As filed with the Securities and Exchange Commission on May 7, 1998
Registration No. 333-25073
811-08177
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ____ |_|
Post-Effective Amendment No. 2 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 2 |X|
THE DRESHER FAMILY OF FUNDS
(Exact Name of Registrant as Specified in Charter)
715 Twining Road, Suite 202
Dresher, Pennsylvania 19025
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(888) 980-7500
Jeffrey C. Brown, President
The Dresher Family of Funds
715 Twining Road, Suite 202, Dresher, Pennsylvania 19025
(Name and Address of Agent for Service)
Copies of communications to:
Lisa A. Ernst, Esquire
Ledgewood Law Firm, P.C.
1521 Locust Street
Philadelphia, Pennsylvania 19102
It is proposed that this filing will become effective (check appropriate box):
|X| Immediately upon filing pursuant |_| On (date) pursuant to
to paragraph (b) paragraph (b)
|_| 60 days after filing pursuant to |_| On (date) pursuant to
paragraph (a)(1) paragraph (a)(1)
|_| 75 days after filing pursuant to |_| On (date) pursuant to
paragraph (a)(2) paragraph (a)(2) of rule 485
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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DECLARATION PURSUANT TO RULE 24F-2: Pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended, Registrant is registering an indefinite number
or amount of its shares of beneficial interest under the Securities Act of 1933,
as amended. Registrant's Rule 24f-2 Notice for the fiscal year ended December
31, 1997 was filed with the Securities and Exchange Commission on May 7, 1998.
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PART A
CROSS REFERENCE SHEET
THE DRESHER FAMILY OF FUNDS
THE DRESHER COMPREHENSIVE GROWTH FUND
THE DRESHER CLASSIC RETIREMENT FUND
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Part A Item Prospectus Caption
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Cover Page Cover Page
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Synopsis Expenses
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Condensed Financial Information Financial Highlights
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General Description of the Fund Cover Page; The Funds; Investment
Objectives and Management Techniques;
Investment Policies and Restrictions;
Risks and Other Considerations; Trust
Management -- Portfolio Turnover;
Appendix A; Appendix B
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Management of the Fund Trust Management
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Management's Discussion of Fund Inapplicable
Performance
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Capital Stock and Other Securities Dividends, Distributions and Taxes;
General Information
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Purchase of Securities Being Offered How to Purchase Shares; Trust
Management -- Distribution Plan
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Redemption or Repurchase How to Redeem Shares
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Pending Legal Proceedings Inapplicable
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THE DRESHER COMPREHENSIVE GROWTH FUND
THE DRESHER CLASSIC RETIREMENT FUND
THE DRESHER COMPREHENSIVE GROWTH FUND (THE "COMPREHENSIVE GROWTH FUND") AND THE
DRESHER CLASSIC RETIREMENT FUND (THE "CLASSIC RETIREMENT FUND;" AND TOGETHER
WITH THE COMPREHENSIVE GROWTH FUND, THE "FUNDS") are two series of shares (the
"Shares") of The Dresher Family of Funds, an open-end investment company (the
"Trust"). The assets of each Fund are separately managed portfolios consisting
of shares of other mutual funds. The Funds are designed to offer investors easy
access to actively managed funds. Both Funds are diversified by asset class and
feature a core component of domestic and international stock funds for growth
potential, combined with bond funds and money market funds for greater price
stability. The Investment Manager has the flexibility to take full advantage of
changing markets and favorable asset classes. The Investment Manager monitors
hundreds of mutual funds, analyzing the relative attractiveness of various funds
to identify and select a mix of underlying funds in order to achieve each Fund's
goals. The Comprehensive Growth Fund is a no-load aggressive growth fund which
seeks capital appreciation without regard to current income. The Classic
Retirement Fund is a no-load moderate growth fund which seeks moderate capital
appreciation and significant income. Both Funds pursue their investment
objectives by investing exclusively in shares of other mutual funds (except for
holdings in cash or cash equivalents). The level of diversification the Funds
obtain from being invested in a number of underlying funds is intended to reduce
the risks associated with an investment in a single underlying fund. By
investing in the Funds, you bear not only the Funds' expenses, but also the
expenses of the underlying funds. THE FUNDS' STRATEGY OF INVESTING IN OTHER
MUTUAL FUNDS RESULTS IN GREATER EXPENSES THAN YOU WOULD INCUR IF YOU WERE TO
INVEST IN THE SAME FUNDS DIRECTLY.
ABOUT THIS PROSPECTUS: THIS PROSPECTUS PROVIDES YOU WITH CONCISE INFORMATION
THAT YOU SHOULD KNOW BEFORE YOU DECIDE IF THE FUNDS PROVIDE THE INVESTMENT
OPPORTUNITIES YOU SEEK. READ IT CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
You can find more detailed information in the Statement of Additional
Information (the "SAI") dated May 7, 1998 (as amended from time to time). The
SAI has been filed with the Securities and Exchange Commission (the "SEC") and
is incorporated in this Prospectus by reference (which means that it is legally
considered part of this Prospectus even though it is not printed here). This
Prospectus is available electronically by using the Trust's World Wide Web
address: http://www.dresherfunds.com. To get a free paper copy of this
Prospectus or the SAI, call the Trust at (888) 980-7500. The SEC maintains a Web
site (http://www.sec.gov) that contains the SAI, material incorporated by
reference herein, and other information regarding registrants that file
electronically with the SEC.
Shares of the Funds are subject to investment risks, including possible loss of
principal. Shares of the Funds are not bank deposits and are not endorsed by,
insured by, guaranteed by, obligations of or otherwise supported by the U.S.
government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other governmental agency or bank.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY
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OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PROSPECTUS: May 7, 1998
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EXPENSES
The table below does not reflect any of the operating costs and investment
advisory fees of the underlying funds. By investing in the Funds, you bear not
only the Funds' expenses detailed below, but also the expenses of the underlying
funds. You would not incur the Funds' expenses detailed below if you were to
perform your own asset allocation, fund review and analysis and invest in the
underlying funds directly.
SHAREHOLDER TRANSACTION EXPENSES
Comprehensive Classic
Growth Retirement
Fund Fund
Sales charge on purchases None None
Sales charge on reinvested dividends None None
Deferred sales charge None None
Exchange fees None None
Redemption fee<F1> None None
<F1> A wire transfer fee is charged by the Funds' Custodian in the case of
redemptions made by wire. Such fee is subject to change and is currently
$10.00.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average daily net assets)
Comprehensive Classic
Growth Retirement
Fund Fund
Management fees (after fee waivers)<F2> 0.95% 0.95%
12b-1 fees<F3> 0.25% 0.25%
Other expenses<F4> 0.00% 0.00%
----- -----
Total Fund operating expenses 1.20% 1.20%
(after fee waivers)
<F2> The management fees are paid to the Investment Manager for analyzing,
selecting and monitoring the underlying funds in each portfolio. Unlike most
other mutual funds, the management fees paid by the Funds include transfer
agency, pricing, custodial, auditing and legal services, taxes, interest,
redemption fees, expenses of non-interested Trustees and general administrative
and other operating expenses. The Distributor, an affiliate of the Investment
Manager, may receive remuneration from certain underlying funds for services
rendered to such funds in connection with investments therein. See the
discussion below under the caption "Fund Management -- Execution of Portfolio
Transactions." In light of this remuneration to the Distributor, the Investment
Manager will voluntarily reduce its
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management fees to keep total Fund operating expenses no greater than 1.20% (not
including extraordinary expenses) until at least December 31, 1998. After
December 31, 1998, the management fee waiver may be terminated, modified or
continued. If there were no such fee waiver, the management fee paid by each
Fund would be 1.20% of its average daily net assets and each Fund's total
operating expenses would be 1.45% of its average daily net assets.
<F3> Based on average daily net assets. The 12b-1 fee is an asset-based sales
charge as defined in the Rules of Fair Practice of the National Association of
Securities Dealers (the "Rules"). See "Fund Management -- Distribution Plan."
The existence of this charge may cause long-term shareholders to pay more in
total sales charges than the economic equivalent of the maximum front-end sales
charges permitted under the Rules.
<F4> Does not include extraordinary expenses. The Funds are newly formed and
this amount is based on estimates for the current fiscal year for the Funds
after management fee waivers. See Footnote 1 above.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each
time period: 1 YEAR 3 YEARS
------ -------
Comprehensive Growth Fund $ 12 $ 37
Classic Retirement Fund $ 12 $ 37
The purpose of the foregoing table is to assist you in understanding the various
costs and expenses that an investor in either Fund will bear, directly or
indirectly. See "Fund Management -- Advisory Fee -- Expenses Borne by Each
Fund." THE EXAMPLE SET FORTH IN THE FOREGOING TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESSER THAN THOSE SHOWN.
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FINANCIAL HIGHLIGHTS
The following information, which has been audited by Sanville & Company, is an
integral part of the Trust's audited financial statements and should be read in
conjunction with the financial statements. The financial statements as of
December 31, 1997 and related auditors' report appear in the Trust's Annual
Report, which can be obtained at no charge by calling or writing to the Trust at
the phone number and address on the front of this Prospectus.
Per share information for a share outstanding throughout the period from October
1, 1997 (date of commencement of investment operators) to December 31, 1997
<TABLE>
<CAPTION>
Comprehensive Classic
Growth Fund Retirement Fund
<S> <C> <C>
Net asset value, beginning of period 25.14 25.23
------ ------
Investment operations:
Net investment income 0.33 0.34
Net realized and unrealized gain (0.27) (0.40)
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Total from investment operations 0.06 (0.06)
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Less distributions:
Dividends from net investment income (0.33) (0.34)
Distributions from net realized gains (0.43) (0.63)
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Total distributions (0.76) (0.97)
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Net asset value at end of period $ 24.44 $ 24.20
===== =====
Total return 0.28% (0.20%)
Ratio of net expenses to average net assets 1.20% (a) 1.20% (a)
Ratio of expenses before waiver to net assets 1.45% (a) 1.45% (a)
Ratio of net investment income to average net 5.12% (a) 5.36% (a)
assets
Portfolio turnover rate 22.39% 6.77%
Net Assets, end of period (000's) $3,592 $ 4,665
<FN>
(a) Annualized.
</FN>
</TABLE>
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THE FUNDS
The Dresher Family of Funds was organized as a Delaware business trust on March
26, 1997. The Trust is registered as an open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act"). The Trust is a
diversified investment company for purposes of the 1940 Act because all of its
assets will be represented by securities of other investment companies or cash
(or cash equivalents). Many of the underlying funds in which the Funds invest
will themselves be diversified investment companies. The level of
diversification the Funds obtain from being invested in a number of underlying
funds is intended to reduce the risks associated with an investment in a single
underlying fund. The Funds currently qualify, and intend to continue to qualify,
as diversified investment companies for purposes of Subchapter M of the Internal
Revenue Code (the "Code"). The Trust currently consists of two separate series
portfolios: the Comprehensive Growth Fund and the Classic Retirement Fund. Each
Fund is managed separately and has its own investment objectives and strategies
designed to meet its respective investment goals. Investment in Shares of one or
more of the Funds involves risks. There can be no assurance that the Funds'
investment objectives will be achieved. See "Risks and Other Considerations."
INVESTMENT OBJECTIVES AND MANAGEMENT TECHNIQUES
Each Fund seeks to achieve its investment objective by investing exclusively
(other than cash or cash equivalents) in a portfolio of other open-end "mutual
funds." (The mutual funds in which the Funds may invest are referred to in this
Prospectus as the "underlying funds.") The Funds will purchase securities of
other investment companies only as permitted under the 1940 Act, including any
exemptive relief granted by the SEC. A Fund will, under normal circumstances,
maintain its assets in a number of underlying funds. However, for temporary
defensive purposes when market conditions dictate, up to 100% of the assets of
either Fund may be invested in cash or cash equivalents. Each Fund may invest in
identical types of mutual funds. Of course, the percentage of each Funds' assets
will vary based upon the Fund's investment objective.
THE DRESHER COMPREHENSIVE GROWTH FUND: This Fund is an aggressive
growth fund which seeks capital appreciation without regard to current income.
Under normal market conditions, at least 75% of its assets at the time of
investment will be invested in mutual funds that invest primarily in common
stock or securities convertible into or exchangeable for common stock. The
allocation of the assets of the Fund are expected to result in the Fund being
exposed to more risk than the Classic Retirement Fund.
THE DRESHER CLASSIC RETIREMENT FUND: This Fund is a moderate growth fund
which seeks moderate capital appreciation and significant income. The mutual
funds comprising this Fund will invest in common stocks, preferred stocks, bonds
and other fixed income securities. Under normal market conditions, no more than
65% of its assets at the time of investment will be invested in mutual funds
that invest primarily in common stock or securities convertible into or
exchangeable for common stock.
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Each Fund's investment objective is non-fundamental and may be changed by the
Board of Trustees of the Trust (the "Board of Trustees") without approval by the
shareholders of that Fund. You would be notified in writing at least 30 days
before a change in the investment objective of a Fund. If there is a change in
investment objective, you should consider whether the particular Fund remains an
appropriate investment in light of your then current financial position and
needs.
The underlying funds may, but need not, have the same investment objectives,
policies and limitations as the Fund. Each Fund can elect to redeem (subject to
the 1% limitation discussed under the caption "Risks and Other Considerations")
its investment in an underlying fund if that action is considered necessary or
appropriate.
ACTIVE MANAGEMENT
The Funds are under the active management of an investment manager and staff
experienced in assessing mutual funds. See "Trust Management -- Investment
Manager, Distributor, and Transfer Agent." The Investment Manager seeks to take
advantage of changing markets, economic conditions and underlying fund
management changes by relying on public sources of information as well as
proprietary techniques.
The Investment Manager selects underlying funds in which to invest based, in
part, upon an analysis of their past performance (absolute, relative and
risk-adjusted), management style, and investment objectives and policies. The
Investment Manager also considers other factors in the selection of underlying
funds, including, but not limited to, asset size, liquidity, expense ratios,
quality of shareholder services, reputation and tenure of portfolio managers,
industry classifications represented in their portfolios, and specific portfolio
holdings.
ASSET ALLOCATION
The assets of the Funds will be invested in a mix of asset classes. This tactic
is usually referred to as "asset allocation." Since the performance of asset
types does not always move in the same direction at the same time, investing in
a mix of asset classes or types can help improve performance and reduce
volatility. Thus, the Investment Manager will manage the risk to a certain
extent by varying the ratio of Fund investments among different asset
categories. Each Fund seeks to meet its investment objectives by investing in a
different mix of stock funds, bond funds and money market funds. Both Funds are
designed to provide exposure to the growth potential of the stock market in
varying degrees and are suitable for intermediate or long-term investing as well
as retirement saving.
Each Fund will allocate its assets among a number of general types of mutual
funds, including, without limitation: aggressive growth, growth and income,
equity income, small company, sector/specialty, foreign stock, global stock,
balanced, income, convertible bond, high yield bond, corporate bond, government
bond, foreign bond, global bond, municipal bond, short-term world income and
money market. The underlying funds may, among other things, seek capital growth
and appreciation by investing primarily in common stock or securities
convertible into or exchangeable for common stock (such as convertible preferred
stock, convertible debentures or warrants); seek a combination of capital
appreciation and current income (including income from dividends, income from
interest, growth of income or any combination thereof) by investing
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primarily in common stocks, preferred stocks, bonds and other fixed income
securities (including convertible preferred stock and convertible debentures);
seek high current income by investing primarily in long- or short-term bonds and
other fixed income securities (such as securities issued, guaranteed or insured
by the U.S. government, commercial paper, preferred stock, convertible preferred
stock or convertible debentures); and seek as high a level of current income as
is consistent with preservation of capital and liquidity by investing in a broad
range of high quality, short-term money market instruments which have remaining
maturities not exceeding one year (including U.S. government securities, bank
obligations, commercial paper, corporate debt securities and repurchase
agreements). (Certain additional investments which the underlying funds may
make, and certain risks associated with the underlying funds' investments, are
described in Appendix B to this Prospectus.)
It is unlikely that at any particular time either Fund will have all of its
assets invested in only one of these general types of underlying funds, and each
Fund may maintain at least some nominal investment in many of these fund types
on an ongoing basis. The Investment Manager will vary the portfolio of each type
of underlying fund based on the mix of such funds that, in the Investment
Manager's view, is most likely to achieve each Fund's investment objective. All
investments involve risk, and there is no assurance that the investment
objectives of the Funds will be achieved.
In allocating assets among general types of underlying funds, the Investment
Manager employs both fundamental and technical analyses to assess relative risk
and reward potential in the financial markets, with the goal of achieving each
Fund's investment objective. The allocation process goes beyond the basic
determination of the degree to which the Funds' assets would be invested in
equity funds versus bond funds. The Investment Manager engages in continuous
research with regard to evolving opportunities in various asset subclasses,
including investment discipline (e.g., "growth investment" vs. "value
investing"), market capitalization (e.g., "small company" vs. "blue chip")
geo-economic considerations (i.e., "domestic" vs. "foreign"), fixed-income
security maturities (i.e., "short-term" vs. "long-term") and sector/industry
relation (e.g., "basic materials" vs. "consumer non-durables" or
"aerospace/defense" vs. "electric utilities").
Generally, in seeking the Funds' objectives, the Investment Manager will alter
the composition of each Fund's portfolio as economic and market trends change.
Subject to the investment policies set forth above, each Fund's portfolio may
vary considerably among equity, bond, and money market mutual funds as these
changes occur.
Each Fund may also deposit cash representing up to the following percentage of
each Fund's net assets in a money market deposit account maintained by the
Fund's Custodian: (i) up to 100% for temporary defensive purposes when and to
the extent that, in the judgment of the Investment Manager, other investments
involve unreasonable risk, or (ii) approximately 5% in order to meet anticipated
redemptions. To the extent that such balances exceed $100,000, such deposits are
not protected by federal insurance.
INVESTMENT POLICIES AND RESTRICTIONS
Each Fund has adopted certain fundamental investment policies. These policies
may not be changed without the vote of a majority of that Fund's outstanding
votes, as defined under
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"General Information -- Voting Rights." Each Fund has also adopted certain
investment policies that are not fundamental and therefore may be changed by the
Board of Trustees without shareholder approval. Under each Fund's fundamental
investment policies, each Fund (1) may purchase securities of any issuer only
when consistent with the maintenance of such Fund's status as a diversified
company under the 1940 Act, (2) may not invest 25% or more of its total assets
in the securities of mutual funds that concentrate themselves (i.e., invest 25%
or more of their total assets) in any one industry, provided that the Fund (a)
may indirectly invest 25% or more of its total assets in one industry if two or
more of the underlying funds invest their assets in a particular industry and
(b) will invest more than 25% of its total assets in mutual funds, and (3) may
purchase or sell commodities, commodities contracts, or real estate, lend or
borrow money, issue senior securities, underwrite securities, or pledge,
mortgage or hypothecate any of its assets only to the extent permitted under the
1940 Act, including any exemptive relief granted by the SEC.
Under each Fund's non-fundamental investment policies, each Fund may not (1)
invest more than 15% of its net assets in illiquid securities, (2) invest for
the purpose of exercising control or management of another issuer, (3) purchase
securities of other investment companies, except as permitted under the 1940
Act, including any exemptive relief granted by the SEC, or (4) purchase
securities of any closed-end investment company or any investment company the
shares of which are not registered in the United States.
RISKS AND OTHER CONSIDERATIONS
Any investment in a mutual fund involves risk. Although the Funds will invest in
a number of underlying funds, this practice does not eliminate investment risk.
Some of the underlying funds in which the Funds invest may involve more risk
than others. For example, the underlying funds may invest some or all of their
assets in a broad array of corporate bonds some which are not considered
investment grade bonds by Standard & Poor's Corporation or Moody's Investor
Services, Inc. or which are unrated; foreign securities and foreign currency
transactions; convertible and debt securities, including, without limitation,
master demand notes, illiquid securities and warrants; and the investments
described in Appendix B to this Prospectus. The underlying funds may also lend
their portfolio securities; sell securities short; borrow money in amounts up to
some designated percentage of their assets for investment purposes; write (sell)
or purchase call or put options on securities or on stock indexes; concentrate
25% or more of their total assets in assets in one industry; enter into futures
contracts or repurchase agreements; and write (sell) or purchase options on
futures contracts. Some of the risks associated with these investment policies
are described in Appendix B to this Prospectus.
Through its investment in underlying funds, each Fund indirectly may invest more
than 25% of its total assets in one industry. Such indirect concentration of the
Fund's assets may subject the Shares of that Fund to greater fluctuation in
value than would be the case in the absence of such concentration.
Each Fund, together with any "affiliated persons" (as defined in the 1940 Act)
may purchase only up to 3% of the total outstanding securities of any underlying
fund. For this purpose, shares of underlying funds held by private discretionary
investment advisory accounts managed by the
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Investment Manager will be aggregated with those held by the Fund. Accordingly,
when affiliated persons and other accounts managed by the Investment Manager
hold shares of any of the underlying funds, the Funds' ability to invest fully
in shares of those funds is restricted, and the Investment Manager must then in
some instances select alternative investments that would not have been its first
preference.
Under certain circumstances, an underlying fund may determine to make a payment
for redemption of its shares to the Fund wholly or partly by a distribution "in
kind" of securities from its portfolio in lieu of cash, in conformity with the
rules of the SEC. In such cases, the Fund may hold securities distributed by an
underlying fund until the Investment Manager determines that it is appropriate
to dispose of such securities. Such disposition may entail additional costs to
the affected Fund.
Investment decisions by the investment advisers of the underlying funds are made
independently of the Funds and the Investment Manager. Therefore, the investment
adviser of an underlying fund may be purchasing securities of the same issuer
whose securities are being sold by the investment adviser of another underlying
fund. The result of this would be an indirect expense to the Funds without
accomplishing any investment purpose.
An investor in either Fund will bear not only its proportionate share of the
expenses of such Fund but also, indirectly, similar expenses of the underlying
funds. These expenses consist of advisory fees, expenses related to the
distribution of shares, brokerage commissions, accounting, pricing and custody
expenses, printing, legal and audit expenses and other miscellaneous expenses.
The Funds intend to arrange to be included within a class of investors entitled
not to pay sales charges by purchasing load fund shares under letters of intent,
rights of accumulation, cumulative purchase privileges and other quantity
discount programs. The Funds will not, however, invest in shares of a mutual
fund that is sold with a contingent deferred sales load. In addition, as a
result of the Funds' policies of investing in other mutual funds, an investor
may receive taxable capital gains distributions to a greater extent than would
be the case if the investor invested directly in the underlying funds. See
"Dividends, Distributions and Taxes."
The underlying funds in which the Funds invest may incur distribution and
shareholder service expenses in the form of "Rule 12b-1 fees" or service fees.
In the event a Fund purchases shares of an underlying fund that imposes Rule
12b-1 or service fees, such fees will be paid by such underlying funds to the
Distributor because portfolio transactions for the Funds are generally placed
through the Distributor. The Distributor is entitled to retain service fees in
an amount equal to the fair market value of the services provided by it to the
underlying funds. The Distributor will reimburse to the Funds fees it receives
from underlying funds for effecting purchases of the underlying funds' shares.
For a description of such arrangements, please see the discussion under the
caption "Trust Management -- Execution of Portfolio Transactions."
Because of the compensation the Distributor, an affiliate of the Investment
Manager, may receive from the underlying funds in connection with the Funds'
investments in such underlying funds, the Investment Manager may have conflicts
of interest in rendering advice to the Funds. The Investment Manager will at all
times fulfill its obligations to act in the best interests of the Funds. In
addition, because the Distributor will reimburse to the Funds any fees received
by it for effecting purchases of the underlying funds' shares, the Trust and the
Investment Manager believe
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that the incentive to the Investment Manager to make investments in underlying
funds which pay such fees is greatly reduced.
The 1940 Act currently provides that any underlying fund is not required to
redeem any shares held by the Funds in excess of 1% of the underlying fund's
outstanding shares in any 30-day period, and any of the Funds' holdings in
excess of that amount may be considered illiquid. However, since the Funds have
elected to reserve the right to pay redemption requests in investment
securities, these positions may be treated as liquid. See also "How to Redeem
Shares - Other Information Concerning Redemption."
The Investment Manager and/or its affiliates have been providing financial
services to individuals, qualified retirement programs, estates and other
business entities since 1984. Although the Investment Manager has substantial
experience and expertise in assessing mutual funds for its clients, the
Investment Manager has no previous experience in advising a mutual fund. In
addition, the Funds are newly formed and have little operating history upon
which an investor may assess investment performance.
TRUST MANAGEMENT
TRUSTEES AND OFFICERS
The business and affairs of the Trust, and thus of each Fund, are managed under
the direction of the Board of Trustees. By virtue of the responsibilities
assumed by NFA as Investment Manager (see below), the Trust has no executive
employees other than its officers, each of whom is employed by NFA or its
affiliates and none of whom devotes full time to the affairs of the Trust. No
officer, director or employee of NFA or any of its affiliates receives any
compensation from the Trust for serving as a Trustee or officer of the Trust.
The Trust pays each Trustee who is not an officer, director or employee of NFA
or any of its affiliates a fee of $100 per meeting attended and reimburses each
such Trustee for travel and out-of-pocket expenses. These costs and expenses of
"non-interested" Trustees are, in turn, reimbursed to the Trust by the
Investment Manager pursuant to the Investment Advisory Agreement. See
"Investment Manager, Distributor, and Transfer Agent" below.
INVESTMENT MANAGER, DISTRIBUTOR, AND TRANSFER AGENT
The Trust has retained as its investment adviser National Financial Advisors,
Inc. ("NFA" or the "Investment Manager"), 715 Twining Road, Suite 202, Dresher,
Pennsylvania 19025, an investment management organization founded in 1992. NFA
provides investment management services to trusts, institutions and high-income
individuals and is registered under the Investment Advisers Act of 1940. The
Investment Manager has not been sponsored, recommended or approved, nor have its
abilities or qualifications been passed upon, by the SEC or any other
governmental agency.
NFA is a wholly owned subsidiary of The National Advisory Group, Inc. ("The
Group"), a Pennsylvania corporation with interests primarily in the financial
services industry. The Group also owns all of the shares of NFA Brokerage
Services, Inc. (the "NFA Brokerage" or the "Distributor"), the NASD mutual funds
only broker/dealer through which Shares of each Fund
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are offered. The Trust entered into a Distribution Agreement with NFA Brokerage
under which each Fund will pay NFA Brokerage for distribution services as
permitted under the Trust's Distribution Plan. See "Distribution Plan." The
Group also owns all of the shares of National Shareholder Services, Inc., a
Pennsylvania corporation ("NSS" or the "Transfer Agent"), which serves as the
Fund's transfer agent, dividend paying agent and shareholder service agent.
Jeffrey C. Brown (President of The Group and President of NFA) and Larissa N.
Patrylak (Vice President of The Group and Controller of NFA) each own 50% of the
outstanding capital stock of The Group and therefore each is deemed to be in
control of NFA, NFA Brokerage and NSS.
Subject to the supervision and direction of the Board of Trustees, NFA, as
Investment Manager, manages each Fund's portfolio in accordance with the stated
policies of that Fund. NFA makes investment decisions for each Fund and places
the purchase and sale orders for portfolio transactions. In addition, NFA
furnishes office facilities and clerical and administrative services, pays the
salaries of all officers and employees who are employed by both it and the Trust
and, subject to the direction of the Board of Trustees, is responsible for the
overall management of the business affairs of each Fund, including the provision
of personnel for recordkeeping, the preparation of governmental reports and
responding to shareholder communications.
Under the Investment Advisory Agreement between the Trust and the Investment
Manager, the Investment Manager is entitled to receive from each Fund as
compensation for its services an annual fee of 1.20% on each Fund's average
daily net assets. However, the Investment Manager is contractually obligated to
reduce its management fee to keep total operating expenses for each Fund at no
greater than 1.20% (not including extraordinary expenses) until at least
December 31, 1998. The fee is paid monthly and calculated on the basis of the
month's net assets. Unlike most mutual funds, the management fees paid by the
Funds to NFA include transfer agency, pricing, custodial, auditing and legal
services, taxes, interest, redemption fees, expenses of non-interested Trustees
and general administrative and other operating expenses of each Fund except as
noted below under "Expenses Borne by Each Fund."
Jeffrey C. Brown is the person primarily responsible for the management of the
portfolio of each of the Funds. Mr. Brown has been President of The Group since
1984 and of The Group's affiliated entities since each of their formation. Mr.
Brown has been a Trustee of the Trust since its inception.
EXPENSES BORNE BY EACH FUND
Each Fund pays all expenses not assumed by the Investment Manager, including
extraordinary expenses and costs pursuant to the Distribution Plan described
below. Until at least December 31, 1998, the Investment Manager is contractually
obligated to reduce its management fee to keep total operating expenses of each
Fund at no greater than 1.20% of average daily net assets (not including
extraordinary) expenses.
An investor in either of the Funds should recognize that it may invest directly
in mutual funds and that, by investing in mutual funds indirectly through either
Fund, the investor will bear not only its proportionate share of the expenses of
the relevant Fund but also indirectly similar expenses paid by underlying funds.
See "Risks and Other Considerations."
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DISTRIBUTION PLAN
Rule 12b-1 ("Rule 12b-1") under the 1940 Act regulates the circumstances under
which an investment company may, directly or indirectly, bear the expenses of
distributing its shares. Rule 12b-1 defines such distribution expenses to
include the costs of "any activity which is primarily intended to result in the
sale of fund shares." Rule 12b-1 provides, among other things, that an
investment company may bear such expenses only pursuant to a plan adopted in
accordance with Rule 12b-1.
The Trust has adopted a Distribution Plan (the "Distribution Plan") with respect
to the distribution of each Fund's Shares. The Distribution Plan permits, among
other things, payments in the form of (a) compensation to securities brokers and
dealers for selling Shares; (b) compensation to securities brokers and dealers,
accountants, attorneys, investment advisors, pension actuaries, non-profit
entities not advised by the Investment Manager or its affiliates and service
organizations for services rendered by them to their clients or members in
reviewing, explaining or interpreting the Funds' prospectus and other selling
materials; (c) advertising costs; (d) costs of telephone, mail, or other direct
solicitation of prospective investors and of responding to inquiries, as well as
the compensation of persons who do the soliciting or respond to inquiries; (e)
preparing and printing prospectuses and other selling materials and the cost of
distributing them (including postage); (f) reimbursement of travel,
entertainment and like expenditures made by the Trustees in promoting the Funds
and their investment objective and policies; (g) fees of public relations
consultants and (h) awards. The fees payable under the Distribution Plan are
payable without regard to actual expenses incurred. Each Fund may expend as much
as, but not more than, 0.25% of its average net assets annually pursuant to the
Distribution Plan.
A report of the amounts expended by each Fund under the Distribution Plan and
the purpose of the expenditure must be made to and reviewed by the Board of
Trustees at least quarterly. In addition, the Distribution Plan provides that it
may not be amended to increase materially the costs which each Fund will bear
for distribution without shareholder approval of the relevant Fund and that
other material amendments of the Distribution Plan must be approved by the Board
of Trustees, and by the Trustees who are not "interested persons" (as defined in
the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any agreements related to the
Distribution Plan, by vote cast in person at a meeting called for the purpose of
voting on the Distribution Plan. The Distribution Plan is terminable at any time
by vote of a majority of the Trustees who are not "interested persons" and who
have no direct or indirect financial interest in the operation of the
Distribution Plan or in any related service agreement or by vote of the majority
of the relevant Fund's Shares. Any dealer or service agreement related to the
Distribution Plan terminates upon assignment and is terminable at any time,
without penalty, upon not more than 60 days' written notice to any other party
to the agreement, by a vote of a majority of the Trustees who are not
"interested persons" and who have no direct or indirect financial interest in
the operation of the Distribution Plan or in any of the related service
agreements or by vote of a majority of the relevant Fund's Shares.
NFA Brokerage is a wholly-owned subsidiary of The Group and is located at the
same address as the Investment Manager. The Distributor serves as the exclusive
agent for the distribution of the Trust's Shares based on a Distribution
Agreement between it and the Trust.
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The Distribution Agreement with the Distributor provides for the payment by each
Fund to the Distributor of a distribution fee (the "Distribution Fee") in an
amount equal to 0.25% of average daily net assets. The Distributor determines
the amount, if any, to be paid to service agents and the basis on which such
payments are made. Certain employees of The Group, NFA Brokerage and the
Investment Manager may receive compensation under the Distribution Plan.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for portfolio transactions of the Funds generally are placed through NFA
Brokerage. NFA Brokerage receives orders from the Investment Manager, places
them with the underlying fund's distributor, transfer agent or other person, as
appropriate, confirms the trades, prices and numbers of shares purchased or
sold, and assures prompt payment by or to the Fund and proper completion of the
order.
Each Fund has authority to purchase shares of underlying funds that impose Rule
12b-1 or service fees. Such underlying funds will sign agreements with the
Distributor pursuant to which the Distributor will provide certain services to
such underlying funds in consideration of the payment of such fees. Such
services may include: sub-accounting, account status information, forwarding of
communications from such underlying funds to a Fund, and share purchase
processing, exchange, and redemption assistance. In the absence of such an
agreement, an underlying fund would retain the Rule 12b-1 or service fees. The
Distributor is entitled to retain fees for services provided by it to an
underlying fund. Such fees will not exceed the fair market value of the services
provided.
In the event an underlying fund pays a fee to the Distributor for effecting the
purchase of such fund's shares, the Distributor will reimburse all such fees to
the relevant Fund. Reimbursement will be made by the Distributor to a Fund as
soon as administratively possible.
PORTFOLIO TURNOVER
Each Fund is actively managed and has no restrictions upon portfolio turnover.
However, it is anticipated that each Fund's rate of portfolio turnover generally
will not exceed 200%. A 100% annual portfolio turnover rate would be achieved if
each security in a Fund's portfolio (other than securities with less than one
year remaining to maturity) were replaced once during the year. A portfolio
turnover rate of 100% or more is considered high and each Fund's rate of
portfolio turnover may be greater than that of many other mutual funds. Trading
also may result in realization of net short-term capital gains that would not
otherwise be realized. Shareholders are taxed on such gains when distributed
from a Fund at ordinary income tax rates. There is no limit on the portfolio
turnover rates of the underlying funds.
HOW TO PURCHASE SHARES
Shares of the Funds are offered as an investment vehicle for individuals,
institutions, corporations and fiduciaries. Each Fund may invest in underlying
funds which are sold with a sales charge; however, the Funds intend to use
various quantity discount programs and/or applicable waivers to avoid imposition
of any sales loads. Prospectuses, sales material and applications can be
obtained from NSS, the Transfer Agent for each Fund, at the address and
telephone number set
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forth below. NSS is a subsidiary of The Group, the parent company of the
Investment Manager and the Distributor.
INITIAL PURCHASE
The minimum initial investment in a Fund is $10,000, except that the Trust
reserves the right, in its sole discretion, to waive or reduce the minimum
initial investment amount for certain investors or to waive or reduce the
minimum initial investment for tax-deferred retirement plans. The minimum
investment is waived for purchases by Trustees, officers and employees of the
Trust and of The Group, as well as for private clients of The Group, including
members of such persons' immediate families. The Trust also reserves the right
to waive the minimum initial investment for financial intermediaries. The Trust
is authorized to reject any purchase order.
PRICE OF SHARES
Shares of each Fund are sold on a continuous basis, without a sales charge, at
the net asset value (the "Net Asset Value") next determined after receipt of a
purchase order by the Transfer Agent. The Net Asset Value per Share of each Fund
is calculated on each day that the New York Stock Exchange (the "NYSE") is open
for trading. The Net Asset Value per Share of each Fund is calculated by
dividing the sum of the value of the securities held by the Fund plus cash or
other assets minus all liabilities (including estimated accrued expenses) by the
total number of outstanding Shares of the Fund, rounded to the nearest cent.
Shares of the underlying funds are valued at their respective net asset values
under the 1940 Act. The underlying funds value securities in their portfolios
for which market quotations are readily available at their current market value
(generally the last reported sale price) and all other securities and assets at
fair value pursuant to methods established in good faith by the board of
trustees or directors of the underlying mutual fund. Money market funds with
portfolio securities with deemed maturities of 397 days or less may use the
amortized cost or penny-rounding methods to value their securities. Securities
having 60 days or less remaining to maturity generally are valued at their
amortized cost, which approximates market value.
Other assets of each Fund are valued at their current market value if market
quotations are readily available and, if market quotations are not available,
they are valued at fair value pursuant to methods established in good faith by
the Board of Trustees.
Investors should note that, due to time constraints involved in the pricing of
shares of mutual funds such as the Funds, the Net Asset Value of Fund Shares
reported in newspapers will lag behind the Funds' actual Net Asset Value by one
business day. Purchase orders received by dealers prior to 4:00 p.m. EST on any
business day, and transmitted to the Transfer Agent by 5:00 p.m. EST that day,
are confirmed at the Net Asset Value determined as of the close of the regular
sessions of trading on the NYSE on that day. It is the responsibility of dealers
to transmit properly completed orders so that they will be received by the
Transfer Agent by 5:00 p.m. EST. Broker-dealers or other agents may charge an
investor a fee for effecting transactions. Direct purchase orders received by
the Transfer Agent by 4:00 p.m. EST are confirmed at that day's Net Asset Value.
Direct investments received by the Transfer Agent after 4:00 p.m. and orders
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received from dealers after 5:00 p.m. are confirmed at the Net Asset Value
determined on the next following business day.
SHAREHOLDER ACCOUNTS
When an investor invests in a Fund, NSS opens an account to which all full and
fractional Shares (to three decimal places) are credited, together with any
dividends and capital gains distributions, which are paid in additional Shares
unless the shareholder otherwise instructs the Transfer Agent.
No stock certificates representing Shares will be issued.
An investor may open an account and make an initial investment in either Fund by
sending a check and completed account application form to NSS at Twining Office
Center, 715 Twining Road, Suite 202, Dresher, Pennsylvania 19025. Checks should
be made payable to The Dresher Comprehensive Growth Fund or The Dresher Classic
Retirement Fund, as appropriate. An account application kit is included with
this Prospectus. Each Fund reserves the rights to limit the amount of
investments and to refuse to sell to any person.
The Transfer Agent mails to shareholders confirmation of all purchases or
redemptions of Shares of the Funds. With a shareholder's prior consent, the
Funds will transmit confirmations and other statements to such shareholder by
e-mail or other electronic media in compliance with SEC guidelines. A consent to
receive such confirmations and statements electronically may be revoked at any
time, whereupon the shareholder will be provided with hard copies of all such
confirmations and statements. In addition, a shareholder who has consented to
electronic delivery may request hard copies at any time.
The Funds' account application contains certain provisions limiting the
liability of the Trust, NSS and certain of their affiliates for certain claims
and costs (including among others, losses resulting from unauthorized
shareholder transactions) relating to the various services (for example,
telephone redemptions and exchanges) made available to investors.
If an order to purchase Shares is canceled because an investor's check does not
clear, the investor will be responsible for any resulting losses or fees
incurred by the Fund or NSS in the transaction.
An investor may also purchase Shares of the Funds by wire. Please call NSS at
(888) 980-7500 for instructions. The investor should be prepared to give the
name in which the account is to be established, the address, telephone number,
and taxpayer identification number for the account, and the name of the bank
that will wire the money.
Investments in a Fund will be made at the Fund's Net Asset Value next determined
after a wire is received together with the account information outlined above.
If the Trust does not receive timely and completed account information, there
may be a delay in the investment of money and any accrual of dividends. To make
an initial wire purchase, an investor must mail a completed account application
to NSS. Banks may impose a charge for sending a wire. There is presently no fee
for receipt of wired funds, but NSS reserves the right to charge shareholders
for this service upon thirty days' prior notice to shareholders.
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SUBSEQUENT PURCHASES
An investor may purchase and add Shares to its account ($100 minimum) directly
by mail or by bank wire or through a dealer. Checks should be sent to NSS,
Twining Office Center, 715 Twining Road, Suite 202, Dresher, Pennsylvania 19025.
Checks should be made payable or endorsed to The Dresher Comprehensive Growth
Fund or The Dresher Classic Retirement Fund, as appropriate. Bank wires should
be sent as outlined above. Each additional purchase request must contain the
account name and number to permit proper crediting.
SHAREHOLDER SERVICES
Contact NSS at (888) 980-7500 for additional information about the shareholder
services described below.
Tax-Deferred Retirement Plans
Shares of the Funds are available for purchase in connection with the following
tax-deferred retirement plans offered by National Actuarial Consultants, Ltd., a
wholly-owned subsidiary of The Group:
- Keogh Plans for self-employed individuals.
- Individual retirement account (IRA) plans for individuals and their
non-employed spouses.
- Qualified pension and profit-sharing plans for employees, including
those profit-sharing plans with 401(k) provisions.
- 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Code.
HOW TO REDEEM SHARES
Shares of the Funds may be redeemed on each day that the Trust is open for
business. Redeeming shareholders will receive the Net Asset Value per Share next
determined after receipt by NSS of a redemption request in the form described
below. Payment is ordinarily sent by mail or by wire within three business days
after tender in such form. However, payment in redemption of Shares purchased by
check will be based on the Net Asset Value next determined after receipt by NSS
of a properly executed redemption request (as described above) but will be
effected only after the check has been collected, which may take up to 15 days
from the purchase date. A shareholder may eliminate this delay by purchasing
Shares of the Funds by certified check or wire.
BY MAIL
Shares may be redeemed by mail by writing directly to the Transfer Agent,
National Shareholder Services, Inc., Twining Office Center, 715 Twining Road,
Suite 202, Dresher, Pennsylvania 19025. The redemption request must be signed
exactly as the shareholder's name appears on the
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application form, with the signature guaranteed, and must include the account
number. If Shares are owned by more than one person, the redemption request must
be signed by all owners exactly as the names appear on the registration. A
signature guarantee may generally be obtained from a bank, broker, dealer,
credit union (if authorized under state law), securities exchange or
association, clearing agency or savings association. A notary public is not an
acceptable guarantor. The Trust may waive the signature guarantee requirement in
its discretion.
A request for redemption will not be processed until all of the necessary
documents have been received in proper form by the Transfer Agent. A shareholder
in doubt as to what documents are required should contact NSS at (888) 980-7500
THROUGH BROKER-DEALERS
Shares may also be redeemed by placing a wire redemption request through a
securities broker or dealer. Broker-dealers or other agents may impose a fee for
this service. A redeeming shareholder will receive the Net Asset Value per Share
next determined after receipt by NSS of its wire redemption request. It is the
responsibility of broker-dealers to promptly and properly transmit wire
redemption orders.
BY TELEPHONE
Shares of the Funds may also be redeemed by telephone. The proceeds will be sent
by mail to the address designated on the redeeming shareholder's account or
wired directly to the redeeming shareholder's existing account at any commercial
bank or brokerage firm in the United States as designated on the application. To
redeem by telephone, call NSS at (888) 980-7500. The redemption proceeds will
usually be sent by mail or by wire within three business days after receipt of
telephone instructions. IRA accounts are not redeemable by telephone.
The telephone redemption privilege is automatically available to all
shareholders. A shareholder may change the bank or brokerage account designated
under this procedure at any time by writing to NSS with the signature guaranteed
by any eligible guarantor institution or by completing a supplemental telephone
redemption authorization form. Contact NSS to obtain this form. Further
documentation will be required to change the designated account if Shares are
held by a corporation, fiduciary or other organization.
Neither the Trust nor NSS, nor their respective affiliates, will be liable for
complying with telephone instructions any of them reasonably believes to be
genuine or for any loss, damage, costs or expense in acting on such telephone
instructions. The investor will bear the risk of any such loss. The Trust or
NSS, or both, will employ reasonable procedures to determine that telephone
instructions are genuine. If the Trust and/or NSS do not employ such procedures,
they may be liable for losses due to unauthorized or fraudulent instructions.
Such procedures may include, among others, requiring forms of personal
identification prior to acting upon telephone instructions, providing written
confirmation by mail or, if the shareholder has given its consent to receipt of
confirmation by such means, by e-mail (in compliance with SEC guidelines) of the
transactions and/or tape recording telephone instructions.
OTHER INFORMATION CONCERNING REDEMPTION
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Each Fund reserves the right to take up to seven days to make payment if, in the
judgment of the Investment Manager, such Fund could be affected adversely by
immediate payment. In addition, the right of redemption may be suspended or the
date of payment postponed (a) for any period during which the NYSE is closed
(other than for customary weekend and holiday closings), (b) when trading in the
markets that the Fund normally utilizes is restricted, or when an emergency, as
defined by the rules and regulations of the SEC, exists, making disposal of that
Fund's investments or determination of its Net Asset Value not reasonably
practicable, or (c) for any other periods as the SEC by order may permit. In the
case of any such suspension, a shareholder may either withdraw such
shareholder's request for redemption or receive payment based on the Net Asset
Value per Share next determined after the termination of the suspension.
The Funds have made an election with the SEC to pay in cash all redemptions
requested by any shareholder of record limited in amount during any 90-day
period to the lesser of $250,000 or 1% of its net assets at the beginning of
such period. This election is irrevocable without the SEC's prior approval.
Redemption requests in excess of applicable limits may be paid, in whole or in
part, in shares of the underlying funds in which a Fund invests or in cash, as
the Board of Trustees may deem advisable; however, payment will be made wholly
in cash unless the Board of Trustees believes that economic or market conditions
exist that would make such a practice detrimental to the best interests of the
Fund. If redemption proceeds are paid in underlying fund shares, such securities
will be valued as set forth under the caption "How to Purchase Shares Price of
Shares." Such underlying fund shares will be readily redeemable or marketable.
The Funds reserve the right to redeem Shares and close an account if, as a
result of redemptions, the aggregate value of a shareholder's account drops
below the applicable Fund's $10,000 minimum balance requirement. Shareholders
will be given 30 days' advance written notice and a chance to increase their
account balance to the minimum requirement before the Fund redeems their Shares.
EXCHANGE PRIVILEGE
Shares of the Funds may be exchanged for each other at Net Asset Value. A
shareholder may request an exchange by sending a written request to NSS. The
request must be signed exactly as the shareholder's name appears on the Trust's
account records. Exchanges may also be requested by telephone. A shareholder who
is unable to execute a transaction by telephone (for example during times of
unusual market activity) should consider requesting that the exchange be made by
mail. An exchange will be effected at the next determined Net Asset Value after
receipt of a request by NSS.
Exchanges may only be made for Shares of Funds then offered for sale in the
shareholder's state of residence and are subject to the applicable minimum
initial investment requirements. The exchange privilege may be modified or
terminated by the Board of Trustees upon 60 days' prior notice to the
shareholders. An exchange results in a sale of the Fund Shares, which may cause
a shareholder to recognize a capital gain or loss.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund will declare and pay, at least annually, dividends to shareholders of
substantially all of its net investment income, if any, earned during the year
from investments, and will distribute net realized capital gains, if any, once
each year. All dividends and distributions will be reinvested automatically at
Net Asset Value in additional Shares of a Fund unless the shareholder has
notified such Fund in writing of the shareholder's election to receive
distributions in cash.
Each Fund intends to qualify continually as a regulated investment company under
Subchapter M of the Code. Such qualification removes from the Fund any liability
for federal income taxes upon the portion of its income distributed to
shareholders and makes federal income tax upon such distributed income generated
by such Fund's investments the sole responsibility of the shareholders.
Continued qualification requires each Fund to distribute to its shareholders
each year substantially all of its income and capital gains. In addition,
amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, each Fund must distribute for each
calendar year an amount equal to the sum of (1) at least 98% of its calendar
year net ordinary income, (2) at least 98% of the excess of its capital gains
over capital losses (adjusted for certain ordinary losses) realized during the
one-year period ending December 31 of such year and (3) 100% of any
undistributed net ordinary income and net capital gains for previous years. A
distribution will be treated as paid on December 31 of the calendar year if it
is declared by the Fund in December of that year with a record date in December
and paid by the Fund during January of the following calendar year. Such
distributions will be taxable to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received. Each year the Trust will notify shareholders of the
tax status of dividends and distributions.
In addition to the distribution requirements outlined above, each Fund must meet
several additional requirements of Subchapter M, including the following: (1)
the Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of securities and certain other income; (2) at the
close of each quarter of the Fund's taxable year, at least 50% of the value of
its total assets must be represented by cash and cash items, U.S. government
securities, securities of other regulated investment companies and other
securities, with those other securities limited, in respect of any issuer, to an
amount that does not exceed 5% of the value of the Fund's total assets and that
does not represent more than 10% of the outstanding voting securities of the
issuer; and (3) at the close of each quarter of the Fund's taxable year, not
more than 25% of the value of its total assets may be invested in securities
(other than U.S. government securities and securities of other regulated
investment companies) of any one issuer.
Any dividend or distribution paid by a Fund has the effect of reducing the Net
Asset Value per Share on the ex-dividend date by the amount of the dividend or
distribution. Therefore, a dividend or distribution paid shortly after a
purchase of Shares by an investor would represent, in substance, a return of
capital to the shareholder, even though subject to income taxes.
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Each Fund may also, from time to time, pay dividends in excess of net income and
net realized capital gains. Any such excess dividends would constitute a
non-taxable return of capital to the shareholder.
Depending on the residence of the shareholder for tax purposes, distributions
also may be subject to state and local taxes, including withholding taxes.
Investors should consult their own tax advisers as to the tax consequences of
ownership of Shares of a Fund in their particular circumstances.
In accordance with the Code, each Fund may be required to withhold a portion of
dividends, redemptions or capital gains paid to a shareholder and remit such
amount to the Internal Revenue Service if the shareholder fails to furnish the
Fund with a correct taxpayer identification number, if the shareholder fails to
supply the Fund with a tax identification number altogether, if the investor
fails to make a required certification that its taxpayer identification number
is correct and that it is not subject to backup withholding, or if the Internal
Revenue Service notifies the Fund to withhold a portion of such distributions
from a shareholder's account.
Income received from a mutual fund in that Fund's portfolio (including dividends
and distributions of short-term capital gains), as well as interest received on
cash held in the Custodian's money market deposit account and net short-term
capital gains received by the Fund on the sale of mutual fund shares, will be
distributed by the Fund (net of expenses incurred by the Fund) and will be
taxable to shareholders as ordinary income. Because each Fund is actively
managed and can realize taxable net short-term capital gains by selling shares
of an underlying fund with unrealized portfolio appreciation, investing in the
Fund rather than directly in the underlying funds may result in increased tax
liability to the shareholder because the Fund must distribute its gain in
accordance with the rules of the Code.
Distributions of net capital gains received from underlying mutual funds, as
well as net long-term capital gains realized by the Fund from the purchase and
sale of underlying mutual fund shares held by the Fund for more than one year,
will be distributed by the Fund and will be taxable to shareholders as long-term
capital gains (even if the shareholder has held the Shares for less than one
year). However, if a shareholder who has received a capital gains distribution
suffers a loss on the sale of its Shares not more than six months after
purchase, the loss will be treated as a long-term capital loss to the extent of
the capital gains distribution received. The Fund will designate long-term
capital gains dividends as subject to a maximum rate of 20% (if the asset was
held for 18 months or longer) or 28% (if held for 12 months or longer but less
than 18 months).
For purposes of determining the character of income received by the Fund when an
underlying fund distributes net capital gains to the Fund, the Fund will treat
the distribution as a long-term capital gain, even if it has held shares of the
mutual fund for less than one year. However, any loss incurred by the Fund on
the sale of that underlying fund's shares held for six months or less will be
treated as a long-term capital loss only to the extent of the gain distribution.
The tax treatment of distributions from the Fund is the same whether the
distributions are received in additional Shares or in cash. Shareholders
receiving distributions in the form of additional Shares will have a cost basis
for federal income tax purposes in each Share received equal to the Net Asset
Value of a Share of the Fund on the reinvestment date.
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Either Fund may invest in underlying funds with capital loss carry-forwards. If
such an underlying fund realizes capital gains, it will be able to offset the
gains to the extent of its loss carry-forwards in determining the amount of
capital gains which must be distributed to its shareholders.
GENERAL INFORMATION
The Trust is a business trust formed under the laws of Delaware on March 26,
1997. It may issue an unlimited number of shares of beneficial interest in one
or more series or classes. Currently it offers Shares of two series. The Board
of Trustees may authorize the issuance of shares of additional series or
classes, if it deems it desirable. Shares within each series have equal,
noncumulative voting rights, and have equal rights as to distributions, assets
and liquidation of such series except to the extent that such voting rights or
rights as to distributions, assets and liquidation vary among classes of a
series.
Upon issuance and sale in accordance with the terms of this Prospectus, each
Share will be fully paid and non-assessable. Shares of the Fund have no
preemptive, subscription or conversion rights and are redeemable as set forth
under "How to Redeem Shares." Under Delaware law, shareholders of a Delaware
business trust are not subject to personal liability for the acts and
obligations of the Trust.
SHAREHOLDERS MEETINGS
The Trust is not required to hold annual shareholders' meetings and does not
intend to do so. The Trust may, however, hold special meetings in connection
with certain matters. These include changing a Fund's fundamental policies,
electing or removing Trustees, or approving or amending any investment advisory
agreement or distribution plan.
VOTING RIGHTS
Shareholders of each Fund have the right to vote on any matters which by law or
the provisions of the Declaration of Trust they may be entitled to vote upon.
Shareholders of each Fund are entitled to one vote for each dollar of Net Asset
Value (number of Shares owned times Net Asset Value per Share) of such Fund.
Unless otherwise permitted by the 1940 Act, shareholders will vote by series and
not in the aggregate. In addition, shareholders will vote exclusively as a class
on any matters relating solely to their arrangement as a class and on any matter
in which the interests of that class differs from the interests of any other
class in that Fund. As used in this Prospectus, the term "vote of a majority of
the outstanding votes" of a Fund (or of the Trust) means the vote of the lesser
of: (1) 67% of the votes of the Fund (or of the Trust) present at a meeting of
shareholders if the holders of more than 50% of the outstanding votes of the
Fund (or the Trust) are present in person or by proxy or (2) more than 50% of
the outstanding votes of the Fund (or the Trust). In compliance with applicable
provisions of the 1940 Act, each Fund intends to vote the shares of the
underlying funds held by it in the same proportion as the vote of all other
holders of such underlying fund's securities. The effect of such "mirror" voting
will be to neutralize the Fund's influence on corporate governance matters
regarding the underlying funds in which the Fund invests.
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SHARE CERTIFICATES
To assist in minimizing administrative costs, share certificates will not be
issued. Records regarding Share ownership are maintained by the Transfer Agent.
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to the Trust at the telephone
number and address shown on the back cover of this Prospectus for National
Shareholder Services.
CUSTODIAN
Firstrust Savings Bank, 1931 Cottman Avenue, Philadelphia, Pennsylvania 19111,
is the custodian (the "Custodian") for each Fund's securities and cash.
AUDITORS
Sanville & Company, 1514 Old York Road, Abington, Pennsylvania 19001 have been
appointed as independent accountants for the Funds.
LEGAL COUNSEL
Ledgewood Law Firm, P.C., 1521 Locust Street, Philadelphia, Pennsylvania 19102,
is legal counsel to the Trust and to the Investment Manager, the Distributor and
the Transfer Agent.
HOW THE FUNDS REPORT PERFORMANCE
From time to time a Fund may advertise its "average annual total return" in
advertisements or reports to shareholders or prospective shareholders.
Quotations of "average annual total return" will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in a Fund
over periods of 1, 5, and 10 years (up to the life of the Fund). A Fund may also
advertise total return (a "nonstandardized quotation") which is calculated
differently from "average annual total return." A nonstandardized quotation of
total return may be a cumulative return which measures the percentage change in
the value of an account between the beginning and end of a period, assuming no
activity in the account other than reinvestment of dividends and capital gains
distributions. A nonstandardized return may also indicate average annual
compounded rates of return over periods other than those specified for "average
annual total return." A nonstandardized quotation of total return will always be
accompanied by a Fund's "average annual total return" as described above.
All total return figures will reflect the deduction of a proportionate share of
Fund expenses on an annual basis, and will assume that all dividends and
distributions are reinvested when paid. Quotations of total return reflect only
the performance of a hypothetical investment in the Funds during the particular
time period on which the calculations are based.
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Total return for a Fund will vary based upon changes in market conditions and
the level of the Fund's expense and should not be considered an indication of
future performance.
The Funds may also compare their performance with that of other mutual funds as
listed in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., or similar independent services that monitor mutual fund
performance, and with appropriate securities indices, which may assume
reinvestment of dividends but usually do not reflect deductions for
administrative and management costs and expenses. Additional information about
the Funds' performance will be contained in the Funds' annual report to
shareholders, which may be obtained without charge from NSS at the address or
telephone number listed on the back cover of this Prospectus.
ANNUAL AND SEMI-ANNUAL REPORT MAILINGS
Twice a year, each Fund provides shareholders with a report showing its
performance and outlining its investments. To reduce mailing costs, the Trust
will combine these mailings by household. If a household has multiple accounts
and the same record address for all the accounts, the Trust will send mailings
for all accounts at that address in a single package. A shareholder who does not
want to combine mailings for its account should write to NSS at the address on
the back of this Prospectus. With a shareholder's prior consent, the Funds will
transmit their annual and semi-annual reports electronically to such shareholder
by e-mail or by posting such reports on the Trust's World Wide Web site. If such
reports are posted on the Trust's World Wide Web site, shareholders will receive
prior notice, in compliance with SEC guidelines, that reports will be delivered
in this manner. A consent to receive such reports electronically may be revoked
at any time, whereupon the shareholder will be provided with hard copies of all
such reports. In addition, a shareholder who has consented to electronic
delivery may request a hard copy of any report at any time.
------------------------------
No dealer, salesman, or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Trust or the Investment Manager.
This Prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
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APPENDIX A
DESCRIPTION OF BOND AND COMMERCIAL PAPER RATING*
STANDARD & POOR'S CORPORATION
BONDS
AAA: Bonds rated AAA have the highest rating assigned by Standards & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA: Bonds rated AA have very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small
degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in the higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than the bonds
in higher rated categories.
BB, B, CCC AND CC: Bonds rated BB, B, CCC and CC are regarded on balance
as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree
of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
COMMERCIAL PAPER
A-1: Commercial paper rated A-1 indicates that the degree of safety
regarding timely payment is very strong.
A-2: Commercial paper rated A-2 indicates that the capacity for timely
payment is strong. However, the relative degree of safety is not as
overwhelming as for issues designated A- 1.
- ------------------------
*As described by Standard & Poor's Corporation
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APPENDIX B
DESCRIPTION OF VARIOUS SECURITIES INVESTED IN,
AND TECHNIQUES EMPLOYED BY,
UNDERLYING FUNDS IN WHICH THE FUNDS MAY INVEST
As described in this Prospectus under "Investment Objectives and Management
Techniques" and under "Risks and Other Consideration," the Funds will invest in
the shares of open-end investment companies (or "mutual funds"). These mutual
funds (collectively referred to in this Appendix as "underlying funds") may
incur risks, certain of which are described in this Appendix B. The underlying
funds may invest in a variety of investment securities and instruments. This
Appendix B is not an exhaustive list of such investment products.
FOREIGN SECURITIES
An underlying fund may invest some or all of its assets in securities of foreign
issuers. Investments in foreign securities involve risks relating to political
and economic developments abroad as well as those that may result from the
difference between the regulation to which U.S. issuers are subject and that
applicable to foreign issuers. These risks may include expropriation,
confiscatory taxation, withholding taxes on dividends and interest, limitations
on the use or transfer of an underlying fund's assets and political or social
instability or diplomatic developments. Foreign issuers are not generally
subject to accounting, auditing and financial reporting standards and practices
comparable to those in the United States. There is often less information
publicly available about a foreign issuer than about a U.S. issuer.
Individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position. Securities of foreign companies may be less liquid and their prices
more volatile than securities of comparable U.S. companies. Moreover, the
underlying funds generally calculate their net asset values and complete orders
to purchase, exchange or redeem shares only on days when the New York Stock
Exchange is open. However, foreign securities in which the underlying funds may
invest may be listed primarily on foreign stock exchanges that may trade on
other days (such as U.S. holidays and weekends). As a result, the net asset
value of an underlying fund's portfolio may be significantly affected by trading
on days when the Investment Manager does not have access to the underlying funds
and shareholders do not have access to the Funds.
Additionally, because foreign securities ordinarily are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect an underlying fund's net asset value, the value of dividends
and interest earned, gains and losses realized on the sale of securities and net
investment income and capital gain, if any, to be distributed to shareholders by
the underlying fund. If the value of a foreign currency rises against the U.S.
dollar, the value of the underlying fund's assets denominated in that currency
will decrease. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets,
international balance of payments, governmental intervention, speculation and
other economic and political conditions. The costs attributable to foreign
investment that an underlying fund must bear frequently are higher that those
attributable to domestic investing. For example, the costs of maintaining
custody of foreign securities are generally higher than custodian costs relating
to domestic securities.
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Income received by an underlying fund from sources within foreign countries may
be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Any such taxes paid by an underlying fund will reduce the
net income of the underlying fund available for distribution to the Funds.
Special tax considerations apply to foreign securities.
Risks may be intensified in the case of investments by an underlying fund in
emerging markets or countries with limited or developing capital markets.
Securities prices in emerging markets can be significantly more volatile than
those in more developed nations, reflecting the greater uncertainties of
investment in less established markets and economies. In particular, countries
with emerging markets may have relatively unstable governments, present the risk
of nationalization of businesses, restrictions on foreign ownership, or
prohibitions on repatriation of assets, and may have less protection of property
rights than more developed countries. The economies of countries with emerging
markets may be predominately based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt or inflation rates. Local securities markets may trade
a small number of securities and may be unable to respond effectively to
increases in trading volume, potentially making prompt liquidation of
substantial holdings difficult or impossible at times. Securities of issuers
located in countries with emerging markets may have limited marketability and
may be subject to more abrupt or erratic price movements. Debt obligations of
developing countries may involve a high degree of risk, and may be in default or
present the risk of default. Governmental entities responsible for repayment of
the debt may be unwilling to repay principal and interest when due, and may
require renegotiation of rescheduling of debt payments. In addition, prospects
for repayment of principal and interest may depend on political as well as
economic factors.
FOREIGN CURRENCY TRANSACTIONS
In connection with its portfolio transactions in securities traded in a foreign
currency, an underlying fund may enter into forward contracts to purchase or
sell an agreed upon amount of a specific currency at a future date that may be
any fixed number of days from the date of the contract agreed upon by the
parties at a price set at the time of the contract. Under such an arrangement,
concurrently with the entry into a contract to acquire a foreign security for a
specified amount of currency, the underlying fund would purchase with U.S.
dollars the required amount of foreign currency for delivery at the settlement
date of the purchase. The underlying fund would enter into similar forward
currency transaction in connection with the sale of foreign securities. The
effect of such transactions would be to fix a U.S. dollar price for the security
to protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during the
period between the date the security purchased or sold and the date on which
payment is made or received, the normal range of which is three to fourteen
days. These contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
forward contract generally has no deposit requirement, and no commissions are
charged at any stage for trades. Although such contracts tend to minimize the
risk of loss due to a decline in the value of the subject currency, they tend to
limit commensurately any potential gain that might result should the value of
such currency increase during the contract period.
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BONDS AND FIXED INCOME SECURITIES
Underlying funds may invest in long or short-term bonds and various other types
of fixed income securities (such as securities issued, guaranteed or insured by
the U.S. government, its agencies or instrumentalities, commercial paper,
preferred stock and convertible debentures). These mutual funds may invest in
investment grade bonds (bonds rated in the four highest ratings categories by
Standard & Poor's Corporation ("S&P") (AAA, AA, A and BBB) or Moody's Investors
Services, Inc. ("Moody's") (Aaa, Aa, A and Baa) or similar nationally recognized
ratings services or in bonds that are not considered investment grade (for
example, bonds rated BB or below by S&P or Ba or below by Moody's). A
description of ratings assigned to commercial paper and corporate debt
obligations by S&P can be found in Appendix A to this Prospectus. In general,
the current value of bonds varies inversely with changes in prevailing interest
rates. If interest rates increase after a bond is purchased, the value of that
security will normally decline. If prevailing interest rates decrease after a
bond is purchased, the bond's market price will normally rise. Non-investment
grade bonds are higher yielding, high risk securities commonly known as "junk
bonds."
HIGH-YIELD SECURITIES
The Funds may, from time to time, invest in shares of underlying funds which
invest in lower-rated securities or in unrated securities, when, in view of the
Investment Manager, such investments are consistent with the Fund's investment
objective. Certain risk factors that investors should recognize as being
associated the Investment Manager's discretion to invest in such underlying
funds are set forth below.
Youth and Growth of the High Yield Bond Market. The high yield, high risk
market is relatively new and at times is subject to substantial volatility. An
economic downturn or increase in interest rates may have a significant effect on
the high yield, high risk securities in an underlying fund's portfolio and the
markets for such securities, as well as on the ability of securities' issuers to
repay principal and interest. Issuers of high yield, high risk securities may be
of low credit worthiness and the high yield, high risk securities may be
subordinated to the claims of senior lenders. During periods of economic
downturn or rising interest rates, the issuers of high yield, high risk
securities may have greater potential for insolvency and a higher incidence of
high yield, high risk bond defaults may be experienced.
Sensitivity of Interest Rate and Economic Changes. Prices of high yield,
high risk securities have been found to be less sensitive to interest rate
changes than higher-rated investments, but more sensitive to adverse economic
changes or individual corporate developments. During an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress that would adversely affect their ability to service
their principal and interest payment obligations, to meet projected business
goals, and to obtain additional financing. If the issuer of a high yield, high
risk security owned by an underlying fund defaults, the fund may incur
additional expenses in seeking recovery. Periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices in
high yield, high risk securities.
Yields on high yield, high risk securities will fluctuate over time.
Payment Expectations. Certain securities held by an underlying fund,
including high yield, high risk securities, may contain redemption or call
provisions. If an issuer exercises these provisions in a declining interest rate
market, the underlying fund would have to replace the security with a lower
yielding security, resulting in a decreased return for the investor.
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Conversely, a high yield, high risk security's value will decrease in a rising
interest rate market, as will the value of the underlying fund's assets.
Liquidity and Valuation. High yield, high risk securities may tend to trade
in markets that are relatively less liquid than the market for higher-rated
securities. It is thus possible that the underlying fund's ability to dispose of
such securities, when its investment adviser deems it desirable to do so, may be
limited. The lack of a liquid secondary market may also have an adverse impact
on market price and the underlying fund's ability to dispose of particular
issues when necessary to meet the underlying fund's liquidity needs or in
response to a specific economic event, such as a deterioration in the
creditworthiness of the issuer. In addition, a less liquid market may interfere
with the ability of the underlying fund to value lower-rated securities
accurately and, consequently, value the fund's assets accurately. Furthermore,
adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of lower-rated securities,
especially in a thinly-traded market.
Credit Ratings. Credit ratings evaluate the safety of principal and
interest payments, not the market value risk of securities. Since credit ratings
agencies may fail to change the credit ratings in a timely manner to reflect
subsequent events, the investment adviser to an underlying fund should monitor
the issuers of high yield, high risk securities in the fund's portfolio to
determine if the issuers will have sufficient cash flow and profits to meet
required principal and interest payment obligations, and to attempt to assure
the securities' liquidity so the fund can meet redemption requests. To the
extent that an underlying fund invests in high yield, high risk securities, the
achievement of the fund's investment objective may be more dependent on the
underlying fund's own credit analysis than is the case for higher quality bonds.
Subsequent to its purchase by an underlying fund, an issue of securities may
cease to be rated or its rating may be reduced below the minimum rating required
for purchase by an underlying fund.
CONVERTIBLE PREFERRED STOCKS AND DEBT SECURITIES
Certain preferred stocks and debt securities that may be held by an underlying
fund have conversion features allowing the holder to convert securities into
another specified security (usually common stock) of the same issuer at a
specified conversion ratio (e.g., two shares of preferred for one share of
common stock) at some specified future date or within a specified period. The
market value of convertible securities generally includes a premium that
reflects the conversion right. That premium may be negligible or substantial. To
the extent that any preferred stock or debt security remains unconverted after
the expiration of the conversion period, the market value will fall to the
extent represented by the premium.
ILLIQUID SECURITIES
An underlying fund may invest in securities for which no readily available
market exists ("illiquid securities") or securities the disposition of which
would be subject to legal restrictions (so-called "restricted securities") and
repurchase agreements maturing in more than seven days. A considerable period
may elapse between an underlying fund's decision to sell securities and the time
when the fund is able to sell such securities. If, during such a period, adverse
market conditions were to develop, the underlying fund might obtain a less
favorable price than prevailed when it decided to sell.
All mutual funds are subject to restrictions on the percentage of their assets
which may be composed of illiquid securities. Subject to these limitations, an
underlying fund may invest in
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restricted securities when such investment is consistent with its investment
objectives, and such securities may be considered to be liquid to the extent the
fund's investment adviser determines that there is a liquid institutional or
other market for such securities. In determining whether a restricted security
is properly considered a liquid security, the fund's investment adviser, under
the direction of the fund's Board of Trustees, will take into account relevant
factors, including the following: (i) the frequency of trades and quotes for the
security; (ii) the number of dealers willing to purchase or sell the security
and the number of potential purchasers; (iii) dealer undertakings to make a
market in the security; and (iv) the nature of the security and marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer). An underlying fund's
investment in such restricted securities could have the effect of increasing the
level of the fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities.
INDUSTRY CONCENTRATION
An underlying fund may concentrate its investments within one industry. Because
the scope of investment alternatives within an industry is limited, the value of
the shares of such an underlying fund may be subject to greater market
fluctuation than an investment in a fund that invests in a broader range of
securities.
OPTION ACTIVITIES
An underlying fund may write (i.e., sell) call options ("calls") if the calls
are "covered" throughout the life of the option. A call is "covered" if the fund
owns the options securities. When a fund writes a call, it receives a premium
and gives the purchaser the right to buy the underlying security at any time
during the call period (usually not more than nine months in the case of common
stock) at a fixed exercise price regardless of market price changes during the
call period. If the call is exercised, the fund will forego any gain from an
increase in the market price of the underlying security over the exercise price.
An underlying fund may purchase a call on securities only to effect a "closing
transaction," which is the purchase of a call covering the same underlying
security and having the same exercise price and expiration date as a call,
previously written by the fund, on which it wishes to terminate its obligation.
If the underlying fund is unable to effect a closing transaction, it will not be
able to sell the underlying security until the call previously written by the
fund expires (or until the call is exercised and the fund delivers the
underlying security).
An underlying fund also may write and purchase put options ("puts"). When a fund
writes a put, it receives a premium and gives the purchaser of the put the right
to sell the underlying security to the fund at the exercise price at any time
during the option period. When a fund purchases a put, it pays a premium in
return for the right to sell the underlying security at the exercise price at
any time during the option period. An underlying fund also may purchase stock
index puts, which differ from puts on individual securities in that they are
settled in cash based on the values of the securities in the underlying index
rather than by delivery of the underlying securities. Purchase of a stock index
put is designed to protect against a decline in the value of the portfolio
generally rather than an individual security in the portfolio. If any put is not
exercised or sold, it will become worthless on its expiration date.
An underlying fund's option positions may be closed out only on an exchange that
provides a secondary market for options of the same series, but there can be no
assurance that a liquid
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secondary market will exist at any given time for any particular option. In this
regard, trading in options on certain securities (such as U.S. government
securities) is relatively new, so that it is impossible to predict to what
extent liquid markets will develop or continue.
An underlying fund's custodian, or a securities depository acting for it,
generally acts as escrow agent as to the securities on which the fund has
written puts or calls, or as to other securities acceptable for such escrow so
that no margin deposit is required of the fund. Until the underlying securities
are released from escrow, they cannot be sold by the fund.
In the event of a shortage of the underlying securities deliverable on exercise
of an option, the Options Clearing Corporation ("OCC") has the authority to
permit other, generally comparable securities to be delivered in fulfillment of
option exercise obligations. If the OCC exercises its discretionary authority to
allow such other securities to be delivered, it may also adjust the exercise
prices of the affected options by setting different prices at which otherwise
ineligible securities may be delivered. As an alternative to permitting such
substitute deliveries, the OCC may impose special exercise settlement
procedures. (See "Leverage" below for a discussion of how options trading
activities involve potential leveraging.)
OPTIONS TRADING MARKETS
Options in which the underlying funds will invest are generally listed on
exchanges. Exchanges on which such options currently are traded are the Chicago
Board Options Exchange and the American, New York, Pacific, and the Philadelphia
Stock Exchanges. Options on some securities may not, however, be listed on any
exchange but traded in the over-the-counter market. Options traded in the
over-the-counter market involve the additional risk that securities dealers
participating in such transactions will fail to meet their obligations to the
underlying fund. The use of options traded in the over-the-counter market may be
subject to limitations imposed by certain state securities authorities. In
addition to the limits on the use of options discussed herein, a mutual fund is
subject to the investment restrictions described in its prospectus and statement
of additional information.
The staff of the SEC currently is of the view that the premiums that a mutual
fund pays for the purchase of unlisted options, and the value of securities used
to cover unlisted options written by the underlying fund, are considered to be
invested in illiquid securities or assets for the purpose of calculating whether
a mutual fund is in compliance with any fundamental investment restriction
prohibiting it from investing more than 15% (or, in many cases, 10%) of its net
assets (taken at current value) in any combination of illiquid assets and
securities.
FUTURES CONTRACTS
An underlying fund may enter into futures contracts for the purchase or sale of
debt securities and stock indexes. A futures contract is an agreement between
two parties to buy and sell a security or an index for a set price on a future
date. Futures contracts are traded on designated "contract markets" that,
through their clearing corporations, guarantee performance of the contracts.
A financial futures contract sale creates an obligation by the seller to deliver
the type of financial instrument called for in the contract in a specified
delivery month for a stated price. A financial futures contract purchase creates
an obligation by the purchaser to take delivery of the type of financial
instrument called for in the contract in a specified delivery month at a stated
price. The
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specific instruments delivered or taken, respectively, at settlement date are
not determined until on or near such date. The determination is made in
accordance with the rules of the exchange on which the futures contract sale or
purchase was made. Futures contracts are traded in the United States only on
commodity exchanges or boards of trade (known as "contract markets") approved
for such trading by the Commodity Futures Trading Commission (the "CFTC"), and
must be executed through a futures commission merchant or brokerage firm that is
a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or acceptance
of commodities or securities, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out a
futures contract sale is effected by purchasing a futures contract for the same
aggregate amount of the specific type of financial instrument or commodity with
the same delivery date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid the difference
and realizes a gain. On the other hand, if the price of the offsetting purchase
exceeds the price of the initial sale, the seller realizes a loss. A purchaser
closes out a futures contract purchase by entering a futures contract sale. If
the offsetting sale price exceeds the purchase price, the purchaser realizes a
gain, and if the purchase price exceeds the offsetting sale price, the purchaser
realizes a loss. An underlying fund may sell financial futures contracts in
anticipation of an increase in the general level of interest rates. Generally,
as interest rates rise, the market value of the securities held by an underlying
fund will fall, thus reducing its net asset value. This interest rate risk may
be reduced without the use of futures as a securities with shorter maturities or
by holding assets in cash. This strategy, however, entails increased transaction
costs in the form of dealer spreads and brokerage commissions and will typically
reduce the fund's average yield as a result of the shortening of maturities.
The sale of financial futures contracts serves as a means of hedging against
rising interest rates. As interest rates increase, the value of an underlying
fund's short position in the futures contracts will also tend to increase, thus
offsetting all or a portion of the depreciation in the market value of the
fund's investment being hedged. While an underlying fund will incur commission
expenses in selling and closing out futures positions (by taking an opposite
position in the futures contract), commissions on futures transactions tend to
be lower than transaction costs incurred in the purchase and sale of portfolio
securities.
An underlying fund may purchase interest rate futures contracts in anticipation
of a decline in interest rates when it is not fully invested. As such purchases
are made, an underlying fund would probably expect that an equivalent amount of
futures contracts will be closed out. Unlike when an underlying fund purchases
or sells a security, no price is paid or received by the fund upon the purchase
or sale of a futures contract. Upon entering into a contract, the underlying
fund is required to deposit with its custodian in a segregated account in the
name of the futures broker an amount of cash and/or U.S. government securities.
This is known as "initial margin." Initial margin is similar to a performance
bond or good faith deposit which is returned to an underlying fund upon
termination of the futures contract, assuming all contractual obligations have
been satisfied. Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance margin," to and
from the broker (or the custodian) are made on a daily basis as the price of the
underlying security or commodity fluctuates, making the long and short positions
in the futures contract more or less valuable. This is known as "marking to the
market." An underlying fund may elect to close some or all of its futures
positions at any time prior to their expiration in order to reduce or eliminate
a hedge
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position then currently held by the fund. The underlying fund may close its
positions by taking opposite positions that will operate to terminate the fund's
position in the futures contracts. Final determinations of variation margin are
then made, additional cash is required to be paid by a release to the underlying
fund, and the fund realizes a loss or a gain. Such closing transactions involve
additional commission costs.
A stock index futures contract may be used to hedge an underlying fund's
portfolio with regard to market risk as distinguished from risk relating to a
specific security. A stock index futures contract does not require the physical
delivery of securities, but merely provides for profits and losses resulting
from changes in the market value of the contract to be credited or debited at
the close of each trading day to the respective accounts of the parties to the
contract. On the contract's expiration date, a final cash settlement occurs.
Changes in the market value of a particular stock index futures contract reflect
changes in the specified index of equity securities on which the contract is
based.
There are several risks in connection with the use of futures contracts. In the
event of an imperfect correlation between the futures contract and the portfolio
position that is intended to be protected, the desired protection may not be
obtained and the underlying fund may be exposed to risk of loss. Further,
unanticipated changes in interest rates or stock price movements may result in a
poorer overall performance for the fund than if it had not entered into futures
contracts on debt securities or stock indexes.
In addition, the market price of futures contracts may be affected by certain
factors. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close future contracts through offsetting
transactions that could distort the normal relationship between the securities
and futures markets. Second, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market may also cause temporary price distortions.
Positions in futures contracts may be closed out only on an exchange or board of
trade that provides a secondary market for such futures. There is no assurance
that a liquid secondary market on an exchange or board of trade will exist at
any particular time. In order to assure that mutual funds have sufficient assets
to satisfy their obligations under their futures contracts, the underlying funds
are required to establish segregated accounts with their custodians. Such
segregated accounts are required to contain an amount of cash, U.S. government
securities and other liquid, high-grade debt securities equal in value to the
current value of the underlying instrument less the margin deposit. (Also see
"Leverage" below.)
The risk to an underlying fund from investing in futures is potentially
unlimited. Gains and losses on investments in options and futures depend upon
the underlying fund's investment adviser's ability to predict correctly the
direction of stock prices, interest rates and other economic factors.
OPTIONS ON FUTURES CONTRACTS
An underlying fund may purchase and write (sell) put and call options on futures
contracts. An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position
B-8
<PAGE>
if the option is a put) at a specified exercise price at any time during the
option period. When an option on a futures contract is exercised, delivery of
the futures position is accompanied by cash representing the difference between
the current market price of the futures contract and the exercise price of the
option. A fund may purchase put options on futures contracts in lieu of, and for
the same purpose as, a sale of a futures contract. It also may purchase such put
options in order to hedge a long position in the underlying futures contract in
the same manner as it purchases "protective puts" on securities.
As with options on securities, the holder of an option on a futures contract may
terminate its position by selling an option of the same series. There is no
guarantee that such closing transactions can be effected. An underlying fund is
required to deposit initial margin and variation margin with respect to put and
call options on futures contracts written by it pursuant to brokers'
requirements similar to those applicable to futures contracts described above
and, in addition, net option premiums received will be included as initial
margin deposits.
In addition to the risks that apply to all options transactions, there are
several special risks relating to options on futures contracts. The ability to
establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. There can be no
certainty that liquid secondary markets for all options on futures contracts
will develop. Compared to the use of futures contracts, the purchase of options
on futures contracts involves less potential risk to an underlying fund because
the maximum amount of risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the use of an option on a
futures contract would result in a loss to the fund when the use of a futures
contract would not, such as when there is no movement in the prices of the
underlying securities. Writing an option on a futures contract involves risks
similar to those arising in the sale of futures contracts, as described above.
SHORT SALES
An underlying fund may sell securities short. In a short sale, the fund sells
securities that it does not own, making delivery with securities "borrowed" from
a broker. The fund is then obligated to replace the borrowed securities by
purchasing them at the market price at the time of replacement. This price may
or may not be less than the price at which the securities were sold by the fund.
Until the securities are replaced, the fund is required to pay to the lender any
dividends or interest that accrue during the period of the loan. In order to
borrow the securities, the fund may also have to pay a premium that would
increase the cost of the securities sold. The proceeds of the short sale will be
retained by the broker, to the extent necessary to meet margin requirements,
until the short position is closed out.
The fund also must deposit in a segregated account an amount of cash or U.S.
government securities equal to the difference between (a) the market value of
the securities sold short at the time they were sold short and (b) the value of
the collateral deposited with the broker in connection with the sale (not
including the proceeds from the short sale). Each day the short position is
open, the fund must maintain the segregated account at such a level that the
amount deposited in it plus the amount deposited with the broker as collateral
(1) equals the current market value of the securities sold short and (2) is not
less than the market value of the securities at the time they were sold short.
Depending upon market conditions, up to 80% of the value of a fund's net assets
may be deposited as collateral for the obligation to replace securities borrowed
to effect short sales and allocated to a segregated account in connection with
short sales. As is
B-9
<PAGE>
the case with all secured transactions, the possibility exists that the
collateral will be called to satisfy the underlying obligations.
An underlying fund will incur a loss as a result of a short sale if the price of
the security increases between the date of the short sale and the date on which
the fund replaces the borrowed security. The fund will realize a gain if the
security declines in price between those dates. The amounts of any gain will be
decreased and the amount of any loss increased by the amount of any premium,
dividends or interest the fund may be required to pay in connection with the
short sale.
A short sale is "against the box" if at all times when the short position is
open the fund owns an equal amount of the securities or securities convertible
into, or exchangeable without further consideration for, securities of the same
issue as the securities sold short. Such a transaction serves to defer a gain or
loss for federal income tax purposes.
WARRANTS
An underlying fund may invest in warrants, which are options to purchase a
specified security, usually an equity security such as common stock, at a
specified price (usually representing a premium over the applicable market value
of the underlying equity security at the time of the warrant's issuance) and
usually during a specified period of time. Moreover, they are usually issued by
the issuer of the security to which they relate. While warrants may be traded,
there is often no secondary market for them. The prices of the warrants do not
necessary move parallel to the prices of the underlying securities. Holders of
warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer. To the extent that the market value of the
security that may be purchased upon exercise of the warrant rises above the
exercise price, the value of the warrant will tend to rise. To the extent that
the exercise price equals or exceeds the market value of such security, or if
the warrant is not exercised within the specified time period, it will become
worthless and the fund will lose the purchase price paid for the warrant and the
right to purchase the underlying security.
MASTER DEMAND NOTES
Although the Funds themselves will not do so, underlying funds (particularly
money market mutual funds) may invest some or all of their assets in master
demand notes. Master demand notes are unsecured obligations of U.S.
corporations, redeemable upon notice, that permit investment by a fund of
fluctuating amounts at varying rates of interest pursuant to direct arrangements
between the fund and the issuing corporation. Because they are direct
arrangements between the fund and the issuing corporation, there is no secondary
market for the notes. However, they are redeemable at face value, plus accrued
interest, at any time.
REPURCHASE AGREEMENTS
Underlying funds, particularly money market funds, may enter into repurchase
agreements with banks and broker-dealers under which they acquire securities
subject to an agreement with the seller to repurchase the securities at an
agreed upon time and price. These agreements are considered under the 1940 Act
to be loans by the purchaser collateralized by the underlying securities. If the
seller should default on its obligation to repurchase the securities, the
underlying fund may experience delay or difficulties in exercising its rights to
realize upon the securities held as collateral and might incur a loss if the
value of the securities should decline.
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<PAGE>
LOANS OF PORTFOLIO SECURITIES
An underlying fund may lend its portfolio securities provided (1) the loan is
secured continuously by collateral of U.S. government securities or cash or cash
equivalent maintained on a daily market-to-market basis in an amount at least
equal to the current market value of the securities loaned; (2) the fund may at
any time call the loan and obtain the return of the securities loaned; (3) the
fund will receive any interest or dividends paid on the loaned securities; and
(4) the aggregate market value of securities loaned will not at any time exceed
one-third of the total assets of the fund. Loans of securities involve a risk
that the borrower may fail to return the securities or may fail to provide
additional collateral.
HEDGING
An underlying fund may employ many of the investment techniques described in
this section not only for investment purposes, but also for hedging purposes.
For example, an underlying fund may purchase or sell put and call options on
common stocks to hedge against movements in individual common stock prices, or
purchase and sell stock index futures and related options to hedge against
marketwide movements in common stock prices. Although such hedging techniques
generally tend to minimize the risk of loss that is hedged against, they also
limit commensurately the potential gain that might have resulted had the hedging
transaction not occurred. Also, the desired protection generally resulting from
hedging transactions may not always be achieved.
LEVERAGE
An underlying fund may borrow up to 25% of the value of its net assets on an
unsecured basis from banks to increase its holdings of portfolio securities. The
practice of leveraging means that a Fund could lose more than the amount it has
invested in an underlying fund. Under the 1940 Act, the fund is required to
maintain continuous asset coverage of 300% with respect to such borrowings and
to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% due to market fluctuations or
otherwise, even if disadvantageous from an investment standpoint. Leveraging
will exaggerate the effect of any increase or decrease in value of portfolio
securities on the fund's net asset value, and money borrowed will be subject to
interest costs (which may include commitment fees and/or the cost of maintaining
minimum average balances) which may or may not exceed the interest and option
premiums received from the securities purchased with borrowed funds.
The staff of the SEC is currently of the view that certain types of securities
transactions, including selling securities short, purchasing or selling futures
contracts, purchasing and selling options on specific securities, stock indexes,
or interest rate futures contracts, and purchasing and selling forward contracts
on currencies also involve potential leveraging. An underlying fund may engage
in these types of transactions subject to the 300% asset coverage requirement.
In the alternative, an underlying fund may engage in these types of transactions
if it segregates assets with respect to such transactions or "covers" such
transactions.
An underlying fund may segregate assets with respect to such transactions as
follows. A fund with a long position in a futures or forward contract, or that
sells a put option, may establish a segregated account (not with a futures
commission merchant or broker) containing cash or certain liquid assets equal to
the purchase price of the contract or the strike price of the put option (less
any margin on deposit). For short positions in futures or forward contracts,
sales of call options, and short sales of securities, a fund may establish a
segregated account (not with a futures
B-11
<PAGE>
commission merchant or broker) with cash and certain liquid securities that,
when added to the amounts deposited with a futures commission merchant or broker
as margin, equal the market value of the instruments or currency underlying the
futures or forward contracts, call options and short sales (but are not less
than the strike price of the call option or the market price at which the short
positions or short sales were established).
An underlying fund may "cover" such transactions in various ways depending on
the type transaction involved. For example, a fund that has a long position in a
futures or forward contract could purchase a put option on the same futures or
forward contract with a strike price as high or higher than the price of the
contract held by the fund. A fund that has sold a put option could sell short
the instruments or currency underlying the put option at the same or higher
price than the strike price of the put option. Similarly, the fund could
purchase a put option, if the strike price of the purchased put option is the
same or higher than the strike price of the put option sold by the fund.
B-12
<PAGE>
TABLE OF CONTENTS
THE DRESHER COMPREHENSIVE GROWTH FUND
THE DRESHER CLASSIC RETIREMENT FUND
EXPENSES
FINANCIAL HIGHLIGHTS
THE FUNDS
INVESTMENT OBJECTIVES AND MANAGEMENT TECHNIQUES
INVESTMENT POLICIES AND RESTRICTIONS
RISKS AND OTHER CONSIDERATIONS
TRUST MANAGEMENT
HOW TO PURCHASE SHARES
HOW TO REDEEM SHARES
DIVIDENDS, DISTRIBUTIONS AND TAXES
GENERAL INFORMATION
HOW THE FUNDS REPORT PERFORMANCE
APPENDIX A...................................................................A-1
APPENDIX B...................................................................B-1
B-13
<PAGE>
CROSS REFERENCE SHEET
THE DRESHER FAMILY OF FUNDS
Statement of Additional
Part B Item Information Caption
- -------------- -----------------------------
Cover Page Cover Page
Table of Contents Table of Contents
General Information and History General Information and History
Investment Objectives and Policies Investment Objectives, Policies
and Restrictions
Management of the Fund Management of the Trust
Control Persons and Principal Principal Holders of Securities
Holders of Securities
Investment Advisory and Other Services Investment Manager, Distributor,
and Transfer Agent; Custodian;
Auditor
Brokerage Allocation and Other Practices Portfolio Transactions
Capital Stock and Other Securities Capital Stock and Other
Securities
Purchase, Redemption and Pricing of Purchase, Redemption and Pricing
Securities Being Offered of Securities Being Offered;
Determination of Net Asset Value
Tax Status Tax Status
Underwriters The Distributor
Calculation of Performance Data Not Applicable
Financial Statements Financial Statements
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE DRESHER FAMILY OF FUNDS 75
Twining Road, Suite 202 Dresher,
Pennsylvania 19025
(888) 980-7500
This Statement of Additional Information relating to The Dresher Family of
Funds (the "Trust") is not a prospectus and should be read in conjunction with
the Trust's prospectus (the "Prospectus") as supplemented from time to time. A
copy of the Prospectus can be obtained from the Trust's distributor, National
Shareholder Services, Inc., 715 Twining Road, Suite 202, Dresher, Pennsylvania
19025, telephone number (888) 980-7500. The date of the Prospectus to which this
Statement of Additional Information relates is May 7, 1998.
The date of this Statement of Additional Information is May 7, 1998.
<PAGE>
TABLE OF CONTENTS
CAPTION PAGE LOCATION OF PROSPECTUS
General Information and History 1 General Information
Investment Objectives, Policies 1 Investment Objectives and Management
and Restrictions Techniques; Investment Policies and
Restrictions; Trust Management --
Portfolio Turnover
Management of the Trust 2 Trust Management
Principal Holders of Securities 4 Principal Holders of Securities
The Investment Manager 4 Trust Management
The Distributor 5 Trust Management
The Transfer Agent 6 Trust Management
The Custodian 6 Trust Management
The Auditor 6 Trust Management
Portfolio Transactions 6 Trust Management -- Execution of
Portfolio Transactions
Capital Stock and Other Securities 7 General Information
Purchase, Redemption and Pricing 7 How to Purchase Shares; How to
of Securities Being Offered Redeem Shares
Determination of Net Asset Value 7 How to Purchase Shares -- Price of
Shares
Tax Status 7 Dividends, Distributions and Taxes
Financial Statements 7 Not Applicable
Additional Information 7 Not Applicable
<PAGE>
GENERAL INFORMATION AND HISTORY
The Trust is a diversified, open-end management investment company
comprised of two portfolios of shares of other open-end registered investment
companies: The Dresher Comprehensive Growth Fund (the "Comprehensive Growth
Fund") and The Dresher Classic Retirement Fund (the "Classic Retirement Fund;"
and together with the Comprehensive Growth Fund, the "Funds"). The Trust was
organized as a trust under the laws of the State of Delaware on March 26, 1997
and has little operating history.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The Trust is an open-end, diversified management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Trust currently consists of two separate portfolios (series),
each with different investment objectives. The Funds seek to achieve their
investment objectives by investing in shares of other open-end investment
companies ("mutual funds"). As of the date of this Statement of Additional
Information, the Trust's series are:
THE DRESHER COMPREHENSIVE GROWTH FUND is an aggressive growth fund which
seeks capital appreciation without regard to current income.
THE DRESHER CLASSIC RETIREMENT FUND is a moderate growth fund which seeks
moderate capital appreciation and significant income.
The investment objectives of the Funds are described in the Prospectus
under the heading "Investment Objectives and Management Techniques." In
addition, each Fund has adopted certain fundamental investment policies. These
fundamental investment policies cannot be changed unless the change is approved
by the lesser of (1) 67% or more of the votes of the Fund (or the Trust) present
at a meeting, if the holders of more than 50% of the outstanding votes of the
Fund (or the Trust) are present or represented by proxy, or (2) more than 50% of
the outstanding votes of the Fund (or the Trust). These fundamental policies are
set forth in the Prospectus under the heading "Investment Policies and
Restrictions."
The Funds' fundamental investment policies have been adopted to avoid
wherever possible the necessity of shareholder meetings otherwise required under
the 1940 Act. This recognizes the need to react quickly to changes in the law or
new investment opportunities in the securities markets and the cost and time
involved in obtaining shareholder approvals for diversely held investment
companies. The Funds have also adopted non-fundamental investment policies, set
forth in the Prospectus. The Funds' non-fundamental investment policies may be
changed by a vote of the Board of Trustees. Any changes in either Fund's
non-fundamental investment policies will be communicated to such Fund's
shareholders prior to the effectiveness of the changes.
1940 ACT RESTRICTIONS. Under the 1940 Act and the rules, regulations and
interpretations thereunder, a "diversified company," as to 75% of its total
assets, may not purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. government or its agencies or instrumentalities or
securities of other investment companies) if, as a result, more than 5% of the
value of its total assets would be invested in the securities of such issuer or
more than 10% of the issuer's voting securities would be held by the Fund.
"Concentration" is generally interpreted under the 1940 Act as investing 25% or
more of total assets in an industry or group of industries. The 1940 Act limits
that ability of investment
B-1
<PAGE>
companies to borrow and lend money and to underwrite securities. The 1940 Act
currently prohibits an open-end fund from issuing senior securities, as defined
in the 1940 Act, except under very limited circumstances.
The mutual funds in which each of the Funds may invest may, but need not,
have the same investment objectives, policies and limitations as the relevant
Fund. Although each of the Funds may from time to time invest in shares of the
same underlying mutual funds, the percentage of each Fund's assets so invested
may vary, and the Investment Manager will determine that such investments are
consistent with the investment objectives and policies of such Fund. The
investments that may, in general, be made by underlying funds in which the Funds
may invest, as well as certain of the risks associated with such investments,
are described in the Prospectus and in Appendix B to the Prospectus.
The Funds have no restrictions on portfolio turnover. However, it is
anticipated that each Fund's rate of portfolio turnover generally will not
exceed 200% annually. A portfolio turnover rate of 100% or more is considered
high.
MANAGEMENT OF THE TRUST
The following table provides biographical information with respect to each
current Trustee and officer of the Trust. Each Trustee who is an "interested
person" of the Trust, as defined in the 1940 Act, is indicated by an asterisk.
Position Held Principal Occupation(s)
Name and Address with the Trust During Past 5 Years
- ---------------- -------------- -------------------
Jeffrey C. Brown* Trustee, President of National Advisory
715 Twining Road, President Group, National Financial Advisors,
Suite 202 Inc. (investment advisor), National
Dresher, PA 19025 Actuarial Consultants, Ltd. (pension
(Age: 40) recordkeeping), and National
Shareholder Services, Inc.
(shareholder services agent); President
and licensed registered representative
of NFA Brokerage Services, Inc.
(NASD broker-dealer).
Larissa N. Patrylak* Trustee, Secretary/Treasurer and Controller of
715 Twining Road, Secretary National Financial Advisors, Inc.,
Suite 202 National Shareholder Services, Inc.,
Dresher, PA 19025 and NFA Brokerage Services, Inc.;
(Age: 43) Vice President of National Actuarial
Consultants, Ltd. Married to Stephen
Patrylak.
Howard S. Lubin Trustee Physician.
715 Twining Road,
Suite 202
Dresher, PA 19025
(Age: 68)
B-2
<PAGE>
Allison M. Miller Trustee Self-employed as financial services
715 Twining Road, consultant, January 1996 - present;
Suite 202 Chief Operations Officer, Crescent
Dresher, PA 19025 Bank & Trust, February 1994 -
(Age: 34) December 1995; Senior Consultant,
Payment Systems Technology & Consulting
(consulting services and implementation
management), January 1992 - January 1994.
Leonid D. Rudnytzky Trustee Professor of Foreign Languages and
Suite 202 Literature at the University of
Dresher, PA 19025 Pennsylvania and Lasalle University.
(Age: 60)
Stephen Patrylak Treasurer Vice President, National Financial
715 Twining Road, Advisors, Inc. and National
Suite 202 Shareholder Services, Inc.; Consultant
Dresher, PA 19025 to National Actuarial Consultants,
(Age: 44) Ltd.; Vice President of NFA
Brokerage Services, Inc. Married to
Larissa N. Patrylak.
Daniel B. Nysch Vice President Director of Computer Operations for
715 Twining Road, The National Advisory Group, Inc.,
Suite 202 Vice President of National Financial
Dresher, PA 19025 Advisors, Inc., NFA Brokerage
(Age: 34) Services, Inc. and National Actual
Consultants, Ltd.
The following table provides compensation information with respect to each
current Trustee who is not an "interested person" of the Trust. No officer,
director or employee of National Financial Advisors, Inc., the Investment
Manager of the Trust receives any compensation from the Trust for serving as an
officer or Trustee of the Trust.
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits
Aggregate Accrued as Estimated Total
Name of Compensation Part of Annual Compensation
Person, from Registrant's Benefits Upon from
Position Registrant1 Expenses Retirement Registrant1
<S> <C> <C> <C> <C>
Allison M. $600 0 0 $600
Miller
B-3
<PAGE>
Howard S. $600 0 0 $600
Lubin
Leonid D. $600 0 0 $600
Rudnytzky
<FN>
(1) Amounts shown are estimated for Registrant's first full fiscal year.
</FN>
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 1998, the following persons were known by the Trust to be
owners of record and beneficiary of more than 5% of the outstanding shares of
each of the funds:
Percentage of
Name and Address Shares Beneficially Owned
A. Classic Retirement Fund
C.W. Group Retirement Plan 9.694%
130 James Way
Southampton, PA 18966
Forensic Specialties, Inc. 401(k) 6.556%
645 Longview Drive
Huntington Valley, PA 19006
Frame Lehigh 401(k) Plan 11.354%
80 Broad Street
Beaver Meadows, PA 18216
Howard Brown and Janet Brown 5.346%
7900 Old York Road, Suite 902 B
Elkins Park, PA 19027
Blocker Enterprises, Inc. 401(k) 6.664%
Route 248, P.O. Box 204
Parryville, PA 18244
Bernard W. Albert Defined Benefit 6.350%
Pension
1460 Joel Drive
Ambler, PA 19002
B-4
<PAGE>
B. Comprehensive Growth Fund
C.W. Group Retirement Plan 12.425%
130 James Way
Southampton, PA 18966
Frame Lehigh 401(k) Plan 14.798%
80 Broad Street
Beaver Meadows, PA 18216
Howard Brown and Janet Brown 6.794%
7900 Old York Road, Suite 902B
Elkins Park, PA 19027
Blocker Enterprises Inc. 401(k) 7.824%
Route 248, P.O. Box 204
Parryville, PA 18244
Jeffrey Brown 5.942%
560 Penllyn Blue Bell Pike
Blue Bell, PA 19422
As of March 31, 1998, the Trust's Trustees and officers as a group owned
4,574 shares of the Classic Retirement Fund (constituting 2.086% of its
outstanding shares) and 10,189 shares of the Comprehensive Growth Fund
(constituting 5.942% of its outstanding shares).
THE INVESTMENT MANAGER
National Financial Advisers, Inc. ("NFA" or the "Investment Manager")
serves as investment manager to the Trust and its Funds pursuant to a written
investment management agreement. NFA is a Pennsylvania corporation organized in
1994, and is a registered investment adviser under the Investment Advisers Act
of 1940, as amended. Jeffrey C. Brown, Trustee and President of the Trust, is
President of NFA. Larissa Patrylak, Trustee and Secretary of the Trust, also
serves as the Secretary/Treasurer and Controller of NFA. Daniel B. Nysch and
Stephen Patrylak, Vice President and Treasurer, respectively, of the Trust, also
serve as Vice Presidents of NFA.
NFA is a wholly owned subsidiary of The National Advisory Group, Inc. ("The
Group"), a Pennsylvania corporation formed in 1984 which provides
non-discretionary investment advisory and retirement services to trusts,
institutions and high-income individuals. Jeffrey C. Brown and Larissa N.
Patrylak are the sole shareholders of The Group. In addition, to NFA, The Group
also owns all of the outstanding shares of the following:
NFA Brokerage Services, Inc., the NASD mutual funds only broker/dealer
through which the shares of each Fund are being offered.
National Shareholder Services, Inc., which will serve as the Funds'
transfer agent, dividend paying agent and shareholder service agent.
National Actuarial Consultants, Ltd., a pension recordkeeper.
B-5
<PAGE>
Certain services provided by NFA under the investment management agreement
are described in the Prospectus. As compensation for its services, each Fund
pays NFA a fee based upon such Fund's average daily net asset value. This fee is
computed daily and paid monthly. The rate at which the fee is paid is described
in the Prospectus. For the period October 1, 1997 (date of commencement of
investment operations) to December 31, 1997, the Investment Manager was due
$14,133 and $10,830 and waived $2,955 and $2,257 from the Classic Retirement
Fund and the Comprehensive Growth Fund, respectively.
NFA pays, out of the investment management fees it receives from the Funds,
all the expenses of the Funds except expenses incurred under the Trust's
Distribution Plan and extraordinary expenses. Until at least December 31, 1998,
NFA is contractually obligated to reduce its management fee to keep total
operating expenses for each Fund at no greater than 1.20% of average daily net
assets (not including extraordinary expenses).
By its terms, the Trust's investment management agreement will remain in
effect through 1999 and from year to year thereafter, subject to annual approval
by (a) the Board of Trustees or (b) a vote of the majority of a Fund's
outstanding votes (as defined in the 1940 Act); provided that in either event
continuance is also approved by a majority of the Trustees who are not
interested persons of the Trust, by a vote cast in person at a meeting called
for the purpose of voting such approval. The Trust's investment management
agreement may be terminated at any time, on sixty days' written notice, without
the payment of any penalty, by the Board of Trustees, by a vote of the majority
of the Fund's outstanding votes, or by NFA. The investment management agreement
automatically terminates in the event of its assignment, as defined by the 1940
Act and the rules thereunder.
THE DISTRIBUTOR
NFA Brokerage Services, Inc. ("NFA Brokerage" or the "Distributor"), a
wholly-owned subsidiary of The Group, with its principal offices at 715 Twining
Road, Suite 218, Dresher, Pennsylvania 19025, serves as the distributor of the
Funds' shares. The Distributor is obligated to sell shares of the Funds on a
best efforts basis only against purchase orders for the shares. Shares of the
Funds are offered to the public on a continuous basis.
The Trust has a Plan of Distribution (the "Distribution Plan") pursuant to
Rule 12b-1 under the 1940 Act ("Rule 12b-1"), pursuant to which the Funds may
expend up to .25% of their respective average net assets annually for the costs
of activities intended to result in the sale of Fund shares. The Trust's
Distribution Agreement with NFA Brokerage (i) provides for the payment by each
Fund to NFA Brokerage of a distribution fee of .25% of average net assets and
(ii) authorizes NFA Brokerage to make payments for activities and expenditures
permitted by the Distribution Plan. During the period October 1, 1997 (date of
commencement at investment operations) through December 31, 1997, $5,212 was
expended by the Trust pursuant to the Distribution Plan, of which approximately
$580 was spent on advertising, $2,891 on printing prospectuses for delivery to
other than current shareholders and $1,741 on professional fees.
The Trustees believe that the Distribution Plan has benefitted and will
continue to benefit each of the Funds and their shareholders. Among these
benefits are reductions in per share expenses of each fund as a result of
increased assets in the Fund and a more predictable flow of cash which may
provide investment flexibility in seeking each Fund's investment objective and
may better enable the Fund to meet redemption demands without liquidating
portfolio securities at inopportune times.
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<PAGE>
In addition, the underlying funds in which the Funds invest may impose such
Rule 12b-1 fees. Rule 12b-1 fees imposed by an underlying fund could be as high
as .75% of an underlying fund's net assets and service fees could be as high as
.25% of an underlying fund's net assets. In the aggregate, such combined fees
could be as high as 1.00% of an underlying fund's net assets. For a description
of the arrangements pursuant to which underlying funds imposing Rule 12b-1 or
service fees pay service fees to the Distributor in connection with services
rendered by the Distributor and the process by which the Distributor will
reimburse to the Funds any fees received for effecting purchases of underlying
funds' shares, see the discussion in the Prospectus entitled "Trust Management
- -- Execution of Portfolio Transactions."
THE TRANSFER AGENT
The Board of Trustees of the Trust has approved an Administration,
Accounting and Transfer Agency Agreement among the Trust, National Shareholder
Services, Inc. ("NSS" or the "Transfer Agent") and NFA. Pursuant to such
Agreement, NSS serves as the Trust's transfer and dividend paying agent and
performs shareholder service activities. NSS also calculates daily net asset
value per share for each Fund and maintains such books and records as are
necessary to enable it to perform its duties. The administrative services
necessary for the operation of the Trust and its Funds provided by NSS include
among other things (i) preparation of shareholder reports and communications,
(ii) regulatory compliance, such as reports and filings with the Securities and
Exchange Commission and state securities commissions and (iii) general
supervision of the operation of the Trust and its Funds, including coordination
of the services performed by NFA, the custodian, independent accountants, legal
counsel and others. NSS is compensated by NFA for its services out of the
investment management fee paid to NFA by each Fund.
NSS is a wholly-owned subsidiary of The Group. The business address of NSS
is 715 Twining Road, Suite 202, Dresher, Pennsylvania 19025.
THE CUSTODIAN
Pursuant to a Custodian Agreement between the Trust, Firstrust Savings Bank
and NFA, Firstrust Savings Bank serves as the Trust's custodian. The principal
business address of Firstrust Savings Bank is 1931 Cottman Avenue, Philadelphia,
Pennsylvania 19111.
THE AUDITOR
Sanville & Company, independent certified public accountants located at
1514 Old York Road, Abington, Pennsylvania 19001, has been selected as the
auditors for the Trust. In such capacity, Sanville & Company periodically
reviews the accounting and financial records of the Trust and examines its
financial statements.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Funds are made by the
Investment Manager subject to the overall supervision and review by the Trust's
Board of Trustees. Portfolio security transactions for the Funds are effected by
or under the supervision of the Investment Manager.
NFA Brokerage, the Distributor of the Fund shares, may assist in the
placement of Fund portfolio transactions. In such capacity, NFA Brokerage may
receive distribution or service payments from the underlying funds or their
underwriters or sponsors in accordance with the
B-7
<PAGE>
normal distribution arrangements of those funds. See "The Distributor." In
providing execution assistance, NFA Brokerage may receive orders from the
Investment Manager; place them with the underlying fund's distributor, transfer
agent or other person, as appropriate; confirm the trade, price and number of
shares purchased or sold; and assure prompt and proper settlement of the order.
The Funds intend to arrange to be included within a class of investors
entitled not to pay sales charges by purchasing load fund shares under letters
of intent, rights of accumulation, cumulative purchase privileges and other
quantity discount programs.
CAPITAL STOCK AND OTHER SECURITIES
See "General Information" in the Prospectus.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
See "How to Purchase Shares" and "How to Redeem Shares" in the Prospectus.
DETERMINATION OF NET ASSET VALUE
See "How to Purchase Shares -- Price of Shares" in the Prospectus.
TAX STATUS
See "Dividends, Distributions and Taxes" in the Prospectus.
FINANCIAL STATEMENTS
Incorporated by reference to the financial statements in the Trust's Annual
Report for the fiscal year ended December 31, 1997 as filed with the SEC on Form
N-SAR on March 6, 1998.
ADDITIONAL INFORMATION
The Prospectus and this Statement of Additional Information do not contain
all of the information included in the Trust's Registration Statement filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, with respect to the securities offered hereby. Certain portions of the
Registration Statement have been omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. The Registration Statement, including
the exhibits filed therewith, may be examined at the offices of the Securities
and Exchange Commission in Washington, D.C.
Statements contained in the Prospectus and this Statement of Additional
Information as to the contents of any agreement or other documents referred to
are not necessarily complete, and, in each instance, reference is made to the
copy of such agreement or other documents filed as an
B-8
<PAGE>
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
B-9
<PAGE>
THE DRESHER FAMILY OF FUNDS
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
Included in Part A:
Financial Highlights for the Period from October 1, 1997 to
December 31, 1997.
Included in Part B:
Portfolio of Investments, December 31, 1997
Statement of Assets and Liabilities as of December 31, 1997
Statement of Operations for the Period Ended December 31, 1997
Statement of Changes in Net Assets for the Period Ended
December 31, 1997
Financial Highlights for the Period from October 1, 1997 to
December 31, 1997
Notes to Financial Statements, December 31, 1997
Incorporated by reference to the financial statements in the
Trust's Annual Report for the fiscal year ended December 31,
1997 as filed with the SEC on Form N-SAR on March 6, 1998.
Included in Part C:
The required Schedules are omitted because the required
information is included in the financial statements including
in Part A and Part B, or because the conditions requiring
their filing do not exist.
(b) Exhibits.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
*(1) Trust Instrument of Registrant
*(2) Bylaws of Registrant
<PAGE>
(3) Inapplicable
***(4) Instrument of Designation of Series of Beneficial
Interest of Registrant
***(5) Investment Advisory Agreement between Registrant and
National Financial Advisors, Inc. ("NFA")
***(6)(a) Distribution Agreement between Registrant and NFA
Brokerage Services ("NFA Brokerage")
**(6)(b) Form of Dealer Agreement between NFA Brokerage and
Dealers.
(7) Inapplicable
***(8) Custody Agreement among Registrant, NFA and
Firstrust Savings Bank
***(9) Administration, Accounting and Transfer Agency
Agreement among Registrant, NFA and National
Shareholder Services, Inc.
***(10) Opinion and Consent of Counsel
(11) Consent of Independent Public Accountants
(12) Inapplicable
***(13) Subscription Agreement between Registrant and
Initial Shareholders
(14) Inapplicable
***(15)(a) Distribution Plan of Registrant
(15)(b) See Exhibit (6)
(16) Inapplicable
(17)(a) Financial Data Schedule - The Dresher Comprehensive
Growth Fund
(17)(b) Financial Data Schedule - The Dresher Classic
Retirement Fund
(18) Inapplicable
- -------------------------------
* Incorporated herein by reference to the Registration Statement as
originally filed with the Securities and Exchange Commission on April 14,
1997.
C-2
<PAGE>
** Incorporated herein by reference to Amendment No. 1 to the
Registration Statement filed with the Securities and Exchange
Commission on or about June 11, 1997.
*** Incorporated herein by reference to Amendment No. 2 to the
Registration Statement filed with the Securities and Exchange
Commission on or about July 17, 1997.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registrant is controlled by the Trustees. Registrant does not have any
subsidiaries.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Set forth below are the number of record holders, as of March 31, 1998, of
Registrant's shares of beneficial interest:
Title of Class Number of Record Holders
Shares of beneficial interest, The Dresher 64
Comprehensive Growth Fund
Shares of beneficial interest, The Dresher 61
Classic Retirement Fund
ITEM 27. INDEMNIFICATION
Article X, Section 10.2 of Registrant's Trust Instrument, incorporated by
reference as Exhibit (1) hereto, provides for the indemnification of
Registrant's past and present Trustees and officers. Indemnification of
Registrant's investment manager, principal underwriter and custodian is provided
for, respectively, in Section 8 of the Investment Advisory Agreement filed
herewith as Exhibit (5), in Section 9 of the Distribution Agreement filed
herewith as Exhibit (6), and in Article VII of the Custody Agreement filed
herewith as Exhibit (8). In no event will Registrant indemnify any of its
Trustees, officers, employees or agents against any liability to which such
person would otherwise be subject by reason of such person's willful
misfeasance, bad faith, gross negligence in the performance of such person's
duties, or by reason of such person's reckless disregard of the duties involved
in the conduct of such person's office or arising under such person's agreement
with Registrant. Registrant will comply with Rule 484 under the Securities Act
of 1933 and Release No. 11330 under the Investment Company Act of 1940 in
connection with any such indemnification.
ITEM 28. BUSINESS AND OTHER CONNECTION OF INVESTMENT ADVISER
NFA is a registered investment adviser providing investment advice to
individuals, employee benefit plans, trusts, and corporations.
The list required by this Item 28 of the officers and directors of NFA, together
with information as to any business, profession, vocation or employment of a
substantial nature engaged in by such officers and directors during the past two
years, is incorporated herein by reference to Schedules A and D of the Form ADV
filed by NFA pursuant to the Investment Advisors Act of 1940 (SEC File No.
408-09).
C-3
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) None.
(b) For information as to the business, profession, vocation or employment
of a substantial nature of each of the principal underwriter, its
officers and directors, reference is made to NFA Brokerage's Form BD
(SEC File No. 8-47870).
(c) Inapplicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records required by Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 to 31a-3 inclusive thereunder at its office
located at 715 Twining Road, Suite 202, Dresher, Pennsylvania 19025. Certain
records, including records relating to Registrant's shareholders and the
physical possession of its assets, may be maintained pursuant to Rule 31a-3 at
the main offices of Registrant's transfer agent, dividend disbursing agent and
custodian located, as the custodian, at 1931 Cottman Avenue, Philadelphia,
Pennsylvania 19111, and, as to the transfer and dividend disbursing agent
functions, at 715 Twining Road, Suite 202, Dresher, Pennsylvania 19025
ITEM 31. MANAGEMENT SERVICES
Inapplicable.
ITEM 32. UNDERTAKINGS
(a) Inapplicable.
(b) Inapplicable.
(c) Inapplicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, Registrant certifies that it
meets all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Registration Statement to be signed on behalf by the undersigned, thereunto
duly authorized, in the City of Dresher and the Commonwealth of Pennsylvania on
this 7th day of May, 1998
THE DRESHER FAMILY OF FUNDS
By: /s/ Jeffrey C. Brown
Jeffrey C. Brown,
Trustee and President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Jeffrey C. Brown Trustee & President May 4, 1998
- -------------------------------
Jeffrey C. Brown
/s/ Stephen Patrylak Trustee & Treasurer May 4, 1998
- --------------------------------
Stephen Patrylak
/s/ Larissa N. Patrylak Trustee & Secretary May 4, 1998
- --------------------------------
Larissa N. Patrylak
/s/ Howard S. Lubin Trustee May 4, 1998
- ------------------------------
Howard S. Lubin
/s/ Leonid D. Rudnytzky Trustee May 4, 1998
- -----------------------
Leonid D. Rudnytzky
/s/ Allison M. Miller Trustee May 4, 1998
- ---------------------
Allison M. Miller
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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