fund's custodian, shareholder servicing agent and accountants,
and coordinates the preparation and payment of Fund expenses and reviews the
Fund's expense accruals. For its services, the Administrator receives a monthly
fee at the annual rate of 0.20% of average total net assets, subject to a
$30,000 annual minimum.
Other operating expenses
The Fund is responsible for its own operating expenses, including but not
limited to, the advisory and administration fees, custody and shareholder
servicing agent fees, legal and auditing expenses, federal and state
registration fees, and fees to the Trust's disinterested Trustees. The Manager
and Sub-Advisor have voluntarily undertaken currently to limit the Fund's
operating expenses to no more than 1.28% annually. The Manager and Sub-Advisor
may reduce their fees or reimburse the Fund for expenses at any time in order to
reduce the Fund's expenses. Reductions made by the Manager and Sub-Advisor in
their fees or payments or reimbursements of expenses which are the Fund's
obligation are subject to reimbursement by the Fund within three subsequent
years provided the Fund is able to do so and remain in compliance with any
applicable expense limitations then in effect.
Brokerage Transactions
The Manager and Sub-Advisor consider a number of factors in determining which
brokers or dealers to use for the Fund's portfolio transactions. While these are
more fully discussed in the SAI, the factors include, but are not limited to,
the reasonableness of commissions, quality of
6
<PAGE>
services and execution, and the availability of research which the Sub-Advisor
may lawfully and appropriately use in its investment advisory capacities.
Provided the Fund receives prompt execution at competitive prices, the sale of
Fund shares also may be considered as a factor in selecting broker-dealers for
the Fund's portfolio transactions.
Investor Guide
How to purchase shares of the Fund
There are several ways to purchase shares of the Fund. An Application Form,
which accompanies this Prospectus, is used if you send money directly to the
Fund by mail or by wire. If you have questions about how to invest, or about how
to complete the Application Form, please call an account representative at
(888)888-8888.
Class I shares are offered at net asset value without a sales charge. First Fund
Distributors, Inc., 4455 E. Camelback Road, Suite 261E, Phoenix, AZ 85018, (the
"Distributor"), acts as Distributor and may, at its discretion, waive the
minimum investment requirements. The Fund also offers Class A shares. The other
Class has a sales charge and other expenses which may result in performance for
that Class which is different from that of Class I shares.
Purchase Order Placed with Investment Dealers
Dealers who have a sales agreement with the Distributor may place orders for
shares of the Fund on behalf of clients at the offering price next determined
after receipt of the client's order by calling the Distributor. If the order is
placed by the client with the dealer by 4:00 p.m. Eastern time and forwarded to
the Transfer Agent any day that the New York Stock Exchange is open for trading,
it will be confirmed at the applicable offering price on that day. The dealer is
responsible for placing orders promptly with the Transfer Agent and for
forwarding payment promptly.
You may send money to the Fund by mail
If you wish to invest by mail, simply complete the Application Form and mail it
with a check (made payable to Liberty Freedom Fund) to the Fund's Shareholder
Servicing Agent, American Data Services, Inc. at the following address:
Liberty Freedom Fund
P.O. Box 640947
Cincinnati, OH 45264-0947
If you wish to send your Application Form and check via an overnight delivery
services (such as Fed Ex), delivery cannot be made to a post office box. In that
case, you should use the following address:
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Liberty Freedom Fund
c/o Star Bank, N.A.
Mutual Fund Custody Department
425 Walnut Street, M/L 6118,
Sixth Floor
Cincinnati, OH 45202
You may wire money to the Fund
Before sending a wire, you should call the Fund at (888) 888-8888 between 9:00
a.m. and 5:00 p.m., Eastern time, on a day when the New York Stock Exchange
("NYSE") is open for trading, in order to receive an account number. It is
important to call and receive this account number, because if your wire is sent
without it or without the name of the Fund, there may be a delay in investing
the money you wire. You should then ask your bank to wire money to:
Star Bank, N.A. Cinti/Trust
ABA # 0420-0001-3
for credit to Liberty Freedom Fund
DDA # 488840257
for further credit to [your name and account number]
Your bank may charge you a fee for sending a wire to the Fund.
Minimum investments
The minimum initial investment in the Fund is $250,000. The minimum subsequent
investment is $25,000.
Subsequent investments
You may purchase additional shares of the Fund by sending a check, with the stub
from an account statement, to the Fund at the address above. Please also write
your account number on the check. If you do not have a stub from an account
statement, you can write your name, address and account number on a separate
piece of paper and enclose it with your check. If you want to send additional
money for investment by wire, it is important for you to call the Fund at
(888)888-8888. You may also make additional purchases through an investment
dealer, as described above.
When is money invested in the Fund?
Any money received for investment in the Fund from an investor, whether sent by
check or by wire, is invested at the net asset value of the Fund which is next
calculated after the money is received (assuming the check or wire correctly
identifies the Fund and account). Orders received
8
<PAGE>
from dealers are invested at the net asset value next calculated after the order
is received. The net asset value is calculated at the close of regular trading
of the NYSE, currently 4:00 p.m., Eastern time. A check or wire received after
the NYSE closes is invested as of the next calculation of the Fund's net asset
value.
What is the net asset value of the Fund?
The Fund's net asset value per share for the Class I shares is calculated by
dividing the value of the Fund's total assets, less its liabilities, by the
number of its shares outstanding. In calculating the net asset value, portfolio
securities are valued using current market values, if available. Securities for
which market quotations are not readily available are valued at fair values
determined in good faith by or under the supervision of the Board of Trustees of
the Trust. The fair value of short-term obligations with remaining maturities of
60 days or less is considered to be their amortized cost.
Other information
The Distributor may waive the minimum investment requirements for purchases by
certain group or retirement plans. All investments must be made in U.S. dollars,
and checks must be drawn on U.S. banks. Third party checks will not be accepted.
A charge may be imposed if a check used to make an investment does not clear.
The Fund and the Distributor reserve the right to reject any investment, in
whole or in part. Federal tax law requires that investors provide a certified
taxpayer identification number and other certifications on opening an account in
order to avoid backup withholding of taxes. See the Application Form for more
information about backup withholding. The Fund is not required to issue share
certificates; all shares are normally held in non-certificated form on the books
of the Fund, for the account of the shareholder. The Fund, under certain
circumstances, may accept investments of securities appropriate for the Fund's
portfolio, in lieu of cash. Prior to making such a purchase, you should call the
Sub-Advisor to determine if such an investment may be made.
Services Available to Shareholders
Retirement Plans
You may invest in the Fund various retirement plans, including IRAs, Simplified
Employee Plan (SEP) IRAs, and all qualified retirement plans. For further
information about any of the plans, agreements, applications and annual fees
contact the Distributor, your financial representative or plan sponsor. To
determine which retirement plan is appropriate for you, consult your tax
adviser.
How to Redeem Your Shares
You have the right to redeem all or any portion of your shares of the Fund at
their net asset value
9
<PAGE>
on each day the NYSE is open for trading.
Redemption in writing
You may redeem your shares by simply sending a written request to the Fund. You
should give your account number and state whether you want all or part of your
shares redeemed. The letter should be signed by all of the shareholders whose
names appear in the account registration. You should send your redemption
request to:
Liberty Freedom Fund
150 Motor Parkway, Suite 109
Hauppauge, NY 11788-0132
Signature guarantee
If the value of the shares you wish to redeem exceeds $5,000, the signatures on
the redemption request must be guaranteed by an "eligible guarantor
institution." These institutions include banks, broker-dealers, credit unions
and savings institutions. A broker-dealer guaranteeing a signature must be a
member of a clearing corporation or maintain net capital of at least $100,000.
Credit unions must be authorized to issue signature guarantees. Signature
guarantees will be accepted from any eligible guarantor institution which
participates in a signature guarantee program. A notary public is not an
acceptable guarantor.
Redemption by telephone
If you complete the Redemption by Telephone portion of the Fund's Application
Form, you may redeem shares on any business day the NYSE is open by calling the
Fund's Shareholder Servicing Agent at (888) 888-8888 before 4:00 p.m. Eastern
time. Redemption proceeds will be mailed or wired, at your direction, on the
next business day to the bank account you designated on the Application Form.
The minimum amount that may be wired is $1,000 (wire charges, if any, will be
deducted from redemption proceeds). Telephone redemptions cannot be made for IRA
accounts.
By establishing telephone redemption privileges, you authorize the Fund and its
Shareholder Servicing Agent to act upon the instruction of any person who makes
the telephone call to redeem shares from your account and transfer the proceeds
to the bank account designated in the Application Form. The Fund and the
Shareholder Servicing Agent will use procedures to confirm that redemption
instructions received by telephone are genuine, including recording of telephone
instructions and requiring a form of personal identification before acting on
these instructions. If these normal identification procedures are followed,
neither the Fund nor the Shareholder Servicing Agent will be liable for any
loss, liability, or cost which results from acting upon instructions of a person
believed to be a shareholder with respect to the telephone redemption privilege.
The Fund may change, modify, or terminate these privileges at any time upon at
least
10
<PAGE>
60 days notice to shareholders.
You may request telephone redemption privileges after your account is opened;
however, the authorization form will require a separate signature guarantee.
Shareholders may experience delays in exercising telephone redemption privileges
during periods of abnormal market activity.
What price is used for a redemption?
The redemption price is the net asset value of the Fund's shares, next
determined after shares are validly tendered for redemption. All signatures of
account holders must be included in the request, and a signature guarantee, if
required, must also be included for the request to be valid.
When are redemption payments made?
As noted above, redemption payments for telephone redemptions are sent on the
day after the telephone call is received. Payments for redemptions sent in
writing are normally made promptly, but no later than seven days after the
receipt of a request that meets requirements described above. However, the Fund
may suspend the right of redemption under certain extraordinary circumstances in
accordance with rules of the Securities and Exchange Commission.
If shares were purchased by wire, they cannot be redeemed until the day after
the Application Form is received. If shares were purchased by check and then
redeemed shortly after the check is received, the Fund may delay sending the
redemption proceeds until it has been notified that the check used to purchase
the shares has been collected, a process which may take up to 15 days. This
delay may be avoided by investing by wire or by using a certified or official
bank check to make the purchase.
Repurchases from dealers
The Fund may accept orders to repurchase shares from an investment dealer on
behalf of a dealer's customers. The net asset value for a repurchase is that
next calculated after receipt of the order from the dealer.
Distributions and Taxes
Dividends and other distributions
Dividends from net investment income, if any, are normally declared and paid by
the Fund in December. Capital gains distributions, if any, are also normally
made in December, but the Fund may make an additional payment of dividends or
distributions if it deems it desirable at another time during any year.
Dividends and capital gain distributions (net of any required tax
withholding) are automatically
11
<PAGE>
reinvested in additional shares of the Fund at the net asset value per share on
the reinvestment date unless you have previously requested in writing to the
Shareholder Servicing Agent that payment be made in cash.
Any dividend or distribution paid by the Fund has the effect of reducing the net
asset value per share on the record date by the amount of the dividend or
distribution. You should note that a dividend or distribution paid on shares
purchased shortly before that dividend or distribution was declared will be
subject to income taxes even though the dividend or distribution represents, in
substance, a partial return to you.
Taxes
The Fund intends to qualify and elect to be treated as a regulated investment
company under Subchapter M of the Code. As long as the Fund continues to
qualify, and as long as the Fund distributes all of its income each year to the
shareholders, the Fund will not be subject to any federal income or excise
taxes. Distributions made by the Fund will be taxable to shareholders whether
received in shares (through dividend reinvestment) or in cash. Distributions
derived from net investment income, including net short-term capital gains, are
taxable to shareholders as ordinary income. A portion of these distributions may
qualify for the intercorporate dividends-received deduction. Distributions
designated as capital gains dividends are taxable as capital gains regardless of
the length of time shares of the Fund have been held. Although distributions are
generally taxable when received, certain distributions made in January are
taxable as if received the prior December. You will be informed annually of the
amount and nature of the Fund's distributions. Additional information about
taxes is set forth in the SAI. You should consult your own advisors concerning
federal, state and local taxation of distributions from the Fund.
General Information
The Trust
The Trust was organized as a Delaware business trust on October 3, 1996. The
Agreement and Declaration of Trust permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, without
par value, which may be issued in any number of series. The Board of Trustees
may from time to time issue other series, the assets and liabilities of which
will be separate and distinct from any other series.
Shareholder Rights
Shares issued by the Fund have no preemptive, conversion or subscription rights.
Shareholders have equal and exclusive rights as to dividends and distributions
as declared by the Fund and to the net assets of the Fund upon liquidation or
dissolution. The Fund, as a separate series of the Trust, votes separately on
matters affecting only the Fund (e.g., approval of the Investment
12
<PAGE>
Advisory Agreement); all series of the trust vote as a single class on matters
affecting all series jointly or the Trust as whole (e.g., election or removal of
Trustees). Voting rights are not cumulative, so that the holders of more than
50% of the shares voting in any election of Trustees can, if they so choose,
elect all of the Trustees. While the Trust is not required and does not intend
to hold annual meetings of shareholders, such meetings may be called by the
Trustees in their discretion, or upon demand by the holders of 10% or more of
the outstanding shares of the Trust for the purpose of electing or removing
Trustees.
Performance Information
From time to time, the Fund may publish its total return in advertisements and
communications to investors. Total return information will include the Fund's
average annual compounded rate of return over the most recent four calendar
quarters and over the period from the Fund's inception of operations. The Fund
may also advertise aggregate and average total return information over different
periods of time. The Fund's total return will be based upon the value of the
shares acquired through a hypothetical $1,000 investment at the beginning of the
specified period and the net asset value of those shares at the end of the
period, assuming reinvestment of all distributions. Total return figures will
reflect all recurring charges against Fund income. You should note that the
investment results of the Fund will fluctuate over time, and any presentation of
the Fund's total return for any prior period should not be considered as a
representation of what an investor's total return may be in any future period.
Shareholder Inquiries
Shareholder inquiries should be directed to the Shareholder Servicing Agent at
(888) 888-8888.
Multiple Classes
Under the Trust's charter documents, the Board of Trustees has the power to
classify or reclassify any unissued shares of a Fund into one or more additional
classes by setting or changing in any one or more respects their relative
rights, voting powers, restrictions, limitations as to dividends, qualifications
of redemption. The Board of Trustees of a Fund may similarly classify or
reclassify any class of its shares into one or more series and, without
shareholder approval, may increase the number of authorized shares of the Fund.
Year 2000 Risk.
Like other business organizations around the world, the Fund could be adversely
affected if the computer systems used by its Manager, Sub-Advisor and other
service providers do not properly process and calculate information related to
dates beginning January 1, 2000. This is commonly known as the "Year 2000
Issue." The Fund's Manager is taking steps that it believes are reasonably
designed to address the Year 2000 Issue with respect to its own computer
systems, and assurances are being obtained from the Fund's other service
providers that they are taking comparable steps. However, there can be no
assurance that these actions will be sufficient to avoid any adverse impact on
the Funds.
13
<PAGE>
Subject to Completion. Preliminary Statement of Additional Information dated
April , 1998
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 any
offers to buy be accepted prior to the time the registration statement becomes
effective. This Statement of Additional Information does not constitute a
prospectus.
The Liberty Freedom Fund
Statement of Additional Information
Dated , 1998
This Statement of Additional Information is not a prospectus, and it should be
read in conjunction with the prospectus dated 1998, as may be amended from time
to time, of The Liberty Freedom Fund (the "Fund"), a series of Advisors Series
Trust (the "Trust"). Liberty Bank and Trust Company, 3801 Canal Street, New
Orleans, Louisiana 70019, is the Manager of the Fund. The Edgar Lomax Company
(the "Advisor") is the Sub-Advisor to the Fund. A copy of the prospectus may be
obtained from the Fund at 6564 Loisdale Court, Suite 310, Springfield, VA 22150;
telephone (888) 263-6438.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Cross-reference to sections
Page in the prospectus
---- -----------------
<S> <C> <C>
Investment Objective and Policies .. B-2 Investment Objective and Policies
Management ......................... B-6 Management of the Fund
Portfolio Transactions and Brokerage B-9 Management of the Fund
Net Asset Value .................... B-10 Investor Guide
Taxation ........................... B-11 Distributions and Taxes
Dividends and Distributions ........ B-12 Distributions and Taxes
Performance Information ............ B-12 General Information
General Information ................ B-13 General Information
Appendix ........................... B-14 Not applicable
</TABLE>
SAI-1-98.LFF
B-1
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is growth of capital, with a
secondary objective of providing income. There is no assurance that the Fund
will achieve its objective. The discussion below supplements information
contained in the prospectus as to investment policies of the Fund.
Convertible Securities and Warrants
The Fund may invest in convertible securities and warrants. A
convertible security is a fixed income security (a debt instrument or a
preferred stock) which may be converted at a stated price within a specified
period of time into a certain quantity of the common stock of the same or a
different issuer. Convertible securities are senior to common stocks in an
issuer's capital structure, but are usually subordinated to similar
non-convertible securities. While providing a fixed income stream (generally
higher in yield than the income derivable from common stock but lower than that
afforded by a similar nonconvertible security), a convertible security also
gives an investor the opportunity, through its conversion feature, to
participate in the capital appreciation of the issuing company depending upon a
market price advance in the convertible security's underlying common stock.
A warrant gives the holder a right to purchase at any time during a
specified period a predetermined number of shares of common stock at a fixed
price. Unlike convertible debt securities or preferred stock, warrants do not
pay a fixed dividend. Investments in warrants involve certain risks, including
the possible lack of a liquid market for resale of the warrants, potential price
fluctuations as a result of speculation or other factors, and failure of the
price of the underlying security to reach or have reasonable prospects of
reaching a level at which the warrant can be prudently exercised (in which event
the warrant may expire without being exercised, resulting in a loss of the
Fund's entire investment therein).
Short-Term Investments
The Fund may invest in any of the following securities and instruments:
Bank Certificates of Deposit, Bankers' Acceptances and Time Deposits.
The Fund may acquire certificates of deposit, bankers' acceptances and time
deposits. Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by the Fund will be
dollar-denominated obligations of domestic or foreign banks or financial
institutions which at the time of purchase have capital, surplus and undivided
profits in excess of $100 million (including assets of both domestic and foreign
branches), based on latest published reports, or less than $100 million if the
principal amount of such bank obligations are fully insured by the U.S.
Government. If the Fund holds instruments of foreign banks or financial
institutions, it may be subject to additional investment risks that are
different in some respects from those incurred by a fund which invests only in
debt obligations of U.S. domestic issuers. See "Foreign Investments" below. Such
risks include future political and economic developments, the possible
imposition of withholding taxes by the particular country in which the issuer is
located on interest income payable on the securities, the possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls, or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities.
Domestic banks and foreign banks are subject to different governmental
regulations with respect to the amount and types of loans which may be made and
interest rates which may be charged. In addition, the profitability of the
banking industry depends largely upon the availability and cost of funds for the
purpose of financing lending operations under prevailing money market
conditions. General economic conditions as well as exposure to credit losses
arising from possible financial difficulties of borrowers play an important part
in the operations of the banking industry.
As a result of federal and state laws and regulations, domestic banks
are, among other things, required to maintain specified levels of reserves,
limited in the amount which they can loan to a single borrower, and subject to
other regulations designed to promote financial soundness. However, such laws
and regulations do not necessarily apply to foreign bank obligations that the
Fund may acquire.
In addition to purchasing certificates of deposit and bankers'
acceptances, to the extent permitted under its
SAI-1-98.LFF
B-2
<PAGE>
investment objectives and policies stated above and in its prospectus, the Fund
may make interest-bearing time or other interest-bearing deposits in commercial
or savings banks. Time deposits are non-negotiable deposits maintained at a
banking institution for a specified period of time at a specified interest rate.
Savings Association Obligations. The Fund may invest in certificates of
deposit (interest-bearing time deposits) issued by savings banks or savings and
loan associations that have capital, surplus and undivided profits in excess of
$100 million, based on latest published reports, or less than $100 million if
the principal amount of such obligations is fully insured by the U.S.
Government.
Commercial Paper, Short-Term Notes and Other Corporate Obligations. The
Fund may invest a portion of its assets in commercial paper and short-term
notes. Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper and short-term notes will normally have
maturities of less than nine months and fixed rates of return, although such
instruments may have maturities of up to one year.
Commercial paper and short-term notes will consist of issues rated at
the time of purchase "A-2" or higher by S&P, "Prime-1" or "Prime-2" by Moody's,
or similarly rated by another nationally recognized statistical rating
organization or, if unrated, will be determined by the Advisor to be of
comparable quality. These rating symbols are described in the Appendix.
Corporate obligations include bonds and notes issued by corporations to
finance longer-term credit needs than supported by commercial paper. While such
obligations generally have maturities of ten years or more, the Fund may
purchase corporate obligations which have remaining maturities of one year or
less from the date of purchase and which are rated "AA" or higher by S&P or "Aa"
or higher by Moody's.
Government Obligations
The Fund may make short-term investments in U.S. Government
obligations. Such obligations include Treasury bills, certificates of
indebtedness, notes and bonds, and issues of such entities as the Government
National Mortgage Association ("GNMA"), Export-Import Bank of the United States,
Tennessee Valley Authority, Resolution Funding Corporation, Farmers Home
Administration, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Farm Credit Banks, Federal Land Banks, Federal Housing Administration,
Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation, and the Student Loan Marketing Association.
Some of these obligations, such as those of the GNMA, are supported by
the full faith and credit of the U.S. Treasury; others, such as those of the
Export-Import Bank of United States, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the FNMA, are supported by
the discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law.
The Fund may invest in sovereign debt obligations of foreign countries.
A sovereign debtor's willingness or ability to repay principal and interest in a
timely manner may be affected by a number of factors, including its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which it may be
subject. Emerging market governments could default on their sovereign debt. Such
sovereign debtors also may be dependent on expected disbursements from foreign
governments, multilateral agencies and other entities abroad to reduce principal
and interest arrearages on their debt. The commitments on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a sovereign debtor's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to meet
such conditions could result in the cancellation of such third parties'
commitments to lend funds to the sovereign debtor, which may further impair such
debtor's ability or willingness to service its debt in a timely manner.
Foreign Investments and Currencies
The Fund may invest in securities of foreign issuers, provided that
they are publicly traded in the United
SAI-1-98.LFF
B-3
<PAGE>
States.
Depositary Receipts. Depositary Receipts ("DRs") include American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") or other forms of depositary receipts. DRs are
receipts typically issued in connection with a U.S. or foreign bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation.
Risks of Investing in Foreign Securities. Investments in foreign
securities involve certain inherent risks, including the following:
Political and Economic Factors. Individual foreign economies of certain
countries may differ favorably or unfavorably from the United States' economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, diversification and balance of payments
position. The internal politics of certain foreign countries may not be as
stable as those of the United States. Governments in certain foreign countries
also continue to participate to a significant degree, through ownership interest
or regulation, in their respective economies. Action by these governments could
include restrictions on foreign investment, nationalization, expropriation of
goods or imposition of taxes, and could have a significant effect on market
prices of securities and payment of interest. The economies of many foreign
countries are heavily dependent upon international trade and are accordingly
affected by the trade policies and economic conditions of their trading
partners. Enactment by these trading partners of protectionist trade legislation
could have a significant adverse effect upon the securities markets of such
countries.
Currency Fluctuations. The Fund may invest in securities denominated in
foreign currencies. Accordingly, a change in the value of any such currency
against the U.S. dollar will result in a corresponding change in the U.S. dollar
value of the Fund's assets denominated in that currency. Such changes will also
affect the Fund's income. The value of the Fund's assets may also be affected
significantly by currency restrictions and exchange control regulations enacted
from time to time.
Taxes. The interest and dividends payable on certain of the Fund's
foreign portfolio securities may be subject to foreign withholding taxes, thus
reducing the net amount of income available for distribution to the Fund's
shareholders.
Repurchase Agreements
The Fund may enter into repurchase agreements with respect to its
portfolio securities. Pursuant to such agreements, the Fund acquires securities
from financial institutions such as banks and broker-dealers as are deemed to be
creditworthy by the Advisor, subject to the seller's agreement to repurchase and
the Fund's agreement to resell such securities at a mutually agreed upon date
and price. The repurchase price generally equals the price paid by the Fund plus
interest negotiated on the basis of current short-term rates (which may be more
or less than the rate on the underlying portfolio security). Securities subject
to repurchase agreements will be held by the Custodian or in the Federal
Reserve/Treasury Book-Entry System or an equivalent foreign system. The seller
under a repurchase agreement will be required to maintain the value of the
underlying securities at not less than 102% of the repurchase price under the
agreement. If the seller defaults on its repurchase obligation, the Fund will
suffer a loss to the extent that the proceeds from a sale of the underlying
securities are less than the repurchase price under the agreement. Bankruptcy or
insolvency of such a defaulting seller may cause the Fund's rights with respect
to such securities to be delayed or limited. Repurchase agreements are
considered to be loans under the 1940 Act.
When-Issued Securities, Forward Commitments and Delayed Settlements
The Fund may purchase securities on a "when-issued," forward commitment
or delayed settlement basis. In this event, the Custodian will segregate liquid
assets equal to the amount of the commitment in a separate account. Normally,
the Custodian will set aside portfolio securities to satisfy a purchase
commitment. In such a case, the Fund may be required subsequently to segregate
additional assets in order to assure that the value of the account remains equal
to the amount of the Fund's commitment. It may be expected that the Fund's net
assets will fluctuate to a greater degree when it sets aside portfolio
securities to cover such purchase commitments than when it sets aside cash.
The Fund does not intend to engage in these transactions for
speculative purposes but only in furtherance of its investment objectives.
Because the Fund will segregate liquid assets to satisfy its purchase
commitments in the manner described, the Fund's liquidity and the ability of the
Advisor to manage it may be affected in the event the
SAI-1-98.LFF
B-4
<PAGE>
Fund's forward commitments, commitments to purchase when-issued securities and
delayed settlements ever exceeded 15% of the value of its net assets.
The Fund will purchase securities on a when-issued, forward commitment
or delayed settlement basis only with the intention of completing the
transaction. If deemed advisable as a matter of investment strategy, however,
the Fund may dispose of or renegotiate a commitment after it is entered into,
and may sell securities it has committed to purchase before those securities are
delivered to the Fund on the settlement date. In these cases the Fund may
realize a taxable capital gain or loss. When the Fund engages in when-issued,
forward commitment and delayed settlement transactions, it relies on the other
party to consummate the trade. Failure of such party to do so may result in the
Fund's incurring a loss or missing an opportunity to obtain a price credited to
be advantageous.
The market value of the securities underlying a when-issued purchase,
forward commitment to purchase securities, or a delayed settlement and any
subsequent fluctuations in their market value is taken into account when
determining the market value of the Fund starting on the day the Fund agrees to
purchase the securities. The Fund does not earn interest on the securities it
has committed to purchase until they are paid for and delivered on the
settlement date.
Illiquid Securities
The Fund may not invest more than 15% of the value of its net assets in
securities that at the time of purchase have legal or contractual restrictions
on resale or are otherwise illiquid. The Advisor will monitor the amount of
illiquid securities in the Fund's portfolio, under the supervision of the
Trust's Board of Trustees, to ensure compliance with the Fund's investment
restrictions.
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 (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 private placement 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 the Fund might be unable
to dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemption requests
within seven days. The 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.
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. If such securities are subject to purchase by institutional buyers
in accordance with Rule 144A promulgated by the Commission under the Securities
Act, the Trust's Board of Trustees may determine that such securities are not
illiquid securities notwithstanding their legal or contractual restrictions on
resale. In all other cases, however, securities subject to restrictions on
resale will be deemed illiquid.
Investment Restrictions
The Trust (on behalf of the Fund) has adopted the following
restrictions as fundamental policies, which may not be changed without the
favorable vote of the holders of a "majority," as defined in the 1940 Act, of
the outstanding voting securities of the Fund. Under the 1940 Act, the "vote of
the holders of a majority of the outstanding voting securities" means the vote
of the holders of the lesser of (i) 67% of the shares of the Fund represented at
a meeting at which the holders of more than 50% of its outstanding shares are
represented or (ii) more than 50% of the outstanding shares of the Fund.
SAI-1-98.LFF
B-5
<PAGE>
As a matter of fundamental policy, the Fund is diversified. The Fund's
investment objective is also fundamental.
In addition, the Fund may not:
1. Issue senior securities, borrow money or pledge its assets, except
that (i) the Fund may borrow from banks in amounts not exceeding one-third of
its total assets (not including the amount borrowed); and (ii) this restriction
shall not prohibit the Fund from engaging in options transactions or short
sales;
2. Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of transactions and except that the Fund may
borrow money from banks to purchase securities;
3. Act as underwriter (except to the extent the Fund may be deemed to
be an underwriter in connection with the sale of securities in its investment
portfolio);
4. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
Government securities);
5. Purchase or sell real estate or interests in real estate or real
estate limited partnerships (although the Fund may purchase and sell securities
which are secured by real estate and securities of companies which invest or
deal in real estate);
6. Purchase or sell commodities or commodity futures contracts;
7. Make loans of money (except for purchases of debt securities
consistent with the investment policies of the Fund and except for repurchase
agreements); or
8. Make investments for the purpose of exercising control or
management.
The Fund observes the following restrictions as a matter of operating
but not fundamental policy, pursuant to positions taken by federal regulatory
authorities:
The Fund may not:
1. Invest in the securities of other investment companies or purchase
any other investment company's voting securities or make any other investment in
other investment companies except to the extent permitted by federal law;
2. Invest more than 15% of its net assets in securities which are
restricted as to disposition or otherwise are illiquid or have no readily
available market (except for securities which are determined by the Board of
Trustees to be liquid);
3. Make loans of securities; or
4. Notwithstanding fundamental restriction 1 above, borrow money,
except from banks for temporary or emergency purposes, and in amounts not to
exceed 5% of total net assets, and subject to the further restriction that no
additional investment in securities will be made while any such loan is
outstanding.
MANAGEMENT
The overall management of the business and affairs of the Trust is
vested with its Board of Trustees. The Board approves all significant agreements
between the Trust and persons or companies furnishing services to it, including
the agreements with the Manager, Advisor, Administrator, Custodian and Transfer
Agent. The day to day operations of the Trust are delegated to its officers,
subject to the Fund's investment objectives and policies and to general
supervision by the Board of Trustees.
The Trustees and officers of the Trust, their ages and positions with
the Trust, their business addresses and principal occupations during the past
five years are:
Name, address and age Position Principal Occupation During Past
Five Years
Walter E. Auch, Sr. (76) Trustee Director, Geotech Communications, Inc.
6001 N. 62d Place Nicholas-Applegate Investment Trust,
Brinson Funds (since 1994), Smith
Barney Trak
SAI-1-98.LFF
B-6
<PAGE>
Paradise Valley, AZ 85253 Fund, Pimco Advisors L.P., Banyan
Realty Trust, Banyan Land Fund II and
Legend Properties.
Eric M. Banhazl (40)* Trustee, Senior Vice President, Investment
2025 E. Financial Way President Company Administration Corporation;
Glendora, CA 91740 and Vice President, First Fund Fund
Treasurer Distributors; President, RNC Mutual
Group; Treasurer, Guiness Flight
Investment Funds, Inc. and
Professionally Managed Portfolios.
Donald E. O'Connor (61) Trustee Retired; formerly Executive Vice
1700 Taylor Avenue President and Chief Operating Officer
Fort Washington MD, 20744 of ICI Mutual Insurance Company (until
January, 1997), VicePresident,
Operations, Investment Company
Institute (until June,1993).
George T. Wofford III (58) Trustee Vice President, Information Services,
305 Glendora Circle Federal Home Loan Bank of San Francisco
Danville, CA 94526 (since March, 1993);formerly Director
of Management Information Services,
Morrison & Foerster (law firm).
Steven J. Paggioli (47) Vice Executive Vice President, Robert H.
479 W. 22d Street President Wadsworth & Associates, Inc. and
New York, NY 10011 Investment Company Administration
Corporation; Vice President First Fund
Distributors, Inc.; President and
Trustee, Professionally Managed
Portfolios; Director, Managers Funds,
Inc.
Robert H. Wadsworth (58) Vice President, Robert H. Wadsworth &
4455 E. Camelback Road President Associates, Inc., Investment Company
Suite 261E Administration Corporation and First
Phoenix, AZ 85018 Fund Distributors,Inc.; Vice President,
Professionally Managed Portfolios;
President,Guinness Flight Investment
Funds, Inc.; Director, Germany Fund,
Inc., New Germany Fund, Inc., Central
European Equity Fund, Inc. and Deutsche
Funds, Inc.
Chris O. Kissack (49) Secretary Employed by Investment Company
4455 E. Camelback Road, 261E Administration Corporation (sinceJuly,
1995 Phoenix, AZ 85018 1996); formerly employed by Bank One,
N.A. (from August,until July, 1996);
O'Connor, Cavanagh, Anderson,
Killingsworthand Beshears (law firm)
(until August, 1995).
* denotes Trustee who is an "interested person" of the Trust under the 1940 Act.
Name and Position Aggregate Compensation from The Trust*
- ----------------- --------------------------------------
Walter E. Auch, Sr., Trustee $12,000
Donald E. O'Connor, Trustee $12,000
George T. Wofford III, Trustee $12,000
*The Trust has no pension or retirement plan. No other entity affiliated with
the Trust pays any compensation to the Trustees.
The Manager
Subject to the supervision of the Board of Trustees, investment
management and related services are provided by the Manager, pursuant to a
Management Agreement (the "Management Agreement"). The Manager is a
majority-owned subsidiary of Liberty Financial Services, Inc.
Under the Management Agreement, the Manager has overall responsibility
for the assets of the Fund, including responsibility for investing the assets in
accordance with the investment objectives, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Agreement and Declaration of Trust and By-Laws; the
Fund's prospectus, statement of additional information, and
SAI-1-98.LFF
B-7
<PAGE>
undertakings; and such other limitations, policies and procedures as the
Trustees of the Trust may impose from time to time in writing to the Manager. In
providing such services, the Manager shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Code, and other applicable law.
Without limiting the generality of the foregoing, the Manager has
agreed to (i) furnish the Fund with advice and recommendations with respect to
the investment of the Fund's assets, (ii) manage and oversee the investments of
the Fund, subject to the ultimate supervision and direction of the Trust's Board
of Trustees; (iii) monitor the day-to-day activity of the Advisor; (iv) furnish
such reports, statements and other data on securities, economic conditions and
other matters related to the investment of the Fund's assets as the Trustees or
the officers of the Trust may reasonably request; and (v) render to the Trust's
Board of Trustees such periodic and special reports as the Board may reasonably
request. The Manager has also agreed, at its own expense, to maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary to the performance of its
obligations under the Management Agreement. Personnel of the Manager may serve
as officers of the Trust provided they do so without compensation from the
Trust. Without limiting the generality of the foregoing, the staff and personnel
of the Manager shall be deemed to include persons employed or retained by the
Manager to furnish statistical information, research, and other factual
information, advice regarding economic factors and trends, information with
respect to technical and scientific developments, and such other information,
advice and assistance as the Manager or the Trust's Board of Trustees may desire
and reasonably request. With respect to the operation of the Fund, the Manager
has agreed to be responsible for the expenses of printing and distributing extra
copies of the Fund's prospectus, statement of additional information, and sales
and advertising materials (but not the legal, auditing or accounting fees
attendant thereto) to prospective investors (but not to existing shareholders);
and the costs of any special Board of Trustees meetings or shareholder meetings
convened for the primary benefit of the Manager.
As compensation for the Manager's services, the Fund pays it an
management fee at the rate specified in the prospectus. In addition to the fees
payable to the Manager, the Advisor and the Administrator, the Trust is
responsible for its operating expenses, including: fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Trust for the benefit of the Fund including all fees and expenses of its
custodian, shareholder services agent and accounting services agent; interest
charges on any borrowings; costs and expenses of pricing and calculating its
daily net asset value and of maintaining its books of account required under the
1940 Act; taxes, if any; a pro rata portion of expenditures in connection with
meetings of the Fund's shareholders and the Trust's Board of Trustees that are
properly payable by the Fund; salaries and expenses of officers and fees and
expenses of members of the Trust's Board of Trustees or members of any advisory
board or committee who are not members of, affiliated with or interested persons
of the Manager, Advisor or Administrator; insurance premiums on property or
personnel of the Fund which inure to its benefit, including liability and
fidelity bond insurance; the cost of preparing and printing reports, proxy
statements, prospectuses and statements of additional information of the Fund or
other communications for distribution to existing shareholders; legal, auditing
and accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Fund, if any; and all other charges and costs of
its operation plus any extraordinary and non-recurring expenses, except as
otherwise prescribed in the Management Agreement.
The Manager may agree to waive certain of its fees or reimburse the
Fund for certain expenses, in order to limit the expense ratio of the Fund or
its classes. In that event, subject to approval by the Trust's Board of
Trustees, the Fund may reimburse the Manager in subsequent years for fees waived
and expenses reimbursed, provided the expense ratio before reimbursement is less
than the expense limitation in effect at that time.
Under the Management Agreement, the Manager will not be liable to the Trust or
the Fund or any shareholder for any act or omission in the course of, or
connected with, rendering services or for any loss sustained by the Trust except
in the case of a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages will be limited as
provided in the 1940 Act) or of willful misfeasance, bad faith or gross
negligence, or reckless disregard of its obligations and duties under the
Agreement.
SAI-1-98.LFF B-8
<PAGE>
The Management Agreement will remain in effect for a period not to
exceed two years. Thereafter, if not terminated, the Management Agreement will
continue automatically for successive annual periods, provided that such
continuance is specifically approved at least annually (i) by a majority vote of
the Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund.
The Management Agreement is terminable by vote of the Board of Trustees
or by the holders of a majority of the outstanding voting securities of the Fund
at any time without penalty, on 60 days written notice to the Manager. The
Management Agreement also may be terminated by the Manager on 60 days written
notice to the Trust. The Advisory Agreement terminates automatically upon its
assignment (as defined in the 1940 Act).
The Sub-Advisor
Subject to the supervision of the Board of Trustees, investment
management and related services are also provided by the Advisor, pursuant to a
Sub-Advisory Agreement (the "Advisory Agreement").
Under the Advisory Agreement, the Advisor agrees to invest the assets
of the Fund in accordance with the investment objectives, policies and
restrictions of the Fund as set forth in the Fund's and Trust's governing
documents, including, without limitation, the Trust's Agreement and Declaration
of Trust and By-Laws; the Fund's prospectus, statement of additional
information, and undertakings; and such other limitations, policies and
procedures as the Trustees of the Trust may impose from time to time in writing
to the Advisor. In providing such services, the Advisor shall at all times
adhere to the provisions and restrictions contained in the federal securities
laws, applicable state securities laws, the Code, and other applicable law.
Without limiting the generality of the foregoing, the Advisor has
agreed to (i) furnish the Fund with advice and recommendations with respect to
the investment of the Fund's assets, (ii) effect the purchase and sale of
portfolio securities; (iii) manage and oversee the investments of the Fund,
subject to the ultimate supervision and direction of the Manager and the Trust's
Board of Trustees; (iv) vote proxies and take other actions with respect to the
Fund's securities; (v) maintain the books and records required to be maintained
with respect to the securities in the Fund's portfolio; (vi) furnish such
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets as the Trustees or the
officers of the Trust may reasonably request; and (vii) render to the Trust's
Board of Trustees such periodic and special reports as the Board may reasonably
request. The Advisor has also agreed, at its own expense, to maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary to the performance of its
obligations under the Advisory Agreement. Personnel of the Advisor may serve as
officers of the Trust provided they do so without compensation from the Trust.
Without limiting the generality of the foregoing, the staff and personnel of the
Advisor shall be deemed to include persons employed or retained by the Advisor
to furnish statistical information, research, and other factual information,
advice regarding economic factors and trends, information with respect to
technical and scientific developments, and such other information, advice and
assistance as the Advisor or the Trust's Board of Trustees may desire and
reasonably request. With respect to the operation of the Fund, the Advisor has
agreed to be responsible for the expenses of printing and distributing extra
copies of the Fund's prospectus, statement of additional information, and sales
and advertising materials (but not the legal, auditing or accounting fees
attendant thereto) to prospective investors (but not to existing shareholders);
and the costs of any special Board of Trustees meetings or shareholder meetings
convened for the primary benefit of the Advisor.
As compensation for the Advisor's services, the Fund pays it a fee at
the rate specified in the prospectus. The Advisor may agree to waive certain of
its fees or reimburse the Fund for certain expenses, in order to limit the
expense ratio of the Fund. In that event, subject to approval by the Trust's
Board of Trustees, the Fund may reimburse the Advisor in subsequent years for
fees waived and expenses reimbursed, provided the expense ratio before
reimbursement is less than the expense limitation in effect at that time.
Under the Advisory Agreement, the Advisor will not be liable to the
Trust or the Fund or any shareholder for any act or omission in the course of,
or connected with, rendering services or for any loss sustained by the Trust
except in the case of a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages will be limited as
provided in the 1940 Act) or of willful misfeasance, bad faith or gross
negligence, or reckless disregard of its obligations and duties under the
Agreement.
SAI-1-98.LFF
B-9
<PAGE>
The Advisory Agreement will remain in effect for a period not to exceed
two years. Thereafter, if not terminated, the Advisory Agreement will continue
automatically for successive annual periods, provided that such continuance is
specifically approved at least annually (i) by a majority vote of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund.
The Advisory Agreement is terminable by vote of the Board of Trustees
or by the holders of a majority of the outstanding voting securities of the Fund
at any time without penalty, on 60 days written notice to the Advisor. The
Advisory Agreement also may be terminated by the Advisor on 60 days written
notice to the Trust. The Advisory Agreement terminates automatically upon its
assignment (as defined in the 1940 Act).
Distribution Plan. The Fund has adopted a Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act with respect to its Class A shares. The Manager
acts as Distribution Coordinator under the Plan, and may make payments on behalf
of the Fund for distribution and related expenses of the Fund, including
preparation, printing and mailing of prospectuses; shareholder reports such as
semiannual and annual reports, performance reports and newsletters; sales
literature and other promotional material to prospective investors; direct mail
solicitation; advertising; public relations; compensation of sales personnel,
advisors or other third parties for their assistance with respect to the
distribution of the Funds' shares; payments to financial intermediaries for
shareholder support; administrative and accounting services with respect to Fund
shareholders; and such other expenses related to the distribution of the Fund's
shares.
Plan payments will be reviewed by the Trustees. However, it is possible
that at times the amount of the Advisor's compensation could exceed the
Advisor's distribution expenses, resulting in a profit to the Advisor. If the
Plan is terminated, the Fund will not be required to make payments for expenses
incurred after the termination.
The Administrator. The Administrator has agreed to be responsible for
providing such services as the Trustees may reasonably request, including but
not limited to (i) maintaining the Trust's books and records (other than
financial or accounting books and records maintained by any custodian, transfer
agent or accounting services agent); (ii) overseeing the Trust's insurance
relationships; (iii) preparing for the Trust (or assisting counsel and/or
auditors in the preparation of) all required tax returns, proxy statements and
reports to the Trust's shareholders and Trustees and reports to and other
filings with the Commission and any other governmental agency (the Trust
agreeing to supply or cause to be supplied to the Administrator all necessary
financial and other information in connection with the foregoing); (iv)
preparing such applications and reports as may be necessary to permit the offer
and sale of the shares of the Trust under the securities or "blue sky" laws of
the various states selected by the Trust (the Trust agreeing to pay all filing
fees or other similar fees in connection therewith); (v) responding to all
inquiries or other communications of shareholders, if any, which are directed to
the Administrator, or if any such inquiry or communication is more properly to
be responded to by the Trust's custodian, transfer agent or accounting services
agent, overseeing their response thereto; (vi) overseeing all relationships
between the Trust and any custodian(s), transfer agent(s) and accounting
services agent(s), including the negotiation of agreements and the supervision
of the performance of such agreements; and (vii) authorizing and directing any
of the Administrator's directors, officers and employees who may be elected as
Trustees or officers of the Trust to serve in the capacities in which they are
elected. All services to be furnished by the Administrator under this Agreement
may be furnished through the medium of any such directors, officers or employees
of the Administrator.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Advisory Agreement states that the Advisor shall be responsible for
broker-dealer selection and for negotiation of brokerage commission rates,
provided that the Advisor shall not direct orders to an affiliated person of the
Advisor without general prior authorization to use such affiliated broker or
dealer by the Trust's Board of Trustees. The Advisor's primary consideration in
effecting a securities transaction will be execution at the most favorable
price. In selecting a broker-dealer to execute each particular transaction, the
Advisor may take the following into consideration: the best net price available;
the reliability, integrity and financial condition of the broker-dealer; the
size of and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to
SAI-1-98.LFF
B-10
<PAGE>
the investment performance of the Fund on a continuing basis. The price to the
Fund in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered.
Subject to such policies as the Manager, Advisor and the Board of
Trustees of the Trust may determine, the Advisor shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Advisor an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Advisor determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Advisor's overall
responsibilities with respect to the Fund. The Advisor is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Advisor, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Advisor shall determine, and the Advisor
shall report on such allocations regularly to the Advisor and the Trust,
indicating the broker-dealers to whom such allocations have been made and the
basis therefor. The Advisor is also authorized to consider sales of shares of
the Fund as a factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best execution, i.e., that such
brokers or dealers are able to execute the order promptly and at the best
obtainable securities price.
On occasions when the Advisor deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients of the Advisor,
the Advisor, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Advisor in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
NET ASSET VALUE
The net asset value of the Fund's shares will fluctuate and is
determined as of the close of trading on the New York Stock Exchange (the
"NYSE") (currently 4:00 p.m. Eastern time) each business day. The NYSE annually
announces the days on which it will not be open for trading. The most recent
announcement indicates that it will not be open on the following days: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. However,
the NYSE may close on days not included in that announcement.
The net asset value per share is computed by dividing the value of the
securities held by the Fund plus any cash or other assets (including interest
and dividends accrued but not yet received) minus all liabilities (including
accrued expenses) by the total number of shares in the Fund outstanding at such
time.
Generally, the Fund's investments are valued at market value or, in the
absence of a market value, at fair value as determined in good faith by the
Advisor and the Trust's Valuation Committee pursuant to procedures approved by
or under the direction of the Board.
The Fund's securities, including ADRs, EDRs and GDRs, which are traded
on securities exchanges are valued at the last sale price on the exchange on
which such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any reported sales, at the mean between
the last available bid and asked price. Securities that are traded on more than
one exchange are valued on the exchange determined by the Advisor to be the
primary market. Securities traded in the over-the-counter market are valued at
the mean between the last available bid and asked price prior to the time of
valuation. Securities and assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Board.
Short-term debt obligations with remaining maturities in excess of 60
days are valued at current market prices, as discussed above. Short-term
securities with 60 days or less remaining to maturity are, unless conditions
indicate otherwise, amortized to maturity based on their cost to the Fund if
acquired within 60 days of maturity or, if already held by the Fund on the 60th
day, based on the value determined on the 61st day.
SAI-1-98.LFF
B-11
<PAGE>
All other assets of the Fund are valued in such manner as the Board in
good faith deems appropriate to reflect their fair value.
TAXATION
The Fund will be taxed, under the Code, as a separate entity from any
other series of the Trust, and it intends to elect to qualify for treatment as a
regulated investment company ("RIC") under Subchapter M of the Code. In each
taxable year that the Fund so qualifies, the Fund (but not its shareholders)
will be relieved of federal income tax on that part of its investment company
taxable income (consisting generally of interest and dividend income, net
short-term capital gains and net realized gains from currency transactions) and
net capital gain that is distributed to shareholders.
In order to qualify for treatment as a RIC, the Fund must distribute
annually to shareholders at least 90% of its investment company taxable income
and must meet several additional requirements. Among these requirements are, in
general, the following: (1) at least 90% of the Fund's gross income each taxable
year must be derived from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of securities or
foreign currencies, or other income derived with respect to its business of
investing in securities or currencies; (2) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RICs and other securities, limited in respect of any one issuer, to an
amount that does not exceed 5% of the value of the Fund's assets and that does
not represent more than 10% of the outstanding voting securities of such issuer;
and (3) at the close of each quarter of the Fund's taxable year, not more than
25% of the value of its assets may be invested in securities (other than U.S.
Government securities or the securities of other RICs) of any one issuer.
Distributions of net investment income and net realized capital gains
by the Fund will be taxable to shareholders whether made in cash or reinvested
in shares. In determining amounts of net realized capital gains to be
distributed, any capital loss carryovers from prior years will be applied
against capital gains. Shareholders receiving distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share of the Fund on the
reinvestment date. Fund distributions also will be included in individual and
corporate shareholders' income on which the alternative minimum tax may be
imposed.
The Fund intends to declare and pay dividends and other distributions
annually, as stated in the Prospectus. In order to avoid the payment of any
federal excise tax based on net income, the Fund must declare on or before
December 31 of each year, and pay on or before January 31 of the following year,
distributions at least equal to 98% of its ordinary income for that calendar
year and at least 98% of the excess of any capital gains over any capital losses
realized in the one-year period ending October 31 of that year, together with
any undistributed amounts of ordinary income and capital gains (in excess of
capital losses) from the previous calendar year.
The Fund may receive dividend distributions from U.S. corporations. To
the extent that the Fund receives such dividends and distributes them to its
shareholders, and meets certain other requirements of the Code, corporate
shareholders of the Fund may be entitled to the "dividends received" deduction.
Availability of the deduction is subject to certain holding period and
debt-financing limitations.
The Fund may be subject to foreign withholding taxes on dividends and
interest earned with respect to securities of foreign corporations.
Redemptions and exchanges of shares of the Fund will result in gains or
losses for tax purposes to the extent of the difference between the proceeds and
the shareholder's adjusted tax basis for the shares. Any loss realized upon the
redemption or exchange of shares within six months from their date of purchase
will be treated as a long-term capital loss to the extent of distributions of
long-term capital gain dividends with respect to such shares during such
six-month period. All or a portion of a loss realized upon the redemption of
shares of the Fund may be disallowed to the extent shares of the Fund are
purchased (including shares acquired by means of reinvested dividends) within 30
days before or after such redemption.
Distributions and redemptions may be subject to state and local income
taxes, and the treatment thereof may differ from the federal income tax
treatment. Foreign taxes may apply to non-U.S. investors.
SAI-1-98.LFF
B-12
<PAGE>
The above discussion and the related discussion in the Prospectus are
not intended to be complete discussions of all applicable federal tax
consequences of an investment in the Fund. The law firm of Paul Hastings
Janofsky & Walker LLP has expressed no opinion in respect thereof. Nonresident
aliens and foreign persons are subject to different tax rules, and may be
subject to withholding of up to 30% on certain payments received from the Fund.
Shareholders are advised to consult with their own tax advisers concerning the
application of foreign, federal, state and local taxes to an investment in the
Fund.
DIVIDENDS AND DISTRIBUTIONS
Dividends from the Fund's investment company taxable income (whether
paid in cash or invested in additional shares) will be taxable to shareholders
as ordinary income to the extent of the Fund's earnings and profits.
Distributions of the Fund's net capital gain (whether paid in cash or invested
in additional shares) will be taxable to shareholders as long-term capital gain,
regardless of how long they have held their Fund shares.
Dividends declared by the Fund in October, November or December of any
year and payable to shareholders of record on a date in one of such months will
be deemed to have been paid by the Fund and received by the shareholders on the
record date if the dividends are paid by the Fund during the following January.
Accordingly, such dividends will be taxed to shareholders for the year in which
the record date falls.
The Fund or any securities dealer effecting a redemption of the Fund's
shares by a shareholder will be required to file information reports with the
IRS with respect to distributions and payments made to the shareholder. In
addition, the Fund will be required to withhold federal income tax at the rate
of 31% on taxable dividends, redemptions and other payments made to accounts of
individual or other non-exempt shareholders who have not furnished their correct
taxpayer identification numbers and made certain required certifications on the
Account Application Form or with respect to which the Fund or the securities
dealer has been notified by the IRS that the number furnished is incorrect or
that the account is otherwise subject to withholding. Amounts withheld under
these rules will be creditable against a shareholder's federal income tax
liability.
PERFORMANCE INFORMATION
Total Return
Average annual total return quotations used in the Fund's advertising
and promotional materials are calculated according to the following formula:
P(1 + T)n = ERV
where "P" equals a hypothetical initial payment of $1000; "T" equals average
annual total return; "n" equals the number of years; and "ERV" equals the ending
redeemable value at the end of the period of a hypothetical $1000 payment made
at the beginning of the period.
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 advertising for publication. Average
annual total return, or "T" in the above formula, is computed by finding the
average annual compounded rates of return over the period that would equate the
initial amount invested to the ending redeemable value. Average annual total
return assumes the reinvestment of all dividends and distributions.
Yield
Annualized yield quotations used in the Fund's advertising and
promotional materials are calculated by dividing the Fund's investment income
for a specified thirty-day period, net of expenses, by the average number of
shares outstanding during the period, and expressing the result as an annualized
percentage (assuming semi-annual compounding) of the net asset value per share
at the end of the period. Yield quotations are calculated according to the
following formula:
YIELD = 2 [(a-b + 1)6 - 1]
___
cd
SAI-1-98.LFF
B-13
<PAGE>
where "a" equals dividends and interest earned during the period; "b" equals
expenses accrued for the period, net of reimbursements; "c" equals the average
daily number of shares outstanding during the period that are entitled to
receive dividends and "d" equals the maximum offering price per share on the
last day of the period.
Except as noted below, in determining net investment income earned
during the period ("a" in the above formula), the Fund calculates interest
earned on each debt obligation held by it during the period by (1) computing the
obligation's yield to maturity, based on the market value of the obligation
(including actual accrued interest) on the last business day of the period or,
if the obligation was purchased during the period, the purchase price plus
accrued interest; (2) dividing the yield to maturity by 360 and multiplying the
resulting quotient by the market value of the obligation (including actual
accrued interest). Once interest earned is calculated in this fashion for each
debt obligation held by the Fund, net investment income is then determined by
totaling all such interest earned.
For purposes of these calculations, the maturity of an obligation with
one or more call provisions is assumed to be the next date on which the
obligation reasonably can be expected to be called or, if none, the maturity
date.
Other information
Performance data of the Fund quoted in advertising and other
promotional materials represents past performance and is not intended to predict
or indicate future results. The return and principal value of an investment in
the Fund will fluctuate, and an investor's redemption proceeds may be more or
less than the original investment amount. In advertising and promotional
materials the Fund may compare its performance with data published by Lipper
Analytical Services, Inc. ("Lipper"), Morningstar, Inc. or CDA Investment
Technologies, Inc. ("CDA"). The Fund also may refer in such materials to mutual
fund performance rankings and other data, such as comparative asset, expense and
fee levels, published by Lipper or CDA. Advertising and promotional materials
also may refer to discussions of the Fund and comparative mutual fund data and
ratings reported in independent periodicals including, but not limited to, The
Wall Street Journal, Money Magazine, Forbes, Business Week, Financial World and
Barron's.
GENERAL INFORMATION
The Trust has no business history prior to the offering of the first of
its series of shares. The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest and to
divide or combine the shares into a greater or lesser number of shares without
thereby changing the proportionate beneficial interest in the Fund. Each share
represents an interest in the Fund proportionately equal to the interest of each
other share. Upon the Fund's liquidation, all shareholders would share pro rata
in the net assets of the Fund available for distribution to shareholders.
The Declaration of Trust does not require the issuance of stock
certificates. If stock certificates are issued, they must be returned by the
registered owners prior to the transfer or redemption of shares represented by
such certificates.
If they deem it advisable and in the best interest of shareholders, the
Board of Trustees may create additional series of shares which differ from each
other only as to dividends. The Board of Trustees has created several series of
shares, and may create additional series in the future, which have separate
assets and liabilities. Income and operating expenses not specifically
attributable to a particular Fund are be allocated fairly among the Funds by the
Trustees, generally on the basis of the relative net assets of each Fund.
Rule 18f-2 under the 1940 Act provides that as to any investment
company which has two or more series outstanding and as to any matter required
to be submitted to shareholder vote, such matter is not deemed to have been
effectively acted upon unless approved by the holders of a "majority" (as
defined in the Rule) of the voting securities of each series affected by the
matter. Such separate voting requirements do not apply to the election of
Trustees or the ratification of the selection of accountants. The Rule contains
special provisions for cases in which an advisory contract is approved by one or
more, but not all, series. A change in investment policy may go into effect as
to one or more series whose holders so approve the change even though the
required vote is not obtained as to the holders of other affected series.
The Fund's custodian, Star Bank, 425 Walnut Street, Cincinnati, Ohio
45202 is responsible for holding the Funds' assets. American Data Services, P.O.
Box 5536, Hauppage NY 11788 acts as the Fund's accounting services
SAI-1-98.LFF
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agent. The Fund's independent accountants, McGladrey & Pullen, LLP, 555 Fifth
Avenue, New York, NY 10017, assist in the preparation of certain reports to the
Securities and Exchange Commission and the Fund's tax returns.
Shares of the Fund owned by the Trustees and officers as a group were
less than 1% at , 1998.
APPENDIX
Description of Ratings
Moody's Investors Service, Inc.: Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa---Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
Moody's applies numerical modifiers "1", "2" and "3" to both the Aaa
and Aa rating classifications. The modifier "1" indicates that the security
ranks in the higher end of its generic rating category; the modifier "2"
indicates a mid-range ranking; and the modifier "3" indicates that the issue
ranks in the lower end of its generic rating category.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great period of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Standard & Poor's Corporation: Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
Commercial Paper Ratings
Moody's commercial paper ratings are assessments of the issuer's
ability to repay punctually promissory obligations. Moody's employs the
following three designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers: Prime 1--highest quality; Prime
2--higher quality; Prime 3--high quality.
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A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment. Ratings are graded into four categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Issues assigned the highest rating, A, are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers "1", "2" and "3" to indicate the relative degree of safety. The
designation A-1 indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. A "+" designation is applied to those issues
rated "A-1" which possess extremely strong safety characteristics. Capacity for
timely payment on issues with the designation "A-2" is strong. However, the
relative degree of safety is not as high as for issues designated A-1. Issues
carrying the designation "A-3" have a satisfactory capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effect of changes in
circumstances than obligations carrying the higher designations.
SAI-1-98.LFF
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<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Not Applicable
(b) Exhibits:
(1) Agreement and Declaration of Trust (1)
(2) By-Laws (1)
(3) Not applicable
(4) Specimen stock certificates (3)
(5) Form of Investment Advisory Agreement (2)
(6) Distribution Agreement (2)
(7) Not applicable
(8) Custodian Agreement (3)
(9) (1)Administration Agreement with Investment Company
Administration Corporation (2)
(2) Fund Accounting Service Agreement (2)
(3) Transfer Agency and Service Agreement (2)
(10) (i) Opinion and consent of counsel relating to
the Al Frank Fund, American Trust Allegiance
Fund, Avatar Advantage Balanced Fund, Avatar
Advantage Equity Allocation Fund, Avatar
Advantage International Equity Fund, Chase
Growth Fund, Edgar Lomax Fund,
InformationTech 100 Fund, Kaminski Poland
Fund, Ridgeway Helms Millenium Fund,
Rockhaven Fund (5)
(ii) Opinion and consent of counsel relating to
the Van Deventer & Hoch American Value Fund
(5)
(11) Not applicable
(12) Not applicable
(13) Investment letters (3)
(14) Individual Retirement Account forms (6)
(15) (i) Form of Distribution Plan (4)
(16) Not applicable
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(1) Previously filed with the Registration Statement on Form N-1A(File
No. 33-17391) on December 6, 1996 and incorporated herein by reference.
(2) Previously filed with Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A(File No. 33-17391) on January 29, 1997 and
incorporated herein by reference.
(3) Previously filed with Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A(File No. 33-17391) on February 28, 1997
and incorporated herein by reference.
(4) Previously filed with Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A (File No. 33-17391) on February 19, 1998
and incorporated herein by reference.
(5) Previously filed with Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A (File No. 33-17391) on March 19, 1998 and
incorporated herein by reference.
(6) To be filed by amendment.
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
Shares of Beneficial Interest
Number of record holders as of March 17, 1998
American Trust Allegiance Fund: 296
InformationTech 100 Fund: 26
Kaminski Poland Fund: 342
Ridgeway-Helms Millennium Fund: 111
Rockhaven Fund: 45
Rockhaven Premier Dividend Fund: 23
Chase Growth Fund: 69
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The Avatar Advantage Equity Allocation Fund: 3
Edgar Lomax Value Fund: 40
Al Frank Asset Management Fund: 218
The Avatar Advantage Balanced Fund: 1
Item 27. Indemnification.
Article VI of Registrant's By-Laws states as follows:
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this
Article, "agent" means any person who is or was a Trustee, officer, employee or
other agent of this Trust or is or was serving at the request of this Trust as a
Trustee, director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise or was a
Trustee, director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes without limitation attorney's fees and any expenses of
establishing a right to indemnification under this Article.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed:
(a) in the case of conduct in his official capacity as a Trustee
of the Trust, that his conduct was in the Trust's best
interests, and
(b) in all other cases, that his conduct was at least not opposed
to the Trust's best interests, and
(c) in the case of a criminal proceeding, that he had no
reasonable cause to believe the conduct of that person was
unlawful.
The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in the best interests of this
Trust or that the person had reasonable cause to believe that the person's
conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action by or in the right of this Trust to procure a
judgment in its favor by reason of the fact that that person is or was an agent
of this Trust, against expenses actually and reasonably incurred by that person
in connection with the defense or settlement of that action if that person acted
in good faith, in a manner that person believed to be in the best interests of
this Trust and with such care, including reasonable inquiry, as
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an ordinarily prudent person in a like position would use under similar
circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision
to the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any claim, issue, or matter as to which that
person shall have been adjudged to be liable on the basis that
personal benefit was improperly received by him, whether or
not the benefit resulted from an action taken in the person's
official capacity; or
(b) In respect of any claim, issue or matter as to which that
person shall have been adjudged to be liable in the
performance of that person's duty to this Trust, unless and
only to the extent that the court in which that action was
brought shall determine upon application that in view of all
the circumstances of the case, that person was not liable by
reason of the disabling conduct set forth in the preceding
paragraph and is fairly and reasonably entitled to indemnity
for the expenses which the court shall determine; or
(c) of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval,
or of expenses incurred in defending a threatened or pending
action which is settled or otherwise disposed of without court
approval, unless the required approval set forth in Section 6
of this Article is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of
this Trust has been successful on the merits in defense of any proceeding
referred to in Sections 2 or 3 of this Article or in defense of any claim, issue
or matter therein, before the court or other body before whom the proceeding was
brought, the agent shall be indemnified against expenses actually and reasonably
incurred by the agent in connection therewith, provided that the Board of
Trustees, including a majority who are disinterested, non-party Trustees, also
determines that based upon a review of the facts, the agent was not liable by
reason of the disabling conduct referred to in Section 4 of this Article.
Section 6. REQUIRED APPROVAL. Except as provided in Section 5 of this
Article, any indemnification under this Article shall be made by this Trust only
if authorized in the specific case on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are not
parties to the proceeding and are not interested persons of
the Trust (as defined in the Investment Company Act of 1940);
or
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(b) A written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding upon a written undertaking by or on behalf of the agent, to repay the
amount of the advance if it is ultimately determined that he or she is not
entitled to indemnification, together with at least one of the following as a
condition to the advance: (i)security for the undertaking; or (ii) the existence
of insurance protecting the Trust against losses arising by reason of any lawful
advances; or (iii) a determination by a majority of a quorum of Trustees who are
not parties to the proceeding and are not interested persons of the Trust, or by
an independent legal counsel in a written opinion, based on a review of readily
available facts that there is reason to believe that the agent ultimately will
be found entitled to indemnification. Determinations and authorizations of
payments under this Section must be made in the manner specified in Section 6 of
this Article for determining that the indemnification is permissible.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article
shall affect any right to indemnification to which persons other than Trustees
and officers of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall be made
under this Article, except as provided in Sections 5 or 6 in any circumstances
where it appears:
(a) that it would be inconsistent with a provision of the
Agreement and Declaration of Trust of the Trust, a resolution
of the shareholders, or an agreement in effect at the time of
accrual of the alleged cause of action asserted in the
proceeding in which the expenses were incurred or other
amounts were paid which prohibits or otherwise limits
indemnification; or
(b) that it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 10. INSURANCE. Upon and in the event of a determination by the
Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent of this Trust against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such, but only to the extent that this Trust would
have the power to indemnify the agent against that liability under the
provisions of this Article and the Agreement and Declaration of Trust of the
Trust.
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does not
apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
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Item 28. Business and Other Connections of Investment Adviser.
The information required by this item with respect to American Trust
Company is as follows:
American Trust Company is a trust company chartered under the
laws of the State of New Hampshire. Its President and Director, Paul H.
Collins, is a director of:
MacKenzie-Childs, Ltd.
3260 State Road 90
Aurora, New York 13026
Great Northern Arts
Castle Music, Inc.
World Family Foundation
all with an address at
Gordon Road, Middletown, New York
Robert E. Moses, a Director of American Trust Company, is a director
of:
Mascoma Mutual Hold Corp.
On The Green
Lebanon, NH 03766
Information required by this item is contained in the Form ADV of the
following entities and is incorporated herein by reference:
Name of investment adviser File No.
Bay Isle Financial Corporation 801-27563
Kaminski Asset Management, Inc. 801-53485
Ridgeway Helms Investment Management 801-49884
Rockhaven Asset Management, LLC 801-54084
Chase Investment Counsel Corp. 801-3396
Avatar Investors Associates Corp. 801-7061
The Edgar Lomax Company 801-19358
Van Deventer & Hoch 801-6118
Al Frank Asset Management, Inc. 801-30528
Heritage West Advisors, LLC 801-55233
Item 29. Principal Underwriters.
(a) The Registrant's principal underwriter also acts as principal
underwriter for the following investment companies:
Guinness Flight Investment Funds, Inc.
Fleming Capital Mutual Fund Group
Fremont Mutual Funds
Jurika & Voyles Mutual Funds
Kayne Anderson Mutual Funds
Masters' Select Investment Trust
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O'Shaughnessy Funds, Inc.
PIC Investment Trust
Purisima Fund
Professionally Managed Portfolios
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group
(b) The following information is furnished with respect to the officers
and directors of First Fund Distributors, Inc.:
Position and Offices Position and
Name and Principal with Principal Offices with
Business Address Underwriter Registrant
- ---------------- ----------- ----------
Robert H. Wadsworth President Vice
4455 E. Camelback Road and Treasurer President
Suite 261E
Phoenix, AZ 85018
Eric M. Banhazl Vice President President,
2025 E. Financial Way Treasurer
Glendora, CA 91741 and Trustee
Steven J. Paggioli Vice President & Vice
479 West 22nd Street Secretary President
New York, New York 10011
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession of the following persons:
(a) the documents required to be maintained by paragraph (4) of Rule
31a-1(b) will be maintained by the Registrant;
(b) the documents required to be maintained by paragraphs (5), (6),
(10) and (11) of Rule 31a-1(b) will be maintained by the respective investment
advisors:
American Trust Company, One Court Street, Lebanon, NH 03766
Bay Isle Financial Corporation, 160 Sansome Street, San Francisco, CA
94104
Kaminski Asset Management, Inc., 210 Second Street, North, #050,
Minneapolis, MN 55401
Ridgeway Helms Investment Management, 303 Twin Dolphin Drive, Redwood
Shores, CA 94065
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Rockhaven Asset Management, 100 First Avenue, Suite 1050, Pittsburgh,
PA 15222
Chase Investment Counsel Corp., 300 Preston Avenue, Charlottesville, VA
22902
Avatar Associates Investment Corp., 900 Third Avenue, New York, NY
10022
The Edgar Lomax Company, 6564 Loisdale Court, Springfield, VA 22150
Van Deventer & Hoch, 800 North Bend Boulevard, Glendale, CA 91203
Al Frank Asset Management, Inc. 465 Forest Avenue, Laguna Beach, CA
92651
Heritage West Advisors, LLC, 1850 North Central Ave., Suite 610,
Phoenix, AZ 85004
(c) with respect to The Heritage West Dividend Capture Income Fund
series of the Registant, all other records will be maintained by the Registrant;
and
(d) all other documents will be maintained by Registrant's custodian,
Star Bank, 425 Walnut Street, Cincinnati, OH 45202.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Registrant hereby undertakes to:
(a) Furnish each person to whom a Prospectus is delivered a copy
of the applicable latest annual report to shareholders, upon
request and without charge.
(b) If requested to do so by the holders of at least 10% of the
Trust's outstanding shares, call a meeting of shareholders for
the purposes of voting upon the question of removal of a
director and assist in communications with other shareholders.
(c) On behalf of each of its series, to change any disclosure of
past performance of an Advisor to a series to conform to
changes in the position of the staff of the Commission with
respect to such presentation.
(d) File a post-effective amendment for the Liberty Freedom Fund
series, using financial statements which may not be certified,
within four to six months of the effective date of this
Registration Statement as such requirement is interprested by
the staff of the Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement on Form N-1A of Advisors Series Trust to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Phoenix
and State of Arizona on the 15th day of April, 1998.
ADVISORS SERIES TRUST
By /s/ Eric M. Banhazl*
Eric M. Banhazl
President
This Amendment to the Registration Statement on Form N-1A of Advisors
Series Trust has been signed below by the following persons in the capacities
indicated on April 15, 1998.
/s/ Eric M. Banhazl* President, Principal Financial
Eric M. Banhazl and Accounting Officer, and Trustee
/s/ Walter E. Auch Sr.* Trustee
Walter E. Auch, Sr.
/s/ Donald E. O'Connor* Trustee
Donald E. O'Connor
/s/ George T. Wofford III* Trustee
George T. Wofford III
* /s/ Robert H. Wadsworth
By: Robert H. Wadsworth
Attorney in Fact
amendment.no21