Form N-1A
Securities and Exchange Commission
Washington, D.C. 20549
Registration Statement Under the Securities Act of 1933 [ ]
Pre-Effective Amendment [ ]
Post-Effective Amendment No. 2 [X]
and/or
Registration Statement Under the Investment Company Act of 1940 [ ]
Amendment No. 4 [x]
(Check appropriate box or boxes.)
Empirical Investment Funds - File Nos. 333-40397 and 811-8493
(Exact Name of Registrant as Specified in Charter)
Empirical Investment Funds, 1521 Alton Road, Suite 364, Miami Beach, FL 33139
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (305) 535-1006
Kaye Kerr, 1521 Alton Road, Suite 364, Miami Beach, FL 33139
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.,
3500 Carew Tower, 441 Vine Street, Cincinnati, OH 45202
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i) of rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
EMPIRICAL GROWTH FUND
PROSPECTUS August____, 1999
1521 Alton Rd., Suite 364
Miami Beach, Florida 33139
For Information, Shareholder Services and Requests:
(800) 466-2987
The investment objective of the Empirical Growth Fund is to achieve
superior risk-adjusted capital appreciation on long term investment dollars.
The Fund is "no-load," which means that investors incur no sales charges,
commissions or deferred sales charges on the purchase or redemption of their
shares.
As with all mutual funds, the Securities and Exchange Commission has not
determined that the information in this prospectus is accurate or complete, nor
has it approved or disapproved of the Fund's shares. It is a criminal offense to
state otherwise.
<PAGE>
TABLE OF CONTENTS
PAGE
ABOUT THE FUND 3
COSTS OF INVESTING IN THE FUND 5
HOW TO INVEST IN THE FUND 6
HOW TO REDEEM SHARES 8
SHARE PRICE CALCULATION 9
DIVIDENDS AND DISTRIBUTIONS 9
TAXES 9
MANAGEMENT OF THE FUND 9
OTHER INFORMATION ABOUT INVESTMENTS 10
YEAR 2000 ISSUE 10
FINANCIAL HIGHLIGHTS 11
<PAGE>
ABOUT THE FUND
Investment Objective
The investment objective of the Empirical Growth Fund is to achieve superior
risk-adjusted capital appreciation on long term investment dollars.
Principal Strategies
Under normal market conditions, the Fund expects to invest at least 75% of
its net assets in equity securities [of U.S. companies]. The Adviser employs a
bottom-up stock selection process that is based on intensive fundamental and
technical research. While the Fund may invest in companies of any size, it will
emphasize medium sized companies. These companies may include those that can
sustain above average and consistent earnings growth as well as companies that
the Adviser believes have new or innovative products, services or processes
which can enhance prospects for growth in future earnings. The Fund may also
invest in large, seasoned companies that, in the judgment of the Adviser,
possess superior potential returns similar to companies with formative growth
profiles.
The Fund seeks to accomplish its objective by creating a portfolio with
significantly less risk relative to other growth funds or investment strategies.
The Adviser seeks to achieve this by monitoring and decreasing the Fund's
exposure to risks that are associated with the market (also known as a
sensitivity to market movements), particular industries and particular
companies. The Adviser may consider a number of factors in making its investment
decisions, including a company's relative price volatility, price to earnings
ratio, return on equity, return on assets, inventory turnover and cash flow
levels, financial leverage, stability of management and other factors which the
Adviser deems helpful in assessing risk. The Adviser seeks to further limit risk
by diversifying the Fund's investments across a broad range of industries and
companies.
Principal Risks of Investing in the Fund
All investments carry risks to some degree. The principal risks of
investing in the Fund are the stock market risks common to all equity
investments and the company risks associated with each individual investment in
the Fund's portfolio. Stock market risk means that Fund shares might decrease in
value in response to such things as general economic conditions and political
stability. Company risk means that Fund shares might decrease in value in
response to the activities and financial prospects of an individual company in
the Fund's portfolio. The Advisor may not be successful in reducing the Fund's
exposure to risks. You could lose money by investing in the Fund.
In addition, the stocks of medium sized companies are subject to certain
risks including:
- possible dependence on a limited product line, market, financial
resources or management group
- less frequent trading and trading with smaller volume than larger
stocks, which may make it difficult for the Fund to buy or sell the
stocks
- greater fluctuation in value than larger, more established company stocks
The Advisor had not managed assets organized as a mutual fund prior to
forming the Fund and the Fund has a limited operating history. In addition,
Kaye Kerr, the Fund's portfolio manager, is the sole employee of the
Adviser and, as a result, the success of the Fund is entirely dependent on
her.
Is this Fund Right for You?
.
The Fund is intended to be a core equity portfolio for investors with a
long term wealthbuilding horizon. You should invest in the Fund only if you are
willing to accept price fluctuation in your investment and the risks associated
with common stock investment.
<PAGE>
COSTS OF INVESTING IN THE FUND
Shareholder Fees (fees paid directly from your investment)
Sales Load Imposed on Purchases NONE
Sales Load Imposed on Reinvested Dividends NONE
Deferred Sales Load NONE
Redemption Fees1 NONE
Exchange Fees NONE
Annual Fund Operating Expenses (expenses that are deducted from Fund assets) 2
Management Fees 1.70%
Distribution (12b-1) Fees NONE
Other Expenses ____
Total Fund Operating Expenses 1.95%
1 The Fund's Custodian imposes a $13 charge for wire redemptions. 2 Update:
The Adviser's fee is equal to 1.95% of the Fund's average daily net assets up to
and including $200 million, minus the amount by which the Fund's total expenses
(including organizational expenses, but excluding brokerage, taxes, interest and
extraordinary expenses) exceeds 1.95 %. This means that the Fund's total
operating expenses will be 1.95%. Because other expenses are estimated to be
0.25%, the management fee is estimated to be 1.70%.
Example:
The example below is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example uses the
same assumptions as other mutual fund prospectuses: a $10,000 initial investment
for the time periods indicated, 5% annual total return, constant operating
expenses, and sale of all shares at the end of each time period. Although your
actual expenses may be different, based on these assumptions your costs would
be:
1 year 3 years 5 years 10 years
Your costs: $___ $___ $_____ $______
<PAGE>
HOW TO PURCHASE SHARES
The minimum initial investment in the Fund is $5,000 ($2,000 for IRAs and
custodial accounts and $500 for systematic Investment Plan accounts). The
minimum subsequent investments is $50. These minimums may be waived at the
discretion of the Fund.
Initial Purchase.
By Mail - You may purchase shares of the Fund by completing and signing the
investment application form which accompanies this Prospectus and mailing it, in
proper form, together with a check made payable to Empirical Growth Fund, and
mailed to: Mutual Shareholder Services, The Tower at Erieview, 36th floor, 1301
East Ninth St., Cleveland, OH 44114. Your purchase of shares of the Fund will be
at the next share price calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal funds
from your bank, which may charge you a fee for doing so. To wire money, you must
call the Transfer Agent at (800) 466-2987 to set up your account and obtain an
account number. You should be prepared at that time to provide the information
on the application. Then, provide your bank with the following information for
purposes of wiring your investment:
Firstar Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Empirical Growth Fund
D.D.A. #[_________]
Account Name _________________ (write in shareholder name) For
the Account # ______________ (write in account number)
You must mail a signed application to the Transfer Agent at the above
address in order to complete your initial wire purchase. Wire orders will be
accepted only on a day on which the Fund, Custodian and Transfer Agent are open
for business. A wire purchase will not be considered made until the wired money
is received and the purchase is accepted by the Fund. Any delays that may occur
in wiring money, including delays which may occur in processing by the banks,
are not the responsibility of the Fund or the Transfer Agent. The investor's
bank may charge a fee for the wire transfer of funds.
Subsequent Purchases. You may make additional purchases in the following
manner:
By Check. Send your check, made payable to the Fund, along with the stub
from a previous purchase or sale confirmation, to Mutual Shareholder Services,
The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio
44114.
By Wire. Funds may be wired by following the previously discussed wire
instructions for an initial purchase.
By Telephone. You may purchase additional shares up to an amount equal to 3
times the market value of shares held in the shareholder's account in the Fund
on the preceding day for which payment has been received, by telephoning the
Transfer Agent, Inc., at 800-466-2987 and identifying your account by number. If
you wish to use this privilege, you must complete a Telephone Purchase
Authorization Form which is available from the Transfer Agent. A confirmation
will be mailed [and payment must be received] within 3 business days of date of
purchase. This telephone purchase option may be discontinued without notice.
<PAGE>
Systematic Investment Plan. The Systematic Investment Plan permits you to
purchase shares of the Fund at monthly intervals ($50 minimum per month). If
your bank allows automatic withdrawals, you may purchase shares by transferring
funds from your bank account. The specified amount will be debited from your
bank account, and shares will be purchased once a month, on or about the 15th
day. Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. If you wish to use the
Systematic Investment Plan , call the Transfer Agent at 800 ___-____ to obtain
the appropriate forms. The Systematic Investment Plan does not assure a profit
and does not protect against loss in declining markets.
Other Purchase Information. The Fund may limit the amount of purchases and
refuse to sell to any person.. If your check or wire does not clear, you will be
responsible for any loss incurred by the Fund. If you are already a shareholder,
the Fund can redeem shares from any identically registered account in the Fund
as reimbursement for any loss incurred. You may be prohibited or restricted from
making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value next determined after
your redemption request has been received by the Transfer Agent with the
following information:
the Fund name
your account number
your account name(s)
the account address
the dollar amount or number of shares you wish to redeem.
the signatures of all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered.
At the discretion of the Fund or Mutual Shareholder Services, you may be
required to furnish additional legal documents to insure proper authorization.
You may receive redemption payments in the form of a check or federal wire
transfer. The proceeds of the redemption may be more or less than the purchase
price of your shares, depending on the market value of the Fund's securities at
the time of your redemption. The Fund's Custodian presently charges $13 for each
wire redemption. Any charges for wire redemptions will be deducted from your
account by redemption of shares. If you purchase or redeem shares through a
securities dealer, you may be charged a fee by that institution.
By Mail. You may redeem any part of your account in the Fund at no charge
by mail. Your request should be addressed to: Empirical Investment Funds, c/o
Mutual Shareholder Services, The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114.
<PAGE>
By Telephone. You may redeem any part of your account in the Fund by
calling the Transfer Agent at (800) 466-2987. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The Fund or the Transfer Agent may terminate telephone redemption or
exchange policy at any time. During periods of extreme market activity it is
possible that you may encounter some difficulty in telephoning the Fund,
although neither the Fund nor the Transfer Agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Fund by
telephone, you may request a redemption or exchange by mail.
Additional Information. If you are not certain of the requirements for a
redemption please call the Transfer Agent at (800) ___-____. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund may require you to redeem all of your shares in the Fund on
30 days' written notice if the value of your shares in the Fund is less than
$5,000 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax advisor concerning the tax consequences of involuntary
redemptions. You may increase the value of your shares in the Fund to the
minimum amount within the 30 day period. Each share of the Fund is subject to
redemption at any time if the Board of Trustees determines in its sole
discretion that failure to so redeem may have materially adverse consequences to
all or any of the shareholders of the Fund.
SHARE VALUATION
The price you pay for your shares is based on the Fund's net asset value
per share (NAV). The NAV is calculated at the close of trading (normally 4:00
p.m. Eastern time) on each day the New York Stock Exchange is open for business
(the Stock Exchange is closed on weekends, Federal holidays and Good Friday).
The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued at their fair
value.
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
The policy of the Fund is to pay dividends from net investment income and
distributions of realized capital gains, if any, annually. When you open your
account, you should specify on your application how you want to receive your
distributions.
Distribution of any net long term capital gains realized by the Fund will
be taxable to the shareholder as long term capital gains, regardless of the
length of time Fund shares have been held by the investor. All income realized
by the Fund, including short term capital gains, will be taxable to the
shareholder as ordinary income. Dividends from net income will be made annually
or more frequently at the discretion of the Fund's Board of Trustees.
If you buy shares just before a distribution is declared, you will pay the
full price for the shares and then receive a portion of the price back as a
taxable distribution. The distribution paid to you would generally be included
in your gross income for tax purposes, whether or not you reinvested it. For
this reason, you should carefully consider the tax consequences of buying shares
of the Fund immediately before distributions are made.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemptions) paid
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement, you must certify on a W-9 tax form supplied by the
Fund that your Social Security or Taxpayer Identification Number provided is
correct and that you are not currently subject to back-up withholding, or that
you are exempt from back-up withholding.
MANAGEMENT OF THE FUND
The Fund retains Worldwide Financial Management Associates, Inc., 1521
Alton Rd., Suite 364, Miami Beach, Florida 33139 (the "Adviser") to manage the
Fund's investments. The Fund's portfolio manager is Kaye Kerr. Ms. Kerr, who is
responsible for the day to day management of the fund, is the Managing Director
and President of the Adviser, which she established in October 1996. Ms. Kerr
began her career as an account executive with R.J. Steichen & Co. in Feb. 1994.
In May of that year, Ms. Kerr went to Tuschner & Company where she became a Vice
President. From December, 1995 until June, 1996, she was a credit representative
with Dayton Hudson Corporation, and from June, 1996 until January, 1997, she was
an assistant with the managed asset group of Dain Bosworth, Inc., an investment
banker/brokerage firm. She has also served as a financial adviser and consultant
to many established and ongoing business operations. Prior to her employment
with R.J. Steichen & Co., Ms. Kerr was an an associate with Jubilee Investment
Corp., a business development company. In addition, she has passed the Series 7
- - General Securities, Series 63 - Uniform Blue Sky, Series 24 -General
Principal, and the Series 65- Registered Investment Advisor NASD licensing
exams.
During the fiscal year ended March 31, 1999 the Fund paid the Adviser a fee
equal to _____% of its average daily net assets The Adviser pays all of the
operating expenses of the Fund except brokerage, taxes, interest and
extraordinary expenses. The Fund pays its organizational expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Adviser.
<PAGE>
OTHER INFORMATION ABOUT INVESTMENTS
Equities. The Fund invests in common stocks (including American Depository
Receipts) and securities that are convertible into common stocks. Convertibility
refers to the ability of the holder of the security to exchange it for another
security, usually debt exchanged for equity. The convertible securities in which
the Fund may invest include bonds, preferred stock, and warrants which may be
converted or exchanged at a stated or determinable exchange ratio into
underlying shares of common stock. Prior to their conversion, convertible
securities may have characteristics similar to both nonconvertible debt
securities and equity securities.
American Depositary Receipts. The fund may also purchase U.S. denominated
American Depositary Receipts ("ADRs") for foreign securities, which are traded
in the U.S. on national securities exchanges or over-the-counter and are issued
by domestic banks.
Additional Investments. For liquidity, diversity and flexibility, the Fund may
invest the remainder of its net assets in real estate investment trusts,
short-term to intermediate-term corporate and U.S. Government debt securities,
cash, and money market instruments.
Real estate investment trusts ("REITs"). REITs were created to give larger
numbers of Americans a means of investing in real estate projects that
previously were accessible to only the wealthy. REITs are designed to pass
through all income of the real estate properties and other assets managed by the
REIT to investors. Many REITs are common stocks.
Corporate Debt Securities. Corporate debt securities are bonds or notes
issued by corporations and other business organizations, including business
trusts, in order to finance their credit needs. Corporate debt securities
include commercial paper which consist of short term (usually from 1 to 270
days) unsecured promissory notes issued by corporations in order to finance
their current obligations. The Fund will only invest in corporate debt
securities rated A or better by Standard & Poor's Corporation ("S&P") or Moody's
Investors Services, Inc. ("Moody's"), or if unrated, determined by the Adviser
to be of comparable quality.
U.S. Government Debt Securities. U.S. government obligations include a
variety of securities that are issued or guaranteed by the U.S. Treasury, by
various agencies of the U.S. government or by various instrumentalities that
have been established or sponsored by the U.S. government. U.S. government
obligations may be backed by the credit of the government as a whole or only by
the issuing agency. U.S. Treasury bonds, notes, and bills and some agency
securities, such as those issued by the Federal Housing Administration and the
Government National Mortgage Association (GNMA), are backed by the full faith
and credit of the U.S. government as to payment of principal and interest and
are the highest quality government securities. Other securities issued by U.S.
government agencies or instrumentalities, such as securities issued by the
Federal Home Loan Banks and the Federal Home Loan Mortgage Corporation, are
supported only by the credit of the agency that issued them, and not by the U.S.
government. Securities issued by the Federal Farm Credit System, the Federal
Land Banks, and the Federal National Mortgage Association (FNMA) are supported
by the agency's right to borrow money from the U.S. Treasury under certain
circumstances, but are not backed by the full faith and credit of the U.S.
government.
<PAGE>
Risks
Convertible Securities. While convertible securities generally offer lower
yields than non-convertible debt securities of similar quality, their prices may
reflect changes in the value of the underlying common stocks. Convertible
securities generally entail less risk than the issuer's common stock
American Depositary Receipts. While ADRs are not considered to be foreign
securities, they do not eliminate all the risk inherent in investing in the
securities of foreign issuers. However, by investing in ADRs the Fund avoids
currency risks during the settlement period. Also, generally the information
available on ADRs is subject to the accounting, auditing and financial reporting
standards of the domestic market or exchange on which they are traded; these
standards are more uniform and more exacting than those to which many foreign
issuers may be subject.
Real estate investment trusts ("REITs"). Some of the risks of equity and
mortgage REITs are that they depend on management skills and are not
diversified. As a result, REITs are subject to the risk of financing either
single projects or any number of projects. REITs depend on heavy cash flow and
may be subject to defaults by borrowers and self-liquidation. Additionally,
equity REITs may be affected by any changes in the value of the underlying
property owned by the trusts. Mortgage REITS may be affected by the quality of
any credit extended.
Corporate Debt Securities. Corporate debt securities rated A or better by
S&P and Moody's generally have adequate to strong protection of principal and
interest payments. In the lower end of these categories, securities are somewhat
more susceptible to the adverse effects of changes in circumstances and economic
conditions. These changes could affect the ability of the issuer to make
payments of principal and interest. In addition to these credit risks, corporate
debt securities are sensitive to fluctuating interest rates. In periods of
rising interest rates the value of a fixed rate security is likely to fall. In
periods of declining interest rates, issuers are more likely to call bonds. If a
bond is called, the Fund will receive its return of principal earlier than
expected and would likely reinvest the proceeds at a lower interest rate, thus
reducing income to the Fund.
U.S. Government Securities. In the case of securities not backed by the
"full faith and credit" of the U.S. government, the Fund must look principally
to the agency issuing or guaranteeing the obligation for ultimate repayment and
may not be able to assert a claim against the U.S. government itself in the
event the agency or instrumentality does not meet its commitments.
Temporary Investments. For temporary defensive purposes, the Fund may hold all
or a portion of its assets in money market instruments, securities of other
no-load registered investment companies or repurchase agreements collateralized
by securities of the U.S. government or its agencies. As a result of engaging in
these temporary measures, the Fund may not achieve its investment objective The
Fund may also invest in such instruments at any time to maintain liquidity or
pending selection of investments in accordance with its policies. If the Fund
acquires securities of another investment company, the shareholders of the Fund
will be subject to duplicative management fees.
Investment Objective. The investment objective of the Fund may be changed
without the affirmative vote of a majority of the outstanding shares of the
Fund. Any such change may result in the Fund having an investment objective
different from the objective that you considered appropriate at the time of your
investment in the Fund.
<PAGE>
YEAR 2000 ISSUE
Like other mutual funds, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by the Adviser or the Fund's various service providers do
not properly process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000 Issue."
The Adviser has taken steps that it believes are reasonably designed to
address the Year 2000 Issue with respect to computer systems that are used and
to obtain reasonable assurances that comparable steps are being taken by the
Fund's major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact on the Fund. In
addition, the Adviser cannot make any assurances that the Year 2000 Issue will
not affect the companies in which the Fund invests or worldwide markets and
economies.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table is intended to help you better understand the Fund's
financial performance since its inception. Certain information reflects
financial results for a single Fund share. The total returns represent the rate
you would have earned (or lost) on an investment in the Fund, assuming
reinvestment of all dividends and distributions. This information has been
audited by McCurdy & Associates CPA's, Inc., whose report, along with the Fund's
financial statements, are included in the Fund's annual report, which is
available upon request.
Selected date for a share outstanding throughout the period: 6/1/98 to 5/31/99
Net Asset Value-
Beginning of Period 10.00
Net Investment Income 0.10
Net Gains or Losses on Securities
(realized and unrealized) (0.31)
------
Total from Investment Operations (0.21)
Dividends
(from net investment income) 0.00
Distributions (from capital gains) 0.00
Return of Capital 0.00
------
Total Distributions 0.00
Net Asset Value-
End of Period 9.79
Total Return -2.10%
Ratios/Supplement Data
Net Assets-End of Period (Thousands) 121
Ratio of Expenses to Average Net Assets 1.95%
Ratio of Net Income to Average Net Assets 2.85%
Portfolio Turnover Rate 27.57%
<PAGE>
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated by reference into this
Prospectus, contains detailed information on Fund policies and operation.
Shareholder reports contain management's discussion of market conditions,
investment strategies and performance results as of the Fund's latest
semi-annual or annual fiscal year end.
Call the Fund at 800-466-2987 to request free copies of the SAI and the
Fund's annual and semi-annual reports, to request other information about the
Fund and to make shareholder inquiries.
You may also obtain information about the Fund (including the SAI and other
reports) from the Securities and Exchange Commission on their Internet site at
http://www.sec.gov or at their Public Reference Room in Washington, D.C. Call
the SEC at 800-SEC-0330 for room hours and operation. You may also obtain Fund
information by sending a written request and duplicating fee to the Public
Reference Section of the SEC, Washington, D.C. 20549-6609.
<PAGE>
Investment Company Act # 811-08493
The Empirical Growth Fund
a series of
Empirical Investment Funds
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information ("SAI") is not a Prospectus. It
should be read in conjunction with the Prospectus of Empirical Growth Fund dated
_________, 1999. This SAI incorporates by reference the financial statements and
independent auditor's report from the Fund's Annual Report to Shareholders for
the fiscal year ended May 31, 1999 ("Annual Report"). A free copy of the
Prospectus and Annual Report can be obtained by writing the Transfer Agent at
The Tower at Erieview, 1301 East Ninth Street, Cleveland, Ohio 44114, or by
calling the Fund at 800-466-2987.
TABLE OF CONTENTS
PAGE
Fund Organization 1
Capital Stock 1
Additional Information About Fund Investments and Risk Considerations 2
Investment Limitations 4
Management of the Fund 4
Investment Adviser 6
Trustees & Officers 7
Portfolio Transactions and Brokerage 7
Other Service Providers 10
Investment Performance 10
Financial Statements 11
<PAGE>
FUND ORGANIZATION
The Fund is a diversified series of Empirical Investment Funds (the "Trust") a
no-load, open-end, diversified, management investment company registered under
the Investment Company Act of 1940 (the "1940 Act") and organized under Delaware
law as a business trust under a Declaration of Trust dated September 29, 1997.
The Declaration of Trust permits the Trust to offer separate series ("Series")
of shares. All consideration received by the Trust for shares of any Series and
all assets of such Series belong to that portfolio and would be subject to
liabilities related thereto. There is currently one Series of the Trust: The
Empirical Growth Fund (the "Fund").
CAPITAL STOCK
The Trust has authorized capital of an indefinite number of shares of $.001
par value common stock of all Series in the aggregate. The shares of each Series
have equal rights and privileges with all other shares of the Trust. The Board
of Trustees is authorized to classify unissued shares of the Trust by assigning
them to a Series for issuance. Additional Series may be offered in the future,
but such additional offerings would not affect the interests of current
shareholders in the existing Series.
The assets received by each Series on the sale of shares of such Series and
all income, earnings, profits and proceeds thereof, subject only to the rights
of creditors, are allocated to such Series, and constitute assets of such
Series. The assets of each Series are required to be segregated on the Series'
books of account.
Each share of a Series represents an equal proportionate interest in that
Series with each other share and is entitled to its proportionate share of such
dividends and distributions out of the income or assets belonging to such Series
as are declared by the Board of Trustees. Upon liquidation of any Series, Series
shareholders are entitled to share pro rata in the net assets belonging to that
Series available for distribution.
Shares of the Fund are fully paid, non-assessable, redeemable and fully
transferable. Shares do not have preemptive rights or subscription rights.
SHAREHOLDER RIGHTS
Any Trustee of the Trust may be removed by vote of the shareholders holding
not less than two-thirds of the outstanding shares of the Trust. The Trust does
not hold annual meetings of shareholders. When matters are submitted to
shareholders for a vote, each shareholder is entitled to one vote for each whole
share he owns and fractional votes for fractional shares he owns. Voting rights
are non-cumulative, which means that holders of a majority of shares can elect
all Trustees of the Trust if they so choose. All shares of the Fund have equal
voting rights and liquidation rights. The Adviser, as of _________, 1999, owns
_____% of the outstanding shares of the Fund. As a result, the Adviser (and Kaye
Kerr, becuase she controls the Adviser) may be deemed to control the Fund. As
the controlling shareholder, she would control the outcome of any proposal
submitted to the shareholders for approval, including changes to the Fund's
fundamental policies or the terms of the management agreement with the Fund's
investment adviser. ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS
<PAGE>
This section contains a more detailed discussion of some of the investments
the Fund may make and some of the techniques it may use, as described in the
Prospectus (see "Objective and Policies").
A. Repurchase Agreements. A repurchase agreement is a short-term investment
in which the purchaser (i.e., the Fund) acquires ownership of a U.S. Government
obligation (which may be of any maturity) and the seller agrees to repurchase
the obligation at a future time at a set price, thereby determining the yield
during the purchaser's holding period (usually not more than seven days from the
date of purchase). Any repurchase transaction in which the Fund engages will
require full collateralization of the seller's obligation during the entire term
of the repurchase agreement. In the event of a bankruptcy or other default of
the seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with the Custodian, other banks with assets of $1 billion or
more and registered securities dealers determined by the Adviser (subject to
review by the Board of Trustees) to be creditworthy. The Adviser monitors the
creditworthiness of the banks and securities dealers with which the Fund engages
in repurchase transactions.
B. American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund invests in foreign securities, such
investments may be subject to special risks. For example, there may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted
by the Trust with respect to the Fund and are fundamental ("Fundamental"), i.e.,
they may not be changed without the affirmative vote of a majority of the
outstanding shares of the Fund. As used in the Prospectus and the Statement of
Additional Information, the term "majority" of the outstanding shares of the
Fund means the lesser of (1) 67% or more of the outstanding shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented at such meeting; or (2) more than 50% of
the outstanding shares of the Fund. Other investment practices which may be
changed by the Board of Trustees without the approval of shareholders to the
extent permitted by applicable law, regulation or regulatory policy are
considered non-fundamental ("Non-Fundamental").
<PAGE>
1. Borrowing Money. The Fund will not borrow money, except (a) from a bank,
provided that immediately after such borrowing there is an asset coverage of
300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Fund will not act as underwriter of securities issued
by other persons. This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum limitations
on its investment policies and limitations, an excess above the fixed percentage
will not be a violation of the policy or limitation unless the excess results
immediately and directly from the acquisition of any security or the action
taken. This paragraph does not apply to the borrowing policy set forth in
paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment company,
whether organized as a trust, association or corporation, or a personal holding
company, may be merged or consolidated with or acquired by the Trust, provided
that if such merger, consolidation or acquisition results in an investment in
the securities of any issuer prohibited by said paragraphs, the Trust shall,
within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or such
portion thereof as shall bring the total investment therein within the
limitations imposed by said paragraphs above as of the date of consummation.
<PAGE>
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
i. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. The Fund will not borrow money or enter into reverse
repurchase agreements.
iii. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. Short Sales. The Fund will not effect short sales of securities.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles.
vi. Illiquid Investments. The Fund will not invest in securities for which
there are legal or contractual restrictions on resale and other illiquid
securities.
MANAGEMENT OF THE FUND
The overall management and responsibility of the business and affairs of
the Fund is vested in the Trust's Board of Trustees. The Board of Trustees
approves all significant agreements between the Trust, on behalf of the Fund,
and persons or companies furnishing services to the Fund, including the
Management Agreement. The Trust is not required to hold and has no current
intentions of holding annual shareholders meetings, although special meetings
may be called for purposes such as changing fundamental policies.
INVESTMENT ADVISER
Responsibility for overall management of the Fund rests with its Board of
Trustees in accordance with Delaware law. Professional investment supervision is
provided by the Investment Adviser, Worldwide Financial Management Associates,
Inc., 300 South Pointe Drive, Suite 4306, Miami Beach, FL 33139.
<PAGE>
Under the terms of the Management Agreement (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the operating expenses of the Fund except brokerage, taxes, interest
and extraordinary expenses. The Fund pays its organizational expenses. As
compensation for its management services and agreement to pay the Fund's
expenses, the Fund is obligated to pay the Adviser a fee, payable monthly, equal
to an annual average rate of 1.95% of its average daily net assets up to and
including $200 million, 1.90% of its average daily net assets from $200 million
up to and including $500 million, 1.85% of its average daily net assets from
$500 million up to and including $1 billion, and 1.80% of its average daily net
assets in excess of $1 billion, minus the amount by which the Fund's total
expenses (including organizational expenses, but excluding brokerage, taxes,
interest and extraordinary expenses) exceeds 1.95%. The Adviser may waive all or
part of its fee, at any time, and at its sole discretion, but such action shall
not obligate the Adviser to waive any fees in the future. For the period from
_________, 1998 (commencement of operations) through May 31, 1999, the Fund paid
fees to the Adviser of $__________.
In order to increase the return to investors, the Adviser may voluntarily
from time to time, waive or reduce its fees on assets held by the Fund, which
would have the effect of lowering the Fund's overall expense ratio and
increasing yield to investors during the time such fees are waived or reduced.
Fee waivers or reductions, other than set forth in the management agreement or
otherwise described in this Prospectus, may be rescinded at any time without
further notice to investors.
The Adviser retains the right to use the name "Empirical" in connection
with another investment company or business enterprise with which the Adviser is
or may become associated. The Trust's right to use the name "Empirical"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Adviser on ninety days written notice.
The Adviser (not the Fund) may pay certain financial institutions (which
may include banks, brokers, securities dealers and other industry professionals)
a "servicing fee" for performing certain administrative functions for Fund
shareholders to the extent these institutions are allowed to do so by applicable
statute, rule or regulation.
The Adviser may make payments to banks or other financial institutions that
provide shareholder services and administer shareholder accounts. The
GlassSteagall Act prohibits banks from engaging in the business of underwriting,
selling or distributing securities. Although the scope of this prohibition under
the Glass-Steagall Act has not been clearly defined by the courts or appropriate
regulatory agencies, management of the Fund believes that the Glass- Steagall
Act should not preclude a bank from providing such services. However, state
securities laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law. If a bank were prohibited from
continuing to perform all or a part of such services, management of the Fund
believes that there would be no material impact on the Fund or its shareholders.
Banks may charge their customers fees for offering these services to the extent
permitted by applicable regulatory authorities, and the overall return to those
shareholders availing themselves of the bank services will be lower than to
those shareholders who do not. The Fund may from time to time purchase
securities issued by banks which provide such services; however, in selecting
investments for the Fund, no preference will be shown for such securities.
<PAGE>
TRUSTEES AND OFFICERS
The overall management and responsibility of the business and affairs of
the Fund is vested in the Trust's Board of Trustees. The Board of Trustees
approves all significant agreements between the Trust, on behalf of the Fund,
and persons or companies furnishing services to the Fund. The names of the
Trustees and executive officers of the Trust are shown below. Each Trustee who
is an "interested person" of the Trust, a defined in the Investment Company Act
of 1940, is indicated by an asterisk.
Name, Age & Address Position Principal Occupations During Past 5 Years
*Kaye Kerr President President and Trustee of Worldwide
Age: 28 Financial Management Associates, Inc., the
1521 Alton Rd., Treasurer Fund's Advisor; Managed Asset Group
Suite 364 Assistant at Dain Bosworth, Inc., an
Miami Beach, FL Trustee investment banker/brokerage firm, from
33139 1996 to 1997; Credit Representative at
Dayton Hudson Corp., a retail operator,
from 1995 to 1996; Vice President and
Account Executive at Tuschner & Company,
Inc., an investment banker/brokerage firm,
from 1994 to 1995; Account Executive at
R.J. Steichen & Co., an investment
banker/brokerage firm, from February, 1994
to June, 1994; New Business Development
Associate at Jubilee Investment Corp., a
business development company, from 1993 to
1994.
Eugene M. Woodard Trustee To be supplied
Age: 58
1455 Ocean Drive
Miami Beach, FL 33139
David A. Shea III Trustee President of Shea Architects since 1978;
Partner of Genesis Architects from 1995 to
Age: 52 1998.
100 N. Sixth
St., Suite 650C
Minneapolis, MN
55403
Diana Sosa- Secretary Vice President of Hotels Ocean Drive,
Gonzalez Inc., a development corporation;
Age: 35 Department Manager with the Federal
436 Ocean Drive Reserve Bank of Atlanta.
Miami Beach, FL
33139
Trustee fees are Trust expenses and each series of the Trust is responsible
for a portion of the Trustee fees. The following table gives the compensation
paid to past and present Trustees for the fiscal year of the Trust ended May 31,
1999.
Name Total Compensation from Trust
(the Trust is not in a Fund Complex)
Kaye Kerr $0
Reza Jalali Bidgoli $_______
David A. Shea III $____
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust, the
Adviser is responsible for the Fund's portfolio decisions and the placing of the
Fund's portfolio transactions. In placing portfolio transactions, the Adviser
seeks the best qualitative execution for the Fund, 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. Consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and subject to its obligation of seeking best qualitative execution, the
Adviser may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute portfolio transactions.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer 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 Trust and to other
accounts over which it exercises investment discretion. [Disclose any directed
brokerage.]
Research services include supplemental research, securities and economic
analyses, statistical services and information with respect to the availability
of securities or purchasers or sellers of securities and analyses of reports
concerning performance of accounts. The research services and other information
furnished by brokers through whom the Fund effects securities transactions may
also be used by the Adviser in servicing all of its accounts. Similarly,
research and information provided by brokers or dealers serving other clients
may be useful to the Adviser in connection with its services to the Fund.
Although research services and other information are useful to the Fund and the
Adviser, it is not possible to place a dollar value on the research and other
information received. It is the opinion of the Board of Trustees and the Adviser
that the review and study of the research and other information will not reduce
the overall cost to the Adviser of performing its duties to the Fund under the
Agreement.
Over-the-counter transactions will be placed either directly with principal
market makers or with broker-dealers, if the same or a better price, including
commissions and executions, is available. Fixed income securities are normally
purchased directly from the issuer, an underwriter or a market maker. Purchases
include a concession paid by the issuer to the underwriter and the purchase
price paid to a market maker may include the spread between the bid and asked
prices.
<PAGE>
To the extent that the Trust and another of the Adviser's clients seek to
acquire the same security at about the same time, the Trust may not be able to
acquire as large a position in such security as it desires or it may have to pay
a higher price for the security. Similarly, the Trust may not be able to obtain
as large an execution of an order to sell or as high a price for any particular
portfolio security if the other client desires to sell the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one client, the resulting participation in
volume transactions could produce better executions for the Trust. In the event
that more than one client wants to purchase or sell the same security on a given
date, the purchases and sales will normally be made by random client selection.
For the period ______, 1998 (commencement of operations) through May 31, 1999,
the Fund paid brokerage commissions of $____________.
OTHER SERVICE PROVIDERS
Transfer Agent. Maxus Information Systems, Inc. (dba Mutual Shareholder
Services), 1301 East 9th Street, Suite 3600, Cleveland, Ohio 44114 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent
pursuant to the terms of the Transfer Agency Agreement. Services provided
include (but are not limited to): maintaining records of shareholders; providing
confirmations of purchases and sales; aggregating, processing and recording
purchases and redemptions of shares; processing dividend and distribution
payments; and forwarding shareholder communications such as proxies, shareholder
reports and dividend notices.
Administration. The Trust and Mutual Shareholder Services have entered into
an Accounting Services and Administration Agreement pursuant to which Mutual
Shareholder Services provides accounting and administrative services to the
Fund. Services furnished by Mutual Shareholder Services include, among others:
maintaining and preserving the records of the Fund, including financial and
corporate reports; computing net asset value, dividends, performance data and
financial information regarding the Fund; preparing reports; assisting with the
preparation and filing with the SEC and state securities regulators of
registration statements, notices, reports and other material required to be
filed under applicable laws; preparing compliance reports; providing routine
accounting services; and providing office facilities and clerical support as
well as providing general oversight of other service providers. For its
administrative and fund accounting services, Mutual Shareholder Services
received from the Adviser $225 for the period ______, 1998 (commencement of
operations) through May 31, 1999.
Custodian. Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202,
is Custodian of the Fund's investments. As Custodian, Firstar Bank, N.A. acts
as the Fund's depository, safekeeps its portfolio securities, collects all
income and other payments with respect thereof, disburses funds at the Fund's
request and maintains records in connection with its duties.
Distributor. Maxus Securities Corporation, 1301 East 9th Street, Suite
3600, Cleveland, Ohio 44114, is an agent for distribution of shares of the Fund
in certain states. The distributor is obligated to sell the shares of the Fund
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.
Independent Accountants. The firm of McCurdy & Associates, CPA's, 27955
Clemens Road, Westlake, Ohio 44145, has been selected as independent public
accountants for the Trust for the fiscal year ending May 31, 2000. McCurdy &
Associates performs an annual audit of the Fund's financial statements and
provides financial, tax and accounting consulting services
<PAGE>
INVESTMENT PERFORMANCE
The Fund may periodically advertise "average annual total return." "Average
annual total return," as defined by the Securities and Exchange Commission, is
computed by finding the average annual compounded rates of return (over the one
and five year periods and the period from initial public offering through the
end of the Fund's most recent fiscal year) 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 $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period. The Fund's average annual total
return for the period ______, 1998 (commencement of operations) through May 31,
1999 was ____%.
The Fund may also periodically advertise its total return over various
periods in addition to the value of a $10,000 investment (made on the date of
the initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for the Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period, assuming
no activity in the account other than reinvestment of dividends and capital
gains distributions.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Russell Midcap Index.
<PAGE>
In addition, the performance of the Fund may be compared to other groups of
mutual funds tracked by any widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, such as
Lipper Analytical Services, Inc. or Morningstar, Inc. The objectives, policies,
limitations and expenses of other mutual funds in a group may not be the same as
those of the Fund. Performance rankings and ratings reported periodically in
national financial publications such as Barron's and Fortune also may be used.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to be
included in this Statement of Additional Information are incorporated herein by
reference to the Trust's Annual Report to Shareholders for the fiscal year ended
May 31, 1999. The Fund will provide the Annual Report without charge at written
request or request by telephone.
<PAGE>
Empirical Investment Funds
PART C. OTHER INFORMATION
Item 23. For the Empirical Growth Fund.
Exhibits
(a) Articles of Incorporation.
(i) Copy of Registrant's Amended and Restated Declaration of
Trust, which was filed as an exhibit to Registrant's
Registration Statement, is hereby incorporated by reference.
(ii) Copy of Amendment to Registrant's Amended and Restated
Declaration of Trust, which was filed as an Exhibit to
Registrant's Post Effective Amendment No. 1, is hereby
incorporated by reference.
(b) By-Laws. Copy of Registrant's Amended By-Laws, which was
filed as an Exhibit to Registrant's Post-Effective
Amendment No. 1, is hereby incorporated by reference.
(c) Instruments Defining Rights of Security Holders - None.
(d) Investment Advisory Contracts. Copy of Registrant's
Management Agreement with its Adviser, Worldwide
Financial Management Associates, Inc., which was filed as
an Exhibit to Registrant's Pre-Effective Amendment No. 2, is
hereby incorporated by reference.
(e) Underwriting Contracts. Copy of Registrant's Underwriting
Agreement with Maxus Securities Corporation, which was
filed as an Exhibit to Registrant's Pre-Effective Amendment
No. 2, is hereby incorporated by reference.
(f) Bonus or Profit Sharing Contracts. Bonus, Profit
Sharing, Pension or Similar Contracts for the benefit of
Directors or Officers - None.
(g) Custodian Agreements. Copy of Registrant's Custody
Agreement with Firstar Bank, N.A., which was filed as an
Exhibit to Registrant's Pre-Effective Amendment No. 2, is
hereby incorporated by reference.
(h) Other Material Contracts - None.
(i) Legal Opinion
(i) Opinion of Richards, Layton & Finger, L.P.A., which was
filed as an Exhibit to Registrant's Pre-Effective Amendment
No. 2, is hereby incorporated by reference.
(ii) Consent of Richards, Layton & Finger, L.P.A. is filed
herewith.
(j) Other Opinions. Consent of McCurdy & Associates CPA's, Inc.
is filed herewith.
(k) Omitted Financial Statements. Financial Statements Omitted
from Item 23 - None.
<PAGE>
(l) Initial Capital Agreements. Copy of Letter of Initial
Stockholders, which was filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 2, is hereby
incorporated by reference.
(m) Rule 12b-1 Plan. 12b-1 Distribution Expense Plan - None.
(n) Financial Data Schedule - None.
(o) Rule 18f-3 Plan - None.
(p) (i) Power of Attorney for Registrant and Certificate with
respect thereto, which was filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 2, is hereby
incorporated by reference.
(ii)Powers of Attorney for Trustees and Officers, which was
filed as an Exhibit to Registrant's Pre-Effective Amendment
No. 2, is hereby incorporated by reference.
Item 24. Persons Controlled by or Under Common Control with the Registrant
As of August 1, 1999, Worldwide Financial Management Associates,
Inc., a Florida Corporation and the Fund's Adviser, owned a majority
of the outstanding shares of the Fund. As sole shareholder of the
Adviser, Kaye Kerr may be deemed to control the Registrant and the
Adviser.
Item 25. Indemnification
(a) Article VII of Registrant's Amended and Restated Declaration
of Trust and Article VI of Registrant's Amended ByLaws provide for
indemnification of officers and Trustees as follows:
Article VII of Registrant's Amended and Restated Declaration of
Trust:
Section 2. Indemnification and Limitation of Liability.
The Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent,
employee, Manager or Principal Underwriter of the Trust,
nor shall any Trustee be responsible for the act or omission
of any other Trustee, and the Trust out of its assets shall
indemnify and hold harmless each and every Trustee from and
against any and all claims and demands whatsoever arising
out of or related to each Trustee's performance of his or
her duties as a Trustee of the Trust; provided that nothing
herein contained shall indemnify, hold harmless or protect
any Trustee from or against any liability to the Trust or
any Shareholder to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of his or her office.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever issued,
executed or done by or on behalf of the Trust or the
Trustees or any of them in connection with the Trust shall
be conclusively deemed to have been issued, executed or
done only in or with respect to their or his or her capacity
as Trustees or Trustee, and such Trustees or Trustee shall
not be personally liable thereon.
<PAGE>
Article VI of Registrant's Amended By-Laws:
Section 2. Actions Other Than By Trust.
This Trust shall indemnify any person who was or is a party
or is threatened to be made a party to any proceeding (other
than an action by or in the right of this Trust) by reason
of the fact that such person is or was an agent of this
Trust, against expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection
with such proceeding, if it is determined that person acted
in good faith and reasonably believed: (a) in the case of
conduct in his official capacity as a Trustee of the Trust,
that his conduct was in the Trust's best interests and (b)
in all other cases, that his conduct was at least not
opposed to the Trust's best interests and (c) in the case of
a criminal proceeding, that he had no reasonable cause to
believe the conduct of that person was unlawful. The
termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not of itself create a presumption that
the person did not act in good faith and in a manner which
the person reasonably believed to be in the best interests
of this Trust or that the person had reasonable cause to
believe that the person's conduct was unlawful.
Section 3. Actions By The Trust. This
Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action by or in the right of this Trust to procure
a judgment in its favor by reason of the fact that the
person is or was an agent of this Trust, against expenses
actually and reasonably incurred by that person in
connection with the defense or settlement of that action if
that person acted in good faith, in a manner that person
believed to be in the best interests of this Trust and with
such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar
circumstances.
Section 7. Advance of Expenses.
Expenses incurred in defending any proceeding may be
advanced by this Trust before the final disposition of the
proceeding provided (a) receipt of a written affirmation by
the Trustee of his good faith belief that he has met the
standard of conduct necessary for indemnification under this
Article and a written undertaking by or on behalf of the
agent, such undertaking being an unlimited general
obligation to repay the amount of the advance if it is
ultimately determined that he has not met those
requirements, and (b) a determination that the facts then
known to those making the determination would not preclude
indemnification under this Article. Determinations and
authorizations of payments under this Section must be made
in the manner specified in Section 6 of this Article for
determining that the indemnification is permissible.
(b) The Registrant may maintain a standard mutual fund and
investment advisory professional and directors and officers
liability policy. The policy, if maintained, would provide
coverage to the Registrant, its Trustees and officers, and could
cover its Adviser, among others. Coverage under the policy would
include losses by reason of any act, error, omission,
misstatement, misleading statement, neglect or breach of duty.
<PAGE>
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the
provisions of Delaware law and the Amended and Restated
Declaration of the Registrant or the Amended By-Laws of the
Registrant, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnifications 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 Trust 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.
Item 26. Business and Other Connections of Investment Adviser
(a) Worldwide Financial Management Associates, Inc., 1521
Alton Rd., Suite 364, Miami Beach, FL 33139 ("Worldwide"), adviser
to Empirical Investment Funds, is a registered investment adviser.
(1) Worldwide has engaged in no other business during
the past two fiscal years.
(2) The following list sets forth other
substantial business activities of the directors
and officers of Worldwide during the past two years:
(i) Kaye Kerr, President of Worldwide, was a
Managed Asset Group Assistant for Dain Bosworth,
Inc. from 1996-1997.
<PAGE>
Item 27. Principal Underwriters
(a) Maxus Securities Corp., the Registrant's underwriter,
acts as underwriter for Maxus Income Fund, Maxus Ohio Heartland
Fund, Maxus Aggressive Value Fund, Maxus Equity Fund and Maxus
Laureate Fund, The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114, and Jhaveri Value Fund, 18820 High
Parkway, Cleveland, Ohio 44116.
(b) The following list sets forth the business address, and
positions with the Underwriter and Registrant, of each director
and officer of the Underwriter.
(1) Richard A. Barone, 1301 East Ninth Street,
Cleveland, Ohio 44122.
(a) President, Treasurer and a Director of Maxus Securities
Corp.
(b) No positions with the Registrant.
(2) Robert W. Curtin, 1301 East Ninth Street, Cleveland, Ohio
44122.
(a) Secretary and a Director of Maxus Securities Corp.
(b) No positions with the Registrant.
(3) Robert F. Pincus, 1301 East Ninth Street, Cleveland, Ohio
44122.
(a) Vice President and Director of Maxus Securities Corp.
(b) No positions with the Registrant.
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 1521
Alton Rd., Suite 364, Miami Beach, FL 33139 and/or by the Registrant's
Custodian, Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio
45202, and/or transfer and shareholder service agent, Maxus
Information Systems, Inc., 1301 East Ninth Street, Cleveland, Ohio
44122.
Item 29. Management Services Not Discussed in Parts A or B
None.
Item 30. Undertakings
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cincinnati, State of Ohio, on the 24th day of
August, 1999.
Empirical Investment Funds
By: /s/
Donald S. Mendelsohn,
Attorney-in-fact
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.
Kaye Kerr* *By: /s/___________________
President, Treasurer and Trustee Donald S. Mendelsohn,
Attorney-in-fact
David A. Shea, III* August 24, 1999
Trustee
<PAGE>
EXHIBIT INDEX
1. Consent of Richards, Layton & Finger, P.A. EX-99.B10
2. Consent of McCurdy & Associates CPA's, Inc., EX-99.B11
<PAGE>
[letterhead of Richards Layton & Finger]
August 23, 1999
Empirical Investment Funds
Suite 364
1521 Alton Road
Miami Beach, Florida 33139
Re: Worldwide Financial Management Associates, Inc. and Empirical
Investment Funds - Offering of Securities
Ladies and Gentlemen:
Reference is made to our opinion dated as of April 27, 1998, attached
hereto (the "Opinion"), as special Delaware counsel for Worldwide Financial
Management Associates, Inc., and for Empirical Investment Funds, in connection
with the transactions described therein. We hereby consent to your relying upon
the Opinion as of its date as if it were addressed to you on the date thereof.
We hereby give you our consent to incorporate by reference the legal opinion
into post-effective Amendment No. 2 to your registration statement (the
"Amendment"). We note that the Opinion speaks as of its date, and only with
respect to the laws, rules and regulations thereunder in effect as of such date,
and we have not undertaken to update the Opinion in any respect. In giving the
foregoing consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ Richards Layton & Finger
GCK/ks
[LETTERHEAD OF MCCURDY & ASSOCIATES]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of
our report dated June 18, 1999 and to all references to our firm included in
or made a part of this Post-Effective Amendment No. 2 to the Registration
Statement of the Empirical Investment Funds.
/s/
- -----------------------------
McCurdy & Associates, CPA's, Inc.
August 16, 1999
<PAGE>
