File Nos. 333-46479 and 811-08659
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. __
Post-Effective Amendment No. 3
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 X
Amendment No. 4
(Check appropriate box or boxes)
THE HENSSLER FUNDS, INC.
1281 Kennestone Circle, Suite 100, Marietta, Georgia 30066
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (800) 936-3863
Gene W. Henssler, 1281 Kennestone Circle, Suite 100, Marietta, Georgia 30066
(Name and Address of Agent for Service)
With copy to:
Stephanie A. Djinis, Esq.
The Law Offices of Stephanie A. Djinis
7918 Jones Branch Drive, Suite 600
McLean, Virginia 22102
It is proposed that this filing will become effective:
<TABLE>
<CAPTION>
<S> <C> <S> <C>
_____ immediately upon filing pursuant to paragraph (b)
__X__ On August 31, 2000 pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)______ on (date) pursuant to
paragraph (a) of Rule 485
_____ 75 days after filing pursuant to paragraph ______ on (date) pursuant to paragraph
(a)(2) of (a)(2) Rule 485
</TABLE>
<PAGE>
The Henssler Equity Fund
1281 Kennestone Circle, Suite 100
Marietta, Georgia 30066
1-800-936-3863
www.henssler.com
PROSPECTUS
August 31, 2000
TABLE OF CONTENTS
-----------------
About the Fund........................................................ 2
Investment Objective.................................................. 2
Principal Investment Strategy......................................... 2
Principal Risks of Investing in the Fund.............................. 3
Past Performance...................................................... 3
Fund Expenses......................................................... 4
The Fund in Detail.................................................... 5
Investment Objective, Investment Strategy and Related Risks........... 5
The Fund's Investment Objective and Investment Strategy .............. 5
Principal Risks of Investment in the Fund............................. 6
Fund Management....................................................... 7
Management's Discussion of Fund Performance........................... 8
Financial Highlights.................................................. 9
Account Information................................................... 10
How to Purchase Shares................................................ 10
How to Sell Shares.................................................... 12
Dividends, Distributions and Taxes.................................... 15
How to Obtain More Information........................................ 16
The Fund is a portfolio of The Henssler Funds, Inc. This Prospectus includes
important information about the Fund that you should know before investing. You
should read the Prospectus and keep it for future reference.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
<PAGE>
ABOUT THE FUND
--------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek growth of capital.
PRINCIPAL INVESTMENT STRATEGY:
The Fund seeks to achieve its objective by investing substantially all of its
assets in securities listed on a national securities exchange or quoted in the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System.
The Fund's principal investment strategies include:
/o/ Investing over ninety percent (90%) of the Fund's assets in a
portfolio of common stocks;
/o/ Focusing on a company's fundamentals in seeking above-average, high
quality securities with strong growth potential; and
/o/ Holding common stock investments until the underlying company's
fundamentals change or other opportunities present themselves.
PRINCIPAL RISKS OF INVESTING IN THE FUND:
The Fund's principal risks include:
MARKET RISK: Stock prices fluctuate in response to many factors, such as changes
in interest rates, the activities of individual companies, and general economic
conditions. Stock market declines, particularly extended declines, may cause a
decrease in the Fund's share price.
BUSINESS AND ECONOMIC RISK: Often a particular industry may be affected by
circumstances that have little or no impact on other industries, such as the
advent of new technologies, which render present technologies obsolete. The
companies within the affected industry may suffer adverse consequences.
POLITICAL RISK: The regulation or deregulation of particular industries may
materially impact the value of companies within the affected industry.
INVESTMENTS IN SMALL COMPANIES: The stocks of small companies may experience
more volatile price fluctuations than those of larger, established companies. In
general, small companies have inexperienced management, serve small markets, and
may find difficulty obtaining financing.
<PAGE>
PAST PERFORMANCE
----------------
The Fund began operations on June 10, 1998. The bar chart and table that follow
provide some indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns compare with those of a broad measure of market
performance.
BAR CHART AND PERFORMANCE TABLE
-------------------------------
The bar chart and table shown below (presented as a bar graph in the
original Excel document) provide an indication of the risks of investing in the
Henssler Equity Fund by showing changes in the Fund's performance from year to
year since its inception and by showing how the Fund's average annual returns
for one year and since inception compare to those of a broad-based securities
market index. How the Fund has performed in the past is not necessarily an
indication of how the Fund will perform in the future.
<TABLE>
<CAPTION>
<S> <C> <C>
20.00% ________________________________________________________________________
15.10%
11.97% XXXXXXXX
10.00% ______________XXXXXXXX________________________XXXXXXXX__________________
XXXXXXXX XXXXXXXX
XXXXXXXX XXXXXXXX
0.00% ______________XXXXXXXX________________________XXXXXXXX__________________
(10.00%)________________________________________________________________________
1998* 1999
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
24.41% (quarter ending December 31, 1998) and the lowest return for a quarter
was -10.00% (quarter ending September 30, 1998).
Average Annual Total Returns Past One Year Life of Fund *
(for the periods ending ------------- --------------
December 31, 1999)
------------------
Henssler Equity Fund 15.10% 17.56%
S & P 500 ** 21.04% 21.19%
*The Fund started operations on June 10, 1998.
** The S&P 500/r/ is the Standard & Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices.
From January 1, 2000 through June 30, 2000, the total return for the Fund was
7.17%.
<PAGE>
FUND EXPENSES
-------------
As an investor, you pay certain fees and expenses in connection with your
investment in the Fund, which are described in the tables below. Shareholder
fees are paid from your account, while annual Fund operating expenses are paid
out of Fund assets, so their effect is included in the share price. As a no load
fund, the Fund does not have a sales charge (load).
FEE TABLE
---------
Shareholder Fees (fees paid directly from your investment):
None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets):
The Henssler Equity Fund
% of average daily net assets
Management Fee.......................................... 0.50%
Other Expenses.......................................... 0.70%
-----
Total Fund Operating Expenses........................... 1.20%
=====
The Fund has entered into an Operating Services Agreement with the Adviser
pursuant to which the Fund pays the Adviser a fee equal to 0.70% of the Fund's
assets on an annualized basis for providing all of the Fund's day-to-day
administrative services, excluding costs of brokerage, interest, taxes,
litigation and other extraordinary expenses.
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. The example below assumes that
you invest $10,000 in the Fund for the time periods indicated and then redeem
all of your shares at the end of those periods. The example below also assumes
that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$120 $380 $660 $1,460
<PAGE>
THE FUND IN DETAIL
INVESTMENT OBJECTIVE,
INVESTMENT STRATEGY AND RELATED RISKS
-------------------------------------
An investment in the Fund cannot be considered a complete investment program. An
investor's needs will depend largely on his or her financial resources and
individual investment goals and objectives. Investors who engage in short-term
trading and/or other speculative strategies and styles may not find the Fund to
be an appropriate investment vehicle.
THE FUND'S INVESTMENT OBJECTIVE AND INVESTMENT STRATEGY:
The Fund's investment objective is to seek growth of capital. The Fund seeks to
achieve its objective by investing substantially all of its assets in securities
listed on a national securities exchange or quoted in the National Association
of Securities Dealers Automated Quotation National Market System ("NASDAQ").
To meet its investment objective, the Fund will employ an investment strategy
that emphasizes long-term capital appreciation and safety of principal. Under
normal circumstances, the Fund invests over 90% of its portfolio in common
stocks of the best companies the Fund's investment adviser, Henssler Asset
Management, LLC (the "Adviser"), can identify, based on the characteristics
below. The Fund may invest in companies of any size, and the Fund typically
holds its common stock investments until the fundamentals of the business change
or other opportunities present themselves. When selecting common stocks for the
Fund, the Adviser seeks companies that exhibit the following characteristics:
/o/ undervalued assets;
/o/ strong balance sheet characteristics and financial foundations;
/o/ high earnings expectations; and
/o/ quality management and potential for future growth.
Factors deemed important by the Adviser in selecting securities of such
companies include, but are not limited to:
/o/ price;
/o/ price history; and
/o/ price-to-earnings ratio.
The Fund believes that its focus on the fundamentals of the businesses it
invests in results in the purchase of above-average, high-quality securities
with strong growth potential.
Under normal circumstances, the Fund anticipates that over 90% of its assets
will be invested in a portfolio of common stocks. The Fund will not invest more
than 25% of its assets in a particular industry sector. Any assets not invested
in equity securities will be invested in cash and cash equivalents, U.S.
Government securities, money market instruments, and certain other fixed income
securities to meet the Fund's liquidity needs and may be so invested, in
extraordinary circumstances, to attempt to protect against significant down
cycles in the stock market.
<PAGE>
TEMPORARY DEFENSIVE POSITIONS:
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in an attempt to
respond to adverse market, economic, political or other conditions. When the
Fund takes a temporary defensive position, the Fund may not be able to achieve
its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND:
All investments carry risks, and an investment in the Fund is no exception. You
could lose money on your investment in the Fund. Accordingly, you should
understand the principal risks of investing in the Fund, each of which is
described below.
MARKET RISK: Stock prices fluctuate in response to many factors, including
changes in interest rates, the activities of individual companies and general
market and economic conditions. Regardless of any one company's particular
prospects, a declining stock market may produce a decline in stock prices for
all companies. Stock market declines may continue for an indefinite period of
time, and investors should understand that from time to time during these
temporary or extended bear markets, the value of the Fund may decline.
BUSINESS AND ECONOMIC RISK: Often, a particular industry, or certain companies
within that industry, may be affected by circumstances that have little to no
impact on other industries, or other companies within that industry. For
example, many industries and companies rely heavily on one type of technology.
If this technology becomes outdated, or ceases to be cost-effective, industries
and companies that rely on the technology may become unprofitable while
companies outside the industry may not be affected at all.
POLITICAL RISK: The regulation or deregulation of particular industries may
materially impact the value of companies within the affected industry. For
example, during the past few years, electric and gas utility sectors of the
economy have been moving towards deregulation and open price competition. In
this new environment, some companies will make a successful transition into, and
prosper under deregulation, and other companies will mismanage the process and
do poorly.
INVESTMENTS IN SMALL COMPANIES: Although the Fund invests in companies of all
sizes, there may be times when the Fund is substantially invested in small
companies. Stocks of smaller companies may have more risks than larger
companies. In general, they have less experienced management teams, serve
smaller markets, and find it more difficult to obtain financing for growth or
potential development than larger companies. Due to these and other factors,
small companies may be more susceptible to market downturns, and their stock
prices may be more volatile.
<PAGE>
PORTFOLIO TURNOVER: Portfolio turnover measures the rate at which the securities
in a Fund's portfolio change during any given year. Portfolio turnover involves
expense to a fund in the form of brokerage commissions and other transaction
costs, which may adversely impact the fund's performance. Additionally, an
increase in portfolio turnover may result in an increase or decrease in taxable
gain or loss attributable to shareholders of a fund. The Adviser manages the
Fund for long-term profits, and expects that under normal conditions, portfolio
turnover should be less than 100%. However, the rate of portfolio turnover may
be higher for the Fund if implementation of the Fund's investment strategy or a
temporary defensive position results in frequent trading.
FUND MANAGEMENT
---------------
Henssler Asset Management, LLC ("Adviser"), located at 1281 Kennestone Circle,
Suite 100, Marietta, Georgia 30066, serves as the investment adviser for the
Fund. The Adviser was organized in February 1998 by its owners, Gene W.
Henssler, Ph.D., and Patricia T. Henssler. The Adviser is an affiliate of G.W
Henssler & Associates, Ltd. ("Henssler & Associates"), an investment manager,
which has provided investment advisory services to corporations, individual
investors, and institutional investors since its inception in 1987.
The Adviser provides investment advisory services and day-to-day administrative
services to the Fund under separate agreements with the Fund. For these
services, the Fund paid the Adviser the fees described below for the fiscal year
ended April 30, 2000. All fees are expressed as an annualized percentage of
average net assets of the Fund. These fees do not include the costs of
brokerage, interest, taxes, litigation, and other extraordinary expenses.
The Henssler Equity Fund
------------------------
Advisory Fee............................ 0.50%
Operating Services Fee.................. 0.70%
Total Fees.............................. 1.20%
Portfolio Management:
---------------------
The Fund is managed by a team of portfolio managers, including Dr. Henssler and
Ted L. Parrish (the "Management Team"). The Fund's Management Team is supported
by a group of research analysts and other members of the Fund's investment
staff.
Dr. Henssler has worked in investment management and financial analysis for over
25 years. Before organizing Henssler & Associates, Dr. Henssler was a Professor
of Finance at Kennesaw State University for 10 years. Dr. Henssler earned his
MBA and Ph.D. in Finance from the University of Michigan in 1965 and 1971,
respectively.
Mr. Parrish has worked in investment management and financial analysis for 5
years. He earned his BBA from Kennesaw State University in 1995, and holds the
Series 7, Series 63 and Series 65 licenses. Mr. Parrish is a Level II Chartered
Financial Analyst candidate.
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------
The financial highlights table is intended to help you understand the Fund's
financial performance for the period of the Fund's operations. 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 (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by McCurdy & Associates CPAs,
Inc., whose report, along with the Fund's financial statements, is included in
the Fund's Annual Report to Shareholders, incorporated by reference into this
Prospectus, and available upon request.
The following are selected per share data and ratios for the Fund for the
periods indicated.
<TABLE>
<CAPTION>
For the period For the fiscal
June 10, 1998 year ended
through April 30, 1999 April 30, 2000
---------------------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.00 $11.74
Income From Investment Operations:
Net Investment Income (Loss) .02 .01
Net Gains (Losses) on Securities
(both realized and unrealized) 1.74 1.56
Total From Investment Operations 1.76 1.57
Less Distributions:
Dividends (from Net Investment Income) (0.02) (0.02)
Distributions (from Capital Gains) - -
Returns of Capital - -
Total Distributions (0.02) (0.02)
-----
Net Asset Value, End of Period $11.74 $13.29
====== ======
Total Return 17.57% 13.37%
Ratios/Supplemental Data:
For the period For the fiscal
June 10, 1998 year ended
through April 30, 1999 April 30, 2000
---------------------- --------------
Net Assets, end of period (in 000s) $15,680 $22,120
Ratio of Expenses to Average Net Assets: 1.20%* 1.20%
Ratio of Net Income (Loss) to Average
Net Assets: 0.17%* 0.10%
Portfolio Turnover Rate 14.00% 58.00%
<FN>
* Annualized
</FN>
</TABLE>
<PAGE>
ACCOUNT INFORMATION
-------------------
VALUATION OF SHARES--DETERMINATION OF NET ASSET VALUE:
The Fund's share price is determined based upon net asset value (NAV). The Fund
calculates NAV at approximately 4:00 p.m., EST, each day that the New York Stock
Exchange (NYSE) is open for trading. The NYSE is closed on national holidays, so
NAV will not be calculated on those days. A list of these national holidays
appears in the Fund's Statement of Additional Information. The Fund's NAV per
share is determined by dividing the total value of the Fund's investments and
other assets less any liabilities by its number of outstanding shares.
Equity securities listed on a national securities exchange or quoted on the
NASDAQ National Market System are valued at the last sale price on the day the
valuation is made or, if no sale is reported, at the latest bid price.
Valuations of variable and fixed income securities are supplied by independent
pricing services approved by the Fund's Board of Directors. Other assets and
securities for which no quotations are readily available are valued at fair
value as determined in good faith by or under the direction of the Board.
Securities with maturities of sixty (60) days or less are valued at amortized
cost.
HOW TO PURCHASE SHARES
----------------------
The Fund does not impose any sales charges on purchases of the Fund. In general,
the Fund requires a minimum initial investment of $2,000 and a minimum
subsequent investment of $200. The Fund will waive minimum investment
requirements for any automatic investment plan of $100 or more per month, and
for certain other accounts, as noted below.
Orders for the purchase of shares of the Fund placed directly with the Fund's
transfer agent, Declaration Service Company (the "Transfer Agent") by an
investor are executed at the next determined NAV per share after receipt by the
Transfer Agent. Orders for the purchase of shares of the Fund placed through
broker-dealers are executed at their next determined NAV per share after receipt
in good order by the broker-dealer. Shares are eligible to receive dividends the
day they are purchased. The Fund reserves the right to reject any order for the
purchase of its shares in whole or in part.
<PAGE>
MINIMUM INITIAL AND ADDITIONAL INVESTMENTS REQUIRED BY THE FUND:
Minimum Additional
Initial Investment Investment
------------------ ----------
Regular Accounts $2,000 $200
Traditional IRA's $1,000 $100
Roth IRA's $1,000 $100
Education IRA's $ 500 $100
Automatic Investment Plan $ 100 $100
OPENING OR ADDING TO AN ACCOUNT:
To make an initial investment in the Fund, all purchasers must complete and send
the required application, along with a check payable to "The Henssler Equity
Fund," to one of the addresses listed below. To make a subsequent investment,
all purchasers must complete and send an investment slip, along with a check
payable to "The Henssler Equity Fund," to an address listed below. All
investments must be in U.S. dollars. Third-party checks cannot be accepted. You
may be charged a fee for any check that does not clear.
Regular Mail Overnight Delivery
------------ ------------------
The Henssler Equity Fund The Henssler Equity Fund
c/o Declaration Service Company c/o Declaration Service Company
Post Office Box 844 555 North Lane, Suite 6160
Conshohocken, PA 19428-0844 Conshohocken, PA 19428-0844
You may also make automatic monthly investments from your bank account in a
regular amount (minimum $100 per month) pursuant to our "Automatic Investment
Plan." Please call us at 1-800-936-3863 for more information about the Automatic
Investment Plan.
<PAGE>
SPECIAL INSTRUCTIONS FOR INDIVIDUAL RETIREMENT ACCOUNTS:
If you are interested in investing your Individual Retirement Account ("IRA") or
Roth IRA in the Fund, you may establish an IRA, IRA Rollover Account, Roth IRA,
or Roth IRA Rollover Account in the Fund. Please call the Fund at 1-800-936-3863
to request an IRA investment package. You may also call a broker-dealer for more
information regarding the establishment of an IRA account in the Fund. For more
complete IRA information, consult your tax professional.
Terms to Understand:
Traditional IRA.................... an individual retirement account. Your
contributions may or may not be deductible depending on your
circumstances. Assets grow tax-deferred; withdrawals and
distributions are taxable in the year made.
Roth IRA........................... an IRA funded with non-deductible
contributions; and tax-free growth of assets and distributions, if the
assets are held for five years or longer and certain conditions are
met.
Education IRA...................... an IRA with nondeductible contributions,
and tax-free growth of assets and distributions, if used to pay
qualified educational expenses.
HOW TO SELL SHARES
You may sell shares at any time. This can be done via the telephone by calling
1-800-936-FUND (3863) or in writing.
There are no fees charged by the Fund for redemptions. However, shareholders who
redeem their shares through a broker-dealer may be charged a fee for the
broker-dealer's services.
WRITTEN SELL ORDERS:
A written letter of instruction must include:
/o/ your name(s) and signature(s)
/o/ your account number
/o/ the fund name
/o/ the dollar amount you want to sell
/o/ how and where to send the proceeds
/o/ if your account is an IRA account,
whether the distribution is qualified or premature
Mail your request to:
Regular Mail Overnight Delivery
------------ ------------------
The Henssler Equity Fund The Henssler Equity Fund
c/o Declaration Service Company c/o Declaration Service Company
Post Office Box 844 555 North Lane, Suite 6160
Conshohocken, PA 19428-0844 Conshohocken, PA 19428-0844
Redemption proceeds will be mailed or wired to the redeeming shareholder within
seven (7) business days, except where those shares have recently been purchased
by personal check. In those cases, redemption proceeds may be withheld until the
check has been collected, which may take up to fifteen (15) business days. To
avoid such withholding, investors should purchase shares by certified or bank
check. Interest will not accrue on uncashed redemption checks.
<PAGE>
Some circumstances require that written sell orders be signature guaranteed. If
the shareholder is a corporation, partnership, agent, fiduciary or surviving
joint owner, additional documentation may be required.
A signature guarantee helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Your shares will be sold at the next NAV per share calculated after your
completed order is received by the Fund's transfer agent.
GENERAL POLICIES:
If your account falls below $1,000, the Fund may ask you to increase your
balance. If the balance remains below $1,000 after ninety (90) days, the Fund
may close your account, and mail you the proceeds from your account to the
address on the Transfer Agent's records.
The Fund reserves the right to:
/o/ Refuse any purchase request for any reason.
/o/ Change any of its purchase or redemption policies or
procedures at any time.
/o/ Delay in sending out redemption proceeds for up to seven (7) business
days. This generally only happens in cases of large redemptions or
during unusual market conditions.
/o/ Suspend the right to redeem and delay redemption proceeds
during times when trading on the NYSE is restricted or halted,
or otherwise as permitted by the SEC.
INVESTMENTS THROUGH THIRD PARTIES:
If you invest through a third party (rather than directly through Henssler), the
policies and fees may be different than those described here. Banks, brokers,
401(k) plans, financial advisers and financial supermarkets may charge
transaction fees and may set different minimum investments or limitations on
buying or selling shares. The Advisor may also pay such parties a fee for
shareholder services out of its own resources.
TELEPHONE PURCHASES BY SECURITIES FIRMS. Member firms of the NASD may telephone
Declaration Service Company at 1-800-936-3863 and place purchase orders on
behalf of investors who carry their Fund investments through the member's
account with the Fund. By electing telephone purchase privileges, NASD member
firms, on behalf of themselves and their clients, agree that neither the Fund,
the Distributor nor the Transfer Agent shall be liable for following
instructions communicated by telephone and reasonably believed to be genuine.
The Fund and its agents provide written confirmations of transactions initiated
by telephone as a procedure designed to confirm that telephone instructions are
genuine. In addition, all telephone transactions with the Transfer Agent are
recorded. As a result of these and other policies, the NASD member firms may
bear the risk of any loss in the event of such a transaction. However, if the
Transfer Agent or the Fund fails to employ this and other established
procedures, the Transfer Agent or the Fund may be liable. The Fund reserves the
right to modify or terminate these telephone privileges at any time.
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
----------------------------------
The Fund pays its shareholders all of its net investment income and net realized
long- and short-term capital gains on an annual basis. Your dividends and
distributions will be reinvested in the Fund unless you instruct the Fund
otherwise. There are no fees or sales charges on reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is in an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or take them in cash. In general,
distributions are taxable as follows:
TAXABILITY OF DISTRIBUTIONS:
TAX RATE FOR TAX RATE FOR 28%
TYPE OF DISTRIBUTION 15% BRACKET BRACKET OR ABOVE
-------------------- ----------- ----------------
Income Dividends Ordinary Income Rate Ordinary Income Rate
Short-Term Capital Gains Ordinary Income Rate Ordinary Income Rate
Long-Term Capital Gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences. The Fund anticipates that the
majority of its distributions will consist of capital gains.
TAXES ON TRANSACTIONS:
Any sale of Fund shares may generate a tax liability. Tax-deferred accounts do
not generate a tax liability unless you are taking a distribution or making a
withdrawal.
The table above can provide a guide for your potential tax liability when
selling fund shares. "Short-term capital gains" applies to Fund shares sold up
to 12 months after buying them. "Long-term capital gains" applies to Fund shares
held for more than twelve (12) months.
<PAGE>
HOW TO OBTAIN MORE INFORMATION
The Statement of Additional Information ("SAI") contains additional information
about the Fund including a more detailed discussion of its investment policies
and the risks associated with various investments. The SAI is incorporated by
reference into this prospectus. This means that the SAI is legally a part of
this prospectus.
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders.
You can obtain more information about the Fund and a copy of the Fund's SAI,
annual or semi-annual reports to shareholders by request and without charge by
contacting the Fund at 1-800-936-FUND (3863) or in writing to The Henssler
Equity Fund, c/o Declaration Service Company, Post Office Box 844, Conshohocken,
Pennsylvania 19428-0844.
You can also obtain these documents, and other information about the Fund from
the SEC's website at http://www.sec.gov. You may review and copy documents at
the SEC Public Reference Room in Washington, D.C. (1-800-SEC-0330). You may
request documents by mail from the SEC by writing to Securities and Exchange
Commission, Public Reference Section, Washington, D.C. 20549-6009. The SEC will
charge a duplicating fee for any requested materials.
Adviser
-------
Henssler Asset Management, LLC
1281 Kennestone Circle, Suite 100
Marietta, Georgia 30066
Distributor
-----------
Declaration Distributors, Inc.
555 North Lane, Suite 6160
Conshohocken, PA 19428
Custodian
---------
The Fifth Third Bank, N.A.
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Transfer, Redemption, and Dividend Disbursing Agent
---------------------------------------------------
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
Independent Accountants
-----------------------
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, Ohio 44145
Legal Counsel
-------------
Stephanie A. Djinis, Esq.
7918 Jones Branch Drive
Suite 600
McLean, Virginia 22102
Investment Company Act File No. 811-08659
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
August 31, 2000
THE HENSSLER EQUITY FUND
a portfolio of
THE HENSSLER FUNDS, INC.
1281 Kennestone Circle, Suite 100
Marietta, Georgia 30066
Telephone No. (770) 425-6669
---------------
The Henssler Equity Fund ("Fund") is a portfolio of The Henssler Funds, Inc.
("Henssler"), a no-load, open-end diversified management investment company. The
Fund's investment objective is to seek growth of capital. The Fund seeks to
achieve its objective by investing in securities listed on a national securities
exchange or quoted in the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System.
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Fund's Prospectus, dated August 31, 2000 (the
"Prospectus"), which has been filed with the Securities and Exchange Commission.
This Statement of Additional Information incorporates by reference the Fund's
Prospectus and the Annual Report to shareholders for the fiscal year ended April
30, 2000. Copies of the Prospectus and the Annual Report are available free of
charge by writing to The Henssler Funds, Inc., c/o Declaration Service Company,
P.O. Box 844, Conshohocken, Pennsylvania 19428-0844, or by telephoning
1-800-936-3863.
<PAGE>
Table of Contents
Page No.
--------
THE FUND...................................................................4
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS....................4
Investments in Common Stock.............................................5
Investments in Small Companies..........................................5
Investments in Sectors..................................................6
Investments in Foreign Securities.......................................6
Low Portfolio Turnover..................................................7
Investment in Fixed Income Securities...................................8
Repurchase Agreements...................................................8
INVESTMENT RESTRICTIONS....................................................9
MANAGEMENT OF THE FUND.....................................................10
ADVISORY AND ADMINISTRATION ARRANGEMENTS...................................13
Advisory and Operational Service Agreements.............................13
Duration and Termination................................................14
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION............................14
General.................................................................14
Research Services.......................................................14
Over-the-Counter Transactions...........................................15
Political Conflicts.....................................................15
DETERMINATION OF NET ASSET VALUE...........................................15
PURCHASE OF SHARES.........................................................16
Purchase by Exchange of Securities......................................17
THE DISTRIBUTOR............................................................18
REDEMPTION OF SHARES.......................................................19
SHAREHOLDER SERVICES.......................................................21
Investment Account......................................................21
Reinvestment of Dividends and Capital Gains
Distribution.........................................................21
DIVIDENDS, DISTRIBUTIONS AND TAXES.........................................21
Dividends and Distributions.............................................21
Taxes ..................................................................21
PERFORMANCE INFORMATION....................................................24
GENERAL INFORMATION........................................................25
Description of Shares...................................................26
Principal Shareholders..................................................26
Independent Accountants.................................................27
Custodian...............................................................27
Transfer, Redemption, And Dividend Disbursing Agent.....................27
Legal Counsel...........................................................27
Reports To Shareholders.................................................27
Additional Information..................................................27
<PAGE>
THE FUND
The Henssler Equity Fund (the "Fund") is the only portfolio of The Henssler
Funds, Inc. ("Henssler"), a no-load, open-end diversified management investment
company incorporated under the laws of the State of Maryland on February 12,
1998.
Henssler's address is 1281 Kennestone Circle, Suite 100, Marietta, Georgia
30066, and its telephone number is (770) 425-6669.
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS
Reference is made to "About the Fund" and "The Fund in Detail" in the Prospectus
for a discussion of the investment strategy, objectives, policies and risks of
the Fund. Set forth below is certain further information relating to the Fund
generally.
The Fund's investment strategy is to emphasize long-term capital appreciation
and safety of principal.
Any assets not invested in equity securities will be invested in cash and cash
equivalents, U.S. Government securities, money market instruments, and certain
other fixed income securities to meet the Fund's liquidity needs and may be so
invested, in extraordinary circumstances, to attempt to protect against
significant down cycles in the stock market. The Fund may invest in securities
of other investment companies, subject to the limits and restrictions contained
in, and the rules and regulations promulgated under, the Investment Company Act
of 1940. In the event that the Fund invests in other investment companies, such
investments would be for cash management purposes.
The Fund is diversified, which means that the Fund may not, as to 75% of its
assets, purchase securities of any one issuer, other than securities issued or
guaranteed by the United States government, if immediately after such purchase
more than 5% of the Fund's total assets would be invested in securities of such
issuer or the Fund would own 10% or more of the outstanding voting securities of
such issuer. The Fund will not invest more than 25% of its assets in a
particular industry sector. The Fund will not purchase securities on margin, but
it may obtain such short-term credit from banks as may be necessary for the
clearance of purchases and sales of securities.
<PAGE>
INVESTMENTS IN COMMON STOCK. Because the Fund invests primarily in common
stocks, shares of the Fund will be subject to market risk, i.e., the possibility
that stock prices could decline over short or even extended periods. The stock
market tends to be cyclical, with periods when the prices of stocks generally
rise and periods when they generally decline. Historically, the market has been
characterized by volatility in the short run and growth in the long run. The
Fund is intended to be a long-term investment vehicle and should not be used to
meet short-term needs.
INVESTMENTS IN SMALL COMPANIES. Although the Fund invests in companies of all
sizes, i.e., large (annual revenues generally over $5 billion), medium (annual
revenues generally between $1 billion and $5 billion), and small (annual
revenues generally under $1 billion), there may be times when the Fund is
significantly invested in small companies. Smaller growth companies may offer
greater potential for capital appreciation than larger companies, particularly
because they often have new products, methods or technologies, or may respond to
changes in industry conditions due to regulatory or other developments more
rapidly than their larger competitors. In addition, because they may be followed
by fewer stock analysts and less information may be available on which to base
stock price evaluations, the market may overlook favorable trends in particular
smaller growth companies, and then adjust its valuation more quickly once
investor interest increases. Smaller growth companies may also be more subject
to a valuation catalyst (such as acquisition or disposition efforts or changes
in management) than larger companies.
On the other hand, the smaller companies in which the Fund may invest may have
relatively small revenues or market share for their products or services, their
businesses may be limited to regional markets, or they may provide goods or
services for a limited market. For example, they may be developing or marketing
new products or services for which markets are not yet established and may never
become established or may have or develop only a regional market for product or
services and thus be affected by local or regional market conditions. In
addition, small companies may lack depth of management or they may be unable to
generate funds necessary for growth or potential development, either internally
or through external financing on favorable terms. Such companies may also be
insignificant in their industries and become subject to intense competition from
larger companies.
Due to these and other factors, small companies may suffer significant losses or
realize substantial growth; therefore, investments in such companies tend to be
volatile and are more speculative.
<PAGE>
INVESTMENTS IN SECTORS. Although the Fund anticipates that, under normal
circumstances, its investments will be diversified across all equity market
sectors, the Fund is permitted to invest up to 25% of its assets in a particular
industry sector. Sector markets, like the national economy as a whole, tend to
be cyclical. Significant product development or favorable regulatory change in a
particular sector may rapidly result in a substantial upswing in that sector's
sales and profits and corresponding increases in the stock prices of the
sector's companies. By investing a substantial percentage of the Fund's assets
in a particular sector, the Adviser will attempt to capitalize on the strength
of that sector and the growth of that industry in relation to other sectors of
the overall economy.
On the other hand, investments in a particular sector are also volatile in
response to unanticipated negative changes in the sector's economy. For example,
unexpected declines in demand, adverse regulatory changes, or shortages of
materials, skilled employees or growth capital may negatively affect an industry
sector without affecting the overall economy. If the Fund is substantially
invested in a particular sector which experiences an unanticipated decline, the
Fund's performance may suffer accordingly.
INVESTMENTS IN FOREIGN SECURITIES. The Adviser may invest up to 20% of the
Fund's assets in equity securities that are issued by foreign issuers and are
traded in the United States and in American Depositary Receipts of foreign
companies. By doing so, the Adviser attempts to take advantage of differences
between economic trends and the performance of securities markets in various
countries. The Adviser believes that it may be possible to obtain significant
appreciation from a portfolio consisting, in part, of foreign investments and
also achieve increased diversification. Increased diversification is gained by
combining securities from various countries that offer different investment
opportunities and are affected by different economic trends.
Generally, investments in securities of foreign companies involve greater risks
than are present in domestic investments. Canadian securities, however, are not
considered by the Adviser to have the same risks as other nations' securities
because Canadian and U.S. companies are generally subject to similar auditing
and accounting procedures and similar governmental supervision and regulation.
Also, Canadian securities are normally more liquid than other non-U.S.
securities. Compared to U.S. and Canadian companies, there is generally less
publicly available information about foreign companies and there may be less
governmental regulation and supervision of foreign stock exchanges, brokers and
listed companies.
In addition, investing in foreign securities also involves the following
considerations: fluctuations in exchange rates of foreign currencies; possible
imposition of exchange control regulation or currency restrictions that would
prevent cash from being brought back to the U.S.; lack of uniform accounting,
auditing, and financial reporting standards; lack of uniform settlement periods
and trading practices; less liquidity and frequently greater price volatility;
possible expropriation or nationalization of assets; and possible imposition of
foreign taxes. Furthermore, the U.S. government has from time to time imposed
restrictions, through taxation and otherwise, on foreign investments by U.S.
investors such as the Fund.
To the extent portfolio securities are denominated in foreign currencies, the
value of the assets of the Fund as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations. Although the Fund values its assets daily in terms
of U.S. dollars, it does not intend to convert its holdings of foreign
securities into U.S. dollars on a daily basis.
<PAGE>
As one way of managing foreign currency exchange rate risk, the Fund may enter
into forward foreign currency exchange contracts (i.e., purchasing or selling
foreign currencies at a future date). These contracts are usually entered into
in order to fix the U.S. dollar value of a security which the Fund has agreed to
buy or sell, but which will not settle until some time in the future. These
contracts may also be used to hedge the U.S. dollar value of a security already
owned by the Fund (position hedging), particularly if a decrease in the value of
the currency in which the foreign security is Denominated is expected. This
method of protecting the value of the Fund's securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities, but it does establish a rate of exchange, which the Fund may
rely upon at a predetermined future point in time.
The Adviser seeks to benefit the Fund when using forward contracts, although the
Adviser may not be able to project precisely the future exchange rates between
foreign currencies and the U.S. dollar. The Fund may therefore, incur a gain or
a loss on a forward contract. A forward contract may help reduce the Fund's
losses on a security when a foreign currency's value decreases but it may
likewise reduce the potential gain on a security if the foreign currency's value
increases.
PORTFOLIO TURNOVER. Due to the Fund's long-term investment style, the Fund
anticipates that portfolio turnover will not exceed 100% per year. Portfolio
turnover results from a change of the securities held by the Fund and involves
expenses to the Fund in the form of brokerage commissions and other transaction
costs. Portfolio turnover may also have an impact on the amount of taxable
distributions to shareholders. Although the rate of portfolio turnover will not
be a limiting factor when the Adviser deems change appropriate and in the best
interest of the Fund's shareholders, the relatively low turnover rate
anticipated in the Fund may benefit the Fund and its shareholders in the form of
lower capital expenses and lower taxable distributions. The portfolio turnover
rates from June 10, 1998 through April 30, 1999, and from May 1, 1999 through
April 30, 2000, were 14% and 58%, respectively.
INVESTMENT IN FIXED INCOME SECURITIES. Under normal circumstances, the Fund
anticipates that substantially all of its assets (ordinarily 90% or more) will
be invested in equity securities. Any assets not invested in equity securities
will be invested in cash and certain cash equivalents, money market instruments,
U.S. Government securities and certain other fixed income securities for
liquidity needs or may be so invested, in extraordinary circumstances, as a
defensive position due to uncertainties in the stock market. The Fund will limit
its investments in corporate bonds and notes to those, which are considered
investment grade (generally, bonds and notes that have received a rating from
Standard & Poor's Corporation of "BBB" or better or from Moody's Investors
Service, Inc. of "Baa" or better) at the time of their purchase. For further
information regarding Standard & Poor's and Moody's investment-grade ratings for
corporate bonds and notes, see Appendix A to this Statement of Additional
Information.
<PAGE>
The Fund's investments in fixed income securities will generally be subject to
both credit risk and market risk. Credit risk relates to the ability of the
issuer to meet interest or principal payments as they become due. Market risk
relates to the fact that market values of fixed income securities generally will
be affected by changes in the level of interest rates. Generally, as interest
rates rise, the market value of fixed income securities will fall. Conversely,
as interest rates fall, the market value of fixed income securities will rise.
Fluctuations in market value do not affect the interest income from the
securities, but are reflected in the Fund's net asset value.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
"primary dealers" in U.S. government securities and member banks of the Federal
Reserve System which furnish collateral equal in value or market price to at
least 102% of the amount of their repurchase obligation. In a repurchase
agreement, the Fund purchases a security from a seller, which undertakes to
repurchase the security at a specified resale price on an agreed future date
(ordinarily a week or less). The resale price generally exceeds the purchase
price by an amount, which reflects an agreed-upon market interest rate for the
term of the repurchase agreement. The principal risk is that, if the seller
defaults, the Fund might suffer a loss to the extent that the proceeds from the
sale of the underlying securities and other collateral held by the Fund in
connection with the related repurchase agreement are less than the repurchase
price. Repurchase agreements maturing in more than seven days are considered by
the Fund to be illiquid.
INVESTMENT RESTRICTIONS
The Fund has adopted the following restrictions and policies relating to the
investment of its assets and its activities, which are fundamental policies and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities (which for this purpose and under the
Investment Company Act of 1940 means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented or (ii) more than 50% of the outstanding shares).
Any investment restriction which involves a maximum percentage of securities or
assets shall not be considered to be violated unless an excess over the
percentage occurs immediately after, and is caused by, an acquisition of
securities or assets of, or borrowings by, the Fund.
The Fund may not:
/1/ As to 75% of its total assets, purchase securities of any one issuer,
other than those issued or guaranteed by the United States government, if
immediately after such purchase more than 5% of the Fund's total assets would be
invested in securities of such issuer or the Fund would own 10% or more of the
outstanding voting securities of such issuer.
/2/ Invest 25% or more of its total assets in the securities of issuers in
any particular Standard & Poor's 500 industry sector.
/3/ Issue senior securities, except as permitted under the Investment
Company Act of 1940.
/4/ Make investments for the purpose of exercising control or management.
<PAGE>
/5/ Purchase or sell real estate or interests in real estate, including real
estate limited partnerships; PROVIDED, HOWEVER, that the Fund may invest in
securities secured by real estate or interests therein or issued by companies,
including real estate investment trusts, which invest in real estate or
interests therein.
/6/ Purchase or sell commodities or commodity contracts, including future
contracts, provided however that the Fund may enter into foreign currency
exchange contracts as described above under "Investments in Foreign Securities."
/7/ Purchase any securities on margin, except that the Fund may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities.
/8/ Make loans to other persons; provided, however, that, for purposes of
this restriction, the term "loan" does not include the purchase of an issue of
publicly distributed bonds or debentures, government obligations, certificates
of deposit, bankers' acceptances or repurchase agreements.
/9/ Borrow amounts in excess of 10% of its total assets, taken at market
value, and then only from banks as a temporary measure for extraordinary or
emergency purposes such as the redemption of Fund shares.
/10/ Mortgage, pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by the Fund except as may be
necessary in connection with borrowings mentioned in (9) above, and then such
mortgaging, pledging or hypothecating may not exceed 10% of the Fund's total
assets, taken at market value.
/11/ Invest more than 10% of the Fund's total assets in securities for which
there are legal or contractual restrictions on resale, securities which are not
readily marketable, securities of foreign issuers which are not listed on a
recognized domestic or foreign securities exchange, or other illiquid
securities.
/12/ Underwrite securities of other issuers except insofar as the Fund may be
deemed an underwriter under the Securities Act of 1933 in selling portfolio
securities.
/13/ Write, purchase or sell puts, calls or combinations thereof.
/14/ Purchase or sell interests in oil, gas or other mineral exploration or
development programs or leases; PROVIDED, HOWEVER, that the Fund may purchase
or sell securities of entities which invest in such programs.
<PAGE>
MANAGEMENT OF THE FUND
Reference is made to "Management of the Fund" in the Prospectus. Set forth below
is further information about the Fund's management.
BOARD OF DIRECTORS. The Fund is governed by a Board of Directors, which is
responsible for protecting the interests of the Fund's shareholders. The members
of the Board of Directors are experienced executives who meet throughout the
year to oversee the Fund's activities, review the Fund's contractual
relationships with service providers, and review the performance of the Fund. A
majority of the Fund's directors are not affiliated with the Adviser.
MANAGEMENT AGREEMENTS. Henssler Asset Management, LLC (the "Adviser") has
entered into an Investment Advisory Agreement (the "Advisory Agreement") with
the Fund to provide investment management services to the Fund. In addition, the
Adviser has entered into an Operating Services Agreement (the "Services
Agreement") with the Fund to provide virtually all day-to-day operational
services to the Fund. As is further explained below, the combined effect of the
Advisory Agreement and the Services Agreement is to place a cap or ceiling on
the Fund's ordinary operating expenses at 1.20% of daily net asset value of the
Fund, excepting brokerage, interest, taxes, litigation, and other extraordinary
expenses.
The Adviser was organized in February 1998 by its owners, Gene W. Henssler,
Ph.D. and Patricia T. Henssler. The Adviser is an affiliate of G.W. Henssler &
Associates, Ltd. ("Henssler & Associates"), an investment manager which has
provided investment advisory services to corporations, individual investors, and
institutional investors since its inception in 1987. Dr. Henssler owns over 90%
of the outstanding interests in Henssler & Associates. Henssler & Associates has
approximately $450 million under private account management, with an additional
$225 million under advisement. The Adviser's offices are located at 1281
Kennestone Circle, Suite 100, Marietta, Georgia 30066.
The Board of Directors is responsible for the overall management of the Fund,
including general supervision of its investment activities. The officers who
administer the Fund's daily operations are appointed by the Board of Directors.
The current Directors and principal officers of the Fund, their addresses, and
their principal occupations for the past five years are set forth below.
"Interested" directors, as defined by the 1940 Act, are designated by an
asterisk.
<PAGE>
<TABLE>
Name and Address (Age)
with Registrant During
the Past 5 Years Positions Principal's Occupations
---------------- --------- -----------------------
<CAPTION>
<S> <C> <C>
1*Gene W. Henssler (60) Director, President G.W. Henssler & Associates, Ltd.
1281 Kennestone Circle
Suite 100
Marietta, Georgia 30066
1*Patricia T. Henssler (45) Director, Executive G.W. Henssler & Associates, Ltd.
1281 Kennestone Circle Vice President and
Suite 100 Treasurer
Marietta, Georgia 30066
1281 Kennestone Circle President and
Suite 100 Treasurer Patricia T. Henssler, CPA
Marietta, Georgia 30066 Secretary Henssler, Still & Associates, LLC
Kenneth M. Davies (60) Director, Principal Kenneth M. Davies, P.C.
Penobscot Building, Suite 3270
1675 Griswold
Detroit, Michigan 48226
Ladd M. Kochman, DBA (55) Director, Professor
Kennesaw State University of Finance Kennesaw State University
1000 Chastain Road
Kennesaw, Georgia 30144-5591
Mr. James L. Brookover (49) Director, Portfolio Reams Asset Management
4725 Stonebridge Court Manager
Columbus, Indiana 47201
Mr. Ted L. Parrish (27) Vice President, G.W. Henssler & Associates, Ltd.
1281 Kennestone Circle Principal
Suite 100
Marietta, Georgia 30066
Mr. William G. Lako, Jr. (29) Vice President, G.W. Henssler & Associates, Ltd.
1281 Kennestone Circle Principal
Suite 100
Marietta, Georgia 30066
Mr. Scott L. Keller (34) Vice President, G.W. Henssler & Associates, Ltd.
1281 Kennestone Circle Principal
Suite 100
Marietta, Georgia 30066 Vice President The Fuji Bank, Ltd.
<FN>
/1/ Gene Henssler and Patricia Henssler are related by marriage.
</FN>
</TABLE>
<PAGE>
The Adviser pays each Director an annual fee of $2,500 per year plus $100 per
meeting attended, together with such directors' actual out-of-pocket expenses
relating to attendance at meetings. The $2,500 annual fee is payable in four
equal quarterly installments and is paid as of the date of each quarterly Board
meeting. During the fiscal year ended April 30, 2000, each Director was paid
$2,900 by the Adviser.
ADVISORY AND ADMINISTRATION ARRANGEMENTS
Reference is made to "Management of the Fund--Management Arrangements" in the
Prospectus for certain information concerning the management and Advisory
arrangements of the Fund.
ADVISORY AND OPERATING SERVICE AGREEMENTS. Henssler Asset Management, LLC (the
"Adviser") has entered into an Investment Advisory Agreement (the "Advisory
Agreement") with the Fund to provide investment management services to the Fund.
In addition to the Advisory Agreement, the Adviser has entered into an Operating
Services Agreement (the "Services Agreement") with the Fund to provide, or make
arrangements for the provision of, virtually all day-to-day operational services
to the Fund.
The Adviser is an affiliate of G.W. Henssler & Associates, an investment manager
described above. Henssler & Associates and the Adviser are under the common
control of Gene W. Henssler, Ph.D. Gene W. Henssler and Patricia T. Henssler,
officers of the Adviser, also serve as officers of Henssler & Associates.
As explained in the Prospectus, the terms of the Advisory Agreement and the
Services Agreement empower the Adviser, subject to the Board of Directors of the
Fund, to manage the Fund's assets and provide or arrange for the provision of
operational and other administrative services for the day-to-day operation of
the Fund. The Adviser has entered into several agreements with third party
providers to provide, among other services, accounting, administrative, dividend
disbursing, transfer agent, registrar, custodial, distribution, shareholder
reporting, sub-accounting and recordkeeping services to the Fund. The combined
effect of the Advisory Agreement and the Services Agreement is to place a cap or
ceiling on the total expenses of the Fund, excepting brokerage interest, taxes,
litigation, and other extraordinary expenses, at an annual rate of 1.20% of the
daily net asset value of the Fund.
During the fiscal period from June 10, 1998 through April 30, 1999, and the
fiscal year ended April 30, 2000, the Fund paid the Adviser $36,969 and $94,823,
respectively, for its services under the Advisory Agreement and $51,756 and
$132,753, respectively, for its services under the Services Agreement.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
Subject to the policies established by the Board of Directors of the Fund, the
Adviser is responsible for the Fund's portfolio decisions, the placing of the
Fund's portfolio transactions and the negotiation of the commissions to be paid
on such transactions. In executing such transactions, the Adviser will use its
best efforts to obtain the execution of portfolio transactions at prices, which
are advantageous to the Fund and involving commission rates which are reasonable
in relation to the value of the transaction.
GENERAL. The Fund has no obligation to deal with any broker or dealer in the
execution of transactions for its portfolio securities. The Adviser will select
brokers or dealers taking into account such factors as price (including the
commission or spread), size of order, difficulty of execution and operational
facilities of the firm involved and the firm's risk in positioning a block of
securities. The Adviser will also consider the research services which the
broker or dealer has provided to the Adviser relating to the security involved
in the transaction and/or to other securities. Consistent with the Code of
Conduct of the NASD and such other policies as the Board of Directors may
determine, the Fund may consider sales of shares of the Fund as a factor in the
selection of brokers or dealers to execute portfolio transactions for the Fund.
During the period from June 10, 1998 (commencement of operations) to April 30,
1999 and the fiscal year ended April 30, 2000, the Fund paid $13,412 and
$23,178, respectively, in brokerage fees.
<PAGE>
RESEARCH SERVICES. Under Section 28(e) of the Securities Exchange Act of 1934
and its Advisory Agreement with the Fund, the Adviser is authorized to pay a
brokerage commission in excess of that which another broker might have charged
for effecting the same transaction, in recognition of the value of brokerage
and/or research services provided by the broker. These research and investment
information services make available to the Adviser for its analysis and
consideration the views and information of individuals and research staffs of
other securities firms. These services may be useful to the Adviser in
connection with Advisory clients other than the Fund and not all such services
may be useful to the Adviser in connection with the Fund. Although such
information may be a useful supplement to the Adviser's own investment
information in rendering services to the Fund, the value of such research and
services is not expected to reduce materially the expenses of the Adviser in the
performance of its services under the Advisory Agreement and will not reduce the
management fees payable to the Adviser by the Fund.
OVER-THE-COUNTER TRANSACTIONS. The Fund may invest in securities traded in the
over-the-counter market. Transactions in the over-the-counter market are
generally principal transactions with dealers and the costs of such transactions
involve dealer spreads rather than brokerage commissions. The Fund, where
possible, deals directly with the dealers who make a market in the securities
involved except in those circumstances where better prices and execution are
available elsewhere. When a transaction involves exchange listed securities, the
Adviser considers the advisability of effecting the transaction with a broker
which is not a member of the securities exchange on which the security to be
purchased is listed (i.e., a third market transaction) or effecting the
transaction in the institutional or fourth market.
POTENTIAL CONFLICTS. The Fund may have investment objectives and strategies
similar to those of other clients of the Adviser. Accordingly, securities held
by the Fund may also be held by other clients of the Adviser and the Adviser may
find it desirable to purchase or sell the same security for the Fund and another
client of the Adviser at the same time. Similarly, due to differing investment
objectives or strategies, the Adviser may find it desirable to purchase a
security for the Fund at the same time that the Adviser wishes to sell the
security for another of the Adviser's clients, or vice versa. In either of the
foregoing circumstances, transactions in the securities will be made, insofar as
feasible, for the Fund and the Adviser's other clients in a manner deemed
equitable to all.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Fund is determined as of 4:00 P.M. on
each day during which The New York Stock Exchange is open for trading. The New
York Stock Exchange is not open on New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Fund will also determine its net asset
value once daily on each day (other than a day during which no shares were
tendered for redemption and no order to purchase or sell shares was received by
the Fund) in which there is sufficient trading in its portfolio securities that
the net asset value might be materially affected. The net asset value per share
is computed by dividing the sum of the value of the securities held by the Fund
plus any cash or other assets (including interest and dividends accrued but not
yet received) minus all liabilities (including accrued expenses) by the total
number of shares outstanding at such time, rounded to the nearest cent.
Expenses, including the management fee payable to the Adviser, are accrued
daily.
<PAGE>
Equity securities listed or traded on a national securities exchange or quoted
on the over-the-counter market are valued at the last sale price on the day the
valuation is made or, if no sale is reported, at the last bid price. Valuations
of fixed income securities are supplied by independent pricing services approved
by Henssler's Board of Directors. Money market securities with a remaining
maturity of 60 days or less are valued on an amortized cost basis if their
original term to maturity from the date of purchase was sixty (60) days or less,
or by amortizing their value on the 61st day prior to maturity, if their term to
maturity from the date of purchase exceeded 60 days, unless the Board of
Directors determines that such valuation does not represent fair value. Other
assets and securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
Henssler's Board of Directors.
PURCHASE OF SHARES
Reference is made to "How to Purchase Shares" in the Prospectus. Set forth below
is further information about the purchase of shares of the Fund.
Shares of the Fund are continuously offered at net asset value, and the Fund
does not impose any sales charges on purchases of Fund shares. The minimum
initial investment in the Fund is generally $2,000 and the minimum subsequent
investment is $200. The minimum initial investment for an Individual Retirement
Account ("IRA"), other tax-deferred retirement account, including accounts with
plans administered under Sections 401(k) and 403(b) of the Internal Revenue
Code, or an account under the Uniform Gift to Minors Act for is $1,000, with
minimum subsequent investments of $100. The Fund will waive minimum investment
requirements for any automatic investment plan of $100 or more per month.
Orders for the purchase of shares of the Fund placed directly to the Fund's
transfer agent, Declaration Service Company (the "Transfer Agent") by an
investor are executed at their next determined net asset value after receipt by
the Transfer Agent. Orders for the purchase of shares of the Fund placed through
brokers are executed at their next determined net asset value after receipt by
the broker. Shares are eligible to receive dividends the day they are purchased.
For further information regarding net asset value, see "Additional
Information-Determination of Net Asset Value." The Fund reserves the right to
reject any order for the purchase of its shares in whole or in part.
<PAGE>
For initial and subsequent investments, shares of the Fund may be purchased by
sending a check payable to "The Henssler Equity Fund," together with a completed
Application to:
Regular Mail For Overnight Delivery
------------ ----------------------
The Henssler Equity Fund The Henssler Equity Fund
c/o Declaration Service Company c/o Declaration Service Company
P.O. Box 844 555 North Lane, Suite 6160
Conshohocken, PA 19428-0844 Conshohocken, PA 19428-0844
Shareholders should be aware that purchases and redemptions mailed to the Fund
at its address in Georgia will not be effected until received by the Transfer
Agent at the address listed above. Investments in the Fund may also be made
through brokerage firms and institutions. However, investors who place their
orders through a broker-dealer may be charged a fee for the broker-dealer's
services. No such charge will be imposed on an investor who purchases Fund
shares directly from the Fund as described above.
AUTOMATIC INVESTMENT PLANS. If you are interested in setting up an Automatic
Investment Plan to invest a specific amount of money in the Fund on a regular
basis, you may complete the appropriate section of the Account Application to
authorize the Transfer agent to automatically debit your bank account
accordingly. Debits must be made in amounts of $100 or more and may be made once
per month on the 15th or last business day of the month. If the 15th falls on a
weekend or holiday, the account will be debited on the previous business day.
Requests to modify or discontinue an Automatic Investment Plan must be received
in writing fifteen (15) days prior to the next scheduled debit date. Please call
the Fund at 1-800-936-3863 to inquire about the Automatic Investment Plan.
WRITTEN SHAREHOLDER INQUIRIES. Written shareholder inquiries may be directed to
the Fund's Transfer Agent at The Henssler Equity Fund, c/o Declaration Service
Company, P.O. Box 844, Conshohocken, PA 19428-0844, or by telephone by calling
1-800-936-3863.
PURCHASE BY EXCHANGE OF SECURITIES. The Board of Directors of Henssler has
determined that it is in the best interest of the Fund to offer its shares, in
lieu of cash payment, for securities approved by the Adviser to be purchased by
the Fund. This will enable an investor to purchase shares of the Fund by
exchanging securities owned by the investor for shares of the Fund. The
Directors believe that such a transaction can benefit the Fund by allowing it to
acquire securities for its portfolio without paying brokerage commissions. For
the same reason, the transaction may also be beneficial to investors. Securities
will be exchanged for shares of the Fund in the absolute discretion of the
Adviser. Cash equivalent securities may be contributed to the Fund in accordance
with the wishes of the investor and the consent of the Adviser. The exchange of
securities in an investor's portfolio for shares of the Fund is treated for
federal income tax purposes as a sale of such securities and the investor may,
therefore, realize a taxable gain or loss.
<PAGE>
The Fund shall not enter into such transactions, however, unless the securities
to be exchanged for Fund shares are securities whose values are readily
ascertainable and are readily marketable, comply with the investment policies of
the Fund, are of the type and quality which would normally be purchased for the
Fund's portfolio, are securities which the Fund would otherwise purchase, and
are acquired for investment and not for immediate resale. The value of the
Fund's shares used to purchase portfolio securities as stated herein will be
determined at such time as the Fund next determines its net asset value. Such
securities will be valued in accordance with the same procedure used in valuing
the Fund's portfolio securities. See "Additional Information - Determination of
Net Asset Value." If you wish to acquire the Fund's shares in exchange for
securities you should contact Declaration Service Company at the address or
telephone number shown on the back page of the Prospectus. The Board of
Directors of Henssler reserves the right to terminate this privilege at any
time.
THE DISTRIBUTOR
Shares of the Fund are continuously offered at net asset value. The Adviser has
entered into a Distribution Agreement on the Fund's behalf with Declaration
Distributors, Inc. (the "Distributor"). Under the Agreement, the Distributor
will provide distribution and distribution services to the Fund in exchange for
a fee to be paid by the Adviser and reimbursement by the Adviser of the
Distributor's out of pocket expenses incurred in connection with the provision
of the foregoing.
The Distribution Agreement has an initial term of one year and will remain in
effect from year to year thereafter, but only so long as such continuance is
approved at least annually by a vote of Henssler's Board of Directors or by vote
of a majority of the outstanding voting securities of the Fund and of the
Directors who, except for their positions as Directors, are not "interested
persons" of Henssler (as defined in the Investment Company Act). In addition, in
the Distribution Agreement, either party may terminate the Distribution
Agreement upon 60 days written notice to the other party. The Distribution
Agreement terminates automatically if "assigned" (as defined in the Investment
Company Act). The Distribution Agreement is subject to the same renewal
requirements and termination provisions as the Advisory Agreement described
under "Management of the Fund - Management Arrangements."
REDEMPTION OF SHARES
Reference is made to "How to Redeem Shares" in the Prospectus for certain
information as to the redemption of shares of the Fund.
REDEMPTION BY MAIL OR TELEPHONE. Shares may be redeemed in writing or by
telephone. If the shareholder is a corporation, partnership, agent, fiduciary or
surviving joint owner, additional documentation of a customary nature may be
required. Shares are redeemed at their next determined net asset value after a
redemption request in good order has been received by the Transfer Agent or, for
redemptions through a broker, after the request has been received by the broker.
A request is deemed to be in good order if it has been signed by the account
holder and is accompanied, where necessary, by a signature guarantee.
<PAGE>
Shares may also be redeemed by telephone by calling toll-free 1-800-936-3863.
The Fund, through the Transfer Agent, has established procedures designed to
confirm the authenticity of telephonic instructions, which procedures include
requiring callers to establish their personal identity and limiting the mailing
of telephone redemption proceeds to the address or bank account set forth on the
Account Application. Investors should understand that neither the Fund nor the
Transfer Agent will be liable for acting upon instructions communicated by
telephone that it reasonably believes to be genuine.
Redemption proceeds wired to a designated account at a shareholder's request for
amounts less than $10,000 will be reduced by a wire transfer fee (currently
$10.00). Certain institutional clients will not be charged this wire redemption
fee. Changes to the designated address or bank account must be made in writing
and may be required to be accompanied by a signature guarantee from an eligible
guarantor.
The Fund reserves the right to redeem, at net asset value, the shares of any
shareholder if, because of redemptions by the shareholder, the account of such
shareholder has a value of less than $1,000. Before the Fund exercises its right
to redeem such shares, the shareholder will be given written notice of the
proposed redemption and will be allowed 90 days to make an additional investment
in an amount which will increase the value of the account to at least $1,000.
The right to redeem shares or to receive payment with respect to any such
redemptions may be suspended for more than seven days only for periods during
which trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission or such Exchange is closed (other than
customary weekend and holiday closings), or any period during which an emergency
exists, as defined by the Securities and Exchange Commission, as a result of
which disposal of portfolio securities or determination of the net asset value
of the Fund is not reasonably practicable, and for such other periods as the
Securities and Exchange Commission may by order permit for the protection of
shareholders of the Fund.
The Fund has made an election with the Securities and Exchange Commission to pay
in cash all redemptions requested by any shareholder of record limited in amount
during any 90-day period to the lesser of $250,000 or one percent (1%) of the
net assets of the Fund at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. Redemptions in excess of the above limits may be paid in whole or in
part, in investment securities or in cash, as the Board of Directors may deem
advisable; however, payment will be made wholly in cash unless the Board of
Directors believes that economic or market conditions exist which would make
such a practice detrimental to the best interests of the Fund. If redemptions
are paid in investment securities, such securities will be valued as set forth
in the Prospectus under "Account Information - Valuation of Shares -
Determination of Net Asset Value" and a redeeming shareholder would normally
incur brokerage expenses if he converted these securities to cash.
The Fund will generally first sell any cash equivalent securities it holds to
meet redemptions and, to the extent these proceeds are insufficient to meet
redemptions, the Fund will sell other portfolio securities at the discretion of
the Adviser. See "Redemption of Shares" in the Prospectus.
The value of shares at the time of redemption may be more or less than the
shareholder's cost, depending on the market value of the securities held by the
Fund at such time. Shareholders who redeem their shares through a broker-dealer
may be charged a fee for the broker-dealer's services.
<PAGE>
SHAREHOLDER SERVICES
The Fund offers the following shareholder services designed to facilitate
investment in its shares.
INVESTMENT ACCOUNT. Each shareholder has an Investment Account and will receive
statements from the Fund's Transfer Agent after each transaction showing the
cumulative activity in the account since the beginning of the year. After the
end of each year, shareholders will receive federal income tax information
regarding dividends and capital gains distributions.
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTION. Unless specific
instructions are given as to the method of payment of dividends and capital
gains distributions, dividends and distributions will automatically be
reinvested in additional shares of the Fund. Such reinvestment will be at the
net asset value of shares of the Fund, without sales charge, as of the close of
business on the ex-dividend date of the dividend or distribution. Shareholders
may elect in writing to receive either their income dividends or capital gains
distributions, or both, in cash, in which event payment will be mailed on the
payment date.
Shareholders may, at any time, notify the Transfer Agent in writing that they no
longer wish to have their dividends and/or distributions reinvested in shares of
the Funds or vice versa and, commencing ten days after the receipt by the
Transfer Agent of such notice, those instructions will be effected.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. The Fund intends to distribute all of its net
investment income and net realized long- or short-term capital gains, if any, to
its shareholders annually after the close of the Fund's fiscal year. See
"Shareholder Services - Reinvestment of Dividends and Capital Gains
Distributions" for information concerning the manner in which dividends and
distributions may be automatically reinvested in shares of the Fund.
Shareholders may elect in writing to receive any such dividends or
distributions, or both, in cash. Dividends and distributions are taxable to
shareholders as discussed below whether they are reinvested in shares of the
Fund or received in cash.
TAXES. The Fund qualifies for the special tax treatment afforded regulated
investment companies under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). If the Fund does not qualify, it will be subject to
federal income tax on the part of its net ordinary income and net realized
capital gains, which it distributes to shareholders.
<PAGE>
Dividends paid by the Fund from its ordinary income, and distributions of the
Fund's net realized short-term capital gains, are taxable to non-tax-exempt
investors as ordinary income. Ordinary income dividends may be eligible for the
70% dividends received deduction allowed to corporations under the Code, if
certain requirements are met.
Distributions made from the Fund's net realized long-term capital gains are
taxable to shareholders as long-term capital gains regardless of the length of
time the shareholder has owned Fund shares. Generally, long-term capital gains
are taxable at a maximum federal income rate of 20%. Upon redemption of Fund
shares held by a non-tax-exempt investor, such investor, generally, will realize
a capital gain or loss equal to the difference between the redemption price
received by the investor and the adjusted basis of the shares redeemed. If the
redemption by the Fund is in-kind, capital gain or loss will be measured by the
difference between the fair market value of securities received and the adjusted
basis of the shares redeemed. Such capital gain or loss, generally, will
constitute a short-term capital gain or loss if the redeemed Fund shares were
held for twelve months or less, and long-term capital gain or loss if the
redeemed Fund shares were held for more than twelve months. If, however, Fund
shares were redeemed within six months of their purchase by an investor, and if
a capital gain dividend was paid with respect to the Fund's shares while they
were held by the investor, then any loss realized by the investor will be
treated as long-term capital loss to the extent of the capital gain dividend.
Under certain provisions of the Code, some shareholders may be subject to 31%
withholding on reportable dividends, capital gains distributions and redemption
payments ("back-up withholding"). Generally, shareholders subject to back-up
withholding will be those for whom a taxpayer identification number is not on
file with the Fund or who, to such Fund's knowledge, have furnished an incorrect
number. When establishing an account, an investor must certify under penalty of
perjury that such number is correct and that he is not otherwise subject to
back-up withholding.
Dividends paid by the Fund from its ordinary income and distributions of the
Fund's net realized short-term capital gains paid to shareholders who are
non-resident aliens will be subject to a 30% United States withholding tax under
existing provisions of the Code applicable to foreign individuals and entities
unless a reduced rate of withholding or a withholding exemption is provided
under applicable treaty law. Non-resident shareholders are urged to consult
their own tax advisers concerning the applicability of the United States
withholding tax.
The Code requires each regulated investment company to pay a nondeductible 4%
excise tax to the extent the company does not distribute, during each calendar
year, 98% of its ordinary income, determined on a calendar year basis, and 98%
of its capital gains, determined, in general, on an October 31 year-end, plus
any undistributed amount from prior years. The Fund anticipates that it will
make sufficient timely distributions to avoid imposition of the excise tax. If
the Fund pays a dividend in May which was declared in the previous October,
November or December to shareholders of record on a date in those months, then
such dividend or distribution will be treated for tax purposes as being paid on
December 31 and will be taxable to shareholders as if received on December 31.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury regulations presently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and the
Treasury regulations promulgated thereunder. The Code and these Treasury
regulations are subject to change by legislative or administrative action.
Dividends and capital gains distributions may also be subject to state and local
taxes.
<PAGE>
The federal income tax consequences set forth above do not address any
particular tax considerations a shareholder of the Fund might have. Shareholders
are urged to consult their tax advisors as to the particular tax consequences of
the acquisition, ownership and disposition of shares of the Fund, including the
application of state, local and foreign tax laws and possible future changes in
federal tax laws. Foreign investors should consider applicable foreign taxes in
their evaluation of an investment in the Fund.
PERFORMANCE INFORMATION
Reference is made to "Past Performance" in the Prospectus. Set forth below is
further information regarding performance of the Fund.
From time to time, the Fund may make available certain information about its
performance. This information may include calculations regarding the total
return on an investment in the Fund ("Total Return"). Total Return is measured
by comparing the value of an investment in the Fund at the beginning of the
relevant period to the redemption value of the investment at the end of the
period (assuming reinvestment of any dividends or capital gains distributions).
When the Fund makes available its Total Return, it will be calculated on an
annualized basis for specified periods of time, and may be calculated for the
period since the start of the Fund's operations. Any performance information
made available by the Fund, including Total Return, is based on the Fund's
historical record and is not intended to indicate future performance.
As stated above, from time to time the Fund may provide its total return in
advertisements, sales literature or reports, and other communications to
shareholders. The Fund's Total Return is calculated based on the Fund's change
in net asset value per share between the beginning and end of the period shown
and assumes reinvestment of the Fund's dividend and capital gains distributions
during the period.
Total return figures will be computed according to a formula prescribed by the
Securities and Exchange Commission. The formula can be expressed as follows:
P(1+T)n = ERV
Where P = a hypothetical initial payment of $10,000
T = average annual total return
N = number of years
ERV = Ending Redeemable Value of a hypothetical $10,000
payment made at the beginning of the 1, 5, or 10
years (or other) periods at the end of the 1, 5, or
10 (or other) periods (or fractional portion thereof).
Note: The ERV assumes complete redemption of the hypothetical investment at the
end of the measuring period. The Fund's net investment income changes in
response to fluctuations in interest rates, dividends declared and the expenses
of the Funds.
<PAGE>
There may be a time when the Fund advertises its yield. Yield figures are based
on historical earnings and, like the rate of return, are not intended to
indicate future performance. The yield of the Fund refers to the income
generated by an investment in the Fund over a thirty-day (or one month) period
(which period will be stated in the advertisement). The yield for any period is
computed by dividing the net investment income per share earned during such
period by the maximum public offering price per share on the last day of the
period, and then annualizing such 30-day (or one month) yield in accordance with
a formula prescribed by the Securities and Exchange Commission. The Fund may
also advertise in terms of sales literature an "actual distribution" which is
computed in the same manner as yield except that actual income dividends
declared per share during the period in question is substituted for net
investment income per share. The Fund's yield will only be advertised when
accompanied by the Fund's total return.
The Fund's performance will vary from time to time depending upon market
conditions, the composition of its portfolio and its operating expenses.
Consequently, any given performance quotation should not be considered
representative of the Fund's performance for any specified period in the future.
In addition, because performance will fluctuate, it may not provide a basis for
comparing an investment in the Fund with certain bank deposits or other
investments that pay a fixed yield for a stated period of time.
The Fund's one-year and life-of-fund average annual total returns for the
periods ended April 30, 2000 are shows below. The returns assume that all
dividends and distributions were reinvested in the Fund.
One-Year Average Life-of-Fund Average
Annual Total Return Annual Total Return*
------------------- --------------------
The Henssler Equity Fund 13.37% 16.42%
* From June 10, 1998, commencement of operations.
As an example, based on the average annual compound rate of return listed above,
you could have expected the following values (unaudited) on a $1,000 investment
assuming no redemption at the end of the time period:
One Year $1,133.70 (based on annualized and unaudited rate of return above)
GENERAL INFORMATION
The Fund is the only portfolio of The Henssler Funds, Inc. ("Henssler"), an
open-end diversified management investment company incorporated under the laws
of the State of Maryland on February 12, 1998.
<PAGE>
The Fund's address 1281 Kennestone Circle, Suite 100, Marietta, Georgia 30066,
and its telephone number is (770) 429-9166.
DESCRIPTION OF SHARES. The Henssler Funds, Inc. ("Henssler") has an authorized
capital of 500,000,000 shares of Common Stock, par value $.0001 per share,
100,000,000 shares of which have been classified as shares of common stock of
The Henssler Equity Fund (the "Fund"). The Board of Directors has the power to
authorize and issue additional classes of stock, without stockholder approval,
by classifying or reclassifying unissued stock, subject to the requirements of
the Investment Company Act of 1940 ('40 Act). In the event of liquidation, each
share of Common Stock is entitled to a pro rata portion of the particular
portfolio's assets after payment of debts and expenses. Shareholders of the Fund
are entitled to one vote for each share held and fractional votes for fractional
shares held and will vote on the election of Directors and any other matter
submitted to a shareholder vote. In addition, shareholders have the right to
remove Directors. Henssler's Articles of Incorporation state that Henssler
reserves the right from time to time to make any amendment of its Articles of
Incorporation now or hereafter authorized by law, including any amendment which
alters the contract rights, as expressly set forth in the Articles of
Incorporation, of any outstanding capital stock. Henssler does not intend to
hold meetings of shareholders in any year in which the Act does not require
shareholders to act upon any of the following matters: (i) election of
Directors; (ii) approval of an investment advisory agreement; (iii) approval of
a distribution agreement; and (iv) ratification of selection of independent
auditors. Voting rights for Directors are not cumulative. Shares issued are
fully paid and non-assessable and have no preemptive or conversion rights.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. Henssler has elected to indemnify its
directors and officers to the maximum extent permitted under the Maryland
General Corporation Law and the Investment Company Act of 1940. Accordingly, a
director or officer of Henssler will not be liable to the Fund or its
shareholders for monetary damages, except in the case of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. See the Articles of Incorporation and Bylaws on file with
the Securities and Exchange Commission for the full text of these provisions.
Under the Maryland General Corporation Law, a stockholder of a corporation
cannot be obligated to a corporation or its creditors with respect to the stock,
except to the extent that the subscription price for the stock has not been
paid.
PRINCIPAL SHAREHOLDERS. As of April 30, 2000, the following entities were known
by the Fund to be record and beneficial owners of five percent or more of the
outstanding stock of the Fund:
Name and Address of Percent of Fund's
Record Owner Number of Shares Outstanding Shares
------------ ---------------- ------------------
Charles Schwab & Co., Inc.
Special Custody A/C FBO Customers 1,340,510.419 73%
101 Montgomery Street
San Francisco, California 94104
As of July 31, 2000, the Officers and Directors of The Henssler Funds, Inc. and
the Manager, as a group, owned less than one percent (1%) of the outstanding
shares of the Fund.
<PAGE>
INDEPENDENT ACCOUNTANTS. McCurdy & Associates CPA's, Inc., 27955 Clemens Road,
Westlake, Ohio 44145 has been selected as the independent accountants of the
Fund. The independent accountants are responsible for auditing the financial
statements of the Fund.
CUSTODIAN. The Fifth Third Bank, 38 Fountain Square, Cincinnati, Ohio 45263 acts
as Custodian of the Fund's assets. The Custodian is responsible for safeguarding
and controlling the Fund's cash and securities, handling the delivery of
securities and collecting interest on the Fund's investments.
TRANSFER, REDEMPTION, AND DIVIDEND DISBURSING AGENT. Declaration Service
Company, 555 North Lane, Suite 6160, Conshohocken, Pennsylvania 19428, acts as
the Fund's Transfer, Redemption, and Dividend Disbursing Agent. The Transfer,
Redemption, and Dividend Disbursing Agent is responsible for the issuance,
transfer and redemption of shares and the operating, maintenance and servicing
of shareholder accounts.
LEGAL COUNSEL. The Law Offices of Stephanie A. Djinis, 7918 Jones Branch Drive,
Suite 600, McLean, Virginia 22102, has been selected as counsel for the Fund.
The Law Offices of Stephanie A. Djinis will pass on legal matters for the Fund
in connection with the offering of its shares. The Law Offices of Stephanie A.
Djinis also represents the Adviser in regard to Fund-related matters and will
pass on legal matters for the Adviser in connection with the offering of the
Fund's shares.
REPORTS TO SHAREHOLDERS. The fiscal year of the Fund ends on April 30 of each
year. The Fund sends to its shareholders at least semi-annually reports showing
the Fund's portfolio and other information. An annual report, containing
financial statements audited by independent auditors, is sent to shareholders
each year.
ADDITIONAL INFORMATION. The Prospectus and this Statement of Additional
Information do not contain all the information set forth in the Registration
Statement and the exhibits relating thereto which Henssler has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, to which reference is hereby
made.
<PAGE>
FINANCIAL STATEMENTS
The Fund's most recent Statement of Assets and Liabilities, which has been
audited by McCurdy & Associates CPA's, Inc., is incorporated by reference to
this Statement of Additional Information.
FINANCIAL STATEMENTS OF THE FUND INCORPORATED BY
REFERENCE IN PART B:
Annual Report to Shareholders for year ended April 30, 2000:
Independent Accountants' Report
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
<PAGE>
APPENDIX A
Ratings of Corporate Debt Obligations
The characteristics of debt obligations rated by Moody's are generally as
follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities of fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
<PAGE>
The characteristics of debt obligations rated by Standard & Poor's are generally
as follows:
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Ratings of Commercial Paper
The Funds' purchases of commercial paper are limited to those instruments rated
A-1 or A-2 by Standard & Poor's or Prime-1 or Prime-2 by Moody's.
Commercial paper rated A-1 or A-2 by Standard & Poor's has the following
characteristics: liquidity ratios are adequate to meet cash requirements; the
issuer's long-term debt is rated "A" or better; the issuer has access to at
least two additional channels of borrowing; and basic earnings and cash flow
have an up and down trend with allowances made for unusual circumstances.
Typically, the issuer's industry is well-established and the issuer has a strong
position within the industry. Relative strength or weakness of the above factors
determines whether an insurer's commercial paper is rated A-1 or A-2, with the
relative degree of safety of commercial paper rated A-2 not being as high as for
commercial paper rated A-1.
Commercial paper rated Prime-1 or Prime-2 by Moody's is the highest commercial
paper rating assigned by Moody's. Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of management of the issuer;
(2) economic evaluation of the issuer's industry or industries and an appraisal
of speculative-type risks which may be inherent in certain areas; (3) evaluation
of the issuer's products in relation to competition and consumer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) 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. Relative strength or
weakness of the above factors determine how the issuer's commercial paper is
rated within various categories.
A commercial paper rating is not a recommendation to purchase, sell or hold a
particular instrument, inasmuch as it does not comment as to market price or
suitability for a particular investment.
<PAGE>
PART C: OTHER INFORMATION
<TABLE>
Item 23. Exhibits:
<CAPTION>
Exhibit
Number:
-------
<S> <C>
/a/ Articles of Incorporation of Registrant dated
February 11, 1998./1/
/b/ By-laws of Registrant./1/
/c/ Inapplicable.
/d/ Form of Advisory Agreement by and between the Registrant and the
Adviser./1/
/e/ Form of Distribution Agreement by and among the Adviser,
Registrant and Declaration Distributors, Inc./1/
/f/ Inapplicable.
/g/ Form of Custody Agreement by and among the Adviser, Registrant
and The Fifth Third Bank dated August 30, 1999./2/
/hl/ Form of Operating Services Agreement by and between the
Registrant and the Adviser./1/
/h2/ Form of Investment Services Agreement by and among the Adviser,
Registrant and Declaration Service Company./1/
/i/ Opinion of The Law Offices of Stephanie A. Djinis, Esq. as to
legality of the shares./3/
/j/ Consent of Independent Auditors./3/
/k/ Inapplicable.
/l/ Agreement concerning initial capital of the Fund./4/
/m/ Inapplicable.
/n/ Inapplicable.
/o/ Inapplicable.
/p/ Code of Ethics. /3/
<FN>
/1/ Incorporated by reference to Registrant's Initial Registration Statement,
SEC File No. 33-46479, filed electronically with the SEC February 18, 1998.
/2/ Incorporated by reference to Post-Effective Amendment No. 3 to the
Registrant's Registration Statement, SEC File No. 33-46479, filed electronically
with the SEC August 31, 1999.
/3/ Filed herewith.
/4/ Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement, SEC File No. 33-46479, filed electronically
with the SEC May 26, 1998.
</FN>
</TABLE>
<PAGE>
Item 24. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
Henssler Asset Management, LLC, the Fund's Adviser, is a Georgia limited
liability company fifty-one percent (51%) owned by Gene W. Henssler, Ph.D. and
forty nine percent (49%) owned by Patricia T. Henssler. The Fund's Adviser is an
affiliate of G.W. Henssler & Associates, Ltd., an investment manager wholly
owned by Dr. Henssler with approximately $450 million under private account
management, with an additional $225 million under advisement.
Item 25. Indemnification
---------------
Section 2-418 of the General Corporation Law of the State of Maryland, Article
VI of Registrant's Charter filed as Exhibit 1, Article VII of Registrant's
By-Laws filed as Exhibit 2, and the Distribution Agreement filed as Exhibit 6
provide, or will provide, for indemnification.
Registrant's Articles of Incorporation (Article VI) provide that Registrant
shall indemnify its directors and officers to the fullest extent permitted by
law.
Registrant's By-laws (Article VII, Section 1) provide that Registrant shall
indemnify any director and/or officer who was or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of Registrant, or is or was serving at
the request of Registrant as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the maximum extent permitted by law.
With respect to indemnification of officers and directors, Section 2-418 of the
Maryland General Corporation Law provides that a corporation may indemnify any
director who is made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of Registrant) by reason of service in
that capacity, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement and expenses actually and
reasonably incurred by him in connection with such action, suit or proceeding
unless (1) it is established that the act or omission of the director was
material to the matter giving rise to the proceeding, and (a) was committed in
bad faith or (b) was the result of active and deliberate dishonesty; or (2) the
director actually received an improper personal benefit of money, property, or
services; or (3) in the case of any criminal action or proceeding, had
reasonable cause to believe that the act or omission was unlawful. A court of
appropriate jurisdiction may, however, except in proceedings by or in the right
of Registrant or in which liability has been adjudged by reason of the person
receiving an improper personal benefit, order such indemnification as the court
shall deem proper if it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances, whether
or not the director has met the requisite standard of conduct.
<PAGE>
Under Section 2-418, Registrant may also indemnify officers, employees and
agents of Registrant who are not Directors to the same extent that it shall
indemnify directors and officers, and to such further extent, consistent with
law, as may be provided by general or specific action of the Board of Directors
or contract. Pursuant to Section 2-418 of the Maryland General Corporation Law,
the termination of any proceeding by judgment, order or settlement does not
create a presumption that the person did not meet the requisite standard of
conduct required by Section 2-418. The termination of any proceeding by
conviction, or a plea of nolo contendere or its equivalent, or an entry of an
order of probation prior to judgment, creates a rebuttable presumption that the
person did not meet the requisite standard of conduct.
Reference is also made to Section 12 of the Distribution Agreement filed as
Exhibit 6 to this Registration Statement. Section 12 of the Distribution
Agreement provides that Registrant, subject to certain conditions and
limitations, shall indemnify, defend and hold harmless the Underwriter, its
officers and directors and any person who controls the Underwriter within the
meaning of the Securities Act of 1933 from and against any and all claims,
demands, liabilities and expenses which they may incur under the Federal
securities laws, the common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the Registration
Statement or any related Prospectus and/or Statement of Additional Information
or arising out of or based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
Reference is also made to Section 6 of the Advisory Agreement filed as Exhibit 5
to this Registration Statement. Section 6 provides that the Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the management of the
Registrant, except for willful misfeasance, bad faith or from negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties under the Advisory Agreement.
The Registrant may purchase insurance on behalf of an officer or director
protecting such person to the full extent permitted under the General Laws of
the State of Maryland, from liability arising from his activities as officer or
director of the Registrant. The Registrant, however, may not purchase insurance
on behalf of any officer or director of the Registrant that protects or purports
to protect such person from liability to the Registrant or to its shareholders
to which such officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, reckless disregard of the duties
involved in the conduct of his office, active or deliberate dishonesty, receipt
of an improper personal benefit, or in the case of a criminal proceeding that
such person had reasonable cause to believe the act or omission was unlawful.
The corporation may provide similar protection, including a trust fund, letter
of credit, or surety bond, not inconsistent with this section. Insurance or
similar protection may also be provided by a subsidiary or affiliate of the
corporation.
Item 26. Business and Other Connections of Investment Adviser
----------------------------------------------------
None.
<PAGE>
Item 27. Principal Underwriters
----------------------
The Fund's Distributor, Declaration Distributors, Inc., also serves as the
distributor for the Declaration Trust Fund, the Pauze Funds, the JWB Aggressive
Growth Fund, and the Noah Fund.
Set forth below is information concerning each director and officer of the
Distributor. The principal business address of the Distributor and each such
person is 555 North Lane, Suite 6160, Conshohocken, PA 19428.
/1/ /2/ /3/
Position and Offices Positions and Offices
Name with Underwriter with Registrant
---- ---------------- ---------------
Terence P. Smith Chief Executive Officer None
Item 28. Location of Accounts and Records
--------------------------------
Registrant maintains the records required to be maintained by it under Rules
31a-1(a), 31a-1(b) and 31a-2(a) under the Investment Company Act of 1940 at its
principal executive offices at 1281 Kennestone Circle, Suite 100, Marietta,
Georgia 30066. Certain records, including records relating to Registrant's
stockholders and the physical possession of its securities, may be maintained
pursuant to Rule 31a-3 at the offices of Registrant's Custodian, Fifth Third
Bank, N.A., 38 Fountain Square Plaza, Cincinnati, Ohio 45263, and Transfer
Agent, Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken,
PA 19428.
Item 29. Management Services
-------------------
None.
Item 30. Undertakings
------------
The Directors will call a meeting of shareholders to vote on the removal of a
Director upon the written request of the record holders of 10% of its
outstanding shares. In addition, if the Directors receive a request from at
least 10 shareholders (who have been shareholders for at least six months)
holding shares of the Fund valued at $25,000 or more or holding at least 1% of
the Fund's outstanding shares, whichever is less, stating that they wish to
communicate with other shareholders to request a meeting to remove a Director,
the Directors will then either make the Fund's shareholder list available to the
applicants or mail their communications to all other shareholders at the
applicants' expense, or the Directors may take such other action as set forth
under Section 16(c) of the Investment Company Act.
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant and the principal underwriter pursuant to the foregoing demands,
liabilities and expenses which they may incur under the 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 director, officer, or controlling
person of the Registrant and the principal underwriter in connection with the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person or the principal underwriter in
connection with the shares 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.
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all the requirements
for effectiveness of this Post-Effective Amendment No. 3 to its registration
statement under Rule 485 (b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 3 to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Marietta, and State of Georgia, on the 30th day of August 2000.
THE HENSSLER FUNDS, INC.
(Registrant)
By: /s/ Gene W. Henssler
Gene W. Henssler
President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 3 to the Registrant's Registration Statement has been signed by
the following persons in the capacities indicated effective as of August 30,
2000:
/s/ Patricia T. Henssler /s/Kenneth M. Davies*
Patricia T. Henssler, Director and Kenneth M. Davies, Director
Treasurer (Principal Accounting
Officer)
/s/Ladd M. Kochman* /s/James L. Brookover*
Ladd M. Kochman, D.B.A., Director James L. Brookover, Director
/s/ Gene W. Henssler
Gene W. Henssler, Ph.D., Director
*By: /s/ Gene W. Henssler
Gene W. Henssler, Ph.D.,
as Attorney in Fact
