The Rockhaven Fund
The Rockhaven Premier Dividend Fund
100 First Avenue, Suite 1050
Pittsburgh, PA 15222
Shareholder Services (888) 229-2105
Fund Literature (800) 522-3508
PROSPECTUS
October 14, 1997
This Prospectus describes two mutual funds. The Rockhaven Fund is a mutual fund
with the investment objective of obtaining above average current income together
with capital appreciation. The Rockhaven Premier Dividend Fund (referred to in
this Prospectus as the "Premier Dividend Fund") is a mutual fund with a primary
investment objective of obtaining high current income and a secondary objective
of seeking capital appreciation. (The two funds collectively are referred to as
the "Funds.") Both Funds attempt to achieve their objective by investing in a
diversified portfolio of equity securities. See "Investment Objective and
Policies." There can be no assurance that either Fund will achieve its
investment objective.
This Prospectus sets forth basic information about the Funds that prospective
investors should know before investing. It should be read and retained for
future reference. Each 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 October 14, 1997, has been filed with
the Securities and Exchange Commission (the "SEC") and is incorporated herein by
reference. This SAI is available without charge upon request to the Funds 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
October 14, 1997
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Table of Contents
Expense Table . . . . . . . . . . . . . . . . . . . . . 2
Investment Objective and Policies . . . . . . . . . . . 3
Management of the Funds . . . . . . . . . . . . . . . . 5
Investor Guide. . . . . . . . . . . . . . . . . . . . . 8
Services Available to Shareholders. . . . . . . . . . . 11
How to Redeem Your Shares . . . . . . . . . . . . . . . 12
Distributions and Taxes . . . . . . . . . . . . . . . . 14
General Information . . . . . . . . . . . . . . . . . . 15
Expense Table
Expenses are one of several factors to consider when investing in the Funds.
There are two types of expenses involved: shareholder transaction expenses, such
as sales loads, and annual operating expenses, such as investment advisory fees.
The Funds are no-load mutual funds and have no shareholder transaction expenses.
The Funds have adopted a plan of distribution under which they will pay the
Advisor, as Distribution Coordinator, a fee at the annual rate of up to 0.25% of
each Fund's net assets. A long-term shareholder may pay more, directly and
indirectly, in such fees than the maximum sales charge permitted under the rules
of the National Association of Securities Dealers. Shares will be redeemed at
net asset value per share.
ANNUAL OPERATING EXPENSES OF EACH FUND
(As a percentage of average net assets)
INVESTMENT ADVISORY FEE 0.75%
12B-1 FEE 0.25%
OTHER EXPENSES (NET OF FEE WAIVERS) (1) 0.50%
TOTAL FUND OPERATING EXPENSES (2) 1.50%
(1) OTHER EXPENSES ARE ESTIMATED FOR THE FIRST FISCAL YEAR OF THE FUNDS.
(2) TOTAL OPERATING EXPENSES ARE NOT EXPECTED TO EXCEED 1.50% OF AVERAGE NET
ASSETS ANNUALLY, BUT IN THE EVENT THAT THEY DO, THE ADVISOR HAS AGREED TO REDUCE
ITS FEES TO INSURE THAT THE EXPENSES FOR EACH FUND WILL NOT EXCEED 1.50%. IF THE
ADVISOR DID NOT LIMIT THE FUNDS' EXPENSES, IT IS EXPECTED THAT "OTHER EXPENSES"
IN THE ABOVE TABLE WOULD BE 1.45% AND "TOTAL OPERATING EXPENSES" WOULD BE 2.45%.
IF THE ADVISOR DOES WAIVE ANY OF ITS FEES, THE FUNDS MAY REIMBURSE THE ADVISOR
IN FUTURE YEARS. SEE "MANAGEMENT OF THE FUNDS."
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 either of the Funds. 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 Funds 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
$15 $47
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 FUNDS' ACTUAL RETURN MAY BE HIGHER OR LOWER. SEE "MANAGEMENT OF THE
FUNDS."
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The minimum initial investment in a Fund is $1,000, with subsequent minimum
investments of $100 or more.
Investment Objective And Policies
What are the Funds' investment objectives?
The investment objective of The Rockhaven Fund is to obtain above average
current income together with capital appreciation. Capital appreciation and
current yield are given equal emphasis.
The primary investment objective of The Premier Dividend Fund is to obtain high
current income, and the Fund has a secondary objective of seeking capital
appreciation. There can be no assurance that either Fund will achieve its
objective.
How do the Funds seek to achieve their objectives?
Under normal market conditions, each Fund will invest at least 65% of its total
assets in income-producing equity securities, consisting of common and preferred
stocks and securities convertible into common stocks, such as convertible bonds
and convertible preferred stocks. Rockhaven Asset Management (the "Advisor")
selects common stocks for each Fund's portfolio that it believes have good
value, attractive yield and potential for dividend growth. Based on the
Advisor's assessment of market and economic conditions and outlook, it also
invests a varying portion of each Fund's portfolio in preferred stocks and
convertible securities. The Advisor expects that the Premier Dividend Fund will
maintain a higher percentage of its portfolio in convertible securities than
will the Rockhaven Fund. The Advisor anticipates that both Funds may have an
annual turnover rate of up to 100%.
There is, of course, no assurance that the Funds' 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 Funds might purchase.
Under normal market conditions, either Fund may invest up to 35% of the value of
its total assets in corporate bonds, notes, rights and warrants, as well as
short-term obligations. Short-term obligations
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include commercial paper, certificates of deposit, bankers' acceptances, U.S.
Government securities and repurchase agreements. If the Advisor believes that
market conditions warrant a temporary defensive posture, a Fund may invest
without limit in high quality, short-term obligations.
Options.
Each Fund may also write covered call options without limit on equity
securities. By writing an option on a security held in its portfolio, a Fund, in
return for the premium it receives, gives up the opportunity for profit from a
price increase in the underlying security above the exercise price, but it
retains the risk of loss should the price of the underlying security decline. In
order to close out an options position, the Fund may enter into a closing
purchase transaction, which is the purchase of a call option on the same
security with the same exercise price and expiration date as the call option
that the Fund has previously written. If the Fund is unable to effect a closing
purchase transaction, it will not be able to sell the underlying security until
the option expires or is exercised. The Fund may also write options on stock
indices, up to 5% of the value of its total assets.
Illiquid Securities.
Each Fund may invest up to 15% of its net assets in securities that are
considered illiquid. An illiquid investment is generally a security which is not
registered under the U.S. securities laws or cannot be disposed of withing seven
days in the normal course of business at approximately the amount at which the
Fund values it. The Fund may not be able to dispose of an illiquid security at
the desired time and price, and it may incur additional expenses if it has to
bear the cost of registering a security.
Foreign Securities.
The Funds may invest in securities of foreign issuers, including Depositary
Receipts with respect to securities of foreign issuers. Up to 50% of a Fund's
total assets may be invested in foreign securities which are listed on a
national securities exchange, but investments in other foreign securities are
not expected to exceed 5% of either Fund's total assets. There are additional
risks associated with investments in foreign securities, including fluctuations
in exchange rates, political or economic instability, and the possible
imposition of exchange controls or other laws or restrictions. Foreign
companies are also not generally subject to the same accounting, auditing and
financial reporting standards comparable to those applicable to U.S. companies.
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The Funds may also invest in securities issued by companies within emerging or
developing countries, which involve greater risks than other foreign
investments. Additional information about foreign investments, including
investment in emerging markets, is contained in the SAI.
Lower Rated Securities.
Each Fund may invest in debt securities which are rated lower than investment
grade by a rating agency, but in no event will a Fund purchase a security rated
lower than "C" or the equivalent. (A description of the ratings of Moody's
Investors Service, Inc. and Standard and Poor's Corporation is included in the
SAI.) The Funds may also invest up to 50% of their total assets in convertible
securities rated as low as C. If a security held by a Fund is downgraded below
C, the Fund will dispose of it in an orderly manner. Lower rated debt
securities, commonly referred to as "junk bonds," usually offer higher yields
than higher rated securities because of the increased risk of default. These
securities are also more likely to react to developments affecting market and
credit risks than are more highly rated securities. In the past, economic
downturns or increases in interest rates have caused a higher incidence of
default by the issuers of junk bonds than by issuers of investment grade
securities. More information about debt securities is contained in the SAI.
Investment restrictions.
Each Fund has adopted certain investment restrictions, which are described fully
in the SAI. Like the Funds' investment objectives, 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 mutual
fund.
Management of the Funds
The Board of Trustees of the Trust establishes the Funds' policies and
supervises and reviews the management of the Funds.
The Advisor.
The Funds' Advisor, Rockhaven Asset Management, LLC, 100 First Avenue, Suite
1050, Pittsburgh, Pennsylvania 15222, was organized in February, 1997 to provide
asset management services to individuals and institutional investors.
Christopher H. Wiles is principally responsible for the management of the Funds'
portfolios. Mr. Wiles (who along with AmSouth Bank of Alabama and its parent,
AmSouth Bancorporation,
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controls the Advisor) is the President of the Advisor and has been active in the
investment field professionally since 1984.
Prior Performance of the Portfolio Manager. Prior to founding the Advisor, Mr.
Wiles was Senior Vice President of Federated Investors, where he was the
portfolio manager of Federated Utility Fund. He was also portfolio manager of
Federated Equity-Income Fund from August 1, 1991 to January 31, 1997, and had
full discretionary authority over the selection of investments for that fund.
The cumulative total return for the Federated Equity-Income Fund Class A Shares
from August 1, 1991 through January 31, 1997 was 139.82%, absent the imposition
of a sales charge. The cumulative total return for the same period for the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") was 135.09%.
At January 31, 1997, the Federated Equity-Income Fund had approximately $970
million in total net assets. Average annual returns for the one-year, three-year
and five-year periods ended January 31, 1997 and for the entire period during
which Mr. Wiles managed that fund compared with the performance of the Standard
& Poor's 500 Index were:
Federated Equity- S&P 500 Lipper Equity
Income Fund (a) Index (b) Income Fund Index (c)
One Year 23.26% 26.34% 19.48%
Three Years 17.03% 20.72% 15.09%
Five Years 16.51% 17.02% 14.73%
August 1, 1991 through
January 31, 1997 17.25% 16.78% 14.99%
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses. The
returns shown are those of the Class A Shares and do not include the effect of
sales charges applicable to the Class A Shares. If an investor had paid the
maximum sales charge on Class A Shares, the average annual returns of the
Federated Equity Income Fund would have been 16.48%. 14.85%, 15.20% and 16.05%,
respectively. The Rockhaven Fund is a no-load fund, without any sales charge on
its shares. During the period from August 1, 1991 through January 31, 1997, the
operating expense ratio of the Federated Equity-Income Fund ranged from .95% to
1.05% of that fund's average daily net assets. The expense ratio for The
Rockhaven
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Fund is expected to be higher, and the effect of those expenses may result in
less favorable performance.
(b) The Standard & Poor's 500 Index is an unmanaged index of common stocks that
is considered to be generally representative of the United States stock market.
The Index is adjusted to reflect reinvestment of dividends.
(c) The Lipper Equity Income Fund Index is equally weighted and composed of the
largest mutual funds within its investment objective. These funds seek high
current income and growth of income through investing 60% of more of their
respective portfolios in equity securities. Historical performance is not
indicative of future performance. The Federated Equity-Income Fund is a separate
fund and its historical performance is not indicative of the potential
performance of The Rockhaven Fund. Share prices and investment returns will
fluctuate reflecting market conditions, as well as changes in company-specific
fundamentals of portfolio securities. The Advisor provides the Funds with advice
on buying and selling securities, manages the investments of the Funds,
furnishes the Funds with office space and certain administrative services, and
provides most of the personnel needed by the Funds. As compensation, each Fund
pays the Advisor a monthly management fee based upon the average daily net
assets of the Fund at the annual rate of 0.75%.
The Administrator.
Investment Company Administration Corporation (the "Administrator") prepares
various federal and state regulatory filings, reports and returns for the Funds,
prepares reports and materials to be supplied to the trustees, monitors the
activities of the Funds' custodian, shareholder servicing agent and accountants,
and coordinates the preparation and payment of Fund expenses and reviews the
Funds' expense accruals. For its services, the Administrator receives a monthly
fee at the annual rate of 0.20%, subject to a $30,000 annual minimum.
Other operating expenses.
Each Fund is responsible for its own operating expenses, including but not
limited to, the advisory and administration fees, custody, recordkeeping and
shareholder servicing agent fees, legal and auditing expenses, federal and state
registration fees, and fees to the Trust's disinterested trustees. The Advisor
may reduce its fees or reimburse a Fund for expenses at any time in order to
reduce the Fund's expenses. Reductions made by the Advisor in its fees or
payments or
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reimbursements of expenses which are a Fund's obligation are subject to
reimbursement by the Fund provided the Fund is able to do so and remain in
compliance with any applicable expense limitations.
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1. The Plan
permits the Fund to pay for distribution and related expenses at an annual rate
of up to 0.25% of the Fund's average net assets. The expenses which the Fund may
pay include: preparing and distributing prospectuses and other sales material;
advertising and public relations expenses; payments to financial intermediaries
and compensation of personnel involved in selling shares of the Fund.
Brokerage transactions.
The Advisor considers a number of factors in determining which brokers or
dealers to use for the Funds' portfolio transactions. While these are more fully
discussed in the Statement of Additional Information, the factors include, but
are not limited to, the reasonableness of commissions, quality of services and
execution, and the availability of research which the Advisor may lawfully and
appropriately use in its investment advisory capacities. Provided that a Fund
receives prompt execution at competitive prices, the Advisor may also consider
the sale of Fund shares or the referral of business to it as a factor in
selecting broker-dealers for the Fund's portfolio transactions. Subject to
overall requirements of obtaining the best combination of price and execution on
a particular transaction, a Fund may place portfolio transactions through an
affiliate of the Advisor, in accordance with procedures adopted by the Board of
Trustees.
Investor Guide
How to purchase shares of a Fund.
There are several ways to purchase shares of either Fund. An Application Form,
which accompanies this Prospectus, is used if you send money directly to a 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. First Fund Distributors, Inc., 4455 E. Camelback Road, Suite 261E,
Phoenix, Arizona 85018, an affiliate of the Administrator, is the principal
underwriter ("Distributor") of the Funds' shares.
You may send money to the Funds by mail.
If you wish to invest by mail, simply complete the Application
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Form and mail it with a check (made payable to either the Rockhaven Fund or the
Rockhaven Premier Dividend Fund) to the Funds' Shareholder Servicing Agent,
American Data Services, Inc. at the following address:
Rockhaven Funds
P.O. Box 640947
Cincinnati, OH 45264-0947
You may wire money to the Funds.
Before sending a wire, you should call the Funds 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 applicable 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
[Rockhaven Fund or
Rockhaven Premier Dividend
Fund]
DDA # 486444862
for further credit to
[your name and account
number]
Your bank may charge you a fee for sending a wire to the Funds.
You may purchase shares through an investment dealer.
You may be able to invest in shares of either Fund through an investment dealer,
if the dealer has made arrangements with the Distributor. The dealer may place
an order for you with a Fund; the price you will pay will be the net asset value
which is next calculated after receipt of the order from the dealer. It is the
responsibility of the dealer to place your order promptly. A dealer may charge
you a fee for placing your order, but you could avoid paying such a fee by
sending an Application Form and payment directly to the Fund. The dealer may
also hold the shares you purchase in its omnibus account rather than in your
name in the records of the Funds' transfer agent. A Fund may reimburse the
dealer for maintaining records of your account as well as for other services
provided to you.
Your dealer is responsible for sending your money to a Fund
promptly after placing the order to purchase shares, and the Fund may cancel the
order if payment is not received from the dealer promptly.
Minimum investments.
The minimum initial investment in each Fund is $1,000. The minimum subsequent
investment is $100.
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Subsequent investments.
You may purchase additional shares of a 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 a Fund?
Any money received for investment in a Fund from an investor, whether sent by
check or by wire, is invested at the net asset value of that 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 a Fund?
Each Fund's net asset value per share 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; for employees and family members of
affiliated persons of the Funds; for IRA accounts of existing shareholders; and
for clients of financial intermediaries eligible to sell shares of the Funds.
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
Funds and the Distributor reserve the right to reject any investment, in whole
or in part. Federal tax law requires that investors provide a certified
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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 Funds are 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 Funds, under certain
circumstances, may accept investments of securities appropriate for a Fund's
portfolio, in lieu of cash. Prior to making such a purchase, you should call the
Advisor to determine if such an investment may be made. Investments must be made
either in U.S. dollars or in securities acceptable to the Advisor.
Services Available to Shareholders
Retirement Plans
You may obtain a prototype IRA plan from the Funds. Shares of the Funds are also
eligible investments for other types of retirement plans.
Automatic investing by check
You may make regular monthly investments in the Funds 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, a 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 Funds.
There is no charge by a Fund for this service. Either 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
Each Fund offers an Automatic Withdrawal Plan 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 a Fund at any time without charge or penalty. A withdrawal under
the Automatic Withdrawal Plan 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.
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Exchange Privilege
You may exchange your shares of either of the Funds (in amounts of $1,000 or
more) for shares of the other Fund. For more information, call the Shareholder
Servicing Agent at (888) 229-2105.
How to Redeem Your Shares
You have the right to redeem all or any portion of your shares of a 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 which
you own. 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:
[Rockhaven Fund or Rockhaven
Premier Dividend Fund]
c/o American Data Services
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
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 a Fund's Application
Form, you may redeem shares on any business day the NYSE is open by calling the
Funds' 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
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makes the telephone call to redeem shares from your account and transfer the
proceeds to the bank account designated in the Application Form. The Funds 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.
Either 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 a 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, either
Fund may suspend the right of redemption under certain extraordinary
circumstances in accordance with rules of the SEC.
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, a 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.
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Repurchases from dealers.
A 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. The dealer is
responsible for forwarding any documents required in connection with a
redemption, including a signature guarantee, promptly, and the Fund may cancel
the order if these documents are not received promptly.
Other information about redemptions.
A redemption may result in recognition of a gain or loss for federal income tax
purposes. Due to the relatively high cost of maintaining smaller accounts, the
shares in your account (unless it is a retirement plan or Uniform Gifts or
Transfers to Minors Act account) may be redeemed by a Fund if, due to
redemptions you have made, the total value of your account is reduced to less
than $500. If a Fund determines to make such an involuntary redemption, you will
first be notified that the value of your account is less than $500, and you will
be allowed 30 days to make an additional investment to bring the value of your
account to at least $500 before the Fund takes any action.
Distributions and Taxes
Dividends and other distributions.
Dividends from net investment income, if any, are normally declared and paid by
each Fund each quarter. Capital gains distributions, if any, are also normally
made in December, but a 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 a 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 a 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.
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Taxes.
Each Fund intends to qualify and elect to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986 (the "Code"). As
long as a Fund continues to qualify, and as long as the Fund distributes all of
its income each year to the shareholders, that Fund will not be subject to any
federal income or excise taxes. Distributions made by a 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
long-term capital gains regardless of the length of time shares of a 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 a Fund's distributions.
Additional information about taxes is set forth in the Statement of Additional
Information. You should consult your own advisers concerning federal, state and
local taxation of distributions from the Funds.
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. The fiscal year of
each Fund ends on August 31.
Shareholder Rights
Shares issued by the Funds have no preemptive, conversion, or subscription
rights. Shareholders have equal and exclusive rights as to dividends and
distributions as declared by the Funds and to the net assets of the Funds upon
liquidation or dissolution. Each Fund, as a separate series of the Trust, votes
separately on matters affecting only that 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 a 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
15
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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, each 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 year and over the
period from the Fund's inception of operations. The Funds may also advertise
aggregate and average total return information over different periods of time. A
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 Funds will fluctuate over time, and any presentation of a 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.
