[CHARTER EQUITY FUND LOGO]
CHARTER EQUITY FUND
PROSPECTUS
JUNE 23, 1999
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TABLE OF CONTENTS
An Overview of the Fund...................................................... 2
Fees and Expenses............................................................ 4
Investment Objective, Principal Investment Strategies and Related Risks...... 5
Investment Advisor........................................................... 9
Shareholder Information...................................................... 11
Distributions and Taxes...................................................... 16
AN OVERVIEW OF THE FUND
CHARTER EQUITY FUND'S INVESTMENT GOALS
The Fund seeks long-term growth of capital.
CHARTER EQUITY FUND'S PRINCIPAL INVESTMENT STRATEGIES
The Fund will primarily invest in common stocks of companies with a market
capitalization in excess of $1 billion. The Fund also will invest in foreign
securities traded on a U.S. exchange and in American Depositary Receipts
("ADRs"). The Fund is non-diversified. This means that it may make larger
investments in individual companies than a fund that is diversified. In
selecting investments, among other factors, the Advisor considers the following:
* Whether the industry sector within which the stock is found is likely to
perform well given the outlook for the economy.
* The relationship between the 5-year historic earnings growth rate and the
price/earnings ratio.
* The relationship between the expected future earnings growth rate and the
price/earnings ratio.
* The attractiveness of a stock's valuation as measured against other stocks
in the same business sector.
PRINCIPAL RISKS OF INVESTING IN THE CHARTER EQUITY FUND
There is the risk that you could lose money on your investment in the Fund. For
example, the following risks could affect the value of your investment:
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* The stock market goes down.
* Interest rates go up which can result in a decline in the stock market.
* Stocks in the Fund's portfolio may not increase their earnings at the rate
anticipated.
* An individual stock or stocks may lose market value.
* Adverse developments occur in foreign markets. Foreign investments involve
greater risk.
* As a non-diversified fund, the share price of the Fund may be more volatile
than the share price of a diversified fund.
WHO MAY WANT TO INVEST IN THE CHARTER EQUITY FUND
The Fund may be appropriate for investors who:
* Are pursuing a long-term goal such as retirement.
* Want to add an investment with growth potential.
* Are willing to accept higher potential for short-term volatility in
exchange for a higher potential for long-term growth than an investment in
cash or bonds.
WHO MAY NOT WANT TO INVEST IN THE CHARTER EQUITY FUND
If you are seeking income, other investment strategies may be more appropriate.
The Fund's principal investment strategy causes the Fund to buy stocks for their
potential for appreciation.
Often that kind of stock pays little or no dividend. Accordingly, it is unlikely
that there will be substantial dividend income generated on your investment in
the Fund.
If you are likely to have to use your funds to meet your short-term needs, an
investment in the Fund may not be appropriate.
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FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price )............................ None
Maximum deferred sales charge (load)
(as a percentage of the lower of original purchase
price or redemption proceeds)................................... None
ANNUAL FUND OPERATING EXPENSES*
(expenses that are deducted from Fund assets)
Management Fees..................................................... 1.00%
Distribution and/or Service (12b-1 Fees)............................ 0.25%
Other Expenses...................................................... 3.00%
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Total Annual Fund Operating Expenses................................ 4.25%
Fee Reduction and/or Expense Reimbursement.......................... (2.50%)
Net Expenses........................................................ 1.75%
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*Other Expenses are estimated for the first fiscal year of the Fund. The Advisor
has contractually agreed to reduce its fees and/or pay operating expenses of the
Fund (excluding interest, tax and other nonrecurring charges) to insure that the
Fund's Total Annual Fund Operating Expenses will not exceed 1.75% of average
daily net assets. This contract's term is indefinite and may be terminated only
by the Board of Trustees. The Advisor is permitted to be reimbursed, subject to
limitations, for fees it waives and for Fund expenses it pays.
EXAMPLE
This Example is intended to help you compare the costs of investing in shares of
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time period
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, under the assumptions, your costs would be:
One Year.............................. $177
Three Years........................... $550
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CHARTER EQUITY FUND'S INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND
RELATED RISKS
WHAT IS THE INVESTMENT OBJECTIVE OF THE CHARTER EQUITY FUND?
The Fund's investment goal is long-term growth of capital.
IN WHAT TYPES OF SECURITIES WILL THE CHARTER EQUITY FUND INVEST?
The Fund will concentrate its investments in common stocks of companies
with a market capitalization in excess of $1 billion. The Fund may also invest
in foreign securities traded on a U.S. exchange and in American Depositary
Receipts ("ADRs").
WHAT IS CHARTER EQUITY FUND?
Charter Equity Fund is a stock mutual fund developed by Charter Financial
Group, Inc., ("Charter" or the "Advisor") for individuals and institutions that
would like Charter to manage their portfolio but who are unable to meet the
minimum account size required of clients handled in Charter's Private Client
Group.
WHAT INVESTMENT APPROACH WILL BE USED IN MANAGING THE CHARTER EQUITY FUND?
The portfolio management team will use the same approach it has used in
managing separate accounts for the Advisor's clients. That approach is based on
a belief that a portfolio is adequately diversified when it is comprised of no
more than 25-30 stocks, each representing 3-4% of market value of the Fund at
time of purchase. It is believed that additional stocks will create no further
diversification but will lessen the impact of each securities' performance on
the total return of the Fund.
The Advisor believes that approach is one of the primary factors
influencing its ability to generate competitive investment returns in a variety
of market conditions and sets Charter Equity Fund apart from many other funds.
The Advisor believes that many mutual funds today are so big that their
large amount of assets under management causes them to hold a greater number of
stocks than their research alone would dictate. When a fund holds a large number
of stocks it can become so overly diversified that even the great stock picks
have a relatively small impact on the performance of the fund. In fairness, it
is also true that bad stock picks also have relatively small impact on fund
performance.
HOW DOES CHARTER PICK THE STOCKS IN THE FUND'S PORTFOLIO?
The research process begins with a universe of approximately 2,000 publicly
traded companies, including the S&P 500, Nasdaq, and non-U.S. stocks traded as
ADRs on U.S. exchanges. The Advisor groups the stocks into nine broadly defined
business sectors. This helps the portfolio management team in
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deciding which sectors are positioned well given current macroeconomic trends
and events. The portfolio will own a greater number of stocks in the sectors the
team expects will do well and fewer in those not so well positioned.
When the team decides to have more of the portfolio in a given sector than
its representation in the S&P 500, the amount by which the sector will be
overweighted will usually be a small amount. It would be unusual for the
portfolio to have greater or lesser exposure to a given business sector than
125% of that sector's makeup in the S&P 500.
Once the Advisor has settled on its sector emphasis, the research turns to
deciding which of the specific stocks within each sector are the ones which are
the best to own. The Advisor employs a philosophy called "Growth at a Reasonable
Price" ("GARP"). This strategy combines some aspects of both the "value" and
"growth" styles of investing. Those aspects emphasize the relationships between
various financial ratios. In its analysis, the Advisor looks for those companies
within each sector that exhibit the best relationship between historic and
projected earnings growth rates and its current Price/Earnings ratio.
In its analysis, the Advisor creates a ratio where the company's current
Price/Earnings ratio is expressed as the numerator and its earnings growth rate
the denominator. A small, positive ratio is most desirable.
When comparing the company's ratios, each company is judged against other
companies within its own business sector rather than with companies in other
business sectors. This is as a way to ensure that the Fund portfolio fulfills
its predetermined sector emphasis. As an example, if the desired portfolio
weighting of drug stocks equals 6% of the total portfolio, and the market value
of each stock in the portfolio will be roughly 3% of the portfolio at purchase,
two drug stocks are needed to fulfill the 6% overall commitment to the drug
sector. Those two drug companies ranking number one and two by ratio are chosen.
Once a security is bought it will not be sold until one of the following
events occurs:
* When there is a change in fundamental financial ratios of that company.
* When a company does not meet expectations and there is a determination that
it will not meet those expectations in the future.
* When the desired committment to a particular business sector is reduced.
The Advisor keeps the portfolio as close to fully invested as possible.
When a company is sold a new company is added immediately to take its place.
This process of replacing securities immediately ensures that cash is kept to
relatively small percentage of the portfolio. However, the Fund may temporarily
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depart from its principal investment strategies by making short-term investments
in cash equivalents in response to adverse market, economic or political
conditions. This may result in the Fund not achieving its investment objective.
In keeping with its investment approach, the Advisor does not anticipate
frequent buying and selling of securities. This means that the Fund should have
a low rate of portfolio turnover and the potential to be a tax efficient
investment. The result should be the realization and distribution to
shareholders of lower capital gains, which would be considered tax efficient.
The anticipated lack of frequent trading also leads to lower transactions costs,
which could help improve performance.
WILL THE INVESTMENT TEAM RESPONSIBLE FOR MANAGING THE CHARTER EQUITY FUND BE THE
SAME TEAM THAT MANAGES ACCOUNTS FOR THE ADVISOR?
Yes, the portfolio management team responsible for managing the Charter
Equity Fund will be the same team that manages accounts for the Advisor. It will
use the same investment strategy in managing the Charter Equity Fund that it
uses in managing the separate accounts of the Advisor. That team generated the
returns for Charter shown in this prospectus.
WHO ARE THE PEOPLE BEHIND CHARTER?
At Charter, the following people are responsible for the management of the
Charter Equity Fund:
SUSAN H. STEWART, ESQUIRE
CHAIRMAN AND PRESIDENT
Susan is co-founder, controlling shareholder, Chairman and President of
Charter Financial Group, Inc. She incorporated Charter Financial Group, Inc. in
November of 1995 to address what she felt was a growing need for a top-flight
investment house in the Washington, DC area. From January of 1994 until she
commenced operations at Charter in January of 1995, she worked as an advisor to
high net worth individuals as a vice president in the trust department of First
Union National Bank. For the 5 years preceding her employment at First Union,
she worked in the trust department of NationsBank. She has more than 14 years of
experience in the investment field including employment as a retail stockbroker
with Merrill Lynch and Shearson, Lehman Bros.
She received her bachelor's degree from Ursinus College and her law degree
from the Dickinson School of Law at Pennsylvania State University. She is an
inactive member of the Bars of the District of Columbia, Delaware and
Pennsylvania.
She was a member of The United States Women's Lacrosse Team from 1976-1980
and has been inducted into the Ursinus College Sports Hall of Fame. She
currently serves as a member of the Board of Trustees of the Lowell School and
of The United States Lacrosse Foundation and is a past board
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member of The District of Columbia Women's Bar Association Foundation and
organizing board member of the Bucks County Women's Fund.
THOMAS A. KING, CFA
CHIEF INVESTMENT OFFICER
Tom was a founding shareholder in Charter. Prior to that he was portfolio
manager at Chase Manhattan, PNC Bank and First Union National Bank, handling
institutional, tax-exempt and taxable funds. He is a CFA (Chartered Financial
Analyst), granted his charter in 1988, and is also a member of Association for
Investment Management and Research (AIMR). Tom holds a finance degree from St.
John's University, a paralegal diploma from New York University and a BA in
History from American University.
WILL I BE CHARGED A COMMISSION TO BUY THE CHARTER EQUITY FUND?
No, the Charter Equity Fund is a no load mutual fund. The Fund does not
charge any sales loads.
RISKS OF INVESTING IN THE FUND
The principal risks of investing in the Fund that may adversely affect the
Fund's net asset value or total return are discussed above in "Principal Risks
of Investing in the Charter Equity Fund." These risks are discussed in more
detail below.
MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than it
was worth at an earlier time. Market risk may affect a single issuer, industry,
sector of the economy or the market as a whole.
MANAGEMENT RISK. The risk that a strategy used by the Advisor may fail to
produce the intended result.
FOREIGN SECURITIES RISK. The risk of investing in the securities of foreign
companies is greater than the risk of investing in domestic companies. Some of
these risks include: (1) unfavorable changes in currency exchange rates; (2)
economic and political instability; (3) less publicly available information; (4)
less strict auditing and financial reporting requirements; (5) less governmental
supervision and regulation of securities markets; (6) higher transaction costs;
(7) potential adverse effects of the euro conversion; and (8) greater
possibility of not being able to sell securities on a timely basis.
YEAR 2000 RISK. Like other business organizations around the world, the
Fund could be adversely affected if the computer systems used by its investment
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 Problem." Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Fund and
investors. That failure could have a negative impact on
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handling securities trades and pricing and accounting services. Additionally,
the services provided to the Fund depend on the interaction of computer systems
with those of brokers, information vendors and other parties; therefore, any
failure of the computer systems of those parties may cause service problems for
the Fund. In addition, this situation may negatively affect the companies in
which the Fund invests and consequently, the value of the Fund's shares. The
Board of Trustees of the Fund has adopted a Year 2000 Project Plan that is
reasonably designed to address the Year 2000 Problem with respect to the
Advisor's and other service providers' computer systems. Included in the Year
2000 Project Plan is a provision for a contingency plan for the retention of
other service providers to replace those service providers whose performance in
converting to Year 2000 compliant data processing equipment has been determined
to be less than satisfactory. There can be no assurance that these actions will
be sufficient to avoid any adverse impact on the Fund. The extent of that risk
cannot be ascertained at this time.
INVESTMENT ADVISOR
Charter Financial Group, Inc. is the investment advisor to the Fund. The
Advisor's address is 1401 I Street, N.W., Suite 505, Washington, DC 20005. The
Advisor, which was established in 1995, provides investment management services
to individual and institutional investors. It has assets under management in
excess of $106 million. The Advisor manages all but $3 million of those assets
on a discretionary basis. The Advisor furnishes the Fund with office space and
certain administrative services and provides most of the personnel needed by the
Fund. For its services, the Fund pays the Advisor a monthly management fee based
upon the average daily net assets of the Fund at the rate of 1.00% annually.
The Fund is responsible for its own operating expenses. The Advisor has
contractually agreed to reduce its fees and/or pay expenses of the Fund to
ensure that the Fund's aggregate annual operating expenses (excluding interest
and tax expenses) will not exceed the limits set forth in the Expense Table. Any
reductions in advisory fees or payment of expenses made by the Advisor are
subject to reimbursement by the Fund if requested by the Advisor in subsequent
fiscal years. This reimbursement may be requested by the Advisor if the
aggregate amount actually paid by the Fund toward operating expenses for such
fiscal year (taking into account the reimbursements) does not exceed the
applicable limitation on Fund expenses. The Advisor is permitted to be
reimbursed for fee reductions and/or expense payments made in the prior three
fiscal years. (After startup, the Fund is permitted to look for longer periods
of five and four years.) Any such reimbursement will be reviewed by the
Trustees. The
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Fund must pay its current ordinary operating expenses before the Advisor is
entitled to any reimbursement of fees and/or expenses.
ADVISOR INVESTMENT RETURNS
Set forth in the table below are certain performance data provided by the
Advisor relating to its individually managed equity accounts. These accounts
have substantially the same investment objective as the Fund and were managed
using substantially similar investment strategies and techniques as those
contemplated for use by the Fund. The investment managers for these accounts
will also manage the Fund. The results presented are not intended to predict or
suggest the return to be experienced by the Fund or the return an investor might
achieve by investing in the Fund.
Results may differ because of, among other things, differences in brokerage
commissions paid, account expenses, including investment advisory fees (which
expenses and fees may be higher for the Fund than for the accounts), the size of
positions taken in relation to account size, timing of purchases and sales,
timing of cash additions and withdrawals. In addition, the private character of
the composite accounts compared with the public character of the Fund and the
tax-exempt status of some of the account holders compared with shareholders in
the Fund may also cause results to differ. Because of this, regardless of market
conditions, the make-up of the portfolio holdings of a fund is dictated by law
and consequently, performance differences may have resulted during the time
periods shown when compared to the composite accounts. Investors should be aware
that the use of different methods of determining performance might have
adversely affected the performance figures shown below.
Investors should not rely on the following performance data as an
indication of future performance of the Advisor or the Fund.
ANNUAL TOTAL RETURNS FOR PERIOD ENDING JUNE 30,
1-Year 3-Year
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Charter Financial Group, Inc. 21.43% 30.37%
S&P 500 Index* 22.38% 28.97%
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* The S&P 500 Index is an unmanaged index generally representative of the
market for stocks of larger-sized companies.
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Footnotes:
Charter Financial Group, Inc., is an autonomous investment management firm. It
has prepared and presented this report in compliance with the Performance
Presentation Standards of the Association for Investment Management and Research
(AIMR-PPS(TM)). AIMR has not been involved in the preparation or review of this
report.
1. Results account for both income and capital appreciation or depreciation
(total return). Returns are asset-weighted and time-weighted. The results are
net of commissions but not management fees. The composite represents all
discretionary accounts that do not have material restrictions and comply with
AIMR standards with a Level II verification.
2. Investors should note that the Fund will compute and disclose its average
annual total return using the standard formula required by SEC rules, which
differs from returns calculated under the method noted above. The SEC total
return calculation method requires that the Fund compute and disclose an average
annual compounded rate of return for one, five and ten year periods or shorter
periods from inception. The calculation provides a rate of return from a
hypothetical initial investment of $1,000 to an ending value as if shares were
redeemed at the end of the period. The formula requires that returns to be shown
for the Fund will be net of Fund advisory fees and all other portfolio operating
expenses.
3. Charter Financial Group, Inc. has only one composite. The 26 accounts in the
composite have assets totaling $85,998,857and comprise 82% of firm assets under
management.
4. All fully discretionary, fee-paying accounts with equity assets of at least
$250,000 on the beginning of each month are included in the composite.
5. For the quarter ended 6/30/99, the composite return was 6.03% with a range of
2.81% to 7.56% and a standard deviation of 1.27%.
6. Security transactions are recorded on the trade date. Dividend income is
recorded on the cash basis.
7. The results portrayed reflect the reinvestment of dividends and other
earnings.
8. There are no non fee-paying accounts in the composite.
SHAREHOLDER INFORMATION
HOW TO BUY SHARES
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 1-800-576-8229. To open an account
by wire, call 1-800-576-8229 for instructions. You may also buy shares of the
Fund through your financial representative. After your account is open, you may
add to it at any time. The Fund reserves the right to reject any purchase in
whole or in part.
You may buy and sell shares of the Fund through certain brokers (and their
agents) that have made arrangements with the Fund to sell its shares. When you
place your order with such a broker or its authorized agent, your order is
treated as if you had placed it directly with the Fund's Transfer Agent, and you
will pay or receive the next price calculated by the Fund. The broker (or agent)
holds your shares in an
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omnibus account in the broker's (or agent's) name, and the broker (or agent)
maintains your individual ownership records. The Fund may pay the broker (or its
agent) for maintaining these records as well as providing other shareholder
services. The broker (or its agent) may charge you a fee for handling your
order. The broker (or agent) is responsible for processing your order correctly
and promptly, keeping you advised regarding the status of your individual
account, confirming your transactions and ensuring that you receive copies of
the Fund's prospectus.
You may open a Fund account with $5,000 and add to your account at any time
with $100 or more. Automatic investment plans allow you to open a Fund account
with $1,000 and add to your account with $50 or more. The minimum investment
requirements may be waived from time to time by the Fund.
BY MAIL. You may send money to the Fund by mail. All purchases by check
should be in U.S. dollars. Third party checks and cash will not be accepted. If
you wish to invest by mail, simply complete the Application Form and mail it
with a check (made payable to the "Charter Equity Fund") to the Fund at the
following address:
Charter Equity Fund
c/o ICA Fund Services Corp.
4455 E. Camelback Rd., Ste. 261E
Phoenix, AZ 85018
If you are making a subsequent purchase, a stub is attached to the account
statement you will receive after each transaction. Detach the stub from the
statement and mail it together with a check made payable to the "Charter Equity
Fund" in the envelope provided with your statement to the address noted above.
Your account number should be written on the check.
BY WIRE. If you are making an initial investment in the Fund, before you
wire funds you should call the Transfer Agent at (800) 576-8229 to advise them
that you are making an investment by wire. The Transfer agent will give you your
account number. The Transfer Agent will ask for your name and the dollar amount
you are investing. You will then receive your account number and an order
confirmation number. You should then complete the Fund Account Application
included with this Prospectus. Include the date and the order confirmation
number on the Account Application and mail the completed Account Application to
the address at the top of the Account Application. Your bank should transmit
immediately available funds by wire in your name to:
Firstar Bank, N.A. Cinti/Trust
ABA #0420-001-3
Attn: Charter Equity Fund
DDA #821601887
Account name (shareholder name)
Shareholder account number
If you are making a subsequent purchase, your bank should wire funds as
indicated above. Before
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each wire purchase, you should be sure to notify the Transfer Agent. It is
essential that your bank include complete information about your account in all
wire instructions. If you have questions about how to invest by wire, you may
call the Transfer Agent. Your bank may charge you a fee for sending a wire to
the Fund.
You may buy and sell shares of the Fund through certain brokers (and their
agents, together "brokers") that have made arrangements with the Fund. An order
placed with such a broker is treated as if it were placed directly with the
Fund, and will be executed at the next share price calculated by the Fund. Your
shares will be held in a pooled account in the broker's name, and the broker
will maintain your individual ownership information. The Fund may pay the broker
for maintaining these records as well as providing other shareholder services.
In addition, the broker may charge you a fee for handling your order. The broker
is responsible for processing your order correctly and promptly, keeping you
advised of the status of your individual account, confirming your transactions
and ensuring that you receive copies of the Fund's prospectus.
AUTOMATIC INVESTMENT PLAN. For your convenience, the Fund offers an
automatic investment plan called Automatic Investment Plan. Under this Plan,
after your initial investment, you authorize the Fund to withdraw from your
personal checking account each month an amount that you wish to invest, which
must be at least $50. If you wish to enroll in this Plan, please complete this
section on the Account Application Form or contact the Transfer Agent. The Fund
may terminate or modify this privilege at any time. You may terminate your
participation in the Plan at any time by notifying the Transfer Agent in
writing. Your termination letter must be received by the Transfer Agent
sufficiently in advance of the next scheduled withdrawal.
RETIREMENT PLANS. The Fund offers an Individual Retirement Account ("IRA")
plan. Also available are Roth and SEP IRA plans. You may obtain information
about opening an IRA account by calling (800) 576-8229. If you wish to open
another type of retirement plan, please contact the Fund at 800- 576-8229.
HOW TO SELL SHARES
You may sell (redeem) your Fund shares on any day the Funds and the New
York Stock Exchange ("NYSE") are open for business either directly to the Fund
or through your investment representative.
BY MAIL. You may redeem your shares by simply sending a written request to
the Transfer Agent. You should give your account number and state whether you
want all or some of your shares redeemed. The letter should be signed by all of
the shareholders whose names appear in the account registration. A signature
guarantee is required for written redemption requests.
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However, signature guarantees are not required if the redemption is under
$100,000 and sent to the shareholder at the address of record on the account.
Call the Transfer Agent for details. You should send your redemption request to:
Charter Equity Fund
c/o ICA Fund Services Corp.
4455 E. Camelback Rd., Ste. 261E
Phoenix, AZ 85018
BY TELEPHONE. If you complete the Redemption by Telephone portion of the
Account Application, you may redeem all or some of your shares by calling the
Transfer Agent at (800) 576-8229 before the close of trading on the NYSE. This
is normally 4:00 p.m. Eastern time. Redemption proceeds will be mailed on the
next business day to the address that appears on the Transfer Agent's records.
If you request, redemption proceeds will be wired on the next business day to
the bank account you designated on the Account Application. The minimum amount
that may be wired is $1,000. Wire charges, if any, will be deducted from your
redemption proceeds. Telephone redemptions cannot be made if you notify the
Transfer Agent of a change of address within 30 days before the redemption
request. If you have a retirement account, you may not redeem shares by
telephone.
When you establish telephone privileges, you are authorizing the Fund and
its Transfer Agent to act upon the telephone instructions of the person or
persons you have designated in your Application. Such persons may request that
the shares in your account be either exchanged or redeemed. Redemption proceeds
will be mailed to the address of record on your account or transferred to the
bank account you have designated on your Account Application.
Before executing an instruction received by telephone, the Fund and the
Transfer Agent will use procedures to confirm that the telephone instructions
are genuine. These procedures will include recording the telephone call and
asking the caller for a form of personal identification. If the Fund and the
Transfer Agent follow these procedures, they will not be liable for any loss,
expense, or cost arising out of any telephone redemption or exchange request
that is reasonably believed to be genuine. This includes any fraudulent or
unauthorized request. 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 by calling the Transfer Agent at (800) 576-8229 for instructions.
You may have difficulties in making a telephone redemption during periods
of abnormal market activity. If this occurs, you may make your redemption
request in writing.
Payment of your redemption proceeds will be made promptly, but not later
than seven days after the receipt of your written request in
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proper form. If you made your initial investment by wire, you will not be
permitted to redeem those shares until one business day after your completed
Account Application is received by the Fund. If you did not purchase your shares
with a certified check or wire, the Fund may delay payment of your redemption
proceeds for 15 days from the date of purchase or until your check has cleared,
whichever occurs first.
The Fund may redeem the shares in your account if the value of your account
is less than $2,500 as a result of redemptions you have made. This does not
apply to retirement plans or Uniform Gifts or Transfers to Minors Act accounts.
You will be notified that the value of your account is less than $2,500 before
the Fund makes an involuntary redemption. You will then have 30 days in which to
make an additional investment to bring the value of your account to at least
$2,500 before the Fund takes any action.
The Fund has the right to pay redemption proceeds to you in whole or in
part by a distribution of securities from the Fund's portfolio. It is not
expected that the Fund would do so except in unusual circumstances.
SYSTEMATIC WITHDRAWAL PROGRAM. As another convenience, you may redeem your
Fund shares through the Systematic Withdrawal Program. If you elect this method
of redemption, the Fund will send you a check in a minimum amount of $100. You
may choose to receive a check each month or calendar quarter. Your Fund account
must have a value of at least $10,000 in order to participate in this Program.
This Program may be terminated at any time by the Fund. You may also elect to
terminate your participation in this Program at any time by writing to the
Transfer Agent at:
ICA Fund Services Corp.
4455 E. Camelback Rd., Suite 261E
Phoenix, AZ 85018
PRICING OF FUND SHARES
The price of the Fund's shares is based on the Fund's net asset value. This
is done by dividing the Fund's assets, minus its liabilities, by the number of
shares outstanding. The Fund's assets are the market value of securities held in
its portfolio, plus any cash and other assets. The Fund's liabilities are fees
and expenses owed by the Fund. The number of Fund shares outstanding is the
amount of shares which have been issued to shareholders. The price you will pay
to buy Fund shares or the amount you will receive when you sell your Fund shares
is based on the net asset value next calculated after your order is received and
accepted.
The net asset value of Fund shares is determined as of the close of regular
trading on the New York Stock Exchange ("NYSE"). This is normally 4:00 p.m.,
Eastern time. Fund shares will not be priced on days that the NYSE is closed for
trading.
15 PROSPECTUS
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DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Fund will make distributions of dividends and capital gains, if any,
annually, usually on or about December 31 of each year. Because of its
investment strategies, the Fund expects that its distributions will primarily
consist of capital gains.
Your dividend and capital gain distributions will automatically be
reinvested in additional Fund shares. If you wish to have your distributions
paid in cash indicate this on the Account Application Form or write to the
Transfer Agent before the payment of the distribution.
TAX CONSEQUENCES
The Fund intends to make distributions of dividends and capital gains.
Dividends are taxable to you as ordinary income. The rate you pay on capital
gain distributions will depend on how long the Fund held the securities that
generated the gains, not on how long you owned your Fund shares. You will be
taxed in the same manner whether you receive your dividends and capital gain
distributions in cash or reinvest them in additional Fund shares.
If you sell your Fund shares, it is considered a taxable event for you.
Depending on the purchase price and the sale price of the shares you exchange or
sell, you may have a gain or a loss on the transaction. You are responsible for
any tax liabilities generated by your transaction.
RULE 12b-1 FEES
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 (the
"Plan"). The Plan permits the Fund to pay for sales distribution and related
expenses at an annual rate of up to 0.25% of the Fund's average daily net assets
annually. The expenses which the Fund may pay include the cost of 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. Payments made pursuant to the
Plan will represent compensation for distribution and service activities, not
reimbursement for specific expenses incurred.
PROSPECTUS 16
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CHARTER EQUITY FUND,
A SERIES OF ADVISORS SERIES TRUST
For investors who want more information about the Fund, the following document
is available free upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Fund and is incorporated into this Prospectus.
You can get free copies of SAI, request other information and discuss your
questions about the Fund by contacting the Fund at:
ICA Fund Services Corp.
4455 E. Camelback Rd., Suite 261E
Phoenix, AZ 85218
Telephone: 1-800-576-8229
To speak with the Advisor concerning management of the Fund, please call
1-888-242-7991.
You can review and copy information about the Fund including the Fund's SAI at
the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. You can obtain information on the operation of the Public
Reference Room by calling 1-800-SEC-0330. You can get text-only copies:
* For a fee, by writing to the Public Reference Room of the Commission,
Washington, DC 20549-6009 or by calling 1-800-SEC-0330.
* Free of charge from the Commission's Internet website at www.sec.gov
Investment Company Act
file no. 811-7959
<PAGE>
Charter Equity Fund is a stock mutual fund. The Fund seeks to provide investors
with long-term growth of capital.
The Securities and Exchange Commission has not approved or disapproved of these
securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
