Liberty Freedom Fund - Class I Shares
4101 Pauger Street
New Orleans, Louisiana 70122
Fund Literature: (800) 645-1704
Shareholder Services: (888) 229-2105
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 June 29, 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....................................... 4
Investment Objective and Policies................... 4
Management of the Fund.............................. 5
Investor Guide...................................... 8
Services Available to Shareholders.................. 10
How to Redeem Your Shares........................... 10
Distributions and Taxes............................. 12
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.
June 29, 1998
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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.
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.
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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 500 Index, a capitalization-weighted
index of 500 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.
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"), 4101 Pauger Street, New
Orleans, Louisiana 70122, (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, as of January 1,
1994, 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. A complete
list and description of the Sub-Advisor's composites is available by request to
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 (minimum
account size required as of January 1, 1994) 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. In addition, the
operating expenses incurred by the private accounts were lower than the
anticipated operating expenses of the Fund, and, accordingly, the performance
results of the composite are greater than what Fund performance would have been.
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. The most recent report of Deloitte & Touche
LLP, detailing specific characteristics of the composite (e.g. dispersion of
returns) is available upon request. The methodology used to calculate
performance conforming to AIMR standards is different from that used by mutual
funds. 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.
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<TABLE>
Total Returns: Years Ended, December 31
Oct. 1, 1990 to
Annualized Cumulative 1997 1996 1995 1994 1993 1992 1991 Dec. 31, 1990
----------- ---------- ---- ---- ---- ----- ---- ------ ----- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sub-Advisors 21.09% 300.42% 24.18% 22.04% 45.75% 3.38% 25.02% 6.35% 27.75% 3.25%
Composite
S&P 500** 20.42% 284.69% 33.34% 22.99% 37.53% 1.30% 10.06% 7.62% 30.45% 8.96%
Number of Portfolios 28 15 9 4 3 3 2 1
End of Period
Composite Assets $641,151 $388,556 $187,712 $43,638 $607 $533 $361 $95
End of Period (Thousands)
Percentage of Total Assets 90% 96% 97% 82% 1% 4% 12% 5%
Represented by the Composites
Standard Deviation 0.27% 0.51% 0.85% 0.45% 0.26% 0.56% - 0 - N/A
of Returns
</TABLE>
*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.
**The Standard & Poor's 500 Composite Stock Price Index, known as the S&P 500,
is an unmanaged 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. It has been taken from published sources and has
not been examined by Deloitte & Touche LLP.
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. The Advisor has agreed
to reduce fees payable to it by the Fund and to pay Fund operating expenses to
the extent necessary to limit the Fund's aggregate annual operating expenses to
the limit set forth in the Expense Table (the "expense cap"). Any such
reductions made by the Advisor in its fees or payment of expenses which are the
Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so
requested by the Advisor, in the first, second or third fiscal year next
succeeding the fiscal year of the reduction or absorption if the aggregate
amount actually paid by the Fund toward the operating expenses for such fiscal
year (taking into account the reimbursement) does not exceed the applicable
limitation on Fund expenses. With respect to the reimbursement of a particular
fee reduction or expense payment, a reimbursement to the Advisor is permitted
only within the three year period following the year in which the Advisor
reduced the subject fee or paid the subject expense. Any such reimbursement is
also contingent upon Board of Trustees review and approval at the time the
reimbursement is made. Such reimbursement may be paid prior to the Fund's
payment of current expenses if so requested by the Advisor even if that practice
may require the Advisor to waive, reduce or absorb current Fund expenses.
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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
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)
229-2105.
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 641265
Cincinnati, OH 45264-1265
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) 229-2105 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 # 488920679
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)229-2105. 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 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.
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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 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.
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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) 229-2105 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.
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.
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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 of capital 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, par value
$.01 per share, 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.
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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) 229-2105.
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.
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Advisor
Liberty Bank & Trust Company
4101 Pauger Street
New Orleans, LA 70122
Sub-Advisor
The Edgar Lomax Company
6564 Loisdale Court, Suite 310
Springfield, VA 22150
Distributor
First Fund Distributors, Inc.
4455 E. Camelback Rd., Ste. 261E
Phoenix, AZ 85018
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
Transfer Agent
American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
(888) 229-2105
Auditors
McGladrey & Pullen LLP
555 Fifth Avenue, 8th Floor
New York, NY 10017-2416
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
Liberty Freedom Fund
4101 Pauger Street
New Orleans, Louisiana 70122
1-877-LIBFUND (542-3863)
Class A Shares
Prospectus
June 29, 1998
Investments offered through Delta Equity Services Corp. Member NASD and
SIPC/Jackson, Shanklin & Sonia Investments, L.L.C. are not bank deposits, nor
are they guaranteed by nor obligations of, Liberty Bank & Trust Company or its
subsidiary banks or affiliates. All investments are subject to risks, including
possible loss of principal amount invested.
Liberty Freedom Fund - Class A Shares
4101 Pauger Street
New Orleans, Louisiana 70122
Fund Literature: (800) 645-1704
Shareholder Services: (888) 229-2105
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 June 29, 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 4
Investment Objective and Policies 5
Management of the Fund 5
Investor Guide 8
Services Available to Shareholders 11
How to Redeem Your Shares 12
Distributions and Taxes 14
General Information 15
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.
June 29, 1998
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 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 500 Index, a capitalization-weighted
index of 500 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.
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"), 4101 Pauger Street, New
Orleans, Louisiana 70122, (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, as of January 1,
1994, 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. A complete
list and description of the Sub-Advisor's composites is available by request to
the Sub-Advisor. A complete list and description of the Sub-Advisor's composites
is available by request to 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 (minimum
account size required as of January 1, 1994) 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. In addition, the
operating expenses incurred by the private accounts were lower than the
anticipated operating expenses of the Fund, and, accordingly, the performance
results of the composite are greater than what Fund performance would have been.
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. The most recent report of Deloitte & Touche
LLP, detailing specific characteristics of the composite (e.g. dispersion of
returns) is available upon request.The methodology used to calculate performance
conforming to AIMR standards is different from that used by mutual funds.
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.
Total Returns: Years Ended, December 31
<TABLE>
Oct. 1, 1990 to
Annualized Cumulative 1997 1996 1995 1994 1993 1992 1991 Dec. 31, 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sub-Advisors 21.09% 300.42% 24.18% 22.04% 45.75% 3.38% 25.02% 6.35% 27.75% 3.25%
Composite
S&P 500** 20.42% 284.69% 33.34% 22.99% 37.53% 1.30% 10.06% 7.62% 30.45% 8.96%
Number of Portfolios 28 15 9 4 3 3 2 1
End of Period
Composite Assets $641,151 $388,556 $187,712 $43,638 $607 $533 $361 $95
End of Period (Thousands)
Percentage of Total Assets 90% 96% 97% 82% 1% 4% 12% 5%
Represented by the Composites
Standard Deviation 0.27% 0.51% 0.85% 0.45% 0.26% 0.56% - 0 - N/A
of Returns
</TABLE>
*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.
**The Standard & Poor's 500 Composite Stock Price Index, known as the S&P 500,
is an unmanaged 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. It has been taken from published sources and has
not been examined by Deloitte & Touche LLP.
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. The Advisor has agreed
to reduce fees payable to it by the Fund and to pay Fund operating expenses to
the extent necessary to limit the Fund's aggregate annual operating expenses to
the limit set forth in the Expense Table (the "expense cap"). Any such
reductions made by the Advisor in its fees or payment of expenses which are the
Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so
requested by the Advisor, in the first, second or third fiscal year next
succeeding the fiscal year of the reduction or absorption if the aggregate
amount actually paid by the Fund toward the operating expenses for such fiscal
year (taking into account the reimbursement) does not exceed the applicable
limitation on Fund expenses. With respect to the reimbursement of a particular
fee reduction or expense payment, a reimbursement to the Advisor is permitted
only within the three year period following the year in which the Advisor
reduced the subject fee or paid the subject expense. Any such reimbursement is
also contingent upon Board of Trustees review and approval at the time the
reimbursement is made. Such reimbursement may be paid prior to the Fund's
payment of current expenses if so requested by the Advisor even if that practice
may require the Advisor to waive, reduce or absorb current Fund expenses.
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", 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 net asset value, 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
Letter of Intent
In investor may qualify for an immediate reduced sales charge on purchases by
completing the Letter on Intent section on the Application Form. The investor
will state an intention to purchase, during the next 13 months, a specified
amount of shares which, if made at one time, would qualify for a reduced sales
charge.
Rights of Accumulation
The reduced sales charges applicable to purchases apply on a cumulative basis
over any period of time. Thus the value of all shares of the Fund owned by an
investor (including the investor's own account, IRA account, or other account),
taken at current net asset value, can be combined with a current purchase of
shares to determine the rate of sales charge applicable to the current purchase
in order to receive the cumulative quantity reduction. When opening a new
account, the fact that the investor currently holds shares of the Fund must be
indicated on the Application Form in order to receive the cumulative quantity
discount. For subsequent purchases, the Fund's Shareholder Servicing Agent (888)
229-2105) should be notified of current fund holdings prior to the purchase of
additional 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 641265
Cincinnati, OH 45264-1265
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
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) 229-2105 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 # 488920679
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)
229-2105. 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 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
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.
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) 229-2105 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.
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 and Shareholder Service Plans
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 Distribution Coordinator 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 Distribution Coordinator for services
provided to the Fund 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
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 Distribution Coordinator's compensation could exceed its
distribution expenses, resulting in a profit to the Distribution Coordinator. If
the Plan is terminated, the Fund will not be required to make payments for
expenses incurred after the termination.
Shareholder Service Plan. The Fund has entered into a Shareholder Service Plan
pursuant to which the Adviser will provide, or arrange for others to provide,
certain specified shareholder services to Class A shareholders. As compensation,
the Fund will pay the Adviser up to 0.25% of the average daily net assets of
Class A shares of the Fund on an annual basis, payable monthly. The Adviser will
pay certain banks, trust companies, broker-dealers, and other financial
intermediaries (each, a "Participating Organization") out of the fees the
Adviser receives from the Fund under the Shareholder Service Plan to the extent
that the Participating Organization performs shareholder servicing functions for
Class A shares owned from time to time by customers of the Participating
Organization. In certain cases, the Adviser may also pay a fee, out of its own
resources and not out of the service fee payable under the Shareholder Services
Plan, to a Participating Organization for providing other administrative
services to its customers who invest in Class A shares.
Pursuant to the Shareholder Services Plan, the Adviser may also enter into
special contractual arrangements with Participating Organizations that process
substantial volumes of purchases and redemptions of Class A shares for their
customers. Under these arrangements, the Participating Organization will
ordinarily establish an omnibus account with the Fund's Transfer Agent and will
maintain sub-accounts for its customers for whom it processes purchases and
redemptions of Class A shares. A Participating Organization may charge its
customers a fee, as agreed by the Participating Organization and the customer,
for the services it provides. Before purchasing shares, customers of
Participating Organizations should read this Prospectus in conjunction with the
service agreement and other literature describing the services and related fees
provided by the Participating Organization.
Compensation of other parties. The Adviser may in its discretion and out of its
own funds compensate third parties for the sale and marketing of shares of the
Fund. The Adviser also may use its own funds to sponsor seminars and educational
programs on the Fund for financial intermediaries and shareholders.
Conversion feature. On the first business day of the month next following the
fourth anniversary of their purchase, Class A shares will automatically convert
to Class I shares and will no longer be subject to the fees associated with the
Distribution and Shareholder Service Plans. This conversion will be on the basis
of the relative net asset values of the two Classes, without the imposition of
any sales charge, fee or other expense. The purpose of the conversion feature is
to eliminate the distribution and shareholder service fees paid by the holders
of Class A shares that have been outstanding for an extended period of time.
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 of capital 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, par value
$.01 per share, 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) 229-2105.
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.
