<PAGE>
PURSUANT TO RULE No. 497(c)
REGISTRATION NO. 333-27645
THE TRAUTMAN KRAMER TRUST
TRAUTMAN KRAMER VALUE PLUS FUND
The Trautman Kramer Trust (the "Trust") is a Delaware business trust
currently consisting of one fund, Trautman Kramer Value Plus Fund, an open-
end, non-diversified management investment company (the "Fund"). The Fund's
investment objective is long-term capital appreciation. Capital appreciation
means an increase in the value of your shares. The Fund seeks to achieve its
objective primarily through investments in securities, generally common stock,
of United States issuers. The Fund also intends to invest up to 10% of its net
assets in securities that have not been registered under the Securities Act of
1933, as amended and therefore are subject to restrictions on resale, and may
be illiquid. There is minimal emphasis on current income (dividends).
Investors should read this Prospectus before investing in the Fund. It
contains important information about the Fund and should be kept for future
reference. A Statement of Additional Information, dated March 23, 1998, which
contains additional information about the Fund has been filed with the
Securities and Exchange Commission. It is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information can be obtained
without charge by calling 1-888-TKCOVAL (1-888-852-6825) or writing the Trust
at c/o Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
----------------
INVESTMENT IN THE FUND IS SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is March 23, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Highlights.......................... 2
Fee Table........................... 4
Performance Calculation............. 5
Investment Objective, Policies and
Risks.............................. 6
Additional Investment Policies and
Risk Considerations................ 7
Investment Adviser and Investment
Advisory Agreement................. 8
Distribution Plans.................. 9
Shareholder Servicing Plans......... 9
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Administrative Services Agreement.. 10
Brokerage Allocation............... 10
Purchase of Shares................. 11
Redemption of Shares............... 16
Shareholder Privileges............. 18
Dividends, Distributions and Tax
Matters........................... 20
Custodian, Transfer Agent and
Dividend Paying Agent............. 22
Counsel and Independent Auditors .. 22
Additional Information............. 22
</TABLE>
----------------
HIGHLIGHTS
WHAT IS THE TRAUTMAN KRAMER TRUST?
The Trautman Kramer Trust, a business trust formed under the laws of the
State of Delaware, is currently comprised of one series.
WHAT IS THE TRAUTMAN KRAMER VALUE PLUS FUND AND HOW IS ITS INVESTMENT
OBJECTIVE ACHIEVED?
The Trautman Kramer Value Plus Fund is an open-end, non-diversified
management investment company. The Fund seeks to achieve its objective
primarily through investments in securities, generally common stock, of United
States issuers. The Fund will invest in common stocks of companies that are
considered by its investment adviser or sub-adviser to be out of favor with
investors and which appear to be undervalued in relation to their potential
growth or earning power. The Fund also intends to invest up to 10% of its net
assets in securities that have not been registered under the Securities Act of
1933, as amended and therefore are subject to restrictions on resale, and may
be illiquid. Overall, the Fund provides investors the opportunity to access a
value style of investment, emphasizing long-term capital appreciation, plus
potential for additional upside performance via non-registered "private"
securities issues. (See "Investment Objective, Policies and Risks.")
WHO MANAGES THE FUND?
Trautman Kramer Capital Management, Inc. (the "Adviser") serves as the
Fund's investment adviser. The Adviser supervises all aspects of the Fund's
operations and provides investment advisory services. As compensation, the
Adviser receives a fee based on the Fund's average daily net assets. To help
in providing these services, the Adviser has entered into a sub-advisory
agreement with Tocqueville Asset Management L.P. (the "Sub-Adviser"). (See
"Investment Adviser and Investment Advisory Contracts.")
BUYING AND SELLING SHARES
The Fund offers Class A and Class B shares. The Class A shares may be
purchased at a price equal to the next determined net asset value per share
plus an initial sales charge equal to 4.50% of the offering price. The
2
<PAGE>
Class B shares may be purchased at a price equal to the next determined net
asset value per share plus an initial sales charge equal to 1.00% of the
offering price, and will be subject to a deferred sales charge of 1.00% as a
percentage of original purchase price or redemption proceeds, as applicable,
if such shares are not held for at least 18 months. As an open-end investment
company, the Fund has an obligation to redeem its shares upon request. Class B
shares may be purchased by an investor only through an IRA, a 401(k) Plan, a
403(b) Plan or 457 (state deferred compensation) Plan or other retirement plan
as determined in the Adviser's sole discretion. (See "Purchase of Shares--
General Information.")
DISTRIBUTION PLANS
The Fund has adopted a distribution plan for each class of shares, pursuant
to Rule 12b-1 of the Investment Company Act of 1940 (the "1940 Act"), that
allows the Fund to pay from the assets attributable to a particular class for
distribution activities related to the sale of such class of shares. Each
distribution plan provides that such expenses may total up to .50% per annum
of the average daily net assets of the class of shares. (See "Distribution
Plans").
SPECIAL RISK CONSIDERATIONS
Investors should be aware that there are risks associated with certain
investment techniques and strategies employed by the Fund. The Fund's net
asset value per share can be expected to fluctuate. Investors should consider
the Fund a supplement to an overall investment program and should only invest
if they are willing to undertake the risks involved. (See "Investment
Objective, Policies and Risks" and "Additional Investment Policies and Risk
Considerations.")
3
<PAGE>
FEE TABLE
The purpose of the fee table provided below is to assist investors in
understanding the various costs and expenses that they will bear directly or
indirectly. "Shareholder Transaction Expenses" are fees charged directly to an
individual account when shares are bought, sold or exchanged. The "Annual Fund
Operating Expenses" summary shows the advisory fee, Rule 12b-1 fee, and other
operating expenses incurred by the Fund. The Adviser may, from time to time,
voluntarily agree to defer or waive fees or absorb some or all of the expenses
of a class of shares of the Fund. To the extent that the Adviser should defer
fees or absorb expenses, it may seek repayment of such deferred fees or
absorbed expenses after this practice is discontinued. However, no repayment
of deferred fees or absorbed expenses will be made if the expense ratio of the
applicable class of shares of the Fund would exceed 1.98%. Under no
circumstances will waived fees be repaid. "Other Expenses" for the Class A and
Class B shares of the Fund are based on estimated amounts for the current
fiscal year. These expenses are deducted from the Fund's income before it is
paid to shareholders.
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load on Purchases
(as a % of offering price)............................... 4.50% 1.00%
Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable..... None 1.00%*
Redemption Fee............................................ ** **
Exchange Fee.............................................. *** ***
ANNUAL FUND OPERATING EXPENSES:
(as a % of average net assets)
Advisory Fee............................................. 1.00% 1.00%
12b-1 Fee(1)............................................. .50% .50%
Other Expenses(2)(3)..................................... .48% .48%
---- ----
Total Operating Expenses(3)............................... 1.98% 1.98%
</TABLE>
- --------
(1) Under the Fund's Rule 12b-1 distribution plan, the Adviser is permitted to
carry forward expenses not reimbursed by the distribution fee to
subsequent fiscal years for submission to the Fund for payment, subject to
the continuation of the plan. Such amounts are not recognized in the
Fund's financial statements as expenses and liabilities, since the
distribution plan can be terminated on an annual basis without further
liability to the Fund. The Rule 12b-1 fee may represent the equivalent of
an annual asset-based sales charge to an investor. As a result of
distribution fees, a long-term shareholder in the Fund may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the Rules of the National Association of Securities Dealers, Inc.
(2) Includes Shareholder Servicing Fee of .25%.
(3) The Adviser has voluntarily undertaken to defer, waive and/or reimburse
expenses during the current fiscal year so that Total Fund Operating
Expenses do not exceed 1.98%. Should the Adviser decide during the current
fiscal year that such deferral, waiver and/or reimbursement cannot be
maintained, shareholders will receive 30 days notice of the change. If
such expenses are not deferred, waived and/or reimbursed, Other Expenses
for the current year would be 3.50% and Total Operating Expenses for the
current year would be 5.00%.
* The maximum 1% contingent deferred sales charge on Class B shares is
applied to redemptions during the 18 months after purchase; the charge
declines to zero after 18 months. The charge is 1% of the value of the
4
<PAGE>
shares sold or the Net Asset Value at the time of purchase, whichever is
less. Class B shares will not be converted to Class A shares.
** The Transfer Agent charges a $12 service fee for each payment of
redemption proceeds made by wire.
***The Transfer Agent charges a $5 fee for each telephone exchange.
EXAMPLE: In the following hypothetical example, you would pay the following
expenses on a $1000 investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C>
$64 $40 $104 $82
You would pay the following expenses on the same investment assuming no
redemption:
<CAPTION>
1 YEAR 3 YEARS
------ -------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C>
$64 $30 $104 $72
</TABLE>
The "Example" set forth above assumes all dividends and other distributions
are reinvested and that the percentages under "Annual Fund Operating Expenses"
remain the same in the years shown. The Class A and Class B shares examples
include the initial sales charge, of 4.50% and 1.00% respectively, and the
Class B shares example, that assumes redemption, also includes the contingent
deferred sales charge of 1.00% for the first eighteen months after purchase.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
PERFORMANCE CALCULATION
The Fund calculates performance on a total return basis for various periods.
The total return basis combines changes in principal and dividends and
distributions for the periods shown, as well as the deduction of all charges
and expenses. The total return basis for Class A shares reflects the deduction
of the maximum initial sales charge at the time of purchase, and the total
return basis for Class B shares reflects the deduction of the maximum initial
sales charge at the time of purchase and maximum contingent deferred sales
charge upon redemption of shares held for the period. Principal changes are
based on the difference between the beginning and closing net asset value for
the period. Calculations assume reinvestment of all dividends and
distributions paid by the Fund. Dividends and distributions are comprised of
net investment income and net realized capital gains, respectively. In
addition, the Fund may calculate performance on a total return basis at net
asset value.
Performance will vary from time to time and past results are not necessarily
representative of future results. A shareholder should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Comparative performance information may be used from time to time in the
advertising or marketing of the Fund's Class A and Class B shares, including
data from Lipper Analytical Services, Inc. and Morningstar Mutual Funds. Such
comparative performance information will be stated in the same terms in which
the comparative data and indices are stated. All advertisements of the Fund
will disclose the maximum sales charge to which investments in shares of the
Fund may be subject.
5
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund's investment objective is fundamental and may not be changed
without a vote of the holders of a majority of its outstanding voting
securities (as defined in the Statement of Additional Information). All
investment policies will be non-fundamental, unless otherwise noted as
fundamental, and may be changed without prior shareholder approval. The Fund
will notify shareholders in writing and revise the Prospectus accordingly
should any such modifications in investment strategies or techniques occur.
There can be no assurance that the Fund will achieve its investment objective.
The investment objective of the Trautman Kramer Value Plus Fund is long-term
capital appreciation. To achieve its objective the Fund invests in a portfolio
consisting of common stocks of United States companies that are considered by
the Adviser or Sub-Adviser to be out of favor with investors and appear to be
undervalued in relation to their potential growth or earning power. Generally,
the Adviser and the Sub-Adviser consider (a) stocks which have under performed
market indices such as Standard & Poor's Composite Index for at least one year
and (b) companies which have a historically low stock price in relation to
such factors as sales, potential earnings or underlying assets to be out of
favor with, and unattractive investments to, investors. The Adviser and Sub-
Adviser search for companies based on their judgment of relative value and
growth potential. One method of evaluating the potential growth and earning
power of a company is on the basis of past growth and profitability, as
reflected in its financial statements. Another method is the determination by
the Adviser or Sub-Adviser that the company has achieved better results than
similar companies in a depressed industry which the Adviser or Sub-Adviser
believes will improve within the next two years. There is no assurance that
the evaluation of the Adviser or Sub-Adviser will be accurate or that the
Fund's objective will be achieved. If the stocks in which the Fund invests
never attain their perceived potential or the valuation of such stocks in the
marketplace does not in fact reflect significant undervaluation, there may be
little or no appreciation or there may be a depreciation in the value of such
stocks.
The Fund also intends to invest up to 10% of its net assets in securities
that have not been registered under the Securities Act of 1933, as amended and
therefore are subject to restrictions on resale, and may be illiquid. These
securities provide an opportunity for additional return potential, but also
present additional risks commensurate with this type of investing. See
"Additional Investment Policies and Risk Considerations--Illiquid Securities."
The Fund may invest up to 25% of its total assets in common stock of foreign
companies which are traded in the United States or purchase American
Depository Receipts (ADRs). ADRs are certificates issued by U.S. banks which
represent the right to receive securities of a foreign issuer which have been
deposited with that bank or a correspondent bank.
In addition, the Fund may invest up to 5% of its net assets in repurchase
agreements which are fully collateralized by obligations of the U.S.
Government or U.S. Government agencies. Under the terms of a repurchase
agreement, the Fund acquires securities from financial institutions or
registered broker-dealers, subject to the seller's agreement to repurchase the
securities at a mutually agreed upon date and price.
The Fund may also invest up to 5% of its net assets in securities
convertible into common stocks, such as warrants and convertible bonds. The
Fund may, from time to time, borrow up to 10% of the value of its total assets
from banks at prevailing interest rates as a temporary measure for
extraordinary or emergency purposes. The Fund may not purchase securities
while borrowings exceed 5% of the value of its total assets.
6
<PAGE>
Finally, the Fund may invest up to 5% of its net assets in variable rate
master demand notes. Variable rate master demand notes are notes issued by
corporations to finance their current operations. Master demand notes are
direct lending arrangements between the Fund and the corporation. There is no
secondary market for the notes, but the Fund may demand payment of the
principal of the instrument at any time.
The Fund has only recently commenced operations and therefore has no
operating history.
ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS
ILLIQUID SECURITIES
The Fund may invest up to 10% of its net assets in illiquid securities.
Illiquid securities are those securities that are not readily marketable,
including restricted securities and repurchase agreements with maturities in
excess of seven days.
RESTRICTED SECURITIES
The Fund may invest in securities that are subject to restrictions on resale
because they have not been registered under the Securities Act of 1933 (the
"1933 Act"). These securities are sometimes referred to as private placements.
Certain restricted securities that may be resold to institutional investors
pursuant to Rule 144A under the 1933 Act may be determined to be liquid under
guidelines adopted by the Board of Trustees. In determining whether or not
such Rule 144A securities are liquid, the Board of Trustees will take into
account trading activity, availability of reliable price, and other relevant
information. Investing in Rule 144A securities could have the effect of
increasing the Fund's level of illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities.
OPTIONS
The Fund may write covered call options on optionable securities or U.S.
stock indices from time to time as the Adviser or Sub-Adviser determines is
appropriate in seeking to attain its objective. A call option written by the
Fund gives the holder the right to buy the underlying securities or index from
the Fund at a stated exercise price. Options on stock indices are settled in
cash.
The Fund may purchase put options to protect its portfolio holdings in an
underlying stock index or security against a decline in market value. The Fund
may also purchase call options to hedge against an increase in prices of stock
indices or securities that it ultimately wants to buy. Such hedge protection
is provided during the life of the put (call) option since the Fund, as holder
of the put (call) option, is able to sell (buy) the underlying security or
index at the exercise price regardless of any increase in the underlying
market price of the security or index.
TEMPORARY INVESTMENTS
The Fund does not intend to engage in short-term trading on an ongoing
basis. Current income is not an objective of the Fund, and any current income
derived from the Fund's portfolio will be incidental. For temporary defensive
purposes, when deemed necessary by the Adviser or Sub-Adviser, the Fund may
invest up to 100% of its assets in U.S. Government obligations or high-quality
debt obligations of U.S. companies.
7
<PAGE>
PORTFOLIO TURNOVER
The portfolio turnover rate is a measure of the Fund's buying and selling
activity. It is anticipated that the annual turnover rate for the Fund should
not exceed 150%. A high rate of portfolio turnover (100% or more) will result
in higher transaction costs, including brokerage commissions. Also, to the
extent that higher portfolio turnover results in a higher rate of net realized
capital gains to the Fund, the portion of the Fund's distributions
constituting taxable capital gains may increase.
SHORT SALES
The Fund may use a technique known as selling short "against the box." This
means that the Fund will not make short sales of securities or maintain a
short position unless, at all times when a short position is open, the Fund
owns an equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration, an equal
amount of the securities sold short. There are certain tax implications
associated with this strategy. See "Dividends, Distributions, and Tax Matters"
below.
YEAR 2000 PROBLEM
Like other mutual funds, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by the advisor/administrator and other service providers
do not properly process and calculate date-related information and data from
and after January 1, 2000. This is commonly known as the "Year 2000 Problem."
The advisor/administrator is taking steps that it believes are reasonably
designed to address the Year 2000 Problem with respect to computer systems
that it uses and to obtain reasonable assurances that comparable steps are
being taken by each Fund's other major service providers. At this time,
however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact to the funds.
INVESTMENT ADVISER AND INVESTMENT ADVISORY AGREEMENTS
Trautman Kramer Capital Management, Inc., 500 Fifth Avenue, New York, New
York 10110, acts as Adviser to the Fund under an investment advisory agreement
(the "Advisory Agreement") which provides that the Adviser identify and
analyze possible investments for the Fund, and determine the amount, timing,
and form of such investments. The Adviser has the responsibility of monitoring
and reviewing the Fund's portfolio on a regular basis and recommending the
ultimate disposition of such investments. It is the Adviser's responsibility
to cause the purchase and sale of securities in the Fund's portfolio, subject
at all times to the policies set forth by the Board of Trustees. The Adviser
is a new company and therefore does not have an operating history as an
investment manager of mutual funds, but its officers and employees are persons
with extensive experience in managing investment portfolios. The types of
investments the Adviser's officers and employees offer advice on include
equity securities, corporate debt securities, commercial paper, U.S.
government securities, and options.
Under the terms of the Advisory Agreement, the Fund pays the cost of all its
expenses (other than those expenses specifically assumed by the Adviser or the
Fund's distributor), including the pro rata costs incurred in connection with
the Fund's maintenance of its registration under the 1933 Act and the 1940
Act, printing of prospectuses distributed to shareholders, taxes or
governmental fees, brokerage commissions, custodial, transfer and shareholder
servicing agent costs, expenses of outside counsel and independent auditors,
preparation of shareholder reports, trustees' fees and shareholder meetings.
For its services under the Advisory Agreement, the Adviser receives a fee at
an annual rate of 1.00% of average daily net assets. The Adviser may from time
to time
8
<PAGE>
and for such periods as it deems appropriate voluntarily reduce its
compensation (and/or voluntarily assume expenses) for a class of shares of the
Fund. The Adviser may, at any later date, recoup such amounts after such time
as the Adviser is no longer reducing its compensation and/or assuming expenses
for such class of the Fund, provided that the aggregate expenses in the year
such amounts are recouped do not exceed any limitation to which the Adviser
has agreed. The Board of Trustees has determined the advisory fee to be fair
and reasonable in light of the services provided to the Fund.
The Adviser has retained Tocqueville Asset Management L.P., 1675 Broadway,
New York, New York 10019, to provide sub-advisory services to the Fund
pursuant to a sub-advisory agreement (the "Sub-Advisory Agreement"). The Sub-
Adviser acts as an adviser to mutual funds. Robert W. Kleinschmidt serves as
the portfolio manager of the Fund. Mr. Kleinschmidt is the President of
Tocqueville Asset Management Corporation, the general partner of the sub-
adviser. He previously held executive positions at the investment management
firm David J. Greene & Co. since 1978, resigning as a partner in 1991. The
Sub-Adviser will, subject at all times to the investment objective and
policies of the Fund and control of the Advisor and the Board of Trustees,
supervise the investment and reinvestment of the cash and securities of the
Fund. For its services under the Sub-Advisory Agreement, the Adviser pays the
Sub-Adviser a fee at an annual rate of .50% of average daily net assets.
DISTRIBUTION PLANS
The Fund has adopted a distribution plan (a "Plan") for each class of
shares, pursuant to the 1940 Act, that allows the Fund to pay from the assets
attributable to a particular class for distribution activities related to the
sale of such class of shares. Each distribution plan provides that such
expenses may total up to .50% per annum of the average daily net assets of the
class of shares.
Each Plan provides that the Fund may finance activities which are primarily
intended to result in the sale of its shares, including, but not limited to,
advertising, printing of prospectuses and reports for other than existing
shareholders, preparation and distribution of advertising material and sales
literature, and payments to dealers including Trautman Kramer & Company, Inc.
(the "Distributor"), the Fund's distributor, who enter into agreements with
the Fund or the Distributor. The Plans will only make payments for expenses
actually incurred on a first-in, first-out basis. The Plan may carry forward
for an unlimited number of years any unreimbursed expenses. If a Plan is
terminated in accordance with its terms, the obligations of the Fund to make
payments pursuant to the Plan will cease and the Fund will not be required to
make any payments past the date the Plan terminates; however, the Distributor
will be entitled to receive all contingent deferred sales charges paid or
payable with respect to any day subsequent to termination of the Class B Plan.
(See the Statement of Additional Information--"Distribution Plan" for further
information about the Plan.)
SHAREHOLDER SERVICING PLANS
The Fund has adopted a Shareholder Servicing Plan for each class of shares
of the Fund. In accordance with the Shareholder Servicing Plan, the Fund may
enter into Shareholder Service Agreements under which it pays fees up to an
annual amount equal to .25% of the average daily net assets of the class of
shares for fees incurred in connection with the personal service and
maintenance of accounts holding such class of shares of the Fund. Such
agreements are entered into between the Trust and various shareholder
servicing agents, including the Distributor and its affiliates, and other
financial institutions and securities brokers (each, a "Shareholder Servicing
Agent"). Among the services provided by Shareholder Servicing Agents are:
answering customer
9
<PAGE>
inquiries regarding account matters; assisting shareholders in designating and
changing various account options; aggregating and processing purchase and
redemption orders and transmitting and receiving funds for shareholder orders;
transmitting, on behalf of the Trust, proxy statements, prospectuses and
shareholder reports to shareholders and tabulating proxies; processing
dividend payments and providing subaccounting services for Fund shares held
beneficially; and providing such other services as the Trust or a shareholder
may request. Shareholder Servicing Agents may periodically waive all or a
portion of their respective shareholder servicing fees.
ADMINISTRATIVE SERVICES AGREEMENT
Under an Administrative Services Agreement, Firstar Trust Company (the
"Administrator") supervises the administration of all aspects of the Fund's
operations, including the Fund's receipt of services for which the Fund is
obligated to pay, provides the Fund with general office facilities and
provides, at the Fund's expense, the services of persons necessary to perform
such supervisory, administrative and clerical functions as are needed to
effectively operate the Fund. Those persons, as well as certain employees and
Trustees of the Trust, may be directors, officers or employees of (and persons
providing services to the Fund may include) the Administrator and its
affiliates. For these services and facilities, the Administrator receives a
fee computed and paid monthly at an annual rate of .05% on the first $200
million of the Fund's average net assets, .04% on the next $500 million of the
Fund's average net assets and .03% on any remaining average net assets in
excess of $700 million, subject to an annual minimum fee, for Class A and
Class B shares, of $40,500.
BROKERAGE ALLOCATION
Subject to the supervision of the Board of Trustees, decisions to buy and
sell securities for the Fund are made by the Adviser or Sub-Adviser. The
Adviser or Sub-Adviser, subject to obtaining the best price and execution, may
allocate brokerage transactions in a manner that takes into account the sale
of shares of the Fund. Subject to the supervision of the Trustees, the Adviser
and Sub-Adviser are authorized to allocate brokerage to affiliated broker-
dealers on an agency basis to effect portfolio transactions. The Trustees have
adopted procedures incorporating the standards of Rule 17e-1 of the 1940 Act,
which require that the commission paid to affiliated broker-dealers must be
reasonable and fair compared to the commission, fee or other remuneration
received, or to be received, by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time.
It is expected that brokerage will be allocated to Trautman Kramer & Company,
Inc., an affiliate of the Adviser and Tocqueville Securities L.P., an
affiliate of the Sub-Adviser. In addition, the Adviser would like to purchase
securities that are directly placed by the issuer where Trautman Kramer &
Company, Inc. acts as the placement agent, and has submitted a request to the
Division of Investment Management ("Division") of the Securities and Exchange
Commission ("Commission") seeking comfort that the Division will not recommend
that the Commission take any enforcement action under Section 10(f) or Section
17(e)(2) of the Investment Company Act of 1940, as amended, or Section 206(3)
of the Investment Advisers Act of 1940, as amended. The Adviser will not
purchase any securities that are directly placed by the issuer where Trautman
Kramer & Company, Inc. acts as the placement agent unless such comfort is
granted by the Division. For a complete discussion of portfolio transactions
and brokerage allocation, see "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
10
<PAGE>
PURCHASE OF SHARES
GENERAL INFORMATION
Class A and Class B shares are sold to investors at the net asset value next
determined after a purchase order becomes effective (as described below) plus
a varying initial sales charge. Class B shares also are subject to a
contingent deferred sales charge payable upon certain redemptions. Class B
shares may be purchased by an investor only through an IRA, a 401(k) Plan, a
403(b) Plan or 457 (state deferred compensation) Plan or other retirement plan
as determined in the Adviser's sole discretion.
The minimum initial investment in the Fund is $1,000 except for IRA accounts
where the minimum is $500. The minimum subsequent investment in the Fund is
$100. The Distributor may, in its discretion, waive the minimum investment
requirements for purchases, including those made via the Automatic Investment
Plan, which is discussed below.
Both Class A and Class B shares of the Fund may be purchased from the
following entities: (a) the Fund's Distributor, (b) authorized securities
dealers which have entered into sales agreements with the Distributor on a
best efforts basis and brokers who have entered into agreements with the Trust
to provide distribution and shareholder services (the "Selling Brokers"); and
(c) the Fund's transfer agent, Firstar Trust Company (the "Transfer Agent").
When placing orders, investors shall specify whether the order is for Class A
or Class B shares. All share purchases that fail to specify a class will
automatically be invested in Class A shares. The Fund reserves the right to
cease offering shares for sale at any time or to reject any order for the
purchase of shares.
A purchase order becomes effective upon receipt of the order by the
Distributor, a Selling Broker or the Transfer Agent. Purchase orders received
prior to 4:00 p.m. New York time are priced according to the net asset value
per share next determined on that day. Purchase orders received after 4:00
p.m. New York time are priced according to the net asset value per share next
determined on the following day.
The net asset value per share is determined by dividing the market value of
the Fund's investments as of the close of trading plus any cash or other
assets (including dividends receivable and accrued interest) less all
liabilities (including accrued expenses) by the number of Fund shares
outstanding. The Fund will determine the net asset value of its shares once
daily as of the close of trading on the New York Stock Exchange (the
"Exchange") on each "Fund business day" which is any day on which the Exchange
is open for business.
Investors who already have a brokerage account with the Distributor or a
Selling Broker may purchase the Fund's shares through such broker. Payment for
purchase orders through the Distributor or the Selling Broker must be made to
the Distributor or the Selling Broker within three business days of the
purchase order. All dealers are responsible for forwarding orders for the
purchase of the Fund's shares on a timely basis.
The Fund's shares normally will be maintained in book entry form and share
certificates will not be issued. The Distributor reserves the right to refuse
to sell shares of the Fund to any person.
11
<PAGE>
INITIAL SALES CHARGES ON CLASS A AND CLASS B SHARES
The initial sales charge imposed upon a sale of Class A shares varies
according to the size of the purchase as shown in the table below. The initial
sales charge imposed upon a sale of Class B shares is 1.00% and, unlike Class
A shares, does not vary based on the size of the purchase.
<TABLE>
<CAPTION>
INITIAL SALES CONCESSION
CHARGE TO DEALERS
----------------- ----------
% OF % OF NET % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
------------------ -------- -------- ----------
<S> <C> <C> <C>
Class A Shares:
Less than $100,000 4.50 4.67 4.00
$100,000 to $249,999........................ 3.50 3.63 3.00
$250,000 to $499,999........................ 2.50 2.56 2.00
$500,000 to $999,999........................ 1.50 1.52 1.00
$1,000,000 and over......................... 1.00 1.01 0.50
Class B Shares:
All amounts................................. 1.00 1.01 1.00
</TABLE>
The reduced initial sales charges apply to the aggregate of purchases of
Class A shares of the Fund made at one time by any "person", which includes an
individual, spouse and children under the age of 21, or a trustee or other
fiduciary of a trust, estate or fiduciary account.
Upon notice to Selling Brokers, the Distributor may reallow up to the full
applicable initial sales charge on Class A shares and such Selling Broker may
therefore be deemed an "underwriter" under the 1933 Act, as amended, during
such periods. The Distributor may, from time to time, provide promotional
incentives to certain Selling Brokers whose representatives have sold or are
expected to sell significant amounts of one or all of the funds of the Trust.
At various times the Distributor may implement programs under which a Selling
Broker's sales force may be eligible to win cash or material awards for
certain sales efforts. The Distributor may also implement programs under which
it will reallow an amount not exceeding the total applicable initial sales
charges on the sales of Class A shares or the maximum contingent deferred
sales charge of Class B shares generated by the Selling Broker during such
programs to any Selling Broker that sponsors sales contests or recognition
programs conforming to criteria established by the Distributor or participates
in sales programs sponsored by the Distributor. The Distributor may provide
marketing services to Selling Brokers, consisting of written informational
material relating to sales incentive campaigns conducted by such Selling
Brokers for their representatives.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE
Qualified Persons. There is no initial sales charge on Class A shares for
"Qualified Persons", which are the following (a) active or retired trustees,
directors, officers, partners or employees (their spouses and children under
age 21) of (i) the Adviser, Sub-Adviser and Distributor or any affiliates or
subsidiaries thereof (the directors, officers or employees of which shall also
include their parents and siblings for all purchases of Fund shares), (ii)
Selling Brokers, (iii) trade organizations to which the Adviser belongs, or
(iv) organizations providing professional services to the Trust and (b)
trustees or custodians of any qualified retirement plan or IRA established for
the benefit of a person in (a) above.
12
<PAGE>
Registered Investment Advisers. There also is no initial sales charge on
Class A shares for a registered investment adviser who purchases the shares
for its own account, or an account for which the investment adviser has
discretion and is authorized to make investment decisions.
REDUCED INITIAL SALES CHARGES ON CLASS A SHARES
Cumulative Quantity Discount. Class A shares of the Fund may be purchased by
any person at a reduced initial sales charge which is determined by (a)
aggregating the dollar amount of the new purchase and the greater of the
purchaser's total (i) net asset value or (ii) cost of all Class A shares of
such Fund, and (b) applying the initial sales charge applicable to such
aggregate. The privilege of the cumulative quantity discount is subject to
modification or discontinuance at any time with respect to all shares
purchased thereafter.
Group Purchases. An individual who is a member of a qualified group (as
defined below) may also purchase Class A shares of the Fund at the reduced
initial sales charge applicable to the group taken as a whole. The reduced
initial sales charge is based upon the aggregate dollar value of Class A
shares previously purchased and still owned by the group plus the securities
currently being purchased and is determined as stated above under "Cumulative
Quantity Discount". For example, if members of the group had previously
invested and still held $90,000 of Class A shares and now were investing
$15,000, the initial sales charge would be 3.50%. In order to obtain such
discount, the purchaser or investment dealer must provide the Transfer Agent
with sufficient information, including the purchaser's total cost, at the time
of purchase to permit verification that the purchaser qualifies for a
cumulative quantity discount, and confirmation that the order is subject to
such verification. Information concerning the current initial sales charge
applicable to a group may be obtained by contacting the Transfer Agent.
A "qualified group" is one which: (a) has been in existence for more than
six months; (b) has a purpose other than acquiring Class A shares at a
discount; and (c) satisfies uniform criteria which enables the Distributor to
realize economies of scale in its costs of distributing Class A shares. A
qualified group must have more than 10 members, must be available to arrange
for group meetings between representatives of the Fund and the members, must
agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to the Distributor,
and must seek to arrange for payroll deduction or other bulk transmission of
investments in the Fund. This privilege is subject to modification or
discontinuance at any time with respect to all Class A shares purchased
thereafter.
Letter of Intent. Investors in Class A shares may also qualify for reduced
initial sales charges by signing a Letter of Intent (the "LOI"). This enables
the investor to aggregate purchases of Class A shares of the Fund during a 13-
month period. The initial sales charge is based on the total amount invested
in Class A shares during the 13-month period. All Class A shares of the Fund
currently owned by the investor will be credited as purchases (at their
current offering prices on the date the LOI is signed) toward completion of
the LOI. A 90-day back-dating period can be used to include earlier purchases
at the investor's cost. The 13-month period would then begin on the date of
the first purchase during the 90-day period. No retroactive adjustment will be
made if purchases exceed the amount indicated in the LOI. A shareholder must
notify the Transfer Agent or Distributor whenever a purchase is being made
pursuant to a LOI.
The LOI is not a binding obligation on the investor to purchase, or on the
Fund to sell, the full amount indicated; however, on the initial purchase (or
subsequent purchases if necessary), 5% of the dollar amount specified in the
LOI will be held in escrow by the Transfer Agent in Class A shares registered
in the shareholder's name in order to assure payment of the proper initial
sales charge. If total purchases pursuant to
13
<PAGE>
the LOI (less any dispositions and exclusive of any distributions on such
shares automatically reinvested) are less than the amount specified, the
investor will be requested to remit to the Transfer Agent an amount equal to
the difference between the initial sales charge paid and the initial sales
charge applicable to the aggregate purchases actually made. If not remitted
within 20 days after written request, an appropriate number of escrowed shares
will be redeemed in order to realize the difference. This privilege is subject
to modification or discontinuance at any time with respect to all shares
purchased thereunder. Shareholders will be paid distributions, either in
additional shares or cash, upon such escrowed shares.
PURCHASES OF CLASS A AND CLASS B SHARES AT NET ASSET VALUE
Recently Redeemed Shares. Class A shares of the Fund may be purchased at net
asset value by persons who have, within the previous 30 days, redeemed their
Class A shares of the Fund. The amount which may be purchased at net asset
value is limited to an amount up to, but not exceeding, the net amount of
redemption proceeds. Such purchases may also be handled by a securities
dealer, who may charge the shareholder a fee for this service. In addition,
Class B shareholders who have redeemed Class B shares may purchase Class B
shares with no initial sales charge (in an amount not exceeding redemption
proceeds) if the purchase occurs within 30 days of redemption of the Class B
shares. This privilege is subject to modification or discontinuance at any
time.
METHODS OF PAYMENT
By Check. Investors who wish to purchase Class A or Class B shares directly
from the Transfer Agent may do so by sending a completed purchase application
(included with this Prospectus or obtainable from the Trust) to The Trautman
Kramer Trust, c/o Firstar Trust Company, P.O. Box 701, Milwaukee, WI 53201-
0701, accompanied by a check payable to the Trautman Kramer Value Plus Fund.
Purchase applications sent to the Fund will be forwarded to the Transfer
Agent, and will not be effective until received by the Transfer Agent. The
price per share is the next determined per share net asset value (plus a
varying initial sales charge with respect to Class A and Class B shares) after
receipt of an application by Firstar Trust Company. The U.S. Postal Service
and other independent delivery services are not agents of the Trust.
Therefore, deposit of purchase applications in the mail or with such services
does not constitute receipt by Firstar Trust Company or the Trust. To purchase
Class A or Class B shares by overnight or express mail, please use the
following street address: The Trautman Kramer Trust--Trautman Kramer Value
Plus Fund, c/o Firstar Trust Company, Mutual Fund Services, Third Floor, 615
East Michigan Street, Milwaukee, Wisconsin 53202. Payment should be made in
the form of a check drawn on a U.S. bank. Neither cash nor third party checks
will be accepted. Firstar Trust Company will charge a $20 fee against a
shareholder's account for any payment check returned to the custodian. The
shareholder will also be responsible for any losses suffered by the Fund as a
result.
By Wire. Investors who purchase Class A or Class B shares directly from the
Transfer Agent may also purchase shares by wire. Funds should be wired to:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA # 075000022
Credit: Firstar Trust Company
Account # 112952137
Further credit: The Trautman Kramer Trust
Name of shareholder and account number (if known)
14
<PAGE>
(Wired funds must be received prior to 4:00 p.m.Eastern time to be eligible
for same day pricing.)
The establishment of a new account or any additional purchases for an
existing account by wire transfer should be preceded by a phone call to
Firstar Trust Company, 1-888-852-6825, to provide information for the account.
The Fund is not responsible for the consequences of delays resulting from the
banking or Federal Reserve wiring system. A properly signed share purchase
application marked "Follow Up" must be sent for all new accounts opened by
wire transfer. Applications are subject to acceptance by the Fund, and are not
binding until so accepted.
By Telephone. The telephone purchase option allows investors to make
subsequent investments directly from a bank checking or savings account. To
establish the telephone purchase option on your account, complete the
appropriate section on the Account Application Form. Only bank accounts held
at domestic financial institutions that are Automated Clearing House (ACH)
members may be used for telephone transactions. The option will become
effective approximately 15 business days after the application form is
received. Subsequent investments may be made by calling 1-888-852-6825. Your
shares will be purchased at the net asset value determined as of the close of
regular trading on the date that the Transfer Agent receives payment for
shares purchased by electronic funds transfer through the ACH system, plus any
initial sales charge. Purchases must be in amounts of $100 or more and may not
be used for initial purchases of the Fund's shares. Most transfers are
completed within three business days after your call to place the order. The
Fund reserves the right to modify or remove the ability to purchase shares by
telephone at any time.
By Automatic Investment Plan. The Fund has an Automatic Investment Plan
which permits an existing shareholder to purchase additional Class A or Class
B shares of the Fund (minimum $100 per transaction) at regular intervals.
Under the Automatic Investment Plan, shares are purchased by transferring
funds from a shareholder's checking, bank money market, NOW account, or
savings account in an amount of $100 or more designated by the shareholder. At
the shareholder's option, the account designated will be debited and shares
will be purchased on the date selected by the shareholder. There must be a
minimum of seven days between automatic purchases. If the date selected by the
shareholder is not a business day, funds will be transferred the next business
day thereafter. Only an account maintained at a domestic financial institution
which is an Automated Clearing House member may be so designated. To establish
an Automatic Investment Account, complete and sign the applicable section of
the Purchase Application and send it to the Transfer Agent. Shareholders may
cancel this privilege or change the amount of purchase at any time by calling
1-888-852-6825 or by mailing written notification to: The Trautman Kramer
Trust, c/o Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-
0701. The change will be effective five business days following receipt of
notification by the Transfer Agent. The Fund may modify or terminate this
privilege at any time or charge a service fee, although no such fee currently
is contemplated. However, a $20 fee will be imposed by Firstar Trust Company
if sufficient funds are not available in the shareholder's account at the time
of the automatic transaction.
While investors may use this option to purchase shares in their IRA or other
retirement plan accounts, neither the Distributor nor the Transfer Agent will
monitor the amount of contributions to ensure that they do not exceed the
amount allowable for Federal tax purposes.
15
<PAGE>
REDEMPTION OF SHARES
GENERAL INFORMATION
A shareholder may redeem Class A shares in the Fund at any time without
charge. Class B shares may be subject to the contingent deferred sales charge
upon redemption.
In order to redeem Class A or Class B shares purchased through the
Distributor or a Selling Broker, the broker must be notified by telephone or
mail to execute a redemption. A properly completed order to redeem shares
received by the broker's office will be executed at the net asset value next
determined after receipt by the broker of the order. Redemption proceeds,
minus any applicable contingent deferred sales charge, will be held in a
shareholder's account with the Distributor unless the broker is instructed to
remit all proceeds directly to the shareholder.
Class A and Class B shares purchased through the Transfer Agent may be
redeemed by the Transfer Agent at the next determined net asset value upon
receipt of a request in good order. Payment will be made, minus any applicable
contingent deferred sales charge, for redeemed shares as soon as practicable,
but in no event later than the seventh day after receipt of a redemption
notification in good order. If the shares being redeemed were purchased
directly from the Transfer Agent by check, payment may be delayed for the
minimum time needed to verify that the purchase check has been honored. This
is not normally more than 15 days from the time of receipt of the check by the
Transfer Agent. "Good order" means that the request complies with the
following: (a) where the shareholder has not elected to permit telephone
redemptions, the request must be in writing, signed by all owners of the
account exactly as the shares are registered and specifying the number of
shares or dollar amount to be redeemed and sent to the Transfer Agent, Attn.
The Trautman Kramer Trust c/o Firstar Trust Company at P.O. Box 701,
Milwaukee, Wisconsin 53201-0701. The U.S. Postal Service and other independent
delivery services are not agents of the Trust. Therefore, deposit of
redemption requests in the mail or with such services does not constitute
receipt by Firstar Trust Company or the Trust. Redemption requests sent by
overnight or express mail should be directed to: The Trautman Kramer Trust c/o
Firstar Trust Company, Mutual Fund Services, Third Floor, 615 East Michigan
Street, Milwaukee, Wisconsin 53202. Requests for redemption by telegram and
requests which are subject to any special conditions or which specify an
effective date other than as provided herein cannot be honored; (b) where
written requests are received within 15 days after a change of an investor's
address or redemption proceeds are to be sent to an address or payee other
than as the shares are registered, signatures on the redemption request must
be guaranteed by a commercial bank which is a member of the Federal Deposit
Insurance Corporation, a trust company or a member firm (broker-dealer) of a
national securities exchange (a notary public or a savings and loan
association is not an acceptable guarantor); (c) the request must include any
additional legal documents concerning authority and related matters in the
case of estates, trusts, guardianships, custodianships, partnerships and
corporations. Any written requests sent to the Fund will be forwarded to the
Transfer Agent and the effective date of a redemption request will be when the
request is received by the Transfer Agent. Shareholders who purchased shares
through the Transfer Agent may arrange for the proceeds of redemption requests
to be sent by Federal Fund wire to a designated bank account by sending wiring
instructions to Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin
53201-0701. The Transfer Agent charges a $12 service fee for each payment of
redemption proceeds made by Federal Fund wire. Additional information
regarding redemptions may be obtained by calling 1-888-852-6825.
Shareholders who have an Individual Retirement Account ("IRA") or other
retirement plan must indicate on their redemption request whether or not to
withhold federal income tax. Redemption requests failing to indicate an
election will be subject to 10% withholding.
16
<PAGE>
Redemption of the Fund's Class A and Class B shares or payments therefore
may be suspended at such times (a) when the Exchange is closed, (b) when
trading on the Exchange is restricted, (c) when an emergency exists which
makes it impractical for the Fund to either dispose of securities or make a
fair determination of net asset value, or (d) for such other period as the
Securities and Exchange Commission may permit for the protection of the Fund's
shareholders. There is no assurance that the net asset value received upon
redemption will be greater than that paid by a shareholder upon purchase.
The Fund reserves the right to close an account that has dropped below $500
in value for a period of three months or longer other than as a result of a
decline in the net asset value per share. Shareholders are notified at least
60 days prior to any proposed redemption and are invited to add to their
account if they wish to continue as shareholders of the Fund.
CONTINGENT DEFERRED SALES CHARGES ON CLASS B SHARES
A contingent deferred sales charge is imposed upon certain redemptions of
Class B shares, according to the applicable percentage, shown in the table
below.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF NET
REDEMPTION DURING ASSET VALUE AT REDEMPTION
----------------- -----------------------------
<S> <C>
18 Months Since Purchase................... 1%
After 18 Months Since Purchase............. None
</TABLE>
In determining the applicability and rate of any contingent deferred sales
charge, Class B shares are redeemed on a first-in/first-out basis. The amount
of the charge is determined as a percentage of the lesser of the current
market value or the cost of the shares being redeemed. Accordingly, redemption
of Class B shares are not subject to a contingent deferred sales charge to the
extent that the value of such shares represents capital appreciation of Fund
assets.
If a redeeming shareholder owns shares of both Class A and Class B, unless
the shareholder specifically requests otherwise, the Class A shares will be
redeemed before any Class B shares. The amount of any contingent deferred
sales charge imposed will reduce the gain or increase the loss on the amount
realized on redemption for purposes of federal income taxes.
Waiver of the Contingent Deferred Sales Charge. The contingent deferred
sales charge for Class B shares will be waived, subject to confirmation of a
shareholder's status, for: (i) a total or partial redemption made within one
year of the death of the shareholder; (ii) a redemption in connection with a
minimum required distribution from an IRA, Keogh or custodial account under
section 403(b) of the Internal Revenue Code of 1986, as amended (the "Code");
(iii) distributions from a qualified plan upon retirement; and (iv) a
redemption resulting from an over-contribution to an IRA.
TELEPHONE REDEMPTION
Shareholders of the Fund will also be permitted to redeem Class A and Class
B shares by telephone. To redeem shares by telephone, call 1-888-852-6825 with
your account name, account number and amount of redemption. Redemption
proceeds will only be sent to a shareholder's address or a pre-authorized bank
account of a commercial bank located within the United States as shown on the
Transfer Agent's records. (Available only if established on the account
application and if there has been no change of address by telephone within the
preceding 15 days.) Once a telephone redemption request has been placed, it
cannot be canceled or modified.
17
<PAGE>
To arrange for telephone redemptions after an account has been opened or to
change the bank account or designated payee, a written request must be sent to
the Transfer Agent. The request must be signed by all owners of the account
with their signatures guaranteed. (See "Redemption of Shares--General
Information").
The Fund reserves the right to refuse a telephone redemption if it believes
it is advisable to do so. Procedures for redeeming shares by telephone may be
modified or terminated by the Fund at any time upon 60 days notice to
shareholders. During periods of substantial economic or market change,
telephone redemptions may be difficult to implement. If a shareholder is
unable to contact the Transfer Agent by telephone, shares may also be redeemed
by delivering the redemption request to the Transfer Agent.
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, the Fund and the Transfer Agent employ reasonable procedures to
confirm that such instructions are genuine. Among the procedures used to
determine authenticity, investors electing to redeem or exchange by telephone
will be required to provide their account number. All such telephone
transactions will be tape recorded. The Fund may implement other procedures
from time to time. If reasonable procedures are not implemented, the Fund
and/or the Transfer Agent may be liable for any loss due to unauthorized or
fraudulent transactions. In all other cases, the shareholder is liable for any
loss for unauthorized transactions.
REDEMPTION IN-KIND
The Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption of Class A or Class B shares
by making payment in whole or in part in securities chosen by the Fund and
valued in the same way as they would be valued for purposes of computing its
net asset value. If payment is made in securities, a shareholder may incur
transaction costs in converting these securities into cash after they have
redeemed their shares.
SHAREHOLDER PRIVILEGES
Systematic Withdrawal Plan. The Fund offers a Systematic Withdrawal Plan for
shareholders who own Class A or Class B shares worth at least $10,000 at
current net asset value of the Fund. Under the Systematic Withdrawal Plan, a
fixed sum (minimum $500) will be distributed at regular intervals (on any day,
either monthly, quarterly or annually). In electing to participate in the
Systematic Withdrawal Plan, investors should realize that within any given
period the appreciation of their investment in the Fund may not be as great as
the amount withdrawn. A shareholder may vary the amount of frequency of
withdrawal payments or temporarily discontinue them by notifying Firstar Trust
Company at 1-888-852-6825. The Systematic Withdrawal Plan does not apply to
shares held in Individual Retirement Accounts or defined contribution
retirement plans. For additional information or to request an application
please call Firstar Trust Company at 1-888-852-6825.
Exchange Privilege. Shareholders may exchange Class A and/or Class B shares
of any or all of an investment in the Fund for shares of the Firstar Money
Market Fund (the "Money Market Fund"). This Exchange Privilege is a convenient
way for shareholders to buy shares in a money market fund in order to respond
to changes in their goals or market conditions. Before exchanging into the
Money Market Fund, shareholders must read the Firstar Money Market Fund's
Prospectus. To obtain the Money Market Fund's Prospectus and the necessary
exchange authorization forms, call the Transfer Agent at 1-888-852-6825. The
Transfer Agent charges a $5 fee for each telephone exchange which will be
deducted from the investor's account from which the funds are being withdrawn
prior to effecting the exchange. There is no charge for exchange
18
<PAGE>
transactions that are requested by mail. Use of the Exchange Privilege is
subject to the minimum purchase and redemption amounts set forth in the
Prospectus for the Money Market Fund. All accounts opened in the Money Market
Fund as a result of using the Exchange Privilege must be registered in the
identical name and taxpayer identification number as a shareholder's existing
account with the Fund.
For purposes of the Exchange Privilege, exchanges into and out of the Money
Market Fund will be treated as shares owned in the Fund. For example, if an
investor who owned shares in the Fund moved an investment from the Fund to the
Money Market Fund and then decided at a later date to move the investment back
to the Fund, he or she would be deemed to have continuously owned shares in
the Fund and would not be imposed the contingent deferred sales charge or the
initial sales charge, as applicable, so long as the investment has been
continuously invested in shares of the Money Market Fund during the period
between withdrawal and reinvestment and the investor repurchased the same
class of shares that such investor originally owned.
Exchanges may be authorized by telephone. In order to protect itself and
shareholders from liability for unauthorized or fraudulent telephone
transactions, the Fund will use reasonable procedures in an attempt to verify
the identity of a person making a telephone exchange request. The Fund
reserves the right to refuse a telephone exchange request if it believes that
the person making the request is not the record owner of the shares being
exchanged, or is not authorized by the shareholder to request the exchange.
Shareholders will be promptly notified of any refused request for a telephone
exchange. As long as these normal identification procedures are followed,
neither the Fund nor its agents will be liable for loss, liability or cost
which results from acting upon instructions of a person believed to be a
shareholder with respect to the telephone exchange privilege. You will not
automatically be assigned this privilege unless you check the box on the
Purchase Application which indicates that you wish to have the privilege. The
exchange privilege may be modified or discontinued at any time.
Remember that each exchange represents the sale of shares of one fund and
the purchase of shares of another for tax purposes. Therefore, shareholders
may realize a taxable gain or loss on the transaction. Before making an
exchange request, an investor should consult a tax or other financial adviser
to determine the tax consequences of a particular exchange. The Distributor is
entitled to receive a fee from the Money Market Fund for certain support
services at the annual rate of .20 of 1% of the average daily net asset value
of the shares for which it is the holder or dealer of record. Because
excessive trading can hurt the Fund's performance and shareholder's, the Fund
reserves the right to temporarily or permanently limit the number of exchanges
or to otherwise prohibit or restrict shareholders from using the Exchange
Privilege at any time, without notice to shareholders. In particular, a
pattern of exchanges with a "market timing" strategy may be disruptive to the
Fund and may thus be restricted or refused. Excessive use of the Exchange
Privilege is defined as more than five exchanges per calendar year. The
restriction or termination of the Exchange Privilege does not affect the
rights of shareholders to redeem shares, as discussed in the Prospectus.
The Money Market Fund is managed by Firstar Investment Research and
Management Company, an affiliate of Firstar Trust Company. The Money Market
Fund is unrelated to The Trautman Kramer Trust.
19
<PAGE>
DIVIDENDS, DISTRIBUTIONS, AND TAX MATTERS
Dividends and Distributions. The Fund pays dividends at least annually. The
Fund also distributes net capital gains (if any) at least annually. Dividends
and distributions of shares may be reinvested at net asset value without an
initial sales charge. Shareholders should indicate on the purchase application
whether they wish to receive dividends and distributions in cash. Otherwise,
all income dividends and capital gains distributions of Class A and Class B
shares are automatically reinvested in the Fund at the next determined net
asset value without an initial sales charge unless the Transfer Agent receives
written notice from an individual shareholder prior to the record date,
requesting that the distributions and dividends be distributed to the investor
in cash. A shareholder may change an election by telephone, subject to certain
limitations, by calling the Transfer Agent at 1-888-852-6825.
Shareholders requesting to have dividends and/or capital gains paid in cash
may choose to have such amounts mailed or sent via electronic funds transfer
("EFT"). Transfers via EFT generally take up to three business days to reach
the shareholder's bank account.
If a shareholder elects to receive distributions and dividends by check and
the post office cannot deliver such check, or if such check remains uncashed
for six months, the Fund reserves the right to reinvest the distribution check
in the shareholder's account at the Fund's then current net asset value per
share (NAV) and to reinvest all subsequent distributions in shares of the
Fund.
Tax Matters. The Fund intends to qualify as a regulated investment company
for federal income tax purposes by satisfying the requirements under
Subchapter M of the Code, including the requirements with respect to
diversification of assets, distribution of income and sources of income. It is
the Fund's policy to distribute to shareholders all of its investment income
(net of expenses) and any capital gains (net of capital losses) in accordance
with the timing requirements imposed by the Code, so that the Fund will
satisfy the distribution requirement of Subchapter M and not be subject to
Federal income taxes or the 4% excise tax.
If the Fund fails to satisfy any of the Code requirements for qualification
as a regulated investment company, it will be taxed at regular corporate tax
rates on all its taxable income (including capital gains) without any
deduction for distributions to shareholders, and distributions to shareholders
will be taxable as ordinary dividends (even if derived from the Fund's net
long-term capital gains) to the extent of the Fund's current and accumulated
earnings and profits.
Distributions by the Fund of its net investment income (including foreign
currency gains and losses) and the excess, if any, of its net short-term
capital gain over its net long-term capital loss are taxable to shareholders
as ordinary income.
Distributions by the Fund of the excess, if any, of its net long-term
capital gain over its net short-term capital loss are designated as capital
gain dividends and are taxable to shareholders as long-term capital gains,
regardless of the length of time shareholders have held their shares.
Distributions by the Fund which are taxable to shareholders as ordinary
income are treated as dividends for Federal income tax purposes, but in any
year only a portion thereof (which cannot exceed the aggregate amount of
qualifying dividends from domestic corporations received by the Fund during
the year) may qualify for the 70% dividends-received deduction for corporate
shareholders.
20
<PAGE>
Distributions to shareholders will be treated in the same manner for Federal
income tax purposes whether shareholders elect to receive them in cash or
reinvest them in additional shares of the Fund. In general, shareholders take
distributions into account in the year in which they are made. However,
shareholders are required to treat certain distributions made during January
as having been paid by the Fund and received by shareholders on December 31 of
the preceding year. A statement setting forth the Federal income tax status of
all distributions made (or deemed made) during the year will be sent to
shareholders promptly after the end of each year.
The Fund may enter into short sales "against the box." See "Additional
Investor Policies and Risk Considerations--Short Sales." Any gains realized by
the Fund on such sales will be recognized at the time the Fund enters into the
short sales.
Investors should carefully consider the tax implications of purchasing
shares just prior to the record date of any ordinary income dividend or
capital gain dividend. Those investors purchasing shares just prior to an
ordinary income or capital gain dividend will be taxed on the entire amount of
the dividend received, even though the net asset value per share on the date
of such purchase reflected the amount of such dividend and such dividend
economically constitutes a return of capital to such investors.
A shareholder will recognize gain or loss upon the sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds
of the sale or redemption and the shareholder's adjusted tax basis in the
shares. Any loss realized upon a taxable disposition of shares within six
months from the date of their purchase will be treated as a long-term capital
loss to the extent of any capital gain dividends received on such shares. All
or a portion of any loss realized upon a taxable disposition of shares of the
Fund may be disallowed if other shares of the Fund are purchased within 30
days before or after such disposition.
If a shareholder is a non-resident alien or foreign entity shareholder,
ordinary income dividends paid to such shareholder generally will be subject
to United States withholding tax at a rate of 30% (or lower rate under an
applicable treaty). We urge non-United States shareholders to consult their
own tax adviser concerning the applicability of the United States withholding
tax.
Under the backup withholding rules of the Code, shareholders may be subject
to 31% withholding of federal income tax on ordinary income dividends, capital
gain dividends and redemption payments made by the Fund. In order to avoid
backup withholding, shareholders must provide the Fund with a correct taxpayer
identification number (which for an individual is usually his Social Security
number) or certify that the shareholder is a corporation or otherwise exempt
from or not subject to backup withholding.
The foregoing discussion of federal income tax consequences is based on tax
laws and regulations in effect on the date of this Prospectus, and is subject
to change by legislative or administrative action. As the foregoing discussion
is for general information only, shareholders should also review the more
detailed discussion of federal income tax considerations relevant to the Fund
that is contained in the Statement of Additional Information. In addition,
shareholders should consult with their own tax adviser as to the tax
consequences of investments in the Fund, including the application of state
and local taxes, which may differ from the federal income tax consequences
described above.
21
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
Firstar Trust Company serves as custodian for the Fund's portfolio
securities and cash, and as transfer and dividend paying agent, and in those
capacities maintains certain financial and accounting books and records
pursuant to agreements with the Trust. Its mailing address is 615 East
Michigan Street, Third Floor, Milwaukee, WI 53202.
The Transfer Agent charges the following fees to shareholders requesting
specialized services: a $12 service fee for each payment of redemption
proceeds made by wire; a $5 fee for each telephone exchange; a $20 fee for any
stop payment order of a liquidation or distribution check; and, a $5 fee for
each research item related to events which occurred in or previous to the
second calendar year previous to the date of the request.
COUNSEL AND INDEPENDENT AUDITORS
Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, N.Y. 10022,
is counsel for the Trust. Ernst & Young LLP, has been appointed independent
auditors for the Trust.
ADDITIONAL INFORMATION
The Trust may issue an unlimited number of shares and classes of the Fund.
Shares of each class of the Fund participate equally in dividends and
distributions and have equal voting, liquidation and other rights. When issued
and paid for, shares will be fully paid and nonassessable by the Trust and
will have no preference, conversion, exchange or preemptive rights.
Shareholders are entitled to one vote for each full share owned and fractional
votes for fractional shares owned. For those investors with qualified trust
accounts, the trustee will vote the shares at meetings of the Fund's
shareholders in accordance with the shareholder's instructions or will vote in
the same percentage as shares that are not so held in trust. The trustee will
forward to these shareholders all communications received by the trustee,
including proxy statements and financial reports. The Trust and the Fund are
not required to hold annual meetings of shareholders and in ordinary
circumstances do not intend to hold such meetings. The Trustees may call
special meetings of shareholders for action by shareholder vote as may be
required by the 1940 Act or the Trust Instrument. Under certain circumstances,
the Trustees may be removed by action of the Trustees or by the shareholders.
Shareholders holding 10% or more of the Trust's outstanding shares may call a
special meeting of shareholders for the purpose of voting upon the question of
removal of Trustees.
The Trust's Board of Trustees may authorize the Trust to offer other funds
which may differ in the types of securities in which their assets may be
invested.
The Code of Ethics of the Adviser, the Sub-Adviser and the Fund prohibit all
affiliated personnel from engaging in personal investment activities which
compete with or attempt to take advantage of the Fund's planned portfolio
transactions. Each entity maintains careful monitoring of compliance with the
Codes of Ethics.
Delaware Law.
The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of personal liability
extended to stockholders of Delaware corporations and the Trust Instrument
provides that shareholders will not be personally liable for liabilities of
the Trust. In light of Delaware
22
<PAGE>
law, the nature of the Trust's business, and the nature of its assets,
management of the Trust believes that the risk of personal liability to the
Fund shareholder would be extremely remote.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust will be required to use its property to protect
or compensate the shareholder. On request, the Trust will defend any claim
made and pay any judgment against a shareholder for any act or obligation of
the Trust. Therefore, financial loss resulting from liability as a shareholder
will occur only if the Trust itself cannot meet its obligations to indemnify
shareholders and pay judgments against them.
Delaware law authorizes electronic or telephone communications between
shareholders and the Trust. Under Delaware law, the Trust will have the
flexibility to respond to future business contingencies. For example, the
Trustees will have the power to incorporate the Trust, to merge or consolidate
it with another entity, to cause each fund to become a separate trust, and to
change the Trust's domicile without a shareholder vote. This flexibility could
help reduce the expense and frequency of future shareholder meetings for non-
investment related issues.
Miscellaneous.
As of the date of this Prospectus, the Fund offers only the two classes of
shares, Class A and Class B, that are offered by this Prospectus. Subsequent
to the date of this Prospectus, the Fund may offer additional classes of
shares through a separate prospectus. Any such additional classes may have
different sales charges and other expenses, which would affect investment
performance. Further information may be obtained by calling 1-888-852-6825.
Shareholders will receive Semi-Annual Reports, which are unaudited, and
Annual Reports, which are audited by independent public auditors ("Reports"),
describing the investment operations of the Fund. Each of these Reports, when
available for a particular fiscal year end or the end of a semi-annual period,
is incorporated herein by reference. The Trust may include information in its
Reports to shareholders that (a) describes general economic trends, (b)
describes general trends within the financial services industry or the mutual
fund industry, (c) describes past or anticipated portfolio holdings for the
Fund or (d) describes investment management strategies for the Trust. Such
information is provided to inform shareholders of the activities of the Trust
for the most recent fiscal year or semi-annual period and to provide the views
of the Adviser, Sub-Adviser and/or the Trust's officers regarding expected
trends and strategies.
The Trust intends to eliminate duplicate mailings of Reports to an address
at which more than one shareholder of record with the same last name has
indicated that mail is to be delivered. Shareholders may receive additional
copies of any Report at no cost by writing to the Fund at the address listed
on the cover page of this Prospectus or by calling 1-888-852-6825.
Inquiries regarding the Trust or the Fund may be directed in writing to the
Trautman Kramer Trust c/o Firstar Trust Company, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701, or by telephone, toll-free, at 1-888-852-6825.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE
STATEMENT OF ADDITIONAL INFORMATION, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
23
<PAGE>
PURSUANT TO RULE No. 497(c)
REGISTRATION NO. 333-27645
STATEMENT OF ADDITIONAL INFORMATION - March 23, 1998
THE TRAUTMAN KRAMER TRUST
THE TRAUTMAN KRAMER VALUE PLUS FUND
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information is incorporated by reference in its entirety
into the Prospectus and should be read in conjunction with the Trust's current
Prospectus, copies of which may be obtained by writing The Trautman Kramer
Trust, c/o Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin
53202 or calling 1-888-TKCOVAL (1-888-852- 6825).
This Statement of Additional Information relates to the Trust's
Prospectus which is dated March 23, 1998.
TABLE OF CONTENTS
PAGE
Investment Policies and Risks............................................. 2
Investment Restrictions................................................... 3
Management .............................................................. 5
Investment Adviser and Investment Advisory Agreements..................... 6
Distribution Plans........................................................ 7
Administrative Services Agreement......................................... 8
Portfolio Transactions and Brokerage...................................... 8
Allocation of Investments................................................. 9
Computation of Net Asset Value............................................ 9
Purchase and Redemption of Shares......................................... 10
Tax Matters .............................................................. 10
Performance Calculation................................................... 15
Additional Information.................................................... 16
Reports .............................................................. 18
Financial Statements...................................................... 19
<PAGE>
The Trautman Kramer Trust (the "Trust") is a Delaware business
trust currently consisting of one fund, the Trautman Kramer Value Plus Fund (the
"Fund"). The Fund is an open-end, non-diversified management investment company.
The Fund's investment objective is long-term capital appreciation. There is
minimal emphasis on current income. Much of the information contained in this
Statement of Additional Information expands on subjects discussed in the
Prospectus. Capitalized terms not defined herein are used as defined in the
Prospectus. No investment in shares of the Fund should be made without first
reading the Fund's Prospectus.
INVESTMENT POLICIES AND RISKS
The following descriptions supplement the investment policies of
the Fund set forth in the Prospectus. The Fund's investments in the following
securities and other financial instruments are subject to the investment
policies and limitations described in the Prospectus and this Statement of
Additional Information.
1. WRITING COVERED CALL OPTIONS ON SECURITIES AND STOCK INDICES
The Fund may write covered call options on optionable securities
or U.S. stock indices from time to time as the Adviser or Sub-Adviser determines
is appropriate in seeking to attain its objective. A call option written by the
Fund gives the holder the right to buy the underlying securities or index from
the Fund at a stated exercise price. Options on stock indices are settled in
cash.
The Fund may write only covered call options, which means that,
so long as the Fund is obligated as the writer of a call option, it will own the
underlying securities subject to the option (or comparable securities or cash
satisfying the cover requirements of securities exchanges).
The Fund will receive a premium for writing a covered call
option, which increases the return of the Fund in the event the option expires
unexercised or is closed out at a profit. The amount of the premium will
reflect, among other things, the relationship of the market price of the
underlying security or index to the exercise price of the option, the term of
the option and the volatility of the market price of the underlying security or
index. By writing a covered call option, the Fund limits its opportunity to
profit from any increase in the market value of the underlying security or index
above the exercise price of the option.
The Fund may terminate an option that it has written prior to the
option's expiration by entering into a closing purchase transaction in which an
option is purchased having the same terms as the option written. The Fund will
realize a profit or loss from such transaction if the cost of such transaction
is less or more than the premium received from the writing of the option.
Because increases in the market price of a call option will generally reflect
increases in the market price of the underlying security or index, any loss
resulting from the repurchase of a call option is likely to be offset in whole
or in part by unrealized appreciation of the underlying security (or securities)
owned by the Fund.
2. PURCHASING PUT AND CALL OPTIONS ON SECURITIES AND STOCK
INDICES
The Fund may purchase put options to protect its portfolio
holdings in an underlying stock index or security against a decline in market
value. Such hedge protection is provided during the life of the put option since
the Fund, as holder of the put option, is able to sell the underlying security
or index at the put exercise price regardless of any decline in the underlying
market price of the security or index. In order for a put option to be
profitable, the market price of the underlying security or index must decline
sufficiently below the exercise price to cover the premium and transaction
costs. By using put options in this manner, the Fund will reduce any profit it
might otherwise have realized in its underlying security or index by the premium
paid for the put option and by transaction costs, but it will retain the ability
to benefit from future increases in market value.
<PAGE>
The Fund may also purchase call options to hedge against an
increase in prices of stock indices or securities that it ultimately wants to
buy. Such hedge protection is provided during the life of the call option since
the Fund, as holder of the call option, is able to buy the underlying security
or index at the exercise price regardless of any increase in the underlying
market price of the security or index. In order for a call option to be
profitable, the market price of the underlying security or index must rise
sufficiently above the exercise price to cover the "out of the money" premium
and transaction costs. By using call options in this manner, the Fund will
reduce any profit it might have realized had it bought the underlying security
or index at the time it purchased the call option by the premium paid for the
call option and by transaction costs, but it limits the loss it will suffer if
the security or index declines in value to such premium and transaction costs.
3. REPURCHASE AGREEMENTS
The Fund may invest up to 5% of its net assets in repurchase
agreements subject to resale to a bank or dealer at an agreed upon price which
reflects a net interest gain for the Fund. The Fund will receive interest from
the institution until the time when the repurchase is to occur.
The Fund will always receive as collateral U.S. Government or
short-term money market securities whose market value is equal to at least 100%
of the amount invested by the Fund, and the Fund will make payment for such
securities only upon the physical delivery or evidence by book entry transfer to
the account of its custodian. If the seller institution defaults, the Fund might
incur a loss or delay in the realization of proceeds if the value of the
collateral securing the repurchase agreement declines and it might incur
disposition costs in liquidating the collateral. The Fund attempts to minimize
such risks by entering into such transactions only with well-capitalized
financial institutions and specifying the required value of the underlying
collateral.
CONCLUSION
Unlike the fundamental investment objective of the Fund set forth
above and the fundamental investment restrictions set forth below which may not
be changed without shareholder approval, the Fund may modify the non-fundamental
investment policies described above upon the approval of the Board of Trustees
and without shareholder approval.
INVESTMENT RESTRICTIONS
The following fundamental policies and investment restrictions
have been adopted by the Fund and except as noted, such policies and
restrictions cannot be changed without approval by the vote of a majority of the
outstanding voting shares of the Fund which, as defined by the Investment
Company Act of 1940, as amended (the "1940 Act"), means the affirmative vote of
the lesser of (a) 67% or more of the shares of the Fund present at a meeting at
which the holders of more than 50% of the outstanding shares of the Fund are
represented in person or by proxy, or (b) more than 50% of the outstanding
shares of the Fund.
The Fund may not:
1. Purchase or sell physical commodities unless acquired
as a result of ownership of securities or other instruments (but
this shall not prevent the Fund from purchasing or selling
options and futures contracts or from investing in securities or
other instruments backed by physical commodities).
2. Purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments (but this
shall not prevent the Fund from investing in securities or other
instruments backed by real estate or securities of companies
engaged in the real estate business). Investments by the Fund in
securities backed by mortgages on real estate or in marketable
securities of companies engaged in such activities are not hereby
precluded.
-3-
<PAGE>
3. Issue any senior security (as defined in the Investment
Company Act of 1940, as amended (the "1940 Act")), except that
(a) the Fund may engage in transactions that may result in the
issuance of senior securities to the extent permitted under
applicable regulations and interpretations of the 1940 Act or an
exemptive order; (b) the Fund may acquire other securities, the
acquisition of which may result in the issuance of a senior
security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; (c) subject to the restrictions
set forth below, the Fund may borrow money as authorized by the
1940 Act.
4. Borrow money, except that the Fund may borrow money for
temporary or emergency purposes in an amount not exceeding 10% of
the value of its total assets at the time when the loan is made.
Any borrowing representing more than 5% of the Fund's total
assets must be repaid before the Fund may make additional
investments.
5. Lend any security or make any other loan but this
limitation does not apply to purchases of publicly issued debt
securities or to repurchase agreements.
6. Underwrite securities issued by others, except to the
extent that the Fund may be considered an underwriter within the
meaning of the Securities Act of 1933, as amended (the "1933
Act") in the disposition of restricted securities.
7. With respect to 50% of its total assets, purchase the
securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in the securities of that
issuer, or (b) the Fund would hold more than 10% of the
outstanding voting securities of that issuer.
8. Purchase the securities of an issuer if, as a result,
25% or more of its total assets would be invested in the
securities of companies whose principal business activities are
in the same industry. These limitations do not apply to
securities issued or guaranteed by the U.S. government or any of
its agencies or instrumentalities.
The following restrictions are non-fundamental and may be changed
by the Fund's Board of Trustees. Pursuant to such restrictions, the Fund will
not:
(1) make short sales of securities, other than short sales
"against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio
transactions, provided that this restriction will not be applied
to limit the use of options, futures contracts and related
options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of the Fund;
(2) purchase the securities of any other investment
company, if the Fund, immediately after such purchase or
acquisition, owns in the aggregate, (i) more than 3% of the total
outstanding voting stock of such investment company, (ii)
securities issued by such investment company having an aggregate
value in excess of 5% of the value of the total assets of the
Fund, or (iii) securities issued by such investment company and
all other investment companies having an aggregate value in
excess of 10% of the value of the total assets of the Fund; and
(3) invest more than 10% of its net assets in illiquid
securities. Illiquid securities are securities that are not
readily marketable or cannot be disposed of promptly within seven
days and in the usual course of business without taking a
materially reduced price. Such securities include, but are not
limited to, time deposits and repurchase agreements with
maturities longer than seven days. Securities that may be resold
under Rule 144A or securities offered pursuant to Section 4(2) of
the Securities Act of 1933, as amended, shall not be deemed
illiquid solely by reason of being unregistered. The Investment
Adviser shall determine whether a particular security is deemed
to be liquid based on the trading markets for the specific
security and other factors.
-4-
<PAGE>
GENERAL. The policies and limitations listed above supplement
those set forth in the Prospectus. Unless otherwise noted, whenever an
investment policy or limitation states a maximum percentage of the Fund's assets
that may be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the Fund's acquisition of such
security or other asset except in the case of borrowing (or other activities
that may be deemed to result in the issuance of a "senior security" under the
1940 Act). Accordingly, any subsequent change in values, net assets, or other
circumstances will not be considered when determining whether the investment
complies with the Fund's investment policies and limitations. If the value of
the Fund's holdings of illiquid securities at any time exceeds the percentage
limitation applicable at the time of acquisition due to subsequent fluctuations
in value or other reasons, the Trustees will consider what actions, if any, are
appropriate to maintain adequate liquidity.
MANAGEMENT
The overall management of the business and affairs of the Fund is
vested with the Board of Trustees. The Board of Trustees approves all
significant agreements between the Trust or the Fund and persons or companies
furnishing services to the Fund, including the Fund's agreement with an
investment advisor, custodian and transfer agent. The day-to-day operations of
the Fund are delegated to the Fund's officers subject always to the investment
objectives and policies of the Fund and to general supervision by the Trust's
Board of Trustees.
The Trustees and officers and their principal occupations are
noted below. Unless otherwise indicated the address of each Trustee and
executive officer is 500 Fifth Avenue, New York, New York 10110.
*Robert J. Kramer (51) -- Chairman of the Board and Trustee. Mr. Kramer is
Chairman of Trautman Kramer & Company, Inc., a
broker dealer, since May 1993, and Trautman
Kramer Capital Management, Inc., since July 1997.
From March 1993 to May 1993, Mr. Kramer was a
Vice President of Investors Associates, Inc., a
broker dealer.
*Mark Barbera (40) -- Chief Financial Officer, Treasurer and Secretary.
Mr. Barbera is Chief Financial Officer of
Trautman Kramer & Company, Inc., a broker dealer,
since July 1993, and Trautman Kramer Capital
Management, Inc., since July 1997. From May 1989
to August 1996, was also the proprietor of
Barbera & Associates, a consulting firm. ` James
A. Arcara (63)-- Trustee. 898 Park Avenue, New
York, New York 10021. Presently Mr. Arcara is
Chairman of Radio Enterprises Inc., a radio
broadcasting company. From 1990 to 1995, Mr.
Arcara was the President of ABC Cap Cities Radio,
a media company. Mr. Arcara is also a Director of
Metro Traffic Inc.
Michael Asch (31)-- Trustee. Mr. Asch is President and Principal of
Anniston Capital, Inc., a merchant bank, since
1992. Since 1993, Mr. Asch has been employed by
Oak Hill Sportswear Corporation in various
capacities, most recently in the capacity as
President, Treasurer and Chief Operation Officer,
since January 1997.
Robert A. DeFruscio (42) -- Trustee. Mr. DeFruscio is the managing partner
of the firm R.A. DeFruscio & Co., a multi-state
CPA and financial consulting firm, since 1983. In
addition, Mr. DeFruscio sits on the Board of The
Cure for Lymphoma Foundation, a cancer research
foundation.
-5-
<PAGE>
John W. Wilson, III (55) -- Trustee. 619 W. Texas, Suite 400, Midland Texas
79701. Mr. Wilson is the President/Executive
Officer of several closely held (family) Texas
corporations involved in various aspects of the
oil and gas industry. Mr. Wilson has been
employed by the "Wilson Companies" which are
comprised of the above referenced Texas
corporations for a period on excess of 20 years.
*Gregory O. Trautman (30) -- President/Trustee. Mr. Trautman is President of
Trautman Kramer & Company, Inc., a broker dealer,
since May 1993. Prior to May 1993, Mr. Trautman
held the position as a stock broker with various
broker dealer firm in New York.
Joseph Neuberger (35) -- Assistant Secretary. 615 E. Michigan Street,
Milwaukee, WI 53202. Since 1994, Mr. Neuberger
has been employed by Firstar Trust Company,
currently in the position of Vice President.
Prior to 1994, Mr. Neuberger was a Manager with
Arthur Andersen LLP.
Dana L Armour (29) -- Assistant Secretary. 615 E. Michigan Street,
Milwaukee, WI 53202. Since 1992, Ms. Armour has
been employed by Firstar Trust Company, currently
in the position of Trust Officer.
- ---------------
* Interested person of the Fund as defined in the 1940 Act.
The Fund does not pay direct remuneration to any officer of the
Fund. For the upcoming fiscal year, 1998, each disinterested Trustee will
receive $250 per board meeting attended. For the upcoming fiscal year, the
Trustees have agreed to waive their fees. "Interested" Trustees do not receive
Trustees' fees. The Trust will not reimburse Trustee expenses.
The table below illustrates the proposed compensation to be paid
to each Trustee for the Trust's upcoming fiscal year:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Accrued Estimated Annual from Fund and
Name of Person, Compensation as Part of Fund Benefits Upon Fund Complex
Position from Fund Expenses Retirement Paid to Trustees
- --------------- ------------ ---------------- ------------------- ----------------
<S> <C> <C> <C> <C>
James A. Arcara $0 $0 $0 $0
Michael Asch $0 $0 $0 $0
Robert A. DeFruscio $0 $0 $0 $0
John W. Wilson $0 $0 $0 $0
</TABLE>
INVESTMENT ADVISER AND INVESTMENT ADVISORY AGREEMENTS
Trautman Kramer Capital Management, Inc. (the "Adviser"), 500
Fifth Avenue, New York, New York 10110, acts as the Adviser to the Fund under an
investment advisory agreement (the "Agreement"). The Agreement provides that
the Adviser identify and analyze possible investments for the Fund, determine
the amount and timing of such investments, and the form of investment. The
Adviser has the responsibility of
-6-
<PAGE>
monitoring and reviewing the Fund's portfolio, and, on a regular basis, to
recommend the ultimate disposition of such investments. It is the Adviser's
responsibility to cause the purchase and sale of securities in the Fund's
portfolio, subject at all times to the policies set forth by the Trust's Board
of Trustees. In addition, the Adviser also provides certain administrative and
managerial services to the Fund.
The Adviser receives a fee from the Fund, calculated daily and
payable monthly, for the performance of its services at an annual rate of 1.00%
of average daily net assets. The advisory fees are higher than that paid by most
investment companies but the Board of Trustees believes them to be reasonable in
light of the services the Fund receives thereunder. The Adviser may from time to
time and for such periods as it deems appropriate voluntarily reduce its
compensation hereunder (and/or voluntarily assume expenses) for the Fund. The
Adviser may, at any later date, recoup such amounts after such time as the
Adviser is no longer reducing its compensation and/or assuming expenses for the
Fund provided that the aggregate expenses in the year such amounts are recouped
do not exceed any limitation to which the Adviser has agreed.
Under the terms of the Agreement, the Fund pays all of its
expenses (other than those expenses specifically assumed by the Adviser and the
Fund's distributor) including the costs incurred in connection with the
maintenance of its registration under the Securities Act of 1933, as amended,
and the 1940 Act, printing of prospectuses distributed to shareholders, taxes or
governmental fees, brokerage commissions, custodial, transfer and shareholder
servicing agents, expenses of outside counsel and independent auditors,
preparation of shareholder reports, and expenses of Trustee and shareholder
meetings.
The Agreement terminates upon assignment (as defined in the 1940
Act) and may be terminated without penalty on 60 days' written notice by a vote
of the majority of the Trust's Board of Trustees or by the Adviser, or by
holders of a majority of the Fund's outstanding shares. The Fund's Agreement
will continue for two years from its effective date and from year-to-year
thereafter provided it is approved, at least annually, in the manner stipulated
in the 1940 Act. This requires that the Agreement and any renewal thereof be
approved by a vote of the majority of the Fund's Trustees who are not parties
thereto or interested persons of any such party, cast in person at a meeting
specifically called for the purpose of voting on such approval.
The Adviser has retained Tocqueville Asset Management L.P., 1675
Broadway, New York, New York 10019, to provide sub-advisory services to the Fund
pursuant to a sub-advisory agreement (the "Sub- Advisory Agreement"). The
Sub-Adviser acts as an adviser to mutual funds. Robert W. Kleinschmidt serves as
the portfolio manager of the Fund. Mr. Kleinschmidt is the President of
Tocqueville Asset Management Corporation, the general partner of the
sub-adviser. He previously held executive positions at the investment management
firm David J. Greene & Co. since 1978, resigning as a partner in 1991. The
Sub-Adviser will, subject at all times to the investment objective and policies
of the Fund and control of the Advisor and the Board of Trustees, supervise the
investment and reinvestment of the cash and securities of the Fund. For its
services under the Sub-Advisory Agreement, the Adviser pays the Sub-Adviser a
fee at an annual rate of .50% of average daily net assets.
DISTRIBUTION PLANS
The Fund has adopted a distribution plan pursuant to Rule 12b-1
of the 1940 Act for the Class A shares and a plan for the Class B shares that
allows the Fund to pay from the assets attributable to a particular class for
distribution activities related to the sale of such class of shares. Each
distribution plan provides that such expenses may total up to .50% per annum of
the average daily net assets of the class of shares. With respect to Class B
shares, because of the .50% annual limitation on the compensation paid during a
fiscal year, compensation relating to a large portion of the commissions
attributable to sales of Class B shares in any one year will be paid by a Fund
to the distributor in fiscal years subsequent thereto. In determining whether to
purchase Class B shares, investors should consider that daily compensation
payments could continue until the Distributor has been reimbursed for the
commissions paid on the sales of Class B shares.
-7-
<PAGE>
Each plan provides that the Fund may finance activities which are
primarily intended to result in the sale of the Fund's shares, including, but
not limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and payments to dealers and shareholder servicing agents
including Trautman Kramer & Company who enter into agreements with the Fund or
its distributor. The Class B Plan also provides that the Fund may finance any
other expenses primarily intended to result in the sale of the Fund's Class B
shares, including, without limitation, payments to brokers at the time of the
sale of Class B shares, if applicable, continuing fees to each such broker,
which fee shall begin to accrue immediately after the sale of such shares, and
accruals for interest.
In approving a Plan in accordance with the requirements of Rule
12b-1 under the 1940 Act, the Trustees (including the "disinterested" Trustees,
as defined in the 1940 Act) considered various factors and determined that there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. Each Plan will continue in effect from year to year if approved
annually (a) by the majority of the Fund's outstanding voting shares or by the
Board of Trustees and (b) by the vote of a majority of the disinterested
Trustees. While the Plans remain in effect, the Fund's Principal Financial
Officer shall prepare and furnish to the Board of Trustees a written report
setting forth the amounts spent by the Fund under the Plan and the purposes for
which such expenditures were made. The Plans may not be amended to increase
materially the amount to be spent for distribution without shareholder approval
and all material amendments to each of the Plans must be approved by the Board
of Trustees and by the disinterested Trustees cast in person at a meeting called
specifically for that purpose. While the Plans are in effect, the selection and
nomination of the disinterested Trustees shall be made by those disinterested
Trustees then in office.
ADMINISTRATIVE SERVICES AGREEMENT
Firstar Trust Company ("Firstar") provides administrative
services to the Fund pursuant to an Administrative Services Agreement with the
Fund. Under the Administrative Services Agreement, Firstar provides
administrative services to all aspects of the Fund's operations, including the
Fund's receipt of services for which the Fund is obligated to pay, provides the
Fund with general office facilities and provides, at the Fund's expense, the
services of persons necessary to perform such supervisory, administrative and
clerical functions as are needed to effectively operate the Fund. Those persons,
as well as certain employees and Trustees of the Trust, may be directors,
officers or employees of (and persons providing services to the Fund may
include) the Administrator and its affiliates. For these services and
facilities, the Administrator receives a fee computed and paid monthly at an
annual rate of .05% on the first $200 million of the Fund's average net assets,
.04% on the next $500 million of the Fund's average net assets and .03% on any
remaining average net assets in excess of $700 million, subject to an annual
minimum fee, for Class A and Class B shares, of $40,500.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to
buy and sell securities for the Fund are made by the Adviser or the Sub-Adviser.
The Adviser and the Sub-Adviser are each authorized to allocate the orders
placed by them on behalf of the Fund to such unaffiliated brokers who also
provide research or statistical material, or other services to the Fund or the
Adviser or the Sub-Adviser for the Fund's use. Such allocation shall be in such
amounts and proportions as the Adviser and the Sub-Adviser shall determine and
the Adviser and Sub-Adviser will report on said allocations regularly to the
Board of Trustees indicating the unaffiliated brokers to whom such allocations
have been made and the basis therefor. In addition, the Adviser and the
Sub-Adviser may consider sales of shares of the Fund and of any other funds
advised or managed by the Adviser and the Sub-Adviser as a factor in the
selection of unaffiliated brokers to execute portfolio transactions for the
Fund, subject to the requirements of best execution. The Trustees have
authorized the allocation of brokerage to affiliated broker-dealers on an agency
basis to effect portfolio transactions. The Trustees have adopted procedures
incorporating the standards of Rule 17e-1 of the 1940 Act, which require that
the
-8-
<PAGE>
commission paid to affiliated broker-dealers must be "reasonable and fair
compared to the commission, fee or other remuneration received, or to be
received, by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time." At times, the Fund may
also purchase portfolio securities directly from dealers acting as principals,
underwriters or market makers. As these transactions are usually conducted on a
net basis, no brokerage commissions are paid by the Fund.
In selecting a broker to execute each particular transaction, the
Adviser and the Sub-Adviser will take the following into consideration: the best
net price available; the reliability, integrity and financial condition of the
broker; the size and difficulty in executing the order; and, the value of the
expected contribution of the broker to the investment performance of the Fund on
a continuing basis. Accordingly, the cost of the brokerage commissions to the
Fund in any transaction may be greater than that available from other brokers if
the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, neither the Adviser nor the Sub-Adviser shall be
deemed to have acted unlawfully or to have breached any duty solely by reason of
its having caused the Fund to pay an unaffiliated broker that provides research
services to the Adviser or the Sub-Adviser for the Fund's use an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker would have charged for effecting the
transaction, if the Adviser or the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
research service provided by such broker viewed in terms of either that
particular transaction of the ongoing responsibilities of the Adviser and the
Sub-Adviser with respect to the Fund.
ALLOCATION OF INVESTMENTS
The Adviser and the Sub-Adviser have other advisory clients which
include individuals, trusts, pension and profit sharing funds, some of which
have similar investment objectives to the Fund. As such, there will be times
when the Adviser or the Sub-Adviser may recommend purchases and/or sales of the
same portfolio securities for the Fund and its other clients. In such
circumstances, it will be the policy of the Adviser and the Sub-Adviser to
allocate purchases and sales among the Fund and its other clients in a manner
which the Investment Adviser or the Sub-Adviser deems equitable, taking into
consideration such factors as size of account, concentration of holdings,
investment objectives, tax status, cash availability, purchase cost, holding
period and other pertinent factors relative to each account. Simultaneous
transactions may have an adverse effect upon the price or volume of a security
purchased by the Fund.
COMPUTATION OF NET ASSET VALUE
The Fund will determine the net asset value of its shares once
daily as of the close of trading on the New York Stock Exchange (the "Exchange")
on each day that the Exchange is open for business. It is expected that the
Exchange will be closed on Saturdays and Sundays and on New Year's Day, Reverend
Martin Luther King Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. The Fund may make or cause
to be made a more frequent determination of the net asset value and offering
price, which determination shall reasonably reflect any material changes in the
value of securities and other assets held by the Fund from the immediately
preceding determination of net asset value. The net asset value of each class is
determined by dividing the market value of the Fund's investments as of the
close of trading plus any cash or other assets (including dividends receivable
and accrued interest) less all liabilities (including accrued expenses)
attributable to that class by the number of the Fund's shares of that class
outstanding. Securities traded on the New York Stock Exchange or the American
Stock Exchange will be valued at the last sale price, or if no sale, at the mean
between the latest bid and asked price. Securities traded in any other U.S. or
foreign market shall be valued in a manner as similar as possible to the above,
or if not so traded, on the basis of the latest available price. Securities sold
short "against the box" will be valued at market as determined above; however,
in instances where the Fund has sold securities short against a long position in
the issuer's convertible securities, for the purpose of valuation, the
securities in the short position will be valued at
-9-
<PAGE>
the "asked" price rather than the mean of the last "bid" and "asked" prices.
Where there are no readily available quotations for securities they will be
valued at a fair value as determined by the Board of Trustees acting in good
faith.
PURCHASE AND REDEMPTION OF SHARES
A complete description of the manner by a which the Fund's shares
may be purchased and redeemed, including discussions concerning the front-end
sales load on Class A and Class B shares and contingent deferred sales charge on
Class B shares, appears in the Prospectus under the headings "Purchase of
Shares" and "Redemption of Shares" respectively.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for
careful tax planning.
Qualification as a Regulated Investment Company
- -----------------------------------------------
The Fund has elected to be taxed as a regulated investment
company for federal income tax purposes under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). As a regulated investment
company, the Fund is not subject to federal income tax on the portion of its net
investment income (i.e., taxable interest, dividends and other taxable ordinary
income, net of expenses) and capital gain net income (i.e., the excess of
capital gains over capital losses) that it distributes to shareholders, provided
that it distributes at least 90% of its investment company taxable income (i.e.,
net investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year (the "Distribution Requirement"),
and satisfies certain other requirements of the Code that are described below.
Distributions by the Fund made during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year, will be
considered distributions of income and gains of the taxable year and will,
therefore, count towards satisfaction of the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a
regulated investment company must derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including, but not limited to, gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement").
In general, gain or loss recognized by the Fund on the
disposition of an asset will be a capital gain or loss. In addition, gain will
be recognized as a result of certain constructive sales, including short sales
"against the box." However, gain recognized on the disposition of a debt
obligation purchased by the Fund at a market discount (generally, at a price
less than its principal amount) will be treated as ordinary income to the extent
of the portion of the market discount which accrued during the period of time
the Fund held the debt obligation. In addition, under the rules of Code section
988, gain or loss recognized on the disposition of a debt obligation denominated
in a foreign currency or an option with respect thereto (but only to the extent
attributable to changes in foreign currency exchange rates), and gain or loss
recognized on the disposition of a foreign currency forward contract, futures
contract, option or similar financial instrument, or of foreign currency itself,
except for regulated futures contracts or non-equity options subject to Code
section 1256 (unless the Fund elects otherwise), will generally be treated as
ordinary income or loss.
-10-
<PAGE>
Further, the Code also treats as ordinary income a portion of the
capital gain attributable to a transaction where substantially all of the return
realized is attributable to the time value of the Fund's net investment in the
transaction and: (1) the transaction consists of the acquisition of property by
the Fund and a contemporaneous contract to sell substantially identical property
in the future; (2) the transaction is a straddle within the meaning of section
1092 of the Code; (3) the transaction is one that was marketed or sold to the
Fund on the basis that it would have the economic characteristics of a loan but
the interest-like return would be taxed as capital gain; or (4) the transaction
is described as a conversion transaction in the Treasury Regulations. The amount
of the gain recharacterized generally will not exceed the amount of the interest
that would have accrued on the net investment for the relevant period at a yield
equal to 120% of the federal long-term, mid-term, or short-term rate, depending
upon the type of instrument at issue, reduced by an amount equal to: (1) prior
inclusions of ordinary income items from the conversion transaction and (2) the
capital interest on acquisition indebtedness under Code section 263(g). Built-in
losses will be preserved where the Fund has a built-in loss with respect to
property that becomes a part of a conversion transaction. No authority exists
that indicates that the converted character of the income will not be passed
through to the Fund's shareholders.
In general, for purposes of determining whether capital gain or
loss recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (1) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (2) the asset is otherwise held by the Fund as part of a "straddle" (which
term generally excludes a situation where the asset is stock and the Fund grants
a qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto), or (3) the asset is stock and the Fund
grants an in-the-money qualified covered call option with respect thereto. In
addition, the Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by the Fund on the lapse of, or any gain or
loss recognized by the Fund from a closing transaction with respect to, an
option written by the Fund will be treated as a short-term capital gain or loss.
Certain transactions that may be engaged in by the Fund (such as
regulated futures contracts, certain foreign currency contracts, and options on
stock indexes and futures contracts) will be subject to special tax treatment as
"Section 1256 contracts." Section 1256 contracts are treated as if they are sold
for their fair market value on the last business day of the taxable year, even
though a taxpayer's obligations (or rights) under such contracts have not
terminated (by delivery, exercise, entering into a closing transaction or
otherwise) as of such date. Any gain or loss recognized as a consequence of the
year-end deemed disposition of Section 1256 contracts is taken into account for
the taxable year together with any other gain or loss that was previously
recognized upon the termination of Section 1256 contracts during that taxable
year. Any capital gain or loss for the taxable year with respect to Section 1256
contracts (including any capital gain or loss arising as a consequence of the
year-end deemed sale of such contracts) is generally treated as 60% long-term
capital gain or loss and 40% short-term capital gain or loss. The Fund, however,
may elect not to have this special tax treatment apply to Section 1256 contracts
that are part of a "mixed straddle" with other investments of the Fund that are
not Section 1256 contracts.
The Fund may purchase securities of certain foreign investment
funds or trusts which constitute passive foreign investment companies ("PFICs")
for federal income tax purposes. If the Fund invests in a PFIC, it has three
separate options. First, it may elect to treat the PFIC as a qualifying electing
fund (a "QEF"), in which case it will each year have ordinary income equal to
its pro rata share of the PFIC's ordinary earnings for the year and long-term
capital gain equal to its pro rata share of the PFIC's net capital gain for the
year, regardless of whether the Fund receives distributions of any such ordinary
earnings or capital gains from the PFIC. Second, for tax years beginning after
December 31, 1997, the Fund may make a mark-to-market election with respect to
its PFIC stock. Pursuant to such an election, the Fund will include as ordinary
income any excess of the fair market value of such stock at the close of any
taxable year over its adjusted tax basis in the stock. If the adjusted tax basis
of the PFIC stock exceeds the fair market value of such stock at the end of a
given taxable year, such excess will be deductible as ordinary loss in the
amount equal to the lesser of the
-11-
<PAGE>
amount of such excess or the net mark-to-market gains on the stock that the Fund
included in income in previous years. The Fund's holding period with respect to
its PFIC stock subject to the election will commence on the first day of the
following taxable year. If the Fund makes the mark-to-market election in the
first taxable year it holds PFIC stock, it will not incur the tax described
below under the third option.
Finally, if the Fund does not elect to treat the PFIC as a QEF
and does not make a mark-to-market election, then, in general, (1) any gain
recognized by the Fund upon a sale or other disposition of its interest in the
PFIC or any "excess distribution" (as defined) received by the Fund from the
PFIC will be allocated ratably over the Fund's holding period in the PFIC stock,
(2) the portion of such gain or excess distribution so allocated to the year in
which the gain is recognized or the excess distribution is received shall be
included in the Fund's gross income for such year as ordinary income (and the
distribution of such portion by the Fund to shareholders will be taxable as an
ordinary income dividend, but such portion will not be subject to tax at the
Fund level), (3) the Fund shall be liable for tax on the portions of such gain
or excess distribution so allocated to prior years in an amount equal to, for
each such prior year, (i) the amount of gain or excess distribution allocated to
such prior year multiplied by the highest tax rate (individual or corporate, as
the case may be) in effect for such prior year, plus (ii) interest on the amount
determined under clause (i) for the period from the due date for filing a return
for such prior year until the date for filing a return for the year in which the
gain is recognized or the excess distribution is received, at the rates and
methods applicable to underpayments of tax for such period, and (4) the
distribution by the Fund to shareholders of the portions of such gain or excess
distribution so allocated to prior years (net of the tax payable by the Fund
thereon) will again be taxable to the shareholders as an ordinary income
dividend.
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
(including, to the extent provided in Treasury Regulations, losses recognized
pursuant to the PFIC mark-to-market election) incurred after October 31 as if it
had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the
Fund must satisfy an asset diversification test in order to qualify as a
regulated investment company. Under this test, at the close of each quarter of
the Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to each of
which the Fund has not invested more than 5% of the value of the Fund's total
assets in securities of such issuer and does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security not the issuer of the option.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
- --------------------------------------------
A 4% non-deductible excise tax is imposed on a regulated
investment company that fails to distribute in each calendar year an amount
equal to 98% of its ordinary income for such calendar year and 98% of its
capital gain net income for the one-year period ended on October 31 of such
calendar year (or, at the election of a regulated investment company having a
taxable year ending November 30 or December 31, for its taxable
-12-
<PAGE>
year (a "taxable year election")). The balance of such income must be
distributed during the next calendar year. For the foregoing purposes, a
regulated investment company is treated as having distributed any amount on
which it is subject to income tax for any taxable year ending in such calendar
year.
For purposes of the excise tax, a regulated investment company
shall: (1) reduce its capital gain net income (but not below its net capital
gain) by the amount of any net ordinary loss for the calendar year; and (2)
exclude foreign currency gains and losses and ordinary gains or losses arising
as a result of a PFIC mark-to-market election (or upon an actual disposition of
the PFIC stock subject to such election) incurred after October 31 of any year
(or after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
- ------------------
The Fund anticipates distributing substantially all of its
investment company taxable income for each taxable year. Such distributions will
be taxable to shareholders as ordinary income and treated as dividends for
federal income tax purposes, but they generally should not qualify for the 70%
dividends-received deduction for corporate shareholders.
The Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. The Fund currently intends to distribute any
such amounts. Net capital gain that is distributed and designated as a capital
gain dividend will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares. The Code provides, however, that under certain conditions
only 50% (58% for alternative minimum tax purposes) of the capital gain
recognized upon the Fund's disposition of domestic "small business" stock will
be subject to tax.
Conversely, if the Fund elects to retain its net capital gain,
the Fund will be taxed thereon (except to the extent of any available capital
loss carryovers) at the 35% corporate tax rate. If the Fund elects to retain its
net capital gain, it is expected that the Fund also will elect to have
shareholders of record on the last day of its taxable year treated as if each
received a distribution of his pro rata share of such gain, with the result that
each shareholder will be required to report his pro rata share of such gain on
his tax return as long-term capital gain, will receive a refundable tax credit
for his pro rata share of tax paid by the Fund on the gain, and will increase
the tax basis for his shares by an amount equal to the deemed distribution less
the tax credit.
Investment income that may be received by the Fund from sources
within foreign countries may be subject to foreign taxes withheld at the source.
The United States has entered into tax treaties with many foreign countries
which may entitle the Fund to a reduced rate of, or exemption from, taxes on
such income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested in various
countries is not known. If more than 50% of the value of the Fund's total assets
at the close of its taxable year consist of the stock or securities of foreign
corporations, the Fund may elect to "pass through" to the Fund's shareholders
the amount of foreign taxes paid by the Fund. If the Fund so elects, each
shareholder would be required to include in gross income, even though not
actually received, his pro rata share of the foreign taxes paid by the Fund, but
would be treated as having paid his pro rata share of such foreign taxes and
would therefore be allowed to either deduct such amount in computing taxable
income or use such amount (subject to various Code limitations) as a foreign tax
credit against federal income tax (but not both). For purposes of the foreign
tax credit limitation rules of the Code, each shareholder would treat as foreign
source income his pro rata share of such foreign taxes plus the portion of
dividends received from the Fund representing income derived from foreign
sources. No deduction for foreign taxes could be claimed by an
-13-
<PAGE>
individual shareholder who does not itemize deductions. Each shareholder should
consult his own tax adviser regarding the potential application of foreign tax
credits.
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Fund will be treated in the manner described
above regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of the Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by
the Fund into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit
to the U.S. Treasury 31% of ordinary income dividends and capital gain
dividends, and the proceeds of redemption of shares, paid to any shareholder (1)
who has failed to provide a correct taxpayer identification number, (2) who is
subject to backup withholding for failure properly to report the receipt of
interest or dividend income, or (3) who has failed to certify to the Fund that
it is not subject to backup withholding or that it is an "exempt recipient"
(such as a corporation).
Sale or Redemption of Shares
- ----------------------------
A shareholder will recognize gain or loss on the sale or
redemption of shares of the Fund in an amount equal to the difference between
the proceeds of the sale or redemption and the shareholder's adjusted tax basis
in the shares. All or a portion of any loss so recognized may be disallowed if
the shareholder purchases other shares of the Fund within 30 days before or
after the sale or redemption. In general, any gain or loss arising from (or
treated as arising from) the sale or redemption of shares of the Fund will be
considered capital gain or loss and will be long-term capital gain or loss if
the shares were held for longer than one year. Long- term capital gain
recognized by an individual shareholder will be taxed at the lowest rates
applicable to capital gains if the holder has held such shares for more than 18
months at the time of the sale. However, any capital loss arising from the sale
or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on such shares. For this purpose, the special holding period rules of
Code section 246(c)(3) and (4) generally will apply in determining the holding
period of shares. Long-term capital gains of noncorporate taxpayers are
currently taxed at a maximum rate at least 11.6% lower than the maximum rate
applicable to ordinary income. Capital losses in any year are deductible only to
the extent of capital gains plus, in the case of a noncorporate taxpayer, $3,000
of ordinary income.
Foreign Shareholders
- --------------------
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, Foreign Corporation, or
foreign partnership ("Foreign Shareholder"), depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
-14-
<PAGE>
If the income from the Fund is not effectively connected with a
U.S. trade or business carried on by a foreign shareholder, ordinary income
dividends paid to a Foreign Shareholder will be subject to U.S. withholding tax
at the rate of 30% (or lower applicable treaty rate) upon the gross amount of
the dividend. Furthermore, such Foreign Shareholder may be subject to U.S.
withholding tax at the rate of 30% (or lower applicable treaty rate) on the
gross income resulting from the Fund's election to treat any foreign taxes paid
by it as paid by its shareholders, but may not be allowed a deduction against
this gross income or a credit against this U.S. withholding tax for the Foreign
Shareholder's pro rata share of such foreign taxes which it is treated as having
paid. Such a Foreign Shareholder generally would be exempt from U.S. federal
income tax on gains realized on the sale of shares of the Fund, capital gain
dividends and amounts retained by the Fund that are designated as undistributed
capital gains.
If the income from the Fund is effectively connected with a U.S.
trade or business carried on by a Foreign Shareholder, then ordinary income
dividends, capital gain dividends, and any gains realized upon the sale of
shares of the Fund will be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or domestic corporations.
In the case of Foreign Shareholders other than corporations, the
Fund may be required to withhold U.S. federal income tax at the rate of 31% on
distributions that are otherwise exempt from withholding tax (or taxable at a
reduced treaty rate) unless such shareholders furnish the Fund with proper
notification of their foreign status.
The tax consequences to a Foreign Shareholder entitled to claim
the benefits of an applicable tax treaty may be different from those described
herein. Foreign Shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
- ------------------------------------------------------
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect.
Rules of state and local taxation of ordinary income dividends
and capital gain dividends from regulated investment companies often differ from
the rules for U.S. federal income taxation described above. Shareholders are
urged to consult their tax advisers as to the consequences of these and other
state and local tax rules affecting investment in the Fund.
PERFORMANCE CALCULATION
For purposes of quoting and comparing the performance of the Fund
to that of other mutual funds and to other relevant market indices in
advertisements or in reports to shareholders, performance may be stated in terms
of total return. Under rules promulgated by the Securities and Exchange
Commission ("SEC"), a fund's advertising performance must include total return
quotations calculated according to the following formula:
P(1 + T)(to the nth power) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical
$1,000 payment, made at the beginning of
the 1, 5 or 10 year period, at the end of
such period (or fractional portion
thereof.)
-15-
<PAGE>
Under the foregoing formula, the time periods used in advertising
will be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication, and will
cover 1, 5 and 10 year periods of the Fund's existence or such shorter period
dating from the effectiveness of the Fund's Registration Statement. In
calculating the ending redeemable value, all dividends and distributions by the
Fund are assumed to have been reinvested at net asset value as described in the
Prospectus on the reinvestment dates during the period. Total return, or "T" in
the formula above, is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value. Any
recurring account charges that might in the future be imposed by the Fund would
be included at that time.
Any quotation of performance stated in terms of yield will be
given no greater prominence than the information prescribed under the SEC's
rules. In addition, all advertisements containing performance data of any kind
will include a legend disclosing that such performance data represents past
performance and that the investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
INDEPENDENT AUDITORS
Ernst & Young LLP serves as independent auditors to the Trust.
LEGAL COUNSEL.
Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, New York 10022 is
counsel to the Trust.
EXPENSES.
The Fund bears certain expenses relating to its operations; such expenses
include, but are not limited to, the following: taxes, interest, brokerage fees
and commissions, fees of the Trustees, Securities and Exchange Commission fees,
state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to current
shareholders, outside auditing and legal expenses, advisory fees, fees and
out-of-pocket expenses of the custodian, administrators and transfer agent,
certain insurance premiums, costs of maintenance of the Fund's existence, costs
of shareholders' reports and meetings, and any extraordinary expenses incurred
in the Fund's operation.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES.
The Trust is a Delaware business trust. The Delaware Trust
Instrument authorizes the Trustees to issue an unlimited number of shares, which
are units of beneficial interest, with $.001 par value. The Trust presently has
one series of shares, which represents interests in the Trautman Kramer Value
Plus Fund. The Trust's Trust Instrument authorizes the Trustees to divide or
redivide any unissued shares of the Trust into one or more additional series by
setting or changing in any one or more aspects their respective preferences,
conversion or other rights, voting power, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Trustees may grant in their discretion.
When issued for payment as described in the Prospectus and this Statement of
Additional Information, the Trust's shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Trust,
shares of the Fund are entitled to receive the assets available for distribution
belonging to the Fund, and a proportionate distribution, based upon the relative
asset values of the
-16-
<PAGE>
respective funds of the Trust, of any general assets not belonging to any
particular fund which are available for distribution.
Shares of the Trust are entitled to one vote per share (with
proportional voting for fractional shares) on such matters as shareholders are
entitled to vote. On any matter submitted to a vote of the shareholders, all
shares are voted separately by individual series (funds), and whenever the
Trustees determine that the matter affects only certain series, may be submitted
for a vote by only such series, except (1) when required by the 1940 Act, shares
are voted in the aggregate and not by individual series; and (2) when the
Trustees have determined that the matter affects the interests of more than one
series and that voting by shareholders of all series would be consistent with
the 1940 Act, then the shareholders of all such series shall be entitled to vote
thereon (either by individual series or by shares voted in the aggregate, as the
Trustees in their discretion may determine). The Trustees may also determine
that a matter affects only the interests of one or more classes of a series, in
which case (or if required under the 1940 Act) such matter shall be voted on by
such class or classes. There will normally be no meetings of shareholders for
the purpose of electing Trustees unless and until such time as less than a
majority of the Trustees have been elected by the shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the election
of Trustees. In addition, Trustees may be removed from office by a vote of the
holders of at least two-thirds of the outstanding shares of the Trust. A meeting
shall be held for such purpose upon the written request of the holders of not
less than 10% of the outstanding shares. Upon written request by ten or more
shareholders meeting the qualifications of Section 16(c) of the 1940 Act, (i.e.,
persons who have been shareholders for at least six months, and who hold shares
having a net asset value of at least $25,000 or constituting 1% of the
outstanding shares) stating that such shareholders wish to communicate with the
other shareholders for the purpose of obtaining the signatures necessary to
demand a meeting to consider removal of a Trustee, the Trust will provide a list
of shareholders or disseminate appropriate materials (at the expense of the
requesting shareholders). Except as set forth above, the Trustees shall continue
to hold office and may appoint their successors.
Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted to the holders of the outstanding voting securities of an
investment company such as the Trust shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each fund of the Trust affected by the matter. For
purposes of determining whether the approval of a majority of the outstanding
shares of a fund will be required in connection with a matter, a fund will not
be deemed to be affected by a matter unless it is clear that the interests of
each fund in the matter are identical, or that the matter does not affect any
interest of the fund. Under Rule 18f-2, the approval of an investment advisory
agreement or any change in investment policy would be effectively acted upon
with respect to a fund only if approved by a majority of the outstanding shares
of such fund. However, Rule 18f-2 also provides that the ratification of
independent public accountants, the approval of principal underwriting
contracts, and the election of Trustees may be effectively acted upon by
shareholders of the Trust voting without regard to series.
SHAREHOLDER AND TRUSTEE LIABILITY.
The Delaware Business Trust Act provides that a shareholder of a
Delaware business trust shall be entitled to the same limitation of personal
liability extended to shareholders of Delaware corporations, and the Delaware
Trust Instrument provides that shareholders of the Trust shall not be liable for
the obligations of the Trust. The Delaware Trust Instrument also provides for
indemnification out of the trust property of any shareholder held personally
liable solely by reason of his or her being or having been a shareholder. The
Delaware Trust Instrument also provides that the Trust shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the Trust, and shall satisfy any judgment thereon. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
considered to be extremely remote.
The Delaware Trust Instrument states further that no Trustee,
officer, or agent of the Trust shall be personally liable in connection with the
administration or preservation of the assets of a Fund or the conduct of the
Trust's business; nor shall any Trustee, officer, or agent be personally liable
to any person for any action or failure to act except for his own bad faith,
willful misfeasance, gross negligence, or reckless disregard of his
-17-
<PAGE>
duties. The Declaration of Trust also provides that all persons having any claim
against the Trustees or the Trust shall look solely to the assets of the Trust
for payment.
REPORTS
Shareholders receive reports at least semi-annually showing the
Fund's holdings and other information. In addition, shareholders receive annual
financial statements examined by the Trust's independent auditors.
-18-
<PAGE>
FINANCIAL STATEMENTS
TRAUTMAN KRAMER VALUE PLUS FUND
Statement of Assets and Liabilities
January 28, 1998
Report of Independent Auditors
To the Shareholder and
Board of Trustees of
The Trautman Kramer Trust -
Trautman Kramer Value Plus Fund
We have audited the accompanying statement of assets and liabilities of the
Trautman Kramer Value Plus Fund, (the "Fund"), as of January 28, 1998. This
statement of assets and liabilities is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this statement of
assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards required that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit of
the statement of assets and liabilities provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the
Trautman Kramer Value Plus Fund at January 28, 1998, in conformity with
generally accepted account principles.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
January 28, 1998
-19-
<PAGE>
TRAUTMAN KRAMER TRUST
Trautman Kramer Value Plus Fund
Statement of Assets and Liabilities
January 28, 1998
ASSETS
Cash $101,284
Unamortized organizational costs $ 41,900
Prepaid expenses $ 14,407
--------
Total Assets $157,591
--------
LIABILITIES
Payable to Investment Adviser $ 56,307
--------
Total Liabilities $ 56,307
--------
NET ASSETS $101,284
========
Capital Stock, No par value; Unlimited number of Class A
shares of beneficial interest authorized; 10,128.400 Class A
shares of beneficial interest outstanding. $101,284
========
Net asset value, and redemption price per share $10.00
======
Maximum Offering Price (4.5% of offering price or $10.47
==== ======
4.7% of net asset value)
The accompanying notes to the statement of assets and liabilities are an
integral part of this statement.
-20-
<PAGE>
TRAUTMAN KRAMER TRUST
TRAUTMAN KRAMER VALUE PLUS FUND
NOTES TO THE STATEMENT OF ASSETS AND LIABILITIES
JANUARY 28, 1998
1. ORGANIZATION
Trautman Kramer Trust (the "Trust") was organized as a Delaware business
trust on May 1, 1997, and is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end, non-diversified
management investment company. Trautman Kramer Value Plus Fund ("the
Fund") is currently the only series of the Trust. The Fund currently
offers two classes of shares, Class A and Class B. The investment
objective of the fund is long-term capital appreciation. The Trust has
had no operations other than those relating to organizational matters
and the sale of 10,128.400 Class A shares of its common stock to its
original shareholder, First Trust Corp. Trustee, Trautman Kramer 401K
Plan, for cash in the amount of $101,284.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Organization costs
------------------
Costs incurred by the Fund in connection with the organization,
registration and the initial public offering of shares, are being
deferred and amortized over the period of benefit, but not to exceed
sixty months from the Fund's commencement of operations. These costs
were advanced by the Investment Adviser and will be reimbursed by the
Fund. The proceeds of any redemption of the initial shares by the
original shareholder will be reduced by a pro-rata portion of any then
unamortized organizational costs in the same proportion as the number of
initial shares being redeemed bears to the number of initial shares
outstanding at the time of such redemption.
(b) Federal Income Taxes
--------------------
The Fund intends to comply with the requirements necessary to qualify as
a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended, and to make the requisite
distributions of income and capital gains to its shareholders sufficient
to relieve it from all or substantially all Federal income taxes.
(c) Use of Estimates
----------------
The preparation of the statement of assets and liabilities in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual amounts could differ from those
estimates.
3. INVESTMENT ADVISER
The Trust, has an agreement with the Investment Adviser, (the "Advisory
Agreement"), with whom certain officers and Trustees of the Trust are
affiliated, to furnish investment advisory services to the Fund. For its
services under the Advisory Agreement, the Adviser receives a fee,
accrued daily and payable monthly at the annual rate of 1.00% of the
Fund's average daily net assets.
The Adviser has retained Tocqueville Asset Management LP. (the
"Sub-Adviser") to provide sub-advisory services to the Fund pursuant to
a sub-advisory agreement (the "Sub-Advisory Agreement). The Sub-Adviser
will, subject at all times to the investment objective and policies of
the Fund and control of the Advisor and the Board of Trustees, supervise
the investment and reinvestment of the cash and securities of the Fund.
For its services under the Sub-Advisory agreement, the Adviser pays the
Sub-Adviser a fee at an annual rate of .50% of the Fund's average daily
net assets.
-21-
<PAGE>
4. DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Plan"), for each class of
shares, pursuant to Rule 12b-1 of the 1940 Act. Pursuant to the Plan,
the Fund may pay for distribution activities related to the sale of its
shares up to an annual amount equal to .50% of the Fund's average daily
net assets.
The Plan provides that the Fund may finance activities which are
primarily intended to result in the sale of its shares, including, but
not limited to, advertising, printing of prospectuses and reports for
other than existing shareholders, preparation and distribution of
advertising material and sales literature, and payments to dealers,
including Trautman Kramer & Company, Inc. (the "Distributor"), who enter
into agreements with the Fund or the Distributor.
5. SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Servicing Plan for each class of
shares for the Fund. In accordance with the Shareholder Servicing Plan,
the Fund may enter into Shareholder Service Agreements under which it
pays fees up to an annual amount equal to .25% of the average daily net
assets for fees incurred in connection with the personal service and
maintenance of accounts holding the shares of the Fund.
6. ADMINISTRATIVE SERVICES AGREEMENT
Under an Administrative Services Agreement, Firstar Trust Company (the
"Administrator")supervises the administration of all aspects of the
Fund's operations. For these services, the Administrator receives a fee
computed and paid monthly, for each class of shares, at an annual rate
of .05% on the first $200 million of the Fund's average net assets, .04%
on the next $500 million of the Fund's average net assets and .03% on
any remaining average net assets in excess of $700 million, subject to
an annual minimum fee, of $40,500 for both classes.
-22-
<PAGE>
INVESTMENT ADVISER
Trautman Kramer Capital Management, Inc.
500 Fifth Avenue
New York, New York 10110
Phone: (212) 575-5500 or (800) 895-4800
Fax: (212) 575-6589
INVESTMENT SUB-ADVISER
Tocqueville Asset Management L.P.
1675 Broadway
New York, New York 10019
Phone: (212) 698-0800
Fax: (212) 262-0154
DISTRIBUTOR
Trautman Kramer & Company, Inc.
500 Fifth Avenue
New York, New York 10110
Phone: (212) 575-5500 or (800) 895-4800
Fax: (212) 575-6589
www.tkco.com
SHAREHOLDERS' SERVICING, CUSTODIAN
AND TRANSFER AGENT
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Phone: (888) 852-6825
=========================
TRAUTMAN KRAMER & COMPANY
I N C O R P O R A T E D
=========================
P R O S P E C T U S
MARCH 23, 1998
expertise potential discipline vision
TRAUTMAN KRAMER
VALUES PLUS FUND
