U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No.
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Post-Effective Amendment No. 3
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 4
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(Check appropriate box or boxes)
LAKE SHORE FAMILY OF FUNDS
(Exact Name of Registrant as Specified in Charter)
8280 Montgomery Road, Suite 302
Cincinnati, Ohio 45236
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (513) 579-8700
Earl V. (Buck) Newsome, Jr.
Lake Shore Fund Group, LLC
8280 Montgomery Road, Suite 302
Cincinnati, Ohio 45236
(Name and Address of Agent for Service)
Copies to:
Wade R. Bridge
Integrated Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
It is proposed that this filing will become effective (check appropriate box)
/X/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on May 1, 1999 pursuant to paragraph (a) of Rule 485
Registrant has registered an indefinite number of shares of beneficial interest
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
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LAKE SHORE
FAMILY OF FUNDS
Prospectus
May 1, 2000
Equity Fund
TABLE OF CONTENTS
Risk/Return Summary ...........................................................
Expense Information ...........................................................
Investment Objective, Principal Investment Strategies and
Related Principal Risk Considerations........................................
How to Purchase Shares..........................................................
How to Redeem Shares ...........................................................
Shareholder Services ...........................................................
Operation of the Fund...........................................................
Dividends and Distributions.....................................................
Calculation of Public Offering Price............................................
Taxes...........................................................................
Distribution Plan...............................................................
Financial Highlights............................................................
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PROSPECTUS
May 1, 2000
LAKE SHORE FAMILY OF FUNDS
8280 MONTGOMERY ROAD, SUITE 302
CINCINNATI, OHIO 45236
The Lake Shore Family of Funds currently offers one series of shares to
investors: the Equity Fund ("Fund").
The EQUITY FUND seeks long-term growth of capital by investing primarily in
common stocks. Dividend and interest income is only an incidental consideration
to the Fund's investment objective.
Lake Shore Fund Group, LLC (the "Adviser"), 8280 Montgomery Road, Suite 302,
Cincinnati, Ohio 45236, manages the Fund's investments.
This Prospectus has information you should know before you invest. Please read
it carefully and keep it with your investment records.
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FOR INFORMATION OR ASSISTANCE IN OPENING AN ACCOUNT, PLEASE CALL:
Nationwide (Toll-Free) ............................. 800-266-9532
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RISK/RETURN SUMMARY
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Equity Fund seeks long-term growth of capital by investing primarily in
common stocks.
WHAT IS THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Equity Fund maintains a core portfolio of approximately 30 common
stocks, all of which are listed on the Standard & Poor's 500 Index at the
time of investment. Approximately 20 of the stocks will be selected on the
basis of price momentum (those stocks exhibiting the most rapid increases
in price according to the Adviser's quantitative models) and the remainder
will be selected on the basis of value (those stocks which appear to be the
best value, relative to the rest of the market, based upon the Adviser's
research and analysis of such factors as yield, price-to-earnings ratio and
dividend coverage). Under normal circumstances, the Fund will invest at
least 65% of its total assets in common stocks.
The Adviser believes the use of two independent, contrasting styles, and
defensive action when the market is in a high-risk period, will add
consistency to the Fund's performance.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
The return on and value of an investment in the Equity Fund will fluctuate
in response to stock market movements. Common stocks are subject to market
risks and fluctuations in value due to earnings, economic conditions and
other factors beyond the control of the Adviser. As a result, there is a
risk that you could lose money by investing in the Fund. In addition, the
Fund may not achieve its investment objective.
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RISK/RETURN BAR CHART AND FEE TABLE
-----------------------------------
The following bar chart and fee table indicate the risks and variability of
investing in the Fund by showing:
- - how the Fund's performance has varied over each full calendar year shown on
the chart below, and
- - how the Fund's average annual total returns compare to other recognized
indices below.
How the Fund has performed in the past does not indicate how the Fund will
perform in the future.
1999 42.26%
During the period shown in the bar chart, the highest return for a calendar year
was 28.74%(quarter ending December 31, 1999) and the lowest return for a
calendar quarter was -3.04%(quarter ending September 30, 1999).
The 5% sales charge is not reflected in the bar chart; if reflected, returns
would be lower than those shown.
AVERAGE ANNUAL RETURNS
(for the periods ended December 31, 1999)
One Year Since Inception
(March 2, 1998)
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Lake Shore Equity Fund 35.14% 24.93%
S&P 500* 21.04% 13.06%
This table illustrates total returns from a hypothetical investment in the Fund.
These shares are compared to the index for the same periods. The performance of
the Fund reflects a 5% sales charge.
* The Standard & Poor's 500 Index is an unmanaged index of common stock prices
of 500 widely held U.S. Stocks.
EXPENSE INFORMATION
-------------------
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................5.00%
Maximum Deferred Sales Charge (Load)..................None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends...............................None
Redemption Fee........................................None*
Exchange Fee..........................................None
* A wire transfer fee is charged by the Fund's custodian in the case of
redemptions made by wire. Such fee is subject to change and is currently
$9. See "How to Redeem Shares."
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ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees 1.00%
Distribution (12b-1) Fees .25%
Other Expenses 3.61%
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Total Annual Fund Operating Expenses(1) 4.86%
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(1) The Adviser has voluntarily agreed to waive all or portion of its fee and to
reimburse certain expenses of the Fund necessary to limit total operating
expenses to 2.98% of the Fund's average net assets. The Adviser reserves the
right to terminate this waiver or any reimbursement at any time in the Adviser's
sole discretion.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in a Fund for the time periods indicated, reinvest all dividends and
distributions, and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
a Fund's operating expenses remain the same. Although your costs may be higher
or lower, based on these assumptions your costs would be:
1 Year $ 962
3 Years 1,888
5 Years 2,817
10 Years 5,149
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED PRINCIPAL
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RISKS
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The Lake Shore Family of Funds (the "Trust") has one Fund. The Fund's investment
objective may be changed by the Board of Trustees without shareholder approval,
as long as notice has been given to shareholders. Unless otherwise indicated,
all investment practices and limitations of the Fund are non-fundamental
policies which may be changed by the Board of Trustees without shareholder
approval.
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INVESTMENT OBJECTIVE. The Equity Fund seeks long-term growth of capital by
investing primarily in common stocks.
PRINCIPAL INVESTMENT STRATEGIES. Under normal circumstances, at least 65% of the
Fund's total assets will be invested in common stocks. The Fund will only invest
in common stocks which are listed on the Standard & Poor's 500 Stock Index (the
"S&P 500") at the time of investment. The S&P 500 is comprised of 500 selected
common stocks which tend to be the leading companies in the leading industries
within the U.S. economy, most of which are listed on the New York Stock
Exchange.
The Adviser's equity management strategy is based on the belief that objective
research and analysis of market performance and economic data, and establishing
detailed buying and selling parameters, will add value to a portfolio. The use
of two independent, contrasting styles, and defensive action when the market is
determined to be in a high-risk period, will add consistency to the Fund's
performance, in the opinion of the Adviser.
The two complimentary styles employed by the Adviser are price momentum and
value investing. The price momentum style focuses on those stocks which are
performing the best relative to the rest of the market. The goal of this style
is to be invested in those stocks which are exhibiting rapid increases in price.
At the other end of the investment spectrum, the value style focuses on those
stocks which appear to offer the best value based on price and earnings
potential relative to the rest of the market, and which are expected to
appreciate over time as investors recognize their inherent value.
The Fund will maintain a core portfolio of approximately 30 stocks.
Approximately 10 of these stocks will be selected from the S&P 500 on the basis
of price momentum, with the Adviser attempting to identify those stocks
exhibiting the most rapid increases in price according to the Adviser's
objective research and analysis of the stock market and economic data. A second
group of approximately 10 stocks will also be selected on the basis of price
momentum; however, these stocks will be selected from the S&P 100. A final group
of approximately 10 stocks will be selected from the S&P 100 on the basis of
value, with the Adviser attempting to identify those stocks which appear to be
the most attractively priced relative to the rest of the market based upon the
Adviser's quantitative assessment of such factors as yield, price-to-earnings
ratio and dividend coverage.
When the Adviser believes substantial price risks exist for common stocks
because of uncertainties in the investment outlook or when in the judgment of
the Adviser it is otherwise warranted in selling to manage the Fund's portfolio,
the Fund may temporarily hold for defensive purposes all or a portion of its
assets in money market instruments such as bank debt instruments (certificates
of deposit, bankers' acceptances and time deposits), commercial paper, U.S.
Government obligations having a maturity of less than one year, shares of money
market investment companies or repurchase agreements collateralized by U.S.
Government obligations. The Fund may not achieve its investment objective during
periods when the Fund has taken such a
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temporary defensive position.
PRINCIPAL INVESTMENT RISKS. The Fund is designed for investors who are investing
for the long term and it is not intended for investors seeking assured income or
preservation of capital. Changes in market prices can occur at any time.
Accordingly, there is no assurance that the Fund will achieve its investment
objective. When you redeem your shares, they may be worth more or less than what
you paid for them.
Because the Fund normally invests most, or a substantial portion, of its assets
in common stocks, the value of the Fund's portfolio will be affected by changes
in the stock markets. Stock markets and stock prices can be volatile. Market
action will affect the Fund's net asset value per share, which fluctuates as the
values of the Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time and not all stock markets move in the same
direction at the same time. Various factors can affect a stock's price (for
example, poor earnings reports by an issuer, loss of major customers, major
litigation against an issuer, or changes in general economic conditions or in
government regulations affecting an industry). Not all of these factors can be
predicted.
HOW TO PURCHASE SHARES
----------------------
INITIAL INVESTMENTS. Your initial investment in the Fund ordinarily must be
at least $1,000 ($250 for tax-deferred retirement plans). The Fund may accept
certain accounts with less than the stated minimum initial investment.
You may open an account and make an initial investment through securities
dealers having a sales agreement with the Trust's principal underwriter, IFS
Fund Distributors, Inc. (the "Underwriter"). You may also make a direct initial
investment by sending a check and a completed account application form to
Integrated Fund Services, Inc. (the "Transfer Agent"), P.O. Box 5354,
Cincinnati, Ohio 45201-5354. Checks should be made payable to the "Lake Shore
Equity Fund." Third party checks will not be accepted. An account application is
included in this Prospectus.
Shares of the Fund are sold on a continuous basis at the public offering price
next determined after receipt of a purchase order by the Trust. Purchase orders
received by dealers prior to the close of the regular session of trading of the
New York Stock Exchange, generally 4:00 p.m., Eastern time, on any business day
and transmitted to the Underwriter by 5:00 p.m., Eastern time, that day are
confirmed at the public offering price determined as of that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Underwriter by 5:00 p.m., Eastern time. Dealers may
charge a fee for effecting purchase orders. Direct purchase orders received by
the Transfer Agent by the close of the regular session of trading of the New
York Stock Exchange, generally 4:00 p.m., Eastern time, are confirmed at that
day's public offering price. Direct investments received by the Transfer Agent
after 4:00 p.m. and orders received from dealers after 5:00 p.m. are confirmed
at the public offering price next determined on the following business day.
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The public offering price of shares of the Fund is the next determined net asset
value ("NAV") per share plus a front-end sales load as shown in the following
table.
Sales Load as % of:
-------------------
Public Net
Offering Amount
Amount of Investment Price Invested
- -------------------- -------- --------
Less than $25,000 5.00% 5.26%
$25,000 but less than $250,000 4.00% 4.16%
$250,000 or more 3.00% 3.09%
REDUCED SALES LOAD. You may be eligible to use the Right of Accumulation to
combine the cost or current net asset value (whichever is higher) of your
existing shares of the Fund with the amount of your current purchases in order
to take advantage of the reduced sales loads set forth in the table above.
Purchases made pursuant to a Letter of Intent may also be eligible for the
reduced sales loads. The minimum initial investment under a Letter of Intent is
$10,000. You should contact the Transfer Agent for information about the Right
of Accumulation and Letter of Intent.
PURCHASES AT NET ASSET VALUE. You may purchase shares of the Fund at net
asset value when your payment for the investment represents your proceeds from
the redemption of shares of any other mutual fund which has a front-end sales
load and is not distributed by the Underwriter. Your investment will qualify for
this provision if the purchase price of the shares of the other fund included a
front-end sales load and the redemption occurred within one year of the purchase
of such shares and no more than sixty days prior to purchase of shares of the
Fund. To make a purchase at net asset value pursuant to this provision, you must
submit photocopies of the confirmations (or similar evidence) showing the
purchase and redemption of shares of the other fund. Your payment may be made
with the redemption check representing the proceeds of the shares redeemed,
endorsed to the order of the Fund. The redemption of shares of the other fund
is, for federal income tax purposes, a sale on which you may realize a gain or
loss. These provisions may be modified or terminated at any time. Shareholders
should contact their securities dealer or the Trust for further information.
Banks, bank trust departments and savings and loan associations, in their
fiduciary capacity or for their own accounts, may also purchase shares of the
Fund at net asset value. To the extent permitted by regulatory authorities, a
bank trust department may charge fees to clients for whose account it purchases
shares at net asset value. Federal and state credit unions may also purchase
shares at net asset value.
In addition, shares of the Fund may be purchased at net asset value by
broker-dealers who have a sales agreement with the Underwriter, and their
registered personnel and employees, including
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members of the immediate families of such registered personnel and employees.
Clients of investment advisers and financial planners may also purchase shares
of the Fund at net asset value if their investment adviser or financial planner
has made arrangements to permit them to do so with the Trust and the
Underwriter. The investment adviser or financial planner must notify the
Transfer Agent that an investment qualifies as a purchase at net asset value.
Trustees, directors, officers and employees of the Trust, the Adviser, the
Underwriter or the Transfer Agent, including members of the immediate families
of such individuals and employee benefit plans established by such entities, may
also purchase shares of the Fund at net asset value.
SUBSEQUENT INVESTMENTS. You may purchase and add shares to your account at
any time either through a securities dealer or by sending a check to the Lake
Shore Family of Funds, P.O. Box 5354, Cincinnati, Ohio 45201-5354. The check
should be made payable to the Lake Shore Equity Fund.
You may also purchase and add shares to your account by bank wire. Please
telephone the Transfer Agent (Nationwide call toll-free 800-266-9532) for
instructions. Your bank may impose a charge for sending your wire. There is
presently no fee for receipt of wired funds, but the Trust reserves the right to
charge shareholders for this service upon 30 days' prior notice.
Each additional purchase request must contain the account name and number to
permit proper crediting. While there is no minimum amount required for
subsequent investments, the Trust reserves the right to impose such a
requirement. All purchases are made at the public offering price plus any
applicable load next determined after receipt of a purchase order by the Trust.
If a broker-dealer received concessions for selling shares of the Fund to you,
such broker-dealer will receive the concessions described above with respect to
additional investments by you.
ADDITIONAL INFORMATION. The Trust mails you confirmations of all purchases or
redemptions of Fund shares. Certificates representing shares are not issued. The
Trust and the Underwriter reserve the right to limit the amount of investments
and to refuse to sell to any person.
The Fund's account application contains provisions in favor of the Trust, the
Transfer Agent and certain of their affiliates, excluding such entities from
certain liabilities (including, among others, losses resulting from unauthorized
shareholder transactions) relating to the various services made available to
investors.
If an order to purchase shares is cancelled because your check does not clear,
you will be responsible for any resulting losses or fees incurred by the Trust
or the Transfer Agent in the transaction.
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HOW TO REDEEM SHARES
--------------------
You may redeem shares of the Fund on each day that the Trust is open for
business by sending a written request to the Transfer Agent. The request must
state the number of shares or the dollar amount to be redeemed and your account
number. The request must be signed exactly as your name appears on the Trust's
account records. If the shares to be redeemed have a value of $25,000 or more,
your signature must be guaranteed by any eligible guarantor institution,
including banks, brokers and dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. If the name(s) or the address on your account has been changed
within 30 days of your redemption request, you will be required to request a
redemption in writing with your signature guaranteed, regardless of the value of
the shares being redeemed.
You may also redeem shares of the Fund by placing a wire redemption request
through a securities broker or dealer. Unaffiliated broker-dealers may charge
you for this service. You will receive the net asset value per share next
determined after receipt by the Trust or its agent of your wire redemption
request. It is the responsibility of broker-dealers to properly transmit wire
redemption orders.
If your instructions request a redemption by wire, the proceeds will be wired
directly to your existing account in any commercial bank or brokerage firm in
the United States as designated on your application and you will be charged a $9
processing fee by the Fund's custodian. The Trust reserves the right, upon 30
days' written notice, to change the processing fee. All charges will be deducted
from your account by redemption of shares in your account. Your bank or
brokerage firm may also impose a charge for processing the wire. In the event
that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
Redemption requests may direct that the proceeds be deposited directly in your
account with a commercial bank or other depository institution by way of an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact the Transfer Agent for more information about ACH
transactions.
Shares are redeemed at their net asset value per share next determined after
receipt by the Transfer Agent of your redemption request in the form described
above. Payment is normally made within 3 business days after tender in such
form, provided that payment in redemption of shares purchased by check will be
effected only after the check has been collected, which may take up to 15 days
from the purchase date. To eliminate this delay, you may purchase shares of the
Fund by certified check or wire.
At the discretion of the Trust or the Transfer Agent, corporate investors and
other associations may be required to furnish an appropriate certification
authorizing redemptions to ensure proper authorization. The Trust reserves the
right to require you to close your account if at any time the
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value of your shares is less than $1,000 (based on actual amounts invested
including any sales load paid, unaffected by market fluctuations), or $250 in
the case of tax-deferred retirement plans, or such other minimum amount as the
Trust may determine from time to time. After notification of the Trust's
intention to close an account, you will be given 30 days to increase the value
of your account to the minimum amount.
The Trust reserves the right to suspend the right of redemption or to postpone
the date of payment for more than 3 business days under unusual circumstances as
determined by the Securities and Exchange Commission.
SHAREHOLDER SERVICES
--------------------
Contact the Transfer Agent (Nationwide call toll-free 800-266-9532) for
additional information about the shareholder services described below.
TAX-DEFERRED RETIREMENT PLANS. Shares of the Fund are available for
purchase in connection with the following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for individuals and their
non-employed spouses, including Roth IRAs and Education IRAs
-- Qualified pension and profit-sharing plans for employees, including
those profit-sharing plans with a 401(k) provision
-- 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Internal Revenue Code
AUTOMATIC WITHDRAWAL PLAN. If the shares in your account have a value of at
least $5,000, you may elect to receive, or may designate another person to
receive, monthly or quarterly payments in a specified amount of not less than
$50 each. There is no charge for this service. Purchases of additional shares of
the Fund while the plan is in effect are generally undesirable because a sales
load is incurred whenever purchases are made.
DIRECT DEPOSIT PLANS. Shares of the Fund may be purchased through direct
deposit plans offered by certain employers and government agencies. These plans
enable you to have all or a portion of your payroll or social security check
transferred automatically to purchase shares of the Fund.
AUTOMATIC INVESTMENT PLAN. You may make automatic monthly investments in
the Fund from your bank, savings and loan or other depository institution
account. The minimum initial
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and subsequent investments must be $50 under the Plan. The Transfer Agent pays
the costs associated with these transfers, but reserves the right, upon 30 days'
written notice, to make reasonable charges for this service. Your depository
institution may impose its own charge for debiting an account which would reduce
your return from an investment in the Fund.
REINVESTMENT PRIVILEGE. If you have redeemed shares of the Fund, you may
reinvest all or part of the proceeds without any additional sales load. This
reinvestment must occur within ninety days of the redemption and the privilege
may only be exercised once per year.
OPERATION OF THE FUND
---------------------
The Fund is a diversified series of the Lake Shore Family of Funds, an open-end
management investment company organized as an Ohio business trust. The Board of
Trustees supervises the business activities of the Trust. Like other mutual
funds, the Trust retains various organizations to perform specialized services
for the Fund.
The Trust retains Lake Shore Fund Group, LLC (the "Adviser"), 8280 Montgomery
Road, Suite 302, Cincinnati, Ohio 45236, to manage the Fund's' investments. The
Fund pays the Adviser a fee equal to the annual rate of 1.00% of the average
value of its daily net assets.
Earl V. (Buck) Newsome, Jr., Gregory J. Bauer and Robert A. McLaughlin are
primarily responsible for managing the portfolio of the Equity Fund. Mr. Newsome
is President of the Adviser and co-founded the Adviser with Mr. Bauer in 1997.
Prior to 1997, Mr. Newsome was Managing Director and co-owner of Cambridge
Financial Group. Inc. ("Cambridge"), a registered investment adviser, founded in
1986. Mr. Bauer, Chairman of the Adviser, co-founded Cambridge Financial Group,
Inc. Mr. McLaughlin serves as Executive Vice President and a director of both
the Adviser and Cambridge. Prior to joining Cambridge in 1996, Mr. McLaughlin
served as retirement system investment officer and assistant director of the
Ohio Public Employees Retirement System.
DIVIDENDS AND DISTRIBUTIONS
---------------------------
The Fund expects to distribute substantially all of its net investment income,
if any, on a quarterly basis. The Fund expects to distribute any net realized
long-term capital gains at least once each year. Management will determine the
timing and frequency of the distributions of any net realized short-term capital
gains.
Distributions are paid according to one of the following options:
Share Option - income distributions and capital gains distributions
reinvested in additional shares.
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Income Option - income distributions and short-term capital gains
distributions paid in cash; long-term capital gains distributions
reinvested in additional shares.
Cash Option - income distributions and capital gains distributions paid in
cash.
You should indicate your choice of option on your application. If no option is
specified on your application, distributions will automatically be reinvested in
additional shares. All distributions will be based on the net asset value in
effect on the payable date.
If you select the Income Option or the Cash Option and the U.S. Postal Service
cannot deliver your checks or if your checks remain uncashed for 6 months, your
dividends may be reinvested in your account at the then-current net asset value
and your account will be converted to the Share Option. No interest will accrue
on amounts represented by uncashed distribution checks.
If you have received a dividend or capital gains distribution in cash from
either Fund, you may return the distribution within 30 days of the distribution
date to the Transfer Agent for reinvestment at the net asset value next
determined after its return. You or your dealer must notify the Transfer Agent
that a distribution is being reinvested pursuant to this provision.
CALCULATION OF PUBLIC OFFERING PRICE
------------------------------------
On each day that the Trust is open for business, the public offering price (net
asset value plus applicable sales load) of the shares of the Fund is determined
as of the close of the regular session of trading on the New York Stock
Exchange, (normally 4:00 p.m., Eastern time). The Trust is open for business on
each day the New York Stock Exchange is open for business. The net asset value
per share of the Fund is calculated by dividing the sum of the value of the
securities held by the Fund plus cash or other assets minus all liabilities
(including estimated accrued expenses) by the total number of shares outstanding
of the Fund, rounded to the nearest cent. The price at which a purchase or
redemption of Fund shares is effected is based on the next calculation of net
asset value after the order is received.
U.S. Government obligations are valued at their most recent bid prices as
obtained from one or more of the major market makers for such securities. Other
portfolio securities are valued as follows: (1) securities which are traded on
stock exchanges or are quoted by NASDAQ are valued at the last reported sale
price as of the close of the regular session of trading on the New York Stock
Exchange on the day the securities are being valued, or, if not traded on a
particular day, at the closing bid price, (2) securities traded in the
over-the-counter market, and which are not quoted by NASDAQ, are valued at the
last sale price (or, if the last sale price is not readily available, at the
last bid price as quoted by brokers that make markets in the securities) as of
the close of the regular session of trading on the New York Stock Exchange on
the day the securities are being valued, (3) securities which are traded both in
the over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market, and (4)
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securities (and other assets) for which market quotations are not readily
available are valued at their fair value as determined in good faith in
accordance with consistently applied procedures established by and under the
general supervision of the Board of Trustees. The net asset value per share of
the Fund will fluctuate with the value of the securities it holds.
TAXES
-----
The Fund has qualified and intends to continue to qualify for the special tax
treatment afforded a "regulated investment company" under Subchapter M of the
Internal Revenue Code so that it does not pay federal taxes on income and
capital gains distributed to shareholders. The Fund intends to distribute
substantially all of its net investment income and any realized capital gains to
its shareholders. Distributions of net investment income as well as from net
realized short-term capital gains, if any, are taxable as ordinary income.
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses) by a Fund are taxable to you as capital
gains, without regard to the length of time you have held your Fund shares.
Capital gains distributions may be taxable at different rates depending on the
length of time a Fund holds its assets.
Redemptions of shares of the Fund are taxable events on which you may realize a
gain or loss.
The Fund will mail a statement to you annually indicating the amount and federal
income tax status of all distributions made during the year. The Fund's
distributions may be subject to federal income tax whether received in cash or
reinvested in additional shares. In addition to federal taxes, you may be
subject to state and local taxes on distributions.
DISTRIBUTION PLAN
-----------------
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund has
adopted a plan of distribution (the "Plan") under which the Fund may directly
incur or reimburse the Underwriter or the Adviser for expenses related to the
sale and distribution of its shares, including payments to securities dealers
and others who are engaged in the sale of shares of the Fund and who may be
advising investors regarding the purchase, sale or retention of Fund shares;
expenses of maintaining personnel who engage in or support distribution of
shares or who render shareholder support services not otherwise provided by the
Transfer Agent; expenses of formulating and implementing marketing and
promotional activities, including direct mail promotions and mass media
advertising; expenses of preparing, printing and distributing sales literature
and prospectuses and statements of additional information and reports for
recipients other than existing shareholders of the Fund; expenses of obtaining
such information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable; and any other
expenses related to the distribution of the Fund's shares.
The annual limitation for payment of expenses pursuant to the Plan is .25% of
the Fund's average daily net assets. Because these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges. In the event the Plan is terminated by the Fund in accordance with its
-13-
<PAGE>
terms, the Fund will not be required to make any payments for expenses incurred
after the date the Plan terminates.
FINANCIAL HIGHLIGHTS
--------------------
The financial highlights table is intended to help you understand the Fund's
financial performance. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that an
investor would have earned on an investment in the Fund (assuming reinvestment
of dividends and distributions). This information has been audited by Joseph
Decosimo & Company whose report, along with the Fund's financial statements, are
included in the Statement of Additional Information, which is available upon
request.
Selected Per Share Data and Ratios for a Share
Outstanding Throughout Each Period
<TABLE>
<CAPTION>
For the For the
Year Period
Ended Ended
December 31, December 31,
1999 1998 (a)
------------- -------------
<S> <C> <C>
Net asset value at beginning of period $ 11.05 $ 10.00
------------- -------------
Income (loss) from investment operations:
Net investment income (loss) (0.11) 0.08
Net realized and unrealized gains on investments 4.76 1.05
------------- -------------
Total from investment operations 4.65 1.13
------------- -------------
Less distributions:
From net investment income/(loss) -- (0.08)
From net capital gains/(losses) (0.27) --
------------- -------------
Total distributions (0.27) (0.08)
------------- -------------
Net asset value at end of period $ 15.43 $ 11.05
============= =============
Total return (b) 42.26% 11.34%
============= =============
Net assets at end of period $ 3,453,747 $ 1,588,758
============= =============
Ratio of net expenses to average net assets (c) 2.32% 1.91%(d)
Ratio of net investment income (loss) to average net assets (1.06)% 0.71%(d)
Portfolio turnover rate 64% 4%(d)
</TABLE>
(a) Represents the period from the initial public offering of shares (March 2,
1998) through December 31, 1998.
(b) Total returns shown exclude the effect of applicable sales loads and are
not annualized.
(c) Absent fee waivers and expense reimbursements, the ratios of expenses to
average net assets would have been 4.86%(d) and 14.24%(d) for the periods
ended December 31, 1999 and December 31, 1998, respectively.
(d) Annualized.
-14-
<PAGE>
LAKE SHORE FAMILY OF FUNDS
8280 Montgomery Road, Suite 302
Cincinnati, Ohio 45236
BOARD OF TRUSTEES
Gregory J. Bauer
Frank G. Doyle III
Francis A. Kovacs, Jr.
Robert A. McLaughlin
Joseph P. Rouse
Ralph P. Schwartz
William N. Stratman
INVESTMENT ADVISER
LAKE SHORE FUND GROUP, LLC
8280 Montgomery Road, Suite 302
Cincinnati, Ohio 45236
UNDERWRITER
IFS FUND DISTRIBUTORS, INC.
312 Walnut Street
Cincinnati, Ohio 45202
SHAREHOLDER SERVICE
Nationwide: (Toll-Free) 800-266-9532
Additional information about the Fund is included in the Statement of Additional
Information, which is hereby incorporated by reference in its entirety.
Additional information about the Fund's investments is available in the Fund's
annual and semiannual reports to shareholders. In the Fund's annual report, you
will find a discussion of the market conditions and strategies that
significantly affected the Fund's performance during its last fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Fund, or to make inquiries about the Fund, please call
1-248-644-8500.
Information about the Fund, including the SAI, can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the Commission at 1-202-942-8090. Reports and other information about
the Fund are available on the Commission's Internet site at http://www.sec.gov.
Copies of information on the Commission's Internet site may be obtained, upon
payment of a duplicating fee, by electronic request at the following e-mail
address: [email protected], or by writing to: Securities and Exchange
Commission, Public Reference Section, Washington, D.C. 20549-0102.
File Number 811-8431
-22-
<PAGE>
LAKE SHORE FAMILY OF FUNDS
--------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
May 1, 2000
Lake Shore Equity Fund
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus of the Lake Shore Family of Funds dated
May 1, 2000. A copy of the Fund's Prospectus can be obtained by writing the
Trust at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202, or by calling
the Trust nationwide toll-free 1-800-266-9532.
TABLE OF CONTENTS
-----------------
THE TRUST..................................................................... 2
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS................................. 2
INVESTMENT LIMITATIONS........................................................ 4
PORTFOLIO TURNOVER............................................................ 6
TRUSTEES AND OFFICERS......................................................... 6
PRINCIPAL SECURITY HOLDERS.................................................... 8
THE INVESTMENT ADVISER........................................................ 9
DISTRIBUTION PLAN.............................................................10
CUSTODIAN.....................................................................11
AUDITORS......................................................................11
INTEGRATED FUND SERVICES, INC.................................................11
SECURITIES TRANSACTIONS.......................................................12
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE..........................14
OTHER PURCHASE INFORMATION....................................................14
THE UNDERWRITER...............................................................15
TAXES.........................................................................16
REDEMPTION IN KIND............................................................17
HISTORICAL PERFORMANCE INFORMATION............................................17
FINANCIAL STATEMENTS..........................................................19
<PAGE>
THE TRUST
---------
The Lake Shore Family of Funds (the "Trust"), an open-end management investment
company, was organized as an Ohio business trust on September 3, 1997. The Trust
currently offers one series of shares to investors: the Equity Fund (referred to
as the "Fund"). The Fund has its own investment objective and policies.
The shares of the Fund represent an equal proportionate interest in the assets
and liabilities belonging to the Fund with each other share of the Fund and is
entitled to such dividends and distributions out of the income belonging to the
Fund as are declared by the Trustees. The shares do not have cumulative voting
rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of any Fund into a
greater or lesser number of shares of that Fund so long as the proportionate
beneficial interest in the assets belonging to that Fund and the rights of
shares of any other Fund are in no way affected. In case of any liquidation of a
Fund, the holders of shares of the Fund being liquidated will be entitled to
receive as a class a distribution out of the assets, net of the liabilities,
belonging to that Fund. Expenses attributable to any Fund are borne by that
Fund. Any general expenses of the Trust not readily identifiable as belonging to
a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. Generally, the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders. No shareholder is liable to further calls or to assessment by the
Trust without his express consent.
Shares of the Fund have equal voting rights and liquidation rights. When matters
are submitted to shareholders for a vote, each shareholder is entitled to one
vote for each full share owned and fractional votes for fractional shares owned.
The Trust does not normally hold annual meetings of shareholders. The Trustees
shall promptly call and give notice of a meeting of shareholders for the purpose
of voting upon the removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding shares. The Trust
will comply with the provisions of Section 16(c) of the Investment Company Act
of 1940 in order to facilitate communications among shareholders.
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
---------------------------------------------
A more detailed discussion of some of the terms used and investment
policies described in the Prospectus (see "Investment Objective, Principal
Investment Strategies and Principal Risk Considerations") appears below:
MAJORITY. As used in the Prospectus and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Trust means
the lesser of (1) 67% or more of the outstanding shares of the Trust (or the
applicable Fund) present at a meeting, if the holders of more than 50% of the
outstanding shares of the Trust (or the applicable Fund) are present or
represented at such meeting or (2) more than 50% of the outstanding shares of
the Trust (or the applicable Fund).
COMMERCIAL PAPER. Commercial paper consists of short-term (usually from one to
two hundred seventy days) unsecured promissory notes issued by corporations in
order to finance their current operations. Each Fund will only invest in
commercial paper rated A-1 or A-2 by Standard & Poor's Ratings Group ("S&P") or
Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's") or which, in
the opinion of Lake Shore Fund Group, LLC (the "Adviser") is of equivalent
investment quality. Certain notes may have floating or variable rates. Variable
and floating rate notes with a demand notice period exceeding seven days will be
subject to each Fund's restrictions on illiquid investments (see "Investment
Limitations") unless, in the judgment of the Adviser, subject to the direction
of the Board of Trustees, such note is liquid.
- 2 -
<PAGE>
The rating of Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: valuation of the management of the issuer; economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
strength of the parent company and the relationships which exist with the
issuer; and recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to meet such
obligations. These factors are all considered in determining whether the
commercial paper is rated Prime-1 or Prime-2. Commercial paper rated A-1
(highest quality) by S&P has the following characteristics: liquidity ratios are
adequate to meet cash requirements; long-term senior debt is rated "A" or
better, although in some cases "BBB" credits may be allowed; the issuer has
access to at least two additional channels of borrowing; basic earnings and cash
flow have an upward trend with allowance made for unusual circumstances;
typically, the issuer's industry is well established and the issuer has a strong
position within the industry; and the reliability and quality of management are
unquestioned. The relative strength or weakness of the above factors determines
whether the issuer's commercial paper is rated A-1 or A-2.
BANK DEBT INSTRUMENTS. Bank debt instruments in which the Funds may invest
consist of certificates of deposit, bankers' acceptances and time deposits
issued by national banks and state banks, trust companies and mutual savings
banks, or of banks or institutions the accounts of which are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation. Certificates of deposit are negotiable certificates evidencing the
indebtedness of a commercial bank to repay funds deposited with it for a
definite period of time (usually from fourteen days to one year) at a stated or
variable interest rate. Bankers' acceptances are credit instruments evidencing
the obligation of a bank to pay a draft which has been drawn on it by a
customer, which instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. Time deposits are
non-negotiable deposits maintained in a banking institution for a specified
period of time at a stated interest rate. Investments in time deposits maturing
in more than seven days will be subject to each Fund's restrictions on illiquid
investments (see "Investment Limitations").
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which a Fund
purchases a security and simultaneously commits to resell that security to the
seller at an agreed upon time and price, thereby determining the yield during
the term of the agreement. In the event of a bankruptcy or other default of the
seller of a repurchase agreement, a Fund could experience both delays in
liquidating the underlying security and losses. To minimize these possibilities,
each Fund intends to enter into repurchase agreements only with its Custodian,
with banks having assets in excess of $10 billion and with broker-dealers who
are recognized as primary dealers in U.S. Government obligations by the Federal
Reserve Bank of New York. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' Custodian at the Federal
Reserve Bank. A Fund will not enter into a repurchase agreement not terminable
within seven days if, as a result thereof, more than 15% of the value of its net
assets would be invested in such securities and other illiquid securities.
Although the securities subject to a repurchase agreement might bear
maturities exceeding one year, settlement for the repurchase would never be more
than one year after the Fund's acquisition of the securities and normally would
be within a shorter period of time. The resale price will be in excess of the
purchase price, reflecting an agreed upon market rate effective for the period
of time the Fund's money will be invested in the securities, and will not be
related to the coupon rate of the purchased security. At the time a Fund enters
into a repurchase agreement, the value of the underlying security, including
accrued interest, will equal or exceed the value of the repurchase agreement,
and in the case of a repurchase agreement exceeding one day, the seller will
agree that the value of the underlying security, including accrued interest,
will at all times equal or exceed the value of the repurchase agreement. The
collateral securing the seller's obligation must be of a credit quality at least
equal to a Fund's investment criteria for portfolio securities and will be held
by the Custodian or in the Federal Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, a repurchase agreement
is deemed to be a loan from a Fund to the seller subject to the repurchase
agreement and is therefore subject to that Fund's investment restriction
applicable to loans. It is not clear whether a court would consider the
securities purchased by a Fund subject to a repurchase agreement as being owned
by that Fund or as being collateral for a loan by the Fund to the seller. In the
event of the commencement of bankruptcy or insolvency proceedings with respect
to the seller of the securities before repurchase of the security under a
repurchase agreement, a Fund may encounter delay and incur costs before being
able to sell the security. Delays may involve loss of interest or decline in
price of the security. If a court characterized the transaction as a loan and a
Fund has not perfected a security interest in the security, that Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, a Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for a Fund, the
Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case, the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case a Fund may
incur a loss if the proceeds to that Fund of the sale of the security to a third
party are less than the repurchase price. However, if the market value of the
securities subject to the repurchase agreement becomes less than the repurchase
price (including interest), the Fund involved will direct the seller of the
security to deliver additional securities so that the market value of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that a Fund will be unsuccessful in seeking to
enforce the seller's contractual obligation to deliver additional securities.
-3-
<PAGE>
STRIPS. STRIPS are U.S. Treasury bills, notes, and bonds that have been issued
without interest coupons or stripped of their unmatured interest coupons,
interest coupons that have been stripped from such U.S. Treasury securities, and
receipts or certificates representing interests in such stripped U.S. Treasury
securities and coupons. A STRIPS security pays no interest in cash to its holder
during its life although interest is accrued for federal income tax purposes.
Its value to an investor consists of the difference between its face value at
the time of maturity and the price for which it was acquired, which is generally
an amount significantly less than its face value. Investing in STRIPS may help
to preserve capital during periods of declining interest rates.
STRIPS do not entitle the holder to any periodic payments of interest prior
to maturity. Accordingly, such securities usually trade a deep discount from
their face or par value and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of comparable
maturities which make periodic distributions of interest. On the other hand,
because there are no periodic interest payments to be reinvested prior to
maturity, STRIPS eliminate the reinvestment risk and lock in a rate of return to
maturity. Current federal tax law requires that a holder of a STRIPS security
accrue a portion of the discount at which the security was purchased as income
each year even though the holder received no interest payment in cash on the
security during the year.
BORROWING AND PLEDGING. A Fund may borrow money from banks, provided that,
immediately after any such borrowings, there is asset coverage of 300% for all
borrowings of the Fund. A Fund will not make any borrowing which would cause its
outstanding borrowings to exceed one-third of the value of its total assets. A
Fund may pledge assets in connection with borrowings but will not pledge more
than one-third of its total assets. Borrowing magnifies the potential for gain
or loss on the portfolio securities of the Fund and, therefore, if employed,
increases the possibility of fluctuation in a Fund's net asset value. This is
the speculative factor known as leverage. A Fund's policies on borrowing and
pledging are fundamental policies which may not be changed without the
affirmative vote of a majority of its outstanding shares. It is the Fund's
present intention, which may be changed by the Board of Trustees without
shareholder approval, to limit a Fund's borrowing to no more than 5% of its net
assets, and only for emergency or extraordinary purposes and not for leverage.
LENDING PORTFOLIO SECURITIES. A Fund may, from time to time, lend securities on
a short-term basis (i.e., for up to seven days) to banks, brokers and dealers
and receive as collateral cash, U.S. Government obligations or irrevocable bank
letters of credit (or any combination thereof), which collateral will be
required to be maintained at all times in an amount equal to at least 100% of
the current value of the loaned securities plus accrued interest. Although a
Fund does have the ability to make loans of all of its portfolio securities, it
is the present intention of the Trust, which may be changed without shareholder
approval, that such loans will not be made with respect to a Fund if as a result
the aggregate of all outstanding loans exceeds one-third of the value of the
Fund's total assets. Securities lending will afford a Fund the opportunity to
earn additional income because the Fund will continue to be entitled to the
interest payable on the loaned securities and also will either receive as income
all or a portion of the interest on the investment of any cash loan collateral
or, in the case of collateral other than cash, a fee negotiated with the
borrower. Such loans will be terminable at any time. Loans of securities involve
risks of delay in receiving additional collateral or in recovering the
securities lent or even loss of rights in the collateral in the event of the
insolvency of the borrower of the securities. A Fund will have the right to
regain record ownership of loaned securities in order to exercise beneficial
rights. A Fund may pay reasonable fees in connection with arranging such loans.
INVESTMENT LIMITATIONS
----------------------
The Trust has adopted certain fundamental investment limitations designed to
reduce the risk of an investment in the Fund. These limitations may not be
changed with respect to the Fund without the affirmative vote of a majority of
the outstanding shares of the Fund.
1. BORROWING MONEY. The Fund will not borrow money, except from a bank, provided
that immediately after such borrowing there is asset coverage of 300% for all
borrowings of the Fund. The Fund will not make any borrowing which would cause
its outstanding borrowings to exceed one-third of the value of its total assets.
2. PLEDGING. The Fund will not mortgage, pledge, hypothecate or in any manner
transfer, as security for indebtedness, any security owned or held by the Fund
except as may be necessary in connection with borrowings described in limitation
(1) above. The Fund will not mortgage, pledge or hypothecate more than one-third
of its assets in connection with borrowings.
3. MARGIN PURCHASES. The Fund will not purchase any securities or evidences of
interest thereon on "margin" (except such short-term credits as are necessary
for the clearance of transactions).
4. OPTIONS. The Fund will not purchase or sell puts, calls, options, futures,
straddles, commodities or commodities futures contracts.
5. REAL ESTATE. The Fund will not purchase, hold or deal in real estate or real
estate mortgage loans, except that a Fund may purchase (a) securities of
companies (other than limited partnerships) which deal in real estate or (b)
securities which are secured by interests in real estate.
6. SHORT SALES. The Fund will not make short sales of securities, or maintain a
short position, other than short sales
-4-
<PAGE>
"against the box."
7. MINERAL LEASES. The Fund will not purchase oil, gas or other mineral leases
or exploration or development programs.
8. UNDERWRITING. The Fund will not act as underwriter of securities issued by
other persons, either directly or through a majority owned subsidiary. This
limitation is not applicable to the extent that, in connection with the
disposition of its portfolio securities (including restricted securities), the
Fund may be deemed an underwriter under certain federal securities laws.
9. ILLIQUID INVESTMENTS. The Fund will not purchase securities which cannot be
readily resold to the public because of legal or contractual restrictions on
resale or for which no readily available market exists or engage in a repurchase
agreement maturing in more than seven days if, as a result thereof, more than
15% of the value of the Fund's net assets would be invested in such securities.
10. CONCENTRATION. The Fund will not invest 25% or more of its total assets in
the securities of issuers in any particular industry; provided, however, that
there is no limitation with respect to investments in obligations issued or
guaranteed by the United States Government or its agencies or instrumentalities
or repurchase agreements with respect thereto.
11. INVESTING FOR CONTROL. The Fund will not invest in companies for the purpose
of exercising control.
12. SENIOR SECURITIES. The Fund will not issue or sell any senior security. This
limitation is not applicable to short-term credit obtained by the Fund for the
clearance of purchases and sales or redemptions of securities.
13. LOANS. The Fund will not make loans to other persons, except (a) by loaning
portfolio securities, or (b) by engaging in repurchase agreements. For purposes
of this limitation, the term "loans" shall not include the purchase of bonds,
debentures, commercial paper or corporate notes, and similar marketable
evidences of indebtedness.
With respect to the percentages adopted by the Trust as maximum limitations on a
Fund's investment policies and restrictions, an excess above the fixed
percentage (except for the percentage limitations relative to the borrowing of
money and the holding of illiquid securities) will not be a violation of the
policy or restriction unless the excess results immediately and directly from
the acquisition of any security or the action taken.
The Trust does not intend to pledge, mortgage or hypothecate the assets of the
Fund. The Fund does not intend to make short sales of securities "against the
box" as described in investment
-5-
<PAGE>
limitation 6. The statements of intention in this paragraph reflect
nonfundamental policies which may be changed by the Board of Trustees without
shareholder approval.
PORTFOLIO TURNOVER
------------------
The Fund does not intend to use short-term trading as a primary means of
achieving their investment objectives. However, a Fund's rate of portfolio
turnover will depend upon market and other conditions, and it will not be a
limiting factor when portfolio changes are deemed necessary or appropriate by
the Adviser. Although the annual portfolio turnover rate of the Fund cannot be
accurately predicted, it is not expected to exceed 100% with respect to the
Fund, but may be either higher or lower. A 100% turnover rate would occur, for
example, if all the securities of a Fund were replaced once in a one-year
period.
High turnover involves correspondingly greater commission expenses and
transaction costs and may result in a Fund recognizing greater amounts of income
and capital gains, which would increase the amount of income and capital gains
which the Fund must distribute to shareholders in order to maintain its status
as a regulated investment company and to avoid the imposition of federal income
or excise taxes.
For the fiscal periods ended December 31, 1999 and 1998, the portfolio turnover
rate for the Equity Fund was 64% and 4%, respectively.
TRUSTEES AND OFFICERS
---------------------
The following is a list of the Trustees and executive officers of the Trust,
their age and their aggregate compensation from the Trust for the fiscal period
ended December 31, 1999. Each Trustee who is an "interested person" of the
Trust, as defined by the Investment Company Act of 1940, is indicated by an
asterisk.
Compensation
Name Age Position Held from the Trust
- ---- --- ------------- --------------
*Gregory J. Bauer 46 Chairman/Trustee $ 0
+Frank G. Doyle III 55 Trustee 500
+Francis A. Kovacs, Jr. 46 Trustee 1,000
*Robert A. McLaughlin 60 Trustee 0
Joseph P. Rouse 55 Trustee 750
+Ralph P. Schwartz 55 Trustee 750
+William N. Stratman 57 Trustee 750
Earl V. Newsome, Jr. 43 President 0
Theresa M. Samocki 30 Treasurer 0
Tina D. Hosking 31 Secretary 0
* Messrs. Bauer and McLaughlin are "interested persons" of the Trust within
the meaning of Section 2(a)(19) of the Investment Company Act of 1940.
-6-
<PAGE>
+ Member of Audit Committee.
The principal occupations of the Trustees and executive officers of the Trust
during the past five years are set forth below:
GREGORY J.BAUER, 1650 Lake Shore Drive, Suite 280, Columbus, Ohio 43204, is
Chairman of Lake Shore Fund Group, LLC (the investment adviser to the Trust). He
is also Chairman and Managing Director of Cambridge Financial Group, Inc., a
registered investment adviser.
FRANK G. DOYLE III, 8041 Hosbrook Road, Suite 200, Cincinnati, Ohio 45236, owns
Preferred Business Services, which leases office space and provides secretarial
support for its clients and AD Mail, a direct mail service company.
FRANCIS A. KOVACS, JR., 155 East Broad Street, 16th Floor, Columbus, Ohio 43215,
is a partner of Coolidge, Wall, Womsley & Lombard Co., L.P.A. Previously, he was
a partner of Schottenstein, Zox & Dunn.
ROBERT A. MCLAUGHLIN, 1650 Lake Shore Drive, Suite 280, Columbus, Ohio 43204, is
Executive Vice President of Lake Shore Fund Group, LLC. He is also Executive
Vice President and a director of Cambridge Financial Group, Inc. Mr. McLaughlin
previously served as retirement system investment officer and assistant director
of the Ohio Public Employees Retirement System.
JOSEPH P. ROUSE, 1800 Provident Tower, One East Fourth Street, Cincinnati, Ohio
45202, is a partner of Keating, Muething & Klekamp, a law firm.
RALPH P. SCHWARTZ, 2289 West Centerville Road, Dayton, Ohio 45459, is a
self-employed certified public accountant.
WILLIAM N. STRATMAN, 7949 Graves Road, Cincinnati, Ohio 45243, is a co-owner of
the Mariners Inn banquet halls. Previously, he owned The Bohlenger Engraving
Company.
EARL V. (BUCK) NEWSOME, JR., 7824 Laurel Avenue, Cincinnati, Ohio 45243 is
President of Lake Shore Fund Group, LLC. He is also the President of Cambridge
Financial Group, Inc.
THERESA M. SAMOCKI, 312 Walnut Street, Cincinnati, Ohio 45202 is Vice President
and Fund Accounting Manager of Integrated Fund Services, Inc.
TINA D. HOSKING, 312 Walnut Street, Cincinnati, Ohio 45202 is Vice President and
Associate General Counsel of Integrated Fund Services, Inc. and IFS Fund
Distributors, Inc.
Each Trustee who is not an employee or officer of the Adviser will receive a
$250 fee for each Board meeting attended and will be reimbursed for travel and
other expenses incurred in the performance of their duties.
-7-
<PAGE>
PRINCIPAL SECURITY HOLDERS
--------------------------
As of April 14, 2000, Advest, Inc. for the benefit of its customers, 90 State
House Square, Hartford, Connecticut, owned of record 73.83% of the outstanding
shares of the Fund. For purposes of voting on matters submitted to shareholders,
any person who owns more than 50% of the outstanding shares of a Fund generally
would be able to cast the deciding vote.
As of April 14, 2000, the Trustees and officers of the Trust as a group owned of
record or beneficially 4.34% of the outstanding shares of the Fund.
INVESTMENT ADVISER
------------------
Lake Shore Fund Group, LLC (the "Adviser") is the Funds' investment manager.
Earl V. (Buck) Newsome, Jr. and Gregory J. Bauer are the controlling
shareholders of the Adviser. Mr. Newsome and Mr. Bauer, by reason of such
affiliation, may directly or indirectly receive benefits from the advisory fees
paid to the Adviser.
Under the terms of the advisory agreement between the Trust and the Adviser, the
Adviser manages the Fund's investments. The Fund pays the Adviser a fee computed
and accrued daily and paid monthly at an annual rate of 1.00% of its average
daily net assets.
For the fiscal periods ended December 31, 1999 and 1998, the Fund accrued
advisory fees of $23,668 and $4,838, respectively. However, in order to reduce
the operating expenses of the Fund the Adviser voluntarily waived its entire
advisory fee and reimbursed the Fund $38,308 and $54,858, respectively, of other
operating expenses.
The Fund is responsible for the payment of all expenses incurred in connection
with the organization, registration of shares and operations of the Fund,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of Fund shares (see "Distribution
Plan"), insurance expenses, taxes or governmental fees, fees and expenses of the
custodian, transfer agent and accounting and pricing agent for the Fund, fees
and expenses of members of the Board of Trustees who are not employees or
officers of the Adviser, the cost of preparing and distributing prospectuses,
statements, reports and other documents to share holders, expense of
shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, such as litigation to which the Trust may
be a party. The Fund may have an obligation to indemnify the Trust's officers
and Trustees with respect to such litigation, except in instances of willful
misfeasance, bad faith, gross negligence or
-8-
<PAGE>
reckless disregard by such officers and Trustees in the performance of their
duties. The compensation and expenses of any officer, Trustee or employee of the
Trust who is an officer, member, director, employee or stockholder of the
Adviser are paid by the Adviser.
By its terms, the Trust's advisory agreement will remain in force until January
8, 2001 and from year to year thereafter, subject to annual approval by (a) the
Board of Trustees or (b) a vote of the majority of a Fund's outstanding voting
securities; provided that in either event continuance is also approved by a
majority of the Trustees who are not interested persons of the Trust, by a vote
cast in person at a meeting called for the purpose of voting such approval. The
Trust's investment advisory agreement may be terminated at any time, on sixty
days' written notice, without the payment of any penalty, by the Board of
Trustees, by a vote of the majority of a Fund's outstanding voting securities,
or by the Adviser. The investment advisory agreement automatically terminates in
the event of its assignment, as defined by the Investment Company Act of 1940
and the rules thereunder.
DISTRIBUTION PLAN
-----------------
As stated in the Prospectus, the Fund has adopted a plan of distribution (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 which
permits the Fund to pay for expenses incurred in the distribution and promotion
of its shares, including but not limited to, the printing of prospectuses,
statements of additional information and reports used for sales purposes,
advertisements, expenses of preparation and printing of sales literature,
promotion, marketing and sales expenses, and other distribution-related
expenses, including any distribution fees paid to securities dealers or other
firms who have executed a distribution or service agreement with the
Underwriter.
The Plan expressly limits payment of the distribution expenses listed above in
any fiscal year to a maximum of .25% of the average daily net assets of each
Fund. For the fiscal period ended December 31, 1999 and 1998, the Fund incurred
distribution expenses of $692 and $250, in the form of payments to
broker-dealers, respectively.
The continuance of the Plan must be specifically approved at least annually by a
vote of the Trust's Board of Trustees and by a vote of the Trustees who are not
interested persons of the Trust and have no direct or indirect financial
interest in the Plan (the "Independent Trustees") at a meeting called for the
purpose of voting on such continuance. The Plan may be terminated by the Fund at
any time by a vote of a majority of the Independent Trustees or by a vote of the
holders of a majority of the outstanding shares of the Fund. In the event the
Plan is terminated in accordance with its terms, the Fund will not be required
to make any payments for expenses incurred by the
-9-
<PAGE>
Adviser after the termination date. The Plan may not be amended to increase
materially the amount to be spent for distribution without shareholder approval.
All material amendments to the Plan must be approved by a vote of the Trust's
Board of Trustees and by a vote of the Independent Trustees.
In approving the Plan, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties as Trustees, that there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Board of Trustees believes that expenditure of the Fund's
assets for distribution expenses under the Plan should assist in the growth of
the Fund which will benefit the Fund and its shareholders through increased
economies of scale, greater investment flexibility, greater portfolio
diversification and less chance of disruption of planned investment strategies.
The Plan will be renewed only if the Trustees make a similar determination for
each subsequent year of the Plan. There can be no assurance that the benefits
anticipated from the expenditure of the Fund's assets for distribution will be
realized. While the Plan is in effect, all amounts spent by the Fund pursuant to
the Plan and the purposes for which such expenditures were made must be reported
quarterly to the Board of Trustees for its review. In addition, the selection
and nomination of those Trustees who are not interested persons of the Trust are
committed to the discretion of the Independent Trustees during such period.
By reason of their ownership of shares of the Adviser, Earl V. (Buck) Newsome,
Jr. and Gregory J. Bauer may each be deemed to have a financial interest in the
operation of the Plan.
CUSTODIAN
---------
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio, has been retained to
act as Custodian for the Funds' investments. Firstar acts as each Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds as instructed and maintains
records in connection with its duties.
AUDITORS
--------
The firm of Joseph Decosimo and Company, PLL, 221 E.4th Street, Suite 2727,
Cincinnati, Ohio 45202, has been selected as independent auditors for the Trust
for the fiscal year ending December 31, 2000. Joseph Decosimo and Company
performs an annual audit of the Trust's financial statements and advises the
Trust as to certain accounting matters.
INTEGRATED FUND SERVICES, INC.
------------------------------
The Trust has retained Integrated Fund Services, Inc. ("Integrated") to act as
its transfer agent. Integrated is an indirect wholly-owned subsidiary
-10-
<PAGE>
of The Western and Southern Life Insurance Company. Integrated maintains the
records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of the Fund's
shares, acts as dividend and distribution disbursing agent and performs other
shareholder service functions. Integrated receives for its services as transfer
agent a fee at an annual rate of $20 per account from the Fund, provided,
however, that the minimum fee is $1,200 per month. In addition, the Fund pays
out-of-pocket expenses, including but not limited to, postage, envelopes,
checks, drafts, forms, reports, record storage and communication lines.
Integrated also provides accounting and pricing services to the Fund. For
calculating daily net asset value per share and maintaining such books and
records as are necessary to enable Integrated to perform its duties, the Fund
pays Integrated a fee in accordance with the following schedule:
Average Monthly Net Assets Monthly Fee
--------------------------- ---------------
$ 0 - $ 50,000,000 $2,000
50,000,000 - 100,000,000 $2,500
100,000,000 - 200,000,000 $3,000
200,000,000 - 300,000,000 $4,000
Over 300,000,000 $5,000 + .001% of average
monthly net assets
In addition, the Fund pays all costs of external pricing services.
Integrated also provides administrative services to the Funds. In this capacity,
Integrated supplies non-investment related statistical and research data,
internal regulatory compliance services and executive and administrative
services. Integrated supervises the preparation of tax returns, reports to
shareholders, reports to and filings with the Securities and Exchange Commission
and state securities commissions, and materials for meetings of the Board of
Trustees. For the performance of these administrative services, the Fund pays
Integrated a fee at the annual rate of .15% of the average value of its daily
net assets up to $50 million, .125% of such assets from $50 million to $100
million and .10% of such assets in excess of $100 million, provided, however,
that the minimum fee is $1,000 per month. For the fiscal period ended December
31, 1999 and 1998, Integrated (formerly Countrywide Fund Services, Inc.)
received from the Fund transfer agency fees, accounting services fees and
administrative service fees of $14,400, $21,000 and $12,000 and $10,800, $18,000
and $9,000, respectively.
SECURITIES TRANSACTIONS
-----------------------
Decisions to buy and sell securities for the Fund and the placing of the Fund's
securities transactions and negotiation of
-11-
<PAGE>
commission rates where applicable are made by the Adviser and are subject to
review by the Board of Trustees of the Trust. In the purchase and sale of
portfolio securities, the Adviser seeks best execution for the Fund's, taking
into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer. The Adviser generally seeks favorable
prices and commission rates that are reasonable in relation to the benefits
received. The Fund paid brokerage commissions of $3,950 and $2,077,
respectively, during the fiscal periods ended December 31, 1999 and 1998.
The Fund may attempt to deal directly with the dealers who make a market in the
securities involved unless better prices and execution are available elsewhere.
Such dealers usually act as principals for their own account. On occasion,
portfolio securities for the Funds may be purchased directly from the issuer.
The Adviser is specifically authorized to select brokers who also provide
brokerage and research services to the Funds and/or other accounts over which
the Adviser exercises investment discretion and to pay such brokers a commission
in excess of the commission another broker would charge if the Adviser
determines in good faith that the commission is reasonable in relation to the
value of the brokerage and research services provided. The determination may be
viewed in terms of a particular transaction or the Adviser's overall
responsibilities with respect to the Funds and to accounts over which it
exercises investment discretion.
Research services include securities and economic analyses, reports on issuers'
financial conditions and future business prospects, newsletters and opinions
relating to interest trends, general advice on the relative merits of possible
investment securities for the Fund and statistical services and information with
respect to the availability of securities or purchasers or sellers of
securities. Although this information is useful to the Fund and the Adviser, it
is not possible to place a dollar value on it. Research services furnished by
brokers through whom the Fund effects securities transactions may be used by the
Adviser in servicing all of its accounts and not all such services may be used
by the Adviser in connection with the Fund.
The Fund has no obligation to deal with any broker or dealer in the execution of
securities transactions. However, the Underwriter and other affiliates of the
Trust or the Adviser may effect securities transactions which are executed on a
national securities exchange or transactions in the over-the-counter market
conducted on an agency basis. No Fund will effect any brokerage transactions in
its portfolio securities with the Adviser if such transactions would be unfair
or unreasonable to
-12-
<PAGE>
its shareholders. Over-the-counter transactions will be placed either directly
with principal market makers or with broker-dealers. Although the Fund does not
anticipate any ongoing arrangements with other brokerage firms, brokerage
business may be transacted from time to time with other firms. Neither the
Underwriter nor affiliates of the Trust or the Adviser will receive reciprocal
brokerage business as a result of the brokerage business transacted by the Fund
with other brokers.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
----------------------------------------------------
The share price (net asset value) and the public offering price (net asset value
plus applicable sales load) of the shares of the Fund are determined as of the
close of the regular session of trading on the New York Stock Exchange (normally
4:00 p.m., Eastern time), on each day the Trust is open for business. The Trust
is open for business on every day except Saturdays, Sundays and the following
holidays: New Year's Day, Martin Luther King, Jr. Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The Trust may also be open for business on other days in which
there is sufficient trading in a Fund's portfolio securities that its net asset
value might be materially affected. For a description of the methods used to
determine the share price and the public offering price, see "Calculation of
Public Offering Price" in the Prospectus.
OTHER PURCHASE INFORMATION
--------------------------
The Prospectus describes generally how to purchase shares of the Fund.
Additional information with respect to certain types of purchases of shares of
the Fund is set forth below.
RIGHT OF ACCUMULATION. A "purchaser" (as defined in the Prospectus) of shares of
a Fund has the right to combine the cost or current net asset value (whichever
is higher) of his existing shares of any Fund in the Lake Shore Family of Funds
with the amount of his current purchases in order to take advantage of the
reduced sales loads set forth in the tables in the Prospectus. The purchaser or
his dealer must notify Integratede Fund Services, Inc. (the "Transfer Agent")
that an investment qualifies for a reduced sales load. The reduced sales load
will be granted upon confirmation of the purchaser's holdings by the Transfer
Agent.
LETTER OF INTENT. The reduced sales loads set forth in the tables in the
Prospectus may also be available to any "purchaser" (as defined in the
Prospectus) of shares of a Fund who submits a Letter of Intent to the Transfer
Agent. The Letter must state an intention to invest in any Fund in the Lake
Shore Family of Funds within a thirteen month period a specified amount which,
if made at one time, would qualify for a reduced sales load. A Letter of Intent
may be submitted with a purchase at the beginning of the thirteen month period
or within ninety days of the first purchase
-13-
<PAGE>
under the Letter of Intent. Upon acceptance of this Letter, the purchaser
becomes eligible for the reduced sales load applicable to the level of
investment covered by such Letter of Intent as if the entire amount were
invested in a single transaction.
The Letter of Intent is not a binding obligation on the purchaser to purchase,
or the Trust to sell, the full amount indicated. During the term of a Letter of
Intent, shares representing 5% of the intended purchase will be held in escrow.
These shares will be released upon the completion of the intended investment. If
the Letter of Intent is not completed during the thirteen month period, the
applicable sales load will be adjusted by the redemption of sufficient shares
held in escrow, depending upon the amount actually purchased during the period.
The minimum initial investment under a Letter of Intent is $10,000.
A ninety-day backdating period can be used to include earlier purchases at the
purchaser's cost (without a retroactive downward adjustment of the sales load).
The thirteen month period would then begin on the date of the first purchase
during the ninety-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the Letter of Intent. The purchaser or
his dealer must notify the Transfer Agent that an investment is being made
pursuant to an executed Letter of Intent.
OTHER INFORMATION. The Trust does not impose a sales load or imposes a reduced
sales load in connection with purchases of shares of the Fund made under the
reinvestment privilege or the purchases described in the "Reduced Sales Load" or
"Purchases at Net Asset Value" sections in the Prospectus because such purchases
require minimal sales effort by the Underwriter. Purchases described in the
"Purchases at Net Asset Value" section may be made for investment only, and the
shares may not be resold except through redemption by or on behalf of the Trust.
THE UNDERWRITER
---------------
IFS Fund Distributors, Inc. (the "Underwriter"), 312 Walnut Street, Cincinnati,
Ohio 45202, is the principal underwriter of the Fund and, as such, is the
exclusive agent for distribution of shares of the Funds. The Underwriter is
obligated to sell the shares on a best efforts basis only against purchase
orders for the shares. Shares of the Fund are offered to the public on a
continuous basis. The Underwriter and Integrated are affiliates by reason of
common ownership.
The Underwriter currently allows concessions to dealers who sell shares of the
Fund, as follows:
Dealer Reallowance as
Amount of Investment % of Public Offering Price
-------------------- --------------------------
Less than $25,000 4.5%
$25,000 but less than $250,000 3.5%
$250,000 or more 2.5%
-14-
<PAGE>
Under certain circumstances, the Underwriter may increase or decrease the
reallowance to dealers. The Underwriter receives that portion of the sales load
which is not reallowed to the dealers who sell shares of the Fund. The
Underwriter retains the entire sales load on all direct initial investments in
the Fund and on all investments in accounts with no designated dealer of record.
For the fiscal periods ended December 31, 1999 and 1998, the aggregate
commissions collected on sale of Fund shares was $3,444 and $6,802,
respectively.
The Fund may compensate dealers, including the Underwriter and its affiliates,
based on the average balance of all accounts in the Fund for which the dealer is
designated as the party responsible for the account. See "Distribution Plan"
above.
TAXES
-----
The Prospectus describes generally the tax treatment of distributions by the
Fund. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
The Fund has qualified and intends to qualify annually for the special tax
treatment afforded a "regulated investment company" under Subchapter M of the
Internal Revenue Code so that it does not pay federal taxes on income and
capital gains distributed to shareholders. To so qualify a Fund must, among
other things, (i) derive at least 90% of its gross income in each taxable year
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currency, or
certain other income (including but not limited to gains from options, futures
and forward contracts) derived with respect to its business of investing in
stock, securities or currencies; and (ii) diversify its holdings so that at the
end of each quarter of its taxable year the following two conditions are met:
(a) at least 50% of the value of the Fund's total assets is represented by cash,
U.S. Government securities, securities of other regulated investment companies
and other securities (for this purpose such other securities will qualify only
if the Fund's investment is limited in respect to any issuer to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer) and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than U.S. Government
securities or securities of other regulated investment companies).
A Fund's net realized capital gains from securities transactions will be
distributed only after reducing such gains by the amount of any available
capital loss carryforwards. Capital losses may
-15-
<PAGE>
be carried forward to offset any capital gains for eight years, after which any
undeducted capital loss remaining is lost as a deduction.
A federal excise tax at the rate of 4% will be imposed on the excess, if any, of
a Fund's "required distribution" over actual distributions in any calendar year.
Generally, the "required distribution" is 98% of a Fund's ordinary income for
the calendar year plus 98% of its net capital gains recognized during the one
year period ending on November 30 of the calendar year plus undistributed
amounts from prior years. The Fund intends to make distributions sufficient to
avoid imposition of the excise tax.
The Trust is required to withhold and remit to the U.S. Treasury a portion (31%)
of dividend income on any account unless the shareholder provides a taxpayer
identification number and certifies that such number is correct and that the
shareholder is not subject to backup withholding.
REDEMPTION IN KIND
------------------
When it in the best interests of a Fund's shareholders, the Fund may make
payment for shares repurchased or redeemed in whole or in part in securities of
the Fund taken at current value. If any such redemption in kind is to be made,
the Fund intends to make an election pursuant to Rule 18f-1 under the Investment
Company Act of 1940. This election will require the Funds to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net asset value of the
Fund during any 90 day period for any one shareholder. Should payment be made in
securities, the redeeming shareholder will generally incur brokerage costs in
converting such securities to cash. Portfolio securities which are issued in an
in-kind redemption will be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
----------------------------------
From time to time, the Fund may advertise average annual total return. Average
annual total return quotations will be computed by finding the average annual
compounded rates of return over 1, 5 and 10 year periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 and 10 year
-16-
<PAGE>
periods at the end of the 1, 5 or 10 year periods (or fractional
portion thereof)
The calculation of average annual total return assumes the reinvestment of all
dividends and distributions and the deduction of the current maximum sales load
from the initial $1,000 payment. If a Fund has been in existence less than one,
five or ten years, the time period since the date of the initial public offering
of shares will be substituted for the periods stated. The average annual returns
of the Fund for the periods ended December 31, 1999 are as follows:
1 year 35.14%
Since Inception 24.93%
The Fund may also advertise total return (a "non-standardized quotation") which
is calculated differently from average annual total return. A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. This computation does not include the effect of
the applicable sales load which, if included, would reduce total return. The
Fund's total returns as calculated in this manner are as follows:
Year Ended (Inception Date March 2, 1998)
----------
December 31, 1998 11.34%
December 31, 1999 58.39%
A nonstandardized quotation may also indicate average annual compounded rates of
return without including the effect of the applicable sales load or over periods
other than those specified for average annual total return. For example, the
Fund's average annual compounded rate of return for period ended December 31,
1999 since the Fund's inception was 28.47%. A nonstandardized quotation of total
return will always be accompanied by the Fund's average annual total return as
described above.
From time to time, the Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
Yield = 2[(a-b/cd +1)6 -1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
-17-
<PAGE>
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that a Fund
owns the security. Generally, interest earned (for the purpose of "a" above) on
debt obligations is computed by reference to the yield to maturity of each
obligation held based on the market value of the obligation (including actual
accrued interest) at the close of business on the last business day prior to the
start of the 30-day (or one month) period for which yield is being calculated,
or, with respect to obligations purchased during the month, the purchase price
(plus actual accrued interest). With respect to the treatment of discount and
premium on mortgage or other receivables-backed obligations which are expected
to be subject to monthly paydowns of principal and interest, gain or loss
attributable to actual monthly paydowns is accounted for as an increase or
decrease to interest income during the period and discount or premium on the
remaining security is not amortized. For the 30 day or one month period ended
March 31, 2000, the Fund's yield was 1.31%.
From time to time the Fund may advertise its performance rankings as published
by recognized independent mutual fund statistical services such as Lipper
Analytical Services, Inc.("Lipper"), or by publications of general interest such
as FORBES, MONEY, THE WALL STREET JOURNAL, BUSINESS WEEK, BARRON'S, FORTUNE OR
MORNINGSTAR MUTUAL FUND VALUES. The Fund may also compare its performance to
that of other selected mutual funds, averages of the other mutual funds within
their categories as determined by Lipper, or recognized indicators such as the
Dow Jones Industrial Average and the Standard & Poor's 500 Stock Index. In
connection with a ranking, the Fund may provide additional information, such as
the particular category of funds to which the ranking relates, the number of
funds in the category, the criteria upon which the ranking is based, and the
effect of fee waivers and/or expense reimbursements, if any. The Fund may also
present their performance and other investment characteristics, such as
volatility or a temporary defensive posture, in light of the Adviser's view of
current or past market conditions or historical trends.
In assessing such comparisons of performance, an investor should keep in mind
that the composition of the investments in the reported indices and averages is
not identical to the Fund's portfolios, that the averages are generally
unmanaged and that the items included in the calculations of such averages may
not be identical to the formula used by the Fund to calculate its performance.
In addition, there can be no assurance that the Fund will continue this
performance as compared to such other averages.
FINANCIAL STATEMENTS
--------------------
The Fund's Annual Financial Statements as of December 31, 1999, which have been
audited by Joseph Decosimo and Company, PLL, are attached to this Statement of
Additional Information.
-18-
<PAGE>
================================================================================
LAKE SHORE FAMILY OF FUNDS
--------------------------
LAKE SHORE EQUITY FUND
ANNUAL REPORT
December 31, 1999
INVESTMENT ADVISER ADMINISTRATOR
------------------ -------------
LAKE SHORE FUND GROUP, LLC COUNTRYWIDE FUND SERVICES, INC.
8280 Montgomery Road 312 Walnut Street
Suite 302 P.O. Box 5354
Cincinnati, Ohio 45236 Cincinnati, Ohio 45201-5354
1.513.794.1440 1.800.266.9532
================================================================================
<PAGE>
Dear Fellow Shareholders,
The stock market averages turned in a strong performance during the year's final
three months, with the S&P 500 Index rising 14.9%, the best performance since
last year's fourth quarter when the market soared off of its October low. The
21.0% total return for the S&P 500 for 1999 was its fifth consecutive year with
an annual gain in excess of 20%, and prior to this string, the market had never
posted more than two years in a row of annual gains of 20%. The Dow's return for
the year was 27.6%, while the Over-the-Counter market led the parade with an
increase of 85.6%.
The gains by the major averages masked significant underperformance by a
majority of issues. In the case of the S&P 500, more stocks in this index
declined than rose, and on the New York Stock Exchange, over 60% of the issues
declined for the year.
Those factors that have been favorable for stocks, namely healthy economic
growth, low inflation and rising corporate profits, remain in place. Remarkably,
the resilient economy which has driven unemployment to a 30-year low has not
caused inflation to ratchet higher. The streamlining of corporate America
several years ago, the globalization of economies, productivity enhancements
derived from technological innovation and competition fostered by the internet
have limited price increases. However, with the doubling of oil prices during
the year, potential labor shortages, and recoveries in foreign economies, upward
pressure may be exerted unless the pace of the domestic economy doesn't slow
down.
An additional factor that benefited the equity market for years was declining
interest rates. This prop was certainly not present in 1999, as the Federal
Reserve Board raised short-term interest rates three times during the year. As a
result, the total return for the 30-year Treasury bond was -14.4%, the worst
annual return ever posted, and the Lehman Government/Corporate Index suffered a
negative return for only the second time since the index was created in 1973.
With the rise in the S&P Index, its P/E ratio also moved to record heights. Part
of this is attributable to the change in the type of names that are now included
in the S&P 500 (more service and technology companies), but many of the large
leading names have
<PAGE>
ballooned to extremely high levels. In contrast, the P/E ratio for the Value
Line Index, which is comprised of 1700 stocks, is more favorably valued. At year
end, its P/E multiple was at 14.5x , versus a peak of 19.7x in the second
quarter of 1998. This would suggest that the broad market is not as richly
priced as some of the large cap stocks.
Economic and market forces were distorted at year end by concerns over potential
Y2K problems. Increased production to create additional inventories, buying to
stockpile goods, and extra liquidity added to the financial system by the Fed
increasing money supply make it difficult to discern underlying trends. From a
stock market perspective, typical year-end strategies employed by many investors
of buying winning stocks and selling losing stocks seemed to be exaggerated.
Carry-over volatility into the new year can be expected.
As we begin the new year, our market indicators continue to suggest that a fully
invested position be maintained. There is certainly a question over valuation,
as well as significant strength in a limited number of issues, and rising
interest rates are not conducive for long-term gains. However, we have not seen
enough of a shift to the negative side of the ledger to indicate a change in
strategy. We will be closely monitoring our indicators to detect further
deterioration.
If you have any questions, please feel free to call us at (513) 794-1440.
Sincerely,
Greg J. Bauer, CFA
Chairman
Lake Shore Family of Funds
<PAGE>
Comparison of the Change in Value of a $10,000 Investment in the
Lake Shore Equity Fund and the S&P 500 Index
[GRAPHIC OMITTED]
12/31/99
--------
Lake Shore Equity Fund $15,047
S&P 500 Index $12,519
--------------------------
Lake Shore Equity Fund
Total Return
1 Year Since Inception*
22.48% 21.64%
--------------------------
Past performance is not predictive of future performance.
*Initial public offering of shares was March 2, 1998.
<PAGE>
LAKE SHORE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
ASSETS
Investment securities, at market value (Cost $2,338,196) $ 3,443,864
Dividends and interest receivable 2,150
Organization expenses, net (Note 2) 13,300
Other Assets 2,323
------------
TOTAL ASSETS 3,461,637
------------
LIABILITIES
Payable to Affiliates (Note 4) 4,503
Accrued expenses $ 3,387
------------
TOTAL LIABILITIES 7,890
------------
NET ASSETS $ 3,453,747
============
NET ASSETS CONSIST OF:
Paid-in capital $ 2,397,188
Accumulated net realized losses from security transactions (49,110)
Net unrealized appreciation on investments 1,105,669
------------
NET ASSETS $ 3,453,747
------------
Shares of beneficial interest outstanding (Unlimited
number of shares authorized, no par value) 223,884
============
Net asset value and redemption price per share (Note 2) $ 15.43
============
Maximum offering price per share (Note 2) $ 16.24
============
See accompanying notes to financial statements.
<PAGE>
LAKE SHORE EQUITY FUND
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
INVESTMENT INCOME
Dividend $ 22,945
Interest 6,947
-----------
TOTAL INVESTMENT INCOME 29,892
-----------
EXPENSES
Investment advisory fees (Note 4) 23,668
Accounting services fees (Note 4) 21,000
Transfer agent fees (Note 4) 14,400
Insurance expense 12,625
Administrative services fees (Note 4) 12,000
Audit Fees 9,012
Custodian fees 8,136
Registration fees 4,439
Postage and supplies 2,595
Trustees' fees and expenses 2,573
Amortization of organization expenses (Note 2) 4,433
Shareholder report costs 840
Pricing costs 702
Distribution expense (Note 4) 692
-----------
TOTAL EXPENSES 117,115
Fees waived and expenses reimbursed by the Adviser (Note 4) (61,976)
-----------
NET EXPENSES 55,139
-----------
NET INVESTMENT LOSS (25,247)
-----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 11,761
Net increase in unrealized appreciation on investments 934,627
-----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 946,388
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 921,141
===========
See accompanying notes to financial statements.
<PAGE>
LAKE SHORE EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the For the
Year Period
Ended Ended
December 31, December 31,
1999 1998(a)
------------ ------------
FROM OPERATIONS
<S> <C> <C>
Net investment income/(loss) $ (25,247) $ 3,426
Net realized gains/(losses) from security transactions 11,761 (3,526)
Net increase in unrealized appreciation on investments 934,627 171,042
------------ ------------
Net increase in net assets from operations 921,141 170,942
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income -- (3,413)
From net realized gains (57,345) --
------------ ------------
Total distributions to shareholders (57,345) (3,413)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 1,036,655 1,324,065
Net asset value of shares issued in
reinvestment of distributions to shareholders 50,241 3,302
Payment for shares redeemed (85,703) (5,138)
------------ ------------
Net increase in net assets from capital share transactions 1,001,193 1,322,229
------------ ------------
TOTAL INCREASE IN NET ASSETS 1,864,989 1,489,758
NET ASSETS
Beginning of period (Note 1) 1,588,758 99,000
------------ ------------
End of period $ 3,453,747 $ 1,588,758
============ ============
UNDISTRIBUTED (ACCUMULATED) NET INVESTMENT
INCOME (LOSS) $ (25,234) $ 13
============ ============
CAPITAL SHARE ACTIVITY
Shares sold 82,679 134,015
Shares issued in reinvestment of distributions to shareholders 3,528 325
Shares redeemed (6,068) (495)
------------ ------------
Net increase in shares outstanding 80,139 133,845
Shares outstanding, beginning of period (Note 1) 143,745 9,900
------------ ------------
Shares outstanding, end of period 223,884 143,745
============ ============
</TABLE>
(a) Represents the period from the initial public offering of shares (March 2,
1998) through December 31, 1998.
See accompanying notes to financial statements.
<PAGE>
LAKE SHORE EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share
Outstanding Throughout Each Period
<TABLE>
<CAPTION>
For the For the
Year Period
Ended Ended
December 31, December 31,
1999 1998 (a)
------------- -------------
<S> <C> <C>
Net asset value at beginning of period $ 11.05 $ 10.00
------------- -------------
Income (loss) from investment operations:
Net investment income (loss) (0.11) 0.08
Net realized and unrealized gains on investments 4.76 1.05
------------- -------------
Total from investment operations 4.65 1.13
------------- -------------
Less distributions:
From net investment income/(loss) -- (0.08)
From net capital gains/(losses) (0.27) --
------------- -------------
Total distributions (0.27) (0.08)
------------- -------------
Net asset value at end of period $ 15.43 $ 11.05
============= =============
Total return (b) 42.26% 11.34%
============= =============
Net assets at end of period $ 3,453,747 $ 1,588,758
============= =============
Ratio of net expenses to average net assets (c) 2.32% 1.91%(d)
Ratio of net investment income (loss) to average net assets (1.06)% 0.71%(d)
Portfolio turnover rate 64% 4%(d)
</TABLE>
(a) Represents the period from the initial public offering of shares (March 2,
1998) through December 31, 1998.
(b) Total returns shown exclude the effect of applicable sales loads and are
not annualized.
(c) Absent fee waivers and expense reimbursements, the ratios of expenses to
average net assets would have been 4.86%(d) and 14.24%(d) for the periods
ended December 31, 1999 and December 31, 1998, respectively (Note 4).
(d) Annualized.
See accompanying notes to financial statements.
<PAGE>
LAKE SHORE EQUITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1999
Market
Shares Value
------ ------------
COMMON STOCKS - 90.0%
TECHNOLOGY - 55.0%
1,580 Apple Computer, Inc.* $ 162,444
2,315 Comcast Corp. 116,329
1,380 EMC Corp.* 150,765
715 IBM Corp. 77,220
1,250 Lucent Technologies, Inc. 93,516
6,250 National Semiconductor* 267,578
1,205 Nextel Communications, Inc.* 124,266
1,690 Nortel Networks 170,690
2,207 Oracle Corp.* 247,322
1,820 Qualcomm, Inc.* 320,547
1,160 Texas Instruments, Inc. 112,375
1,910 Unisys Corp.* 61,000
------------
1,904,052
------------
CONSUMER, CYCLICAL - 12.9%
2,010 Circuit City Stores Inc. 90,576
700 Delphi Automotive Systems Corp. 11,025
1,260 Ford Motor Co. 67,331
1,125 General Motors Corp. 81,773
3,060 Harrah's Entertainment* 80,899
1,665 Wal-Mart Stores, Inc. 115,093
------------
446,697
------------
CONSUMER, NON-CYCLICAL - 6.7%
1,280 Bristol-Myers Squibb Co. 82,160
1,835 Heinz (H.J.) Co. 73,056
1,515 Tandy Corporation 74,519
------------
229,735
------------
INDUSTRIAL - 5.9%
1,690 LSI Logic Corp.* 114,075
900 Minnesota Mining & Manufacturing Co. 88,088
------------
202,163
------------
<PAGE>
LAKE SHORE EQUITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1999
Market
Shares Value
------ ------------
CONGLOMERATES - 3.1%
690 General Electric Co. 106,777
------------
TELECOMMUNICATIONS - 2.3%
1,270 Bell Atlantic Corp. 78,184
------------
ENERGY - 2.1%
830 Chevron Corp. 71,899
------------
FINANCIAL SERVICES - 2.0%
594 Associates First Capital Corp. - Class A 16,298
1,045 Bank of America Corp. 52,446
------------
68,744
------------
TOTAL COMMON STOCKS (Cost $2,002,583) 3,108,251
------------
MONEY MARKETS - 9.7%
335,613 Firstar Stellar Treasury Fund (Cost $335,613) 335,613
TOTAL INVESTMENT SECURITIES (Cost $2,338,196) - 99.7% 3,443,864
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.3% 9,883
------------
NET ASSETS - 100.0% $ 3,453,747
============
* Non-income producing security.
See accompanying notes to financial statements.
<PAGE>
LAKE SHORE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1. ORGANIZATION
The Lake Shore Family of Funds (the Trust) is registered under the Investment
Company Act of 1940 (the 1940 Act) as an open-end management investment company.
The Trust was organized as an Ohio business trust under a Declaration of Trust
dated September 3, 1997. The Trust currently offers one series of shares to
investors: the Lake Shore Equity Fund. The Trust was capitalized on December 23,
1997, when the initial shares of the Fund were purchased at $10.00 per share.
The initial public offering of shares of the Equity Fund commenced on March 2,
1998. The Equity Fund had no operations prior to the public offering of shares
except for the initial issuance of shares.
The Equity Fund seeks long-term growth of capital by investing primarily in
common stocks. Dividend and interest income is only an incidental consideration
to the Fund's investment objective.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Equity Fund's significant accounting policies:
Security valuation -- The Fund's portfolio securities are valued as of the close
of business of the regular session of trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern time). Securities traded on a national stock
exchange or quoted by NASDAQ are valued based upon the closing price on the
principal exchange where the security is traded, or, if not traded on a
particular day, at the closing bid price. U.S. Government obligations are valued
at their most recent bid prices as obtained from one or more of the major market
makers for such securities.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The maximum offering price per share is equal to
the net asset value per share plus a sales load equal to 5.26% of the net asset
value (or 5.00% of the offering price). The redemption price per share is equal
to the net asset value per share.
Investment income -- Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Discounts and premiums on securities
purchased are amortized in accordance with income tax regulations which
approximate generally accepted accounting principles.
Distributions to shareholders -- The Fund expects to distribute substantially
all of its net investment income, if any, on a quarterly basis. The Fund expects
to distribute any net realized long-term capital gains, if any, at least once
each year. Management will determine the timing and frequency of the
distributions of any net realized short-term capital gains.
Organization expenses -- Expenses of organization have been capitalized and are
being amortized on a straight-line basis over five years. In the event any of
the initial shares of a Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by a pro rata portion of any unamortized
organization expenses in the same proportion as the number of initial shares
being redeemed bears to the number of initial shares of the Fund outstanding at
the time of the redemption.
<PAGE>
LAKE SHORE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are determined on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
As of December 31, 1999, net unrealized appreciation on investments was
$1,105,669 for federal income tax purposes, of which $1,188,092 related to
appreciated securities and $82,423 related to depreciated securities based on a
federal income tax cost basis of $2,338,196.
3. INVESTMENT TRANSACTIONS
For the year ended December 31, 1999, cost of purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $2,066,996 and $1,385,724 respectively.
4. TRANSACTIONS WITH AFFILIATES
Certain trustees and officers of the Trust are also officers of Lake Shore Fund
Group, LLC (the Adviser), of Countrywide Fund Services, Inc. (CFS), the
administrative services agent, shareholder servicing and transfer agent, and
accounting services agent for the Trust, or of CW Fund Distributors, Inc. (the
Underwriter), the exclusive agent for the distribution of the Fund's shares.
ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser pursuant to the terms of an
Advisory Agreement. The Fund pays the Adviser an investment advisory fee,
computed and accrued daily and paid monthly, at an annual rate of 1.00% of its
average daily net assets.
In order to voluntarily reduce operating expenses for the year ended December
31, 1999, the Adviser waived its entire advisory fee of $23,668 and reimbursed
the Fund for $38,308 of other operating expenses.
<PAGE>
LAKE SHORE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement, CFS supplies non-investment
related administrative and compliance services for the Fund. CFS supervises the
preparation of tax returns, reports to shareholders, reports to and filings with
the Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For these services, CFS
receives a monthly fee from the Fund at an annual rate of 0.15% of its average
daily net assets up to $50 million; 0.125% of such net assets from $50 million
to $100 million; and 0.10% of such net assets in excess of $100 million, subject
to a $1,000 minimum monthly fee.
TRANSFER AGENT AGREEMENT
Under the terms of a Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement, CFS maintains the records of each shareholder's account,
answers shareholders' inquiries concerning their accounts, processes purchases
and redemptions of the Fund's shares, acts as dividend and distribution
disbursing agent and performs other shareholder service functions. For these
services, CFS receives a monthly fee at an annual rate of $20 per shareholder
account, subject to a $1,200 minimum monthly fee. In addition, the Fund pays CFS
out-of-pocket expenses including, but not limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement, CFS calculates the daily
net asset value per share and maintains the financial books and records of the
Fund. For these services, CFS receives a monthly fee, based on current asset
levels, of $2,000 from the Fund. From July through December of 1999 these fees
were reduced to $1,500 per month. In addition, the Fund pays certain CFS
out-of-pocket expenses incurred by CFS in obtaining valuations of the Fund's
portfolio securities.
UNDERWRITING AGREEMENT
Under the terms of an Underwriting Agreement, the Underwriter serves as the
exclusive agent for the distribution of the Fund's shares. For these services,
the Underwriter earned $3,444 from underwriting commissions on the sale of
shares during the year ended December 31, 1999.
PLAN OF DISTRIBUTION
The Trust has adopted a Plan of Distribution (the Plan) pursuant to Rule 12b-1
under the 1940 Act. The Plan provides that the Fund may directly incur or
reimburse the Underwriter or the Adviser for certain costs related to the
distribution of the Fund shares, not to exceed 0.25% of average daily net
assets. For the year ended December 31, 1999, the Fund incurred $692 of expenses
under the Plan.
5. FEDERAL TAX INFORMATION FOR SHAREHOLDERS
On December 15, 1999, the Fund declared and paid a short-term capital gain
distribution of $51,143.69 or $0.2382 per share and a long-term capital gain
distribution of $6,201.55 or $0.0289 per share. In January of 2000, shareholders
were provided with the Form 1099-DIV which reported the amount and tax status of
the capital gain distributions paid during calendar year 1999.
<PAGE>
JOSEPH DECOSIMO
AND COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
An Ohio Registered Partnership Having Limited Liability
- --------------------------------------------------------------------------------
Private Companies Practice Section
Member AICPA Division for CPA Firms
SEC Practice Section
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Lake Shore Equity Fund and
The Trustees of Lake Shore Family of Funds
We have audited the accompanying statements of assets and liabilities, including
the portfolio of investments, of the Lake Shore Equity Fund (one of the funds of
the Lake Shore Family of Funds ) as of December 31, 1999, and the related
statements of operations for the year then ended and changes in net assets and
the financial highlights for the year ended December 31, 1999 and the period
ended March 2, 1998 (date of initial public offering of shares) through December
31, 1998. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financig hlights are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements and financial
highlights. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and fincial highlights referred to
above present fairly, in all material respects, the financial position of the
Lake Shore Equity Fund of the Lake Shore Family of Funds as of December 31,
1999, and the results of its operations for the year then ended and changes in
its net assets and financial highlights for the year ended December 31, 1999 and
the period from March 2, 1998 through December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ Joseph Decosimo and Company, PLL
Joseph Decosimo and Company, PLL
Cincinnati, Ohio
January 21, 2000
<PAGE>
LAKE SHORE FAMILY OF FUNDS
PART C. OTHER INFORMATION
- ------- -----------------
Item 23. Exhibits
- -------- --------
(a) Agreement and Declaration of Trust*
(b) Bylaws*
(c) Incorporated by reference to Agreement and Declaration of Trust
and Bylaws
(d) Investment Advisory Agreement with Lake Shore Fund Group, LLC*
(e) (i) Underwriting Agreement with Countrywide Investments, Inc*
(ii) Agreement to Transfer of Underwriting Agreement to CW Fund
Distributors, Inc.*
(f) Inapplicable
(g) Custody Agreement with Firstar Bank, N.A.*
(h) (i) Administration Agreement with Countrywide Fund Services,
Inc.*
(ii) Accounting Services Agreement with Countrywide Fund
Services, Inc.*
(iii)Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement with Countrywide Fund Services, Inc.*
(i) Opinion and Consent of Counsel*
(j) Consent of Independent Accountants
(k) Inapplicable
(l) Agreement Relating to Initial Capital*
(m) Plan of Distribution Pursuant to Rule 12b-1*
(n) Financial Data Schedule for the Equity Fund - Previously Filed
with Form N-SAR
(o) Inapplicable
(p) Codes of Ethics
- --------------------------------------
* Incorporated by reference to the Trust's Registration Statement on Form
N-1A.
<PAGE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
- ------- -------------------------------------------------------------
No person is directly or indirectly controlled by or under common
control with the Registrant.
Item 25. Indemnification
- -------- ---------------
Article VI of the Registrant's Agreement and Declaration of Trust
provides for indemnification of officers and Trustees as follows:
"SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject
to and except as otherwise provided in the Securities Act of
1933, as amended, and the 1940 Act, the Trust shall indemnify
each of its Trustees and officers, including persons who serve at
the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person") against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered
Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party
or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, and
except that no Covered Person shall be indemnified against any
liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's
office.
SECTION 6.5 ADVANCES OF EXPENSES. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered Person in
defending a proceeding to the full extent permitted by the
Securities Act of 1933, as amended, the 1940 Act, and Ohio
Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section
-2-
<PAGE>
1701.13(E), as amended, these laws, and not Ohio Revised Code
Section 1701.13(E), shall govern.
SECTION 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs, executors and
administrators. Nothing contained in this article shall affect
any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of
any such person.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The Registrant maintains a standard mutual fund and investment
advisory professional and directors and officers liability policy. The
policy provides coverage to the Registrant, its Trustees and officers,
and Lake Shore Fund Group, LLC (the "Adviser"). Coverage under the
policy will include losses by reason of any act, error, omission,
misstatement, misleading statement, neglect or breach of duty.
The Advisory Agreement with the Adviser provides that the Adviser
shall not be liable for any action taken, omitted or suffered to be
taken by it in its reasonable
-3-
<PAGE>
judgment, in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Agreement, or in accordance with (or in the absence of) specific
directions or instructions from the Trust, provided, however, that
such acts or omissions shall not have resulted from the Adviser's
willful misfeasance, bad faith or gross negligence, a violation of the
standard of care established by and applicable to the Adviser in its
actions under this Agreement or breach of its duty or of its
obligations hereunder.
Item 26. Business and Other Connections of the Investment Adviser
- -------- --------------------------------------------------------
(a) The Adviser is a registered investment adviser, providing
investment advisory services to the Registrant.
(b) The directors and officers of the Adviser and any other business,
profession, vocation or employment of a substantial nature
engaged in at any time during the past two years:
(i) Earl V. (Buck) Newsome, Jr. - President and a controlling
shareholder of the Adviser. President and a controlling
shareholder of Cambridge Financial Group, Inc.
(ii) Gregory J. Bauer - Chairman and a controlling shareholder of
the Adviser. Chairman, Managing Director and a controlling
shareholder of Cambridge Financial Group, Inc.
(iii)Robert A. McLaughlin - Executive Vice President and a
director of the Adviser. Executive Vice President and a
director of Cambridge Financial Group, Inc.
Item 27. Principal Underwriters
- -------- ----------------------
(a) IFS Fund Distributors, Inc. also acts as underwriter for the
following open-end investment companies: Brundage Story and Rose
Investment Trust, The Caldwell & Orkin Funds, Inc., Profit Funds
Investment Trust, UC Investment Trust, The Winter Harbor Fund,
Stockjungle.com Trust, The Westport Funds, Jamestown Funds,
Flippin Bruce & Porter Fund, The Bjurman Funds and The James
Advantage Funds.
(b) The following list sets forth the directors and executive
officers of the Distributor. Unless otherwise noted with an
-4-
<PAGE>
asterisk(*), the address of the persons named below is 312 Walnut
Street, Cincinnati, Ohio 45202.
*The address is 420 East Fourth Street, Cincinnati, Ohio 45202.
Position Position
with with
Name Distributor Registrant
---- ----------- ----------
*William F. Ledwin Director None
*Jill T. McGruder Director None
Maryellen Peretzky Director None
Terrie A. Wiedenheft First Vice None
President,
Chief Financial
Officer and
Treasurer
Tina D. Hosking Vice President Secretary to the
and Associate Fund
General Counsel
Theresa M. Samocki Vice President Treasurer
Fund Accounting
Manager
Elizabeth A. Santen Assistant Vice None
President
Steven F. Nienhaus Assistant Vice None
President
Michele M. Hawkins Assistant Vice None
President
Brian J. Manley Assistant Vice None
President
(c) Inapplicable
Item 28. Location of Accounts and Records
- -------- --------------------------------
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder will be maintained by the Registrant at its
offices located at 8280 Montgomery Road, Cincinnati, Ohio 45236 as
well as at the offices of the Registrant's transfer agent located at
312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202.
-5-
<PAGE>
Item 29. Management Services Not Discussed in Parts A or B
- ------- -------------------------------------------------
Inapplicable
Item 30. Undertakings
- -------- ------------
Inapplicable
-6-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Registration Statement to be signed below on its behalf by the undersigned,
thereunto duly authorized, in the City of Cincinnati and State of Ohio, on the
1st day of May, 2000.
LAKE SHORE FAMILY OF FUNDS
By: /s/ Gregory J. Bauer
-----------------------
Gregory J. Bauer
Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Gregory J. Bauer Chairman May 1, 2000
- ------------------------------ and Trustee
Gregory J. Bauer
/s/ Theresa M. Samocki Treasurer May 1, 2000
- ------------------------------
Theresa M. Samocki
Trustee /s/ Tina D. Hosking
- ------------------------------ -------------------
Frank G. Doyle III* Tina D. Hosking
Attorney-in-fact*
May 1, 2000
- ------------------------------ Trustee
Francis A. Kovacs, Jr.*
- ------------------------------ Trustee
Robert A. McLaughlin*
- ------------------------------ Trustee
Joseph P. Rouse*
- ------------------------------ Trustee
Ralph P. Schwartz*
- ------------------------------ Trustee
William N. Stratman*
<PAGE>
INDEX TO EXHIBITS
-----------------
(a) Agreement and Declaration of Trust*
(b) Bylaws*
(c) Incorporated by reference to Agreement and Declaration of Trust and Bylaws
(d) Investment Advisory Agreement*
(e) (i) Underwriting Agreement*
(ii) Agreement to Transfer Underwriting Agreement*
(f) Inapplicable
(g) Custody Agreement*
(h) (i) Administration Agreement*
(ii) Accounting Services Agreement*
(iii)Transfer, Dividend Disbursing, Shareholder Service and Plan Agency
Agreement*
(i) Opinion and Consent of Counsel*
(j) Consent of Independent Auditors
(k) Inapplicable
(l) Agreement Relating to Initial Capital*
(m) Plan of Distribution Pursuant to Rule 12b-1*
(n) Financial Data Schedule for the Equity Fund - Previously Filed with Form
N-SAR
(o) Inapplicable
(p) Codes of Ethics
- ----------------------------
* Incorporated by reference to the Trust's Registration Statement on Form
N1-A.
CONSENT OF INDEPENDENT AUDITORS
To the Shareholders of Lake Shore Equity Fund and
The Trustees of Lake Shore Family of Funds
We hereby consent to the use of our report dated January 21, 2000, on the
statements of assets and liabilities of Lake Shore Equity Fund, one of the funds
of the Lake Shore Family of Funds, and the related statements of operations,
changes in net assets and the financial highlights, in Post-Effective Amendment
No.3, dated May 1, 2000, to the Registration Statement on Form N-1A of Lake
Shore Family of Funds, as filed with the Securities and Exchange Commission.
Joseph Decosimo and Company, PLL
Cincinnati, Ohio
May 1, 2000
CODE OF ETHICS
THE LAKE SHORE FAMILY OF FUNDS
LAKE SHORE FUND GROUP, LLC
A. INTRODUCTION
------------
Rule 17j-1 under the Investment Company Act of 1940 (the "Act") requires
registered investment companies and their investment advisers to adopt
codes of ethics and reporting requirements to prevent fraudulent, deceptive
and manipulative practices. Lake Shore Family of Funds (the "Trust") is
registered as an open-end management investment company under the Act. Lake
Shore Fund Group, LLC ("the Adviser") is the investment adviser of the
Trust. Except as otherwise specified herein, this Code applies to all
employees, members, officers, directors and trustees of the Adviser and the
Trust.
This Code of Ethics is based on the principle that the officers, directors,
trustees, members and employees of the Adviser and the Trust have a
fiduciary duty to place the interests of the Trust before their own
interests, to conduct all personal securities transactions consistently
with this Code of Ethics (the "Code") and to do so in a manner which does
not interfere with the portfolio transactions of the Trust, or otherwise
take unfair advantage of their relationship to the Trust. Persons covered
by this Code must adhere to this general principle as well as comply with
the specific provisions of this Code. Technical compliance with this Code
will not insulate from scrutiny trades which indicate an abuse of an
individual's fiduciary duties to the Trust.
B. DEFINITIONS
-----------
1. "Access person" means (i) any employee, member, director, principal,
trustee or officer of the Trust or the Adviser, (ii) any employee of
any company in a control relationship to the Trust or the Adviser who,
in the ordinary course of his or her business, makes, participates in
or obtains information regarding the purchase or sale of securities
for the Trust or whose principal function or duties relate to the
making of any recommendation to the Trust regarding the purchase or
sale of securities and (iii) any natural person in a control
relationship to the Trust or the Adviser who obtains information
concerning recommendations made to the Trust with regard to the
purchase or sale of a security. A natural person in a control
relationship or an employee of a company in a control relationship
does not become an "access person" simply by virtue of the following:
<PAGE>
normally assisting in the preparation of public reports, but not
receiving information about current recommendations or trading; a
single instance of obtaining knowledge of current recommendations or
trading activity; or, infrequently and inadvertently obtaining such
knowledge. The Compliance Officer(s) for the Trust and the Adviser are
responsible for determining who are access persons.
2. A security is "being considered for purchase or sale" when the order
to purchase or sell such security has been given, or prior thereto
when, in the opinion of an investment manager, a decision, whether or
not conditional, has been made (even though not yet implemented) to
make the purchase or sale, or when the decision-making process has
reached a point where such a decision is imminent.
3. "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions
of Section 16 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, except that the determination of direct or
indirect beneficial ownership shall apply to all securities which an
access person has or acquires. (See Appendix A for a more complete
description.)
4. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act.
5. "Disinterested trustee" means a trustee who is not an "interested
person" within the meaning of Section 2(a)(19) of the Act.
6. "Equivalent security" means any security issued by the same entity as
the issuer of a subject security, including options, rights, warrants,
preferred stock, restricted stock, phantom stock, bonds and other
obligations of that company, or a security convertible into another
security.
7. "Immediate family" of an individual means any of the following persons
who reside in the same household as the individual:
child grandparent son-in-law
stepchild spouse daughter-in-law
grandchild sibling brother-in-law
parent mother-in-law sister-in-law
step-parent father-in-law
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<PAGE>
Immediate family includes adoptive relationships and any other
relationship (whether or not recognized by law) which the applicable
Compliance Officer determines could lead to possible conflicts of
interest, diversions of corporate opportunity, or appearances of
impropriety which this Code is intended to prevent.
8. "Investment personnel" means those employees who provide information
and advice to an investment manager or who help execute the investment
manager's decisions.
9. "Investment manager" means any employee entrusted with the direct
responsibility and authority to make investment decisions affecting
the Trust.
10. "Purchase or sale of a security" includes, without limitation, the
writing, purchase or exercise of an option to purchase or sell a
security, conversions of convertible securities and short sales.
11. "Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include shares of registered open-end
investment companies, securities issued by the Government of the
United States, short-term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the Act,
bankers' acceptances, bank certificates of deposit, commercial paper,
and such other money market instruments as designated by the Adviser
and the Board of Trustees of the Trust.
Security does not include futures contracts or options on futures
contracts (provided these instruments are not used to indirectly
acquire an interest which would be prohibited under this Code).
C. PRE-CLEARANCE REQUIREMENTS
--------------------------
All access persons shall clear in advance through the applicable Compliance
Officer any purchase or sale, direct or indirect, of any Security in which
such access person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership interest. The applicable Compliance
Officer shall retain written records of such clearance requests.
The applicable Compliance Officer will not grant clearance for any purchase
or sale if the Security is currently being considered for purchase or sale
or being purchased or sold by the Trust. If the Security proposed to be
purchased or sold by the access person is an option, clearance will not
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<PAGE>
be granted if the Securities subject to the option are being considered for
purchase or sale as indicated above. If the Security proposed to be
purchased or sold is a convertible security, clearance will not be granted
if either that security or the securities into which it is convertible are
being considered for purchase or sale as indicated above.
The applicable Compliance Officer may refuse to preclear a transaction if
he or she deems the transaction to involve a conflict of interest, possible
diversion of corporate opportunity, or an appearance of impropriety.
Clearance is effective, unless earlier revoked, until the earlier of (1)
the close of business on the fifth trading day, beginning on and including
the day on which such clearance was granted, or (2) the access person
learns that the information provided to the Compliance Officer in such
access person's request for clearance is not accurate. If an access person
places an order for a transaction within the five trading days but such
order is not executed within the five trading days (e.g., a limit order),
clearance need not be reobtained unless the person who placed the original
order amends such order in any way. Clearance may be revoked at any time
and is deemed revoked if, subsequent to receipt of clearance, the access
person has knowledge that a security to which the clearance relates is
being considered for purchase or sale.
D. EXEMPTED TRANSACTIONS
---------------------
The pre-clearance requirements in Section C of this Code shall not apply
to:
1. Purchases or sales which are non-volitional on the part of either the
access person or the Trust.
2. Purchases which are part of an automatic dividend reinvestment plan.
3. Purchases effected upon the exercise of rights issued by an issuer PRO
RATA to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
4. Purchases or sales by a disinterested trustee or a member of his or
her immediate family.
5. Purchases or sales of debt obligations issued by or on behalf of
states and municipalities and other qualifying issuers which pay
interest that is exempt from federal and/or state income tax.
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<PAGE>
E. PROHIBITED ACTIONS AND TRANSACTIONS
-----------------------------------
Notwithstanding a grant of clearance under Section C hereof, the following
actions and transactions are prohibited and will result in sanctions
including but not limited to the sanctions expressly provided for in this
Section.
1. Investment personnel and investment managers shall not acquire, for
any account in which such investment personnel or investment manager
has a beneficial ownership interest, any security in an initial public
offering.
2. Access persons shall not execute a securities transaction on a day
during which the Trust has a pending buy or sell order in that same
security or an equivalent security until that order is executed or
withdrawn. An access person shall disgorge any profits realized on
trades within such period. This prohibition does not apply to
disinterested trustees and their immediate families.
3. An investment manager shall not buy or sell a security within seven
calendar days before or after the Trust trades in that security or an
equivalent security unless the Trust's entire position in that
security or equivalent securities has been sold prior to the
investment manager's transaction and the investment manager is also
selling the security. An investment manager shall disgorge any profits
realized on trades within such period.
4. Investment personnel and investment managers shall not accept from any
person or entity that does or proposes to do business with or on
behalf of the Trust a gift or other thing of more than de minimis
value or any other form of advantage. The solicitation or giving of
such gifts by investment personnel and investment managers is also
prohibited. For purposes of this subparagraph, "de minimis" means $100
or less if received in the normal course of business.
5. Investment personnel and investment managers shall not serve on the
board of directors of publicly traded companies, absent prior
authorization from the applicable Compliance Officer provided,
however, that any directorships held by such investment personnel or
investment managers as of the date of the adoption of this Code of
Ethics shall be deemed to be authorized. The applicable Compliance
Officer will grant authorization only if it is determined that the
board
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<PAGE>
service would be consistent with the interests of the Trust. In the
event board service is authorized, such individuals serving as
directors shall be isolated from those making investment decisions
through procedures designed to safeguard against potential conflicts
of interest, such as a Chinese Wall policy or investment restrictions.
6. Investment personnel and investment managers shall not acquire a
security in a private placement, absent prior authorization from the
applicable Compliance Officer. The applicable Compliance Officer will
not grant clearance for the acquisition of a security in a private
placement if it is determined that the investment opportunity should
be reserved for the Trust or that the opportunity to acquire the
security is being offered to the individual requesting clearance by
virtue of such individual's position with the Adviser or the Trust (as
applicable). An individual who has been granted clearance to acquire
securities in a private placement shall disclose such investment when
participating in a subsequent consideration by the Trust of an
investment in the issuer. A subsequent decision by the Trust to
purchase such a security shall be subject to independent review by
investment personnel with no personal interest in the issuer.
7. Investment personnel and investment managers shall not purchase during
the underwriting of the security any security which, due to its public
demand in relation to the amount offered, is likely to increase in
value.
8. Investment personnel and investment managers shall not engage in short
sales or margin trades of securities.
9. An access person shall not execute a securities transaction while in
possession of material non-public information regarding the security
or its issuer.
10. An access person shall not execute a securities transaction which is
intended to raise, lower, or maintain the price of any security or to
create false appearance of active trading (anti-market manipulation).
11. An access person shall not execute a securities transaction involving
the purchase or sale of a security at a time when such access person
intends, or knows of another's intention, to purchase or sell that
security (or an equivalent security) on behalf of the Trust. This
prohibition would apply whether the transaction is in the same (e.g.,
two purchases) or the
- 6 -
<PAGE>
opposite (a purchase and sale) direction as the transaction of the
Trust.
12. An access person shall not cause or attempt to cause the Trust to
purchase, sell, or hold any security in a manner calculated to create
any personal benefit to such access person or his or her immediate
family. If an access person or his or her immediate family stands to
materially benefit from an investment decision for the Trust that the
access person is recommending or in which the access person is
participating, the access person shall disclose to the persons with
authority to make investment decisions for the Trust, any beneficial
ownership interest that the access person or his or her immediate
family has in such security or an equivalent security, or in the
issuer thereof, where the decision could create a material benefit to
the access person or his or her immediate family or the appearance of
impropriety.
F. REPORTING
---------
1. Each access person, except a disinterested trustee, shall arrange for
the applicable Compliance Officer to receive directly from the
broker-dealer effecting a transaction in any security in which such
access person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership interest, duplicate copies of
each confirmation for each securities transaction and periodic account
statements for each brokerage account in which such access person has
any beneficial ownership interest, unless such information is provided
pursuant to paragraph 2 of this Section.
2. In the event an access person, other than a disinterested trustee,
does not arrange for the provision of information by broker-dealers as
required in the preceding paragraph 1, the access person shall report
to the applicable Compliance Officer no later than 10 days after the
end of each calendar quarter the information described below with
respect to transactions in any security in which such access person
has, or by reason of such transaction acquires, any direct or indirect
beneficial ownership interest in the security; provided, however, that
an access person shall not be required to make a report with respect
to transactions effected for any account over which such access person
does not have any direct or indirect influence:
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<PAGE>
a. The date of the transaction and the name of the security;
b. The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition); and
c. The name of the broker, dealer or bank with or through whom the
transaction was effected.
Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he or
she has any direct or indirect beneficial ownership in the security to
which the report relates.
3. Each access person, except a disinterested trustee, shall upon
commencement of employment and annually thereafter verify in writing
that all transactions in any security in which such access person has,
or by reason of such transaction has acquired, any direct or indirect
beneficial ownership in the security have been reported to the
applicable Compliance Officer. If an access person had no transactions
during the year, such access person shall so advise the applicable
Compliance Officer.
4. A disinterested trustee need only report a transaction in a security
if such trustee, at the time of that transaction, knew or, in the
ordinary course of fulfilling his or her official duties as a trustee,
should have known that, during the 15-day period immediately preceding
the date of the transaction by the trustee, such security was
purchased or sold by the Trust or was being considered for purchase or
sale by the Trust.
5. The Adviser or the Trust may, in its discretion, require an access
person to disclose in connection with a report, recommendation or
decision of such access person to purchase or sell a security any
direct or indirect beneficial ownership by such person of such
security.
G. CONFIDENTIALITY OF TRANSACTIONS AND INFORMATION
-----------------------------------------------
1. Every access person shall treat as confidential information the fact
that a security is being considered for purchase or sale by the Trust,
the contents of any research report, recommendation or
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<PAGE>
decision, whether at the preliminary or final level, and the holdings
of the Trust and shall not disclose any such confidential information
without prior consent from the applicable Compliance Officer.
Notwithstanding the foregoing, the holdings of the Trust shall not be
considered confidential after such holdings by the Trust have been
disclosed in a public report to shareholders or to the Securities and
Exchange Commission.
2. Access persons shall not disclose any such confidential information to
any person except those employees and officers who need such
information to carry out the duties of their position with the Adviser
or the Trust (as applicable).
H. SANCTIONS
---------
Upon discovering a violation of this Code, the Adviser or the Board of
Trustees of the Trust (as applicable) may impose such sanctions as it deems
appropriate, including, without limitation, a letter of censure or
suspension or termination of the employment of the violator. All material
violations of this Code and any sanctions imposed with respect thereto
shall be reported periodically to the Board of Trustees of the Trust.
I. CERTIFICATION OF COMPLIANCE
---------------------------
Each access person, except a disinterested trustee, shall annually certify
that he or she has read and understands this Code and recognizes that he or
she is subject hereto.
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<PAGE>
APPENDIX A TO THE CODE OF ETHICS
"BENEFICIAL OWNERSHIP"
For purposes of this Code, "beneficial ownership" is interpreted in the same
manner as it would be in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and the rules
and regulations thereunder, except that the determination of direct or indirect
beneficial ownership applies to all securities which an access person has or
acquires. the Adviser and the Trust will interpret beneficial ownership in a
broad sense.
The existence of beneficial ownership is clear in certain situations, such as:
securities held in street name by brokers for an access person's account, bearer
securities held by an access person, securities held by custodians, pledged
securities, and securities held by relatives or others for an access person. An
access person is also considered the beneficial owner of securities held by
certain family members. The SEC has indicated that an individual is considered
the beneficial owner of securities owned by such individual's immediate family.
The relative's ownership of the securities may be direct (i.e., in the name of
the relative) or indirect.
An access person is deemed to have beneficial ownership of securities owned by a
trust of which the access person is the settlor, trustee or beneficiary,
securities owned by an estate of which the access person is the executor or
administrator, legatee or beneficiary, and securities owned by a partnership of
which the access person is a partner.
An access person must comply with the provisions of this Code with respect to
all securities in which such access person has a beneficial ownership interest.
If an access person is in doubt as to whether she or he has a beneficial
ownership interest in a security, the access person should report the ownership
interest to the applicable Compliance Officer. An access person may disclaim
beneficial ownership as to any security on required reports.
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<PAGE>
AMENDED CODE OF ETHICS
COUNTRYWIDE FINANCIAL SERVICES, INC.
Adopted May 25, 1999
I. STATEMENT OF GENERAL PRINCIPLES
This Code of Ethics has been adopted by Countrywide Financial Services,
Inc., Countrywide Investments, Inc., Countrywide Fund Services, Inc. and CW
Fund Distributors, Inc. (collectively "Countrywide") for the purpose of
instructing all employees, officers and directors of Countrywide in their
ethical obligations and to provide rules for their personal securities
transactions. All employees, officers and directors owe a fiduciary duty to
the clients of Countrywide. A fiduciary duty means a duty of loyalty,
fairness and good faith towards clients, and the obligation to adhere not
only to the specific provisions of this Code but to the general principles
that guide the Code. These general principles are:
o The duty at all times to place the interests of clients first;
o The requirement that all personal securities transactions be
conducted in a manner consistent with the Code of Ethics and in
such a manner as to avoid any actual or potential conflict of
interest or any abuse of any individual's position of trust and
responsibility; and
o The fundamental standard that employees, officers and directors
should not take inappropriate advantage of
<PAGE>
their positions, or of their relationship with clients.
It is imperative that the personal trading activities of the employees,
officers and directors of Countrywide be conducted with the highest regard
for these general principles in order to avoid any possible conflict of
interest, any appearance of a conflict, or activities that could lead to
disciplinary action. This includes executing transactions through or for
the benefit of a third party when the transaction is not in keeping with
the general principles of this Code. All personal securities transactions
must also comply with our Insider Trading Policy and Procedures of
Countrywide Investments, Inc. and the Securities and Exchange Commission's
Rule 17j-1. Under this rule, no Employee may:
o employ any device, scheme or artifice to defraud any client of
Countrywide;
o make to any client of Countrywide any untrue statement of a
material fact or omit to state to such client a material fact
necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
o engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon any client of
Countrywide; or
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<PAGE>
o engage in any manipulative practice with respect to any client of
Countrywide.
II. DEFINITIONS
A. ADVISORY CLIENTS: all Countrywide Funds and all privately managed
advisory accounts of Countrywide.
B. ADVISORY EMPLOYEES: Employees of Countrywide Investments, Inc. who
participate in or make recommendations with respect to the purchase or sale
of securities including fund portfolio managers and assistant fund
portfolio managers. The Compliance Officer will maintain a current list of
all Advisory Employees.
C. BENEFICIAL INTEREST: ownership or any benefits of ownership, including
the opportunity to directly or indirectly profit or otherwise obtain
financial benefits from any interest in a security.
D. COMPLIANCE OFFICER: Michele Hawkins or, in her absence, an alternate
Compliance Officer (Maryellen Peretzky, Robert Leshner or Susan Flischel),
or their respective successors in such positions.
E. EMPLOYEE ACCOUNT: each account in which an Employee or a member of his
or her family has any direct or indirect Beneficial Interest or over which
such person exercises control or influence, including, but not limited to,
any joint account, partnership, corporation, trust or estate. An Employee's
family members include the Employee's spouse, minor children, any
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<PAGE>
person living in the home of the Employee, and any relative of the Employee
(including in-laws) to whose support an Employee directly or indirectly
contributes.
F. EMPLOYEES: the employees, officers, and directors of Countrywide,
including Advisory Employees. The Compliance Officer will maintain a
current list of all Employees.
G. EXEMPT TRANSACTIONS: transactions which are 1) effected in an amount or
in a manner over which the Employee has no direct or indirect influence or
control, 2) pursuant to a systematic dividend reinvestment plan, systematic
cash purchase plan or systematic withdrawal plan, 3) in connection with the
exercise or sale of rights to purchase additional securities from an issuer
and granted by such issuer pro-rata to all holders of a class of its
securities, 4) in connection with the call by the issuer of a preferred
stock or bond, 5) pursuant to the exercise by a second party of a put or
call option, 6) closing transactions no more than five business days prior
to the expiration of a related put or call option, or 7) with respect to
any affiliated or unaffiliated registered open-end investment company.
H. COUNTRYWIDE FUNDS: any series of Countrywide Investment Trust,
Countrywide Strategic Trust or Countrywide Tax-Free Trust.
I. RECOMMENDED LIST: the list of those Securities which
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<PAGE>
Countrywide currently is recommending to Advisory Clients for purchase or
sale.
J. RELATED SECURITIES: securities issued by the same issuer or issuer under
common control, or when either security gives the holder any contractual
rights with respect to the other security, including options, warrants or
other convertible securities.
K. SECURITIES: any note, stock, treasury stock, bond, debenture, evidence
of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral-trust certificate, pre-organization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas or other mineral rights, or, in general, any
interest or instrument commonly known as a "security," or any certificate
or interest or participation in temporary or interim certificate for,
receipt for, guarantee of, or warrant or right to subscribe to or purchase
(including options) any of the foregoing; except for the following: 1)
securities issued by the government of the United States, 2) bankers'
acceptances, 3) bank certificates of deposit, 4) commercial paper, 5) debt
securities, provided that (a) the security has a credit rating of Aa or Aaa
from Moody's Investor Services, AA or AAA from Standard & Poor's Ratings
Group, or an
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<PAGE>
equivalent rating from another rating service, or is unrated but comparably
creditworthy, (b) the security matures within twelve months of purchase,
(c) the market is very broad so that a large volume of transactions on a
given day will have relatively little effect on yields, and (d) the market
for the instrument features highly efficient machinery permitting quick and
convenient trading in virtually any volume, and 6) shares of registered
open-end investment companies.
L. SECURITIES TRANSACTION: the purchase or sale, or any action to
accomplish the purchase or sale, of a Security for an Employee Account.
III. PERSONAL INVESTMENT GUIDELINES
A. Personal Accounts and Pre-Clearance
1. Employees must conduct all securities transactions for Employee
Accounts through a Countrywide account, unless the Employee gives
prior written notice to the Compliance Officer of an account with
another brokerage firm for transactions in registered, open-end
investment company shares only. If such notice is given, the
Employee may, subject to this Code, conduct registered, open-end
investment company transactions through that brokerage firm.
2. Employees must obtain prior written permission from the
Compliance Officer to open or maintain a margin
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<PAGE>
account, or a joint or partnership account with persons other
than the Employee's spouse, parent, or child (including custodial
accounts).
3. No Employee may execute a Securities Transaction without first
obtaining Pre-Clearance from the Compliance Officer. Prior to
execution the Employee must submit the Pre-Clearance form to the
Compliance Officer, or in the case of a Pre-Clearance request by
the Compliance Officer, to the alternate Compliance Officer. An
Employee may not submit a Pre-Clearance request if, to the
Employee's knowledge at the time of the request, the same
Security or a Related Security is being actively considered for
purchase or sale, or is being purchased or sold, by an Advisory
Client.
4. Advisory Employees may not execute a Securities Transaction while
at the same time recommending contrary action to clients.
5. Settlement of Securities Transactions must be made on or before
settlement date. Extensions and pre-payments are not permitted.
6. The Personal Investment Guidelines in this section III do not
apply to Exempt Transactions. Employees must remember that
regardless of the transaction's status as exempt or not exempt,
the Employee's fiduciary
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<PAGE>
obligations remain unchanged.
7. Directors of Countrywide who (i) are not directly employed by
Countrywide and (ii) do not in the ordinary course of fulfilling
the duties of that position participate in or make
recommendations with respect to the purchase or sale of
Securities by Advisory Clients, are subject at all times to the
fiduciary obligations described in this Code; provided, however,
that the Personal Investment Guidelines and Compliance Procedures
in Section III and IV of this Code apply to such directors only
if the director knew or, in the ordinary course of fulfilling the
duties of that position, should have known, that during the
fifteen days immediately preceding or after the date of the
director's transaction that the same Security or a Related
Security was or was to be purchased or sold by an Advisory Client
or that such purchase or sale for an Advisory Client was being
considered, in which case such Sections apply only to such
transaction.
B. Limitations on Pre-Clearance
1. After receiving a Pre-Clearance request, the Compliance Officer
will promptly review the request and will deny the request if the
Securities
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<PAGE>
Transaction will violate this Code.
2. Employees may not execute a Securities Transaction on a day
during which a purchase or sell order in that same Security or a
Related Security is pending for, or is being actively considered
on behalf of, an Advisory Client. In order to determine whether a
Security is being actively considered on behalf of an Advisory
Client, the Compliance Officer will consult the current
Recommended List and, in the case of non-equity Securities,
consult each Advisory Employee responsible for investing in
non-equity Securities for any Advisory Client. Securities
Transactions executed in violation of this prohibition shall be
unwound or, if not possible or practical, the Employee must
disgorge to the appropriate Countrywide Fund, as determined by
the Compliance Officer (or, if disgorgement to a Countrywide Fund
is inappropriate, to a charity chosen by the Compliance Officer),
the value received by the Employee due to any favorable price
differential received by the Employee. For example, if the
Employee buys 100 shares at $10 per share, and a Countrywide Fund
buys 1000 shares at $11 per share, the Employee would pay $100
(100 shares x $1 differential) to the Countrywide Fund.
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<PAGE>
3. An Advisory Employee may not execute a Securities Transaction
within seven (7) calendar days after a transaction in the same
Security or a Related Security has been executed on behalf of a
Countrywide Fund unless the Countrywide Fund's entire position in
the Security has been sold prior to the Advisory Employee's
Securities Transaction and the Advisory Employee is also selling
the Security. If the Compliance Officer determines that a
transaction has violated this prohibition, the transaction shall
be unwound or, if not possible or practical, the Advisory
Employee must disgorge to the appropriate Countrywide Fund or
Funds the value received by the Advisory Employee due to any
favorable price differential received by the Advisory Employee.
4. Pre-Clearance requests involving a Securities Transaction by an
Employee within fifteen calendar days after any Advisory Client
has traded in the same Security or a Related Security will be
evaluated by the Compliance Officer to ensure that the proposed
transaction by the Employee is consistent with this Code and that
all contemplated Advisory Client activity in the Security has
been completed. It is wholly within the Compliance Officer's
discretion to
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<PAGE>
determine when Pre-Clearance will or will not be given to an
Employee if the proposed transaction falls within the fifteen day
period.
5. Pre-Clearance procedures apply to any Securities Transactions in
a private placement. In connection with a private placement
acquisition, the Compliance Officer will take into account, among
other factors, whether the investment opportunity should be
reserved for Advisory Clients, and whether the opportunity is
being offered to the Employee by virtue of the Employee's
position with Countrywide. Employees who have been authorized to
acquire securities in a private placement will, in connection
therewith, be required to disclose that investment if and when
the Employee takes part in any subsequent investment in the same
issuer. In such circumstances, the determination by an Advisory
Client to purchase Securities of that issuer will be subject to
an independent review by personnel of the Countrywide with no
personal interest in the issuer.
6. Employees are prohibited from acquiring any Securities in an
initial public offering. This restriction is imposed in order to
preclude any possibility of an Employee profiting improperly from
the Employee's
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<PAGE>
position with Countrywide, and applies only to the Securities
offered for sale by the issuer, either directly or through an
underwriter, and not to Securities purchased on a securities
exchange or in connection with a secondary distribution.
7. Employees are prohibited from acquiring low priced equity
securities (or "penny stock"), defined as those equity securities
trading below $5 per share.
C. Other Restrictions
1. If a Securities Transaction is executed on behalf of a
Countrywide Fund within seven (7) calendar days after an Advisory
Employee executed a transaction in the same Security or a Related
Security, the Compliance Officer will review the Advisory
Employee's and the Countrywide Fund's transactions to determine
whether the Advisory Employee did not meet his or her fiduciary
duties to Advisory Clients in violation of this Code. If the
Compliance Officer determines that the Advisory Employee's
transaction violated this Code, the transaction shall be unwound
or, if not possible or practical, the Advisory Employee must
disgorge to the appropriate Countrywide Fund or Funds the value
received by the Advisory Employee due to any favorable price
differential received by the Advisory Employee.
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<PAGE>
2. Employees are prohibited from serving on the boards of directors
of publicly traded companies, absent prior authorization in
accord with the general procedures of this Code. The
consideration of prior authorization will be based upon a
determination that the board service will be consistent with the
interests of Advisory Clients. In the event that board service is
authorized, Employees serving as directors will be isolated from
other Employees making investment decisions with respect to the
securities of the company in question.
3. No Employee may accept from a customer or vendor an amount in
excess of $100 per year in the form of gifts or gratuities, or as
compensation for services. If there is a question regarding
receipt of a gift, gratuity or compensation, it is to be reviewed
by the Compliance Officer.
IV. COMPLIANCE PROCEDURES
A. Employee Disclosure and Certification
1. At the commencement of employment with Countrywide, each Employee
must certify that he or she has read and understands this Code
and recognizes that he or she is subject to it, and must disclose
all personal Securities holdings.
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<PAGE>
2. The above disclosure and certification is also required annually,
along with an additional certification that the Employee has
complied with the requirements of this Code and has disclosed or
reported all personal Securities Transactions required to be
disclosed or reported pursuant to the requirements of this Code.
B. Pre-Clearance
1. Advisory Employees will maintain an accurate and current
Recommended List at all times, updating the list as necessary.
The Advisory Employees will submit all Recommended Lists to the
Compliance Officer as they are generated, and the Compliance
Officer will retain the Recommended Lists for use when reviewing
Employee compliance with this Code. Upon receiving a
Pre-Clearance request, the Compliance Officer will contact the
trading desk and all Advisory Employees to determine whether the
Security the Employee intends to purchase or sell is or was owned
within the past fifteen (15) days by an Advisory Client, and
whether there are any pending purchase or sell orders for the
Security. The Compliance Officer will determine whether the
Employee's request violates any
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<PAGE>
prohibitions or restrictions set out in this Code.
2. If authorized, the Pre-Clearance is valid for orders placed by
the close of business on the second trading day after the
authorization is granted. If during the two day period the
Employee becomes aware that the trade does not comply with this
Code or that the statements made on the request form are no
longer true, the Employee must immediately notify the Compliance
Officer of that information and the Pre-Clearance may be
terminated. If during the two day period the trading desk is
notified that a purchase or sell order for the same Security or
Related Security is pending, or is being considered on behalf of
an Advisory Client, the trading desk will not execute the
Employee Transaction and will notify the Employee and the
Compliance Officer that the Pre-Clearance is terminated.
C. Compliance
1. All Employees must direct their broker, dealer or bank to send
duplicate copies of all confirmations and periodic account
statements directly to the Compliance Officer. Each Employee must
report, no later than ten (10) days after the close of each
calendar quarter, on the Securities Transaction Report form
provided by
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<PAGE>
Countrywide, all transactions in which the Employee acquired any
direct or indirect Beneficial Interest in a Security and certify
that he or she has reported all transactions required to be
disclosed pursuant to the requirements of this Code.
2. The Compliance Officer will spot check the trading confirmations
provided by brokers to verify that the Employee obtained any
necessary Pre-Clearance for the transaction. On a quarterly basis
the Compliance Officer will compare all confirmations with the
Pre-Clearance records, to determine, among other things, whether
any Advisory Client owned the Securities at the time of the
transaction or purchased or sold the security within fifteen (15)
days of the transaction. The Employee's annual disclosure of
Securities holdings will be reviewed by the Compliance Officer
for compliance with this Code, including transactions that reveal
a pattern of trading inconsistent with this Code.
3. If an Employee violates this Code, the Compliance Officer will
report the violation to the management personnel of Countrywide
for appropriate remedial action which, in addition to the actions
specifically delineated in other sections of this Code, may
include a reprimand of the Employee, or suspension or
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<PAGE>
termination of the Employee's relationship with Countrywide.
4. The management personnel of Countrywide will prepare an annual
report to the board of directors of Countrywide that summarizes
existing procedures and any changes in the procedures made during
the past year. The report will identify any violations of this
Code, any significant remedial action during the past year and
any instances when a Securities Transaction was executed on
behalf of a Countrywide Fund within seven (7) calendar days after
an Advisory Employee executed a transaction but no remedial
action was taken. The report will also identify any recommended
procedural or substantive changes to this Code based on
management's experience under this Code, evolving industry
practices, or legal developments.
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<PAGE>
EMPLOYEE ACKNOWLEDGMENT FORM
I hereby acknowledge that I have received, read and understand the Code of
Ethics of Countrywide Investments, Inc. and confirm that I agree to abide by it.
Employee Name (please print):
Signature: Date:
-------------------------------------
Comments:
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<PAGE>
PRE-CLEARANCE OF SECURITY TRANSACTION
To: Michele Hawkins, Compliance Officer
From: __________________________________________
(Name of Employee)
Date: __________________________________
1. I hereby seek approval for the |_| purchase/|_| sale of _________
shares or $__________ par value of for the cash or margin account of
_____________________.
2. The price per share or contract is approximately
$_________________.
3. The transaction |_| is/|_| is not in connection with a private
placement.
4. Said transaction was recommended to me by
__________________________________.
I have no knowledge of any Fund of Countrywide Investments or other account
managed by Countrywide Investments actively considering the purchase or sale of
this Security.
I have read the Countrywide Code of Ethics within the past year and
recognize that I am subject to it.
After inquiry, I am satisfied that this transaction is consistent with the
Code of Ethics and the Countrywide Investments, Inc.'s Insider Trading Policy.
If I become aware that the trade does not comply with this Code or that the
statements made on the request are no longer true, I will immediately notify the
Compliance Officer.
--------------------------------------
Signature of Employee
APPROVED: ______________________________ DATE: ______________________
TRANSACTION COMPLETED: Date ______ No. of Shares _________ Price
TRANSACTION UNFILLED: ____________________
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<PAGE>
COMMENTS/FOLLOW UP:
- ------------------
(This authorization is valid until close of business on the second trading
day following authorization.
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<PAGE>
------- Quarter 1999
Countrywide Funds
*Includes: Countrywide Investments, Inc., Countrywide Fund Services, Inc. and
Countrywide Financial Services, Inc.
QUARTERLY SECURITIES TRANSACTIONS REPORT FOR EMPLOYEES,
OFFICERS AND INTERESTED TRUSTEES
All employees, officers, and interested Trustees are required to report ALL
securities transactions in accounts over which they have direct or indirect
control or influence. Transactions in direct obligations of the United States
Treasury and transactions in shares of any mutual funds are exempt and need not
be reported. Each non-exempt transaction MUST be listed. DO NOT ATTACH BROKERAGE
REPORTS. If no transactions occurred during the reporting period, please check
NONE, sign and date the report. The report must be returned to the Legal
Department before the 10th day of the month following the end of the quarter.
|_| I have executed no Securities Transactions (other than those specifically
exempted by the Code) during the quarter.
|_| The following is a complete list of my Securities Transactions:
<TABLE>
<CAPTION>
===================================================================================================
# of Shares
or
Purchase, Principal
Transaction Sale, Amount Executing
Security Date or Other of Security Price Broker
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
===================================================================================================
</TABLE>
I certify that I have read and understand the Code of Ethics and that I
have complied with the requirements of the Code of Ethics, including disclosure
of all Securities Transactions that require disclosure.
Printed Name: ____________________________ Signature:_________________
Date: ____________________
THIS REPORT SHALL NOT BE CONSTRUED AS AN ADMISSION THAT THE REPORTING PERSON HAS
ANY DIRECT OR INDIRECT BENEFICIAL OWNERSHIP IN ANY SECURITY TO WHICH THIS REPORT
RELATES.
8686 5/28/99
