Prospectus dated January 8, 1999
UPRIGHT GROWTH FUND
615 West Mount Pleasant Avenue
Livingston, New Jersey 07039
(973) 533-1818
The Upright Growth Fund ( the "Fund") is a newly organized, diversified mutual
fund that invests in stocks for long-term capital growth. This is the primary
objective of the Fund. The Fund invests in the common stock of companies that
are traded on the New York Stock Exchange ("NYSE"), American Stock Exchange
("ASE"), over-the-counter (OTC) and stocks traded on foreign stock exchanges.
The Fund's investment adviser seeks appreciation of capital through investments
in stocks of large and small companies that are reasonably priced or undervalued
with the potential for growth.
The adviser to the Fund is Upright Financial Corporation (the "Adviser") founded
in 1990 by David Y.S. Chiueh, the president and sole stockholder of the
Investment Adviser. The Adviser also serves as the administrator for the Fund.
This Fund is designed for investors that are interested in a long-term
investment. Investors should be willing and financially able to tolerate changes
in the value of their investment in the Fund. This investment may present
greater risk than other investments, with a potential for greater investment
gain or loss in the future.
The Upright Growth Fund is a portfolio of Upright Investments Trust.
The minimum initial investment in the Fund is $2,000. The Fund has a sales
charge of 3%. There are no 12b-1 marketing fees.
This prospectus contains the information you should know about the Fund before
you invest. Please read the prospectus and retain it for future reference. A
Statement of Additional Information for the Fund (dated January 8, 1999) has
been filed with the Securities and Exchange Commission ("SEC") and is
incorporated by reference into this prospectus. It is made available for no
additional charge by calling 1-216-687-1000.
This prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, the shares of the Fund in any jurisdiction in which such may not
lawfully be made.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, PASSED UPON THE
ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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Table of Contents
Page Page
Fees and Expenses..................... [ ] How to Purchase Shares.........[ ]
Investment Objectives and Policies.....[ ] How to Redeem Shares...........[ ]
Performance............................[ ] Dividends and Distributions....[ ]
Management of the Fund.................[ ] Tax Information................[ ]
Net Asset Value........................[ ] General Information............[ ]
Fees and Expenses
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases1 ..............................3.0%
Maximum sales charge imposed on reinvested amounts.....................None
Deferred sales charge imposed on redemptions
(as a percentage of amount redeemed).................................None
Redemption fee2........................................................None
Exchange fee...........................................................None
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees..................................................... 1.5%
12b-1 Fees.......................................................... NONE
Other Fees3 (after expense reimbursements).......................... .45%
Total Fund Operating Expenses (after expense reimbursements)........ 1.95%
Example
The table below shows what an investor would pay if he or she invested $1000
over the various time frames indicated. The example assumes reinvestment of all
dividends, an average annual return of 5%, and that "Total Fund Operating
Expenses" remain the same each year.
1 Year 3 Years
$49 $89
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1 The sales charge is reduced for investments of $50,000 or more, declining to
.75% for purchases of $1 million or more. The sales charge may be waived for
certain investors.
2 The Fund's custodian bank may charge for redemptions by wire.
3 Other Expenses including Administrative Fees. For the fiscal year ending June
30, 1999, the Advisor has agreed to waive the management fee and/or reimburse
the Fund's operating expenses to the extent necessary to ensure that the total
operating expense does not exceed 1.95%. "Other expenses" have been estimated
for the current fiscal year since the Fund did not begin operations until
September 30, 1999, and are presented net of reimbursements. Absent these
reimbursements, other expenses and total operating expenses are estimated to be
2.75% and 4.25%.
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Investment Objectives and Policies
Fundamental Goal. The Fund seeks to provide long term growth of capital, with
income as a secondary objective.
Strategy. The Fund invests in common stock, preferred stock, securities
convertible into common stock, of companies that are traded on the NYSE, ASE,
OTC and on foreign stock exchanges. In selecting investments for the Fund, the
Adviser uses a Top-Down and Bottom-Up strategy. This means that the adviser
invests in companies with a favorable relationship between price/earnings ratios
and growth rates, in sectors offering the potential for above average return.
The Adviser evaluates a company's management, sales growth, operating margins,
revenue, earnings growth, free cash flows, return on equity, the economic
outlook for the industry, and relevant economic and political environments.
The Adviser considers industry diversification as an important factor, although
the emphasis on a certain industry may change due to the outlook for earnings in
certain sectors. Diversification means placing a limitation on the amount of
money invested in any one issuer and limiting the amount of money invested in
any one industry. Diversification reduces the risks of investing.
Although the Fund invests primarily in common stock, it may invest a portion of
its assets in cash or cash equivalents such as obligations issued or guaranteed
by the U.S. Government, its agencies and/or instrumentality's ("U.S. Government
Securities") or high quality money market instruments such as notes,
certificates of deposit or bankers acceptances. The Adviser may assume a
temporary defensive posture in the market, in which case, the Fund may invest up
to 100% of its assets in these instruments. The Adviser may invest up to 10% of
the Fund's assets in warrants, up to 25% of its assets in foreign issuers of
securities not publicly traded in the U.S., engage in the purchase and sale of
put and call options in an amount of up to 15% of its net assets, covered
options writing (sell) are not subject to the 15% limitation. The Fund may make
short sales of securities in an aggregate amount not greater than 25% of net
assets, and may borrow up to one-third of its net assets.
Risk Factors. The Fund is only appropriate for long-term, aggressive investors
who can accept the fluctuations in portfolio value and have no immediate
financial needs for this investment. The risk associated with this investment
include: Market Risk, the possibility that a downward business cycle can
adversely affect a specific investment, as well as changes in the economic and
political landscape; Management Risk, that the strategy or determinations that
the adviser makes will fail to achieve the intended objectives; Liquidity Risk,
the risk assoicated with the particular secondary market in which a security
trades. The absence of a trading market could make it difficult to ascertain a
market value for illiquid positions. A Fund's net asset value could be adversely
affected if there were no ready buyer at an acceptable price at the time the
Fund decided to sell. The value of the Fund's investments will vary from
day-to-day, and generally reflect changes in market conditions, interest rates
and other company, political, and economic news. The Fund is not, by itself, a
balanced investment plan. The lack of operating history and that the investment
adviser has not previously managed mutual fund assets presents certain risks.
The value of the Fund's shares will fluctuate to a greater degree than the
shares of funds utilizing more conservative investment techniques or those
having as investment objectives, the conservation of capital and/or the
realization of current income. When you sell your fund shares, they may be worth
more or less than what you paid for them. There is no assurance that this Fund
can achieve its objective, since all investments are inherently subject to
market risk.
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Performance
The term "total return" will be used as tool for measuring for the Fund's
performance. Total return shows how an investment in the Fund has increased or
decreased over a certain period of time, assuming that all distributions are
reinvested. Cumulative total return reflects the actual performance over a
certain period of time and an average total return reflects a hypothetical rate
of return. Total return will be shown for recent one, five and ten year periods
and may be shown for other periods as well. From time to time the Fund may
advertise its "yield". The yield refers to the income generated by Fund over a
specified thirty-day period, which is then expressed as an annual percentage
rate. The calculation will reflect the deduction of the maximum sales charge of
3%.
Investors should note that yield and total return figures are based on
historical earnings and are not intended to indicate future performance. In
reports or other communications to investors or in advertising material, the
Fund may describe general economic and market conditions affecting the fund and
may compare its performance with that of other mutual funds as listed in the
rankings prepared by Lipper Analytical Services, Inc. or similar investment
services that monitor evaluations of the Fund published by nationally recognized
rating services and by financial publications that are nationally recognized.
Because this fund invests in stocks, its performance is related to that of the
overall stock market. The S&P 500 is the Standard & Poors Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock prices. The S&P 500
figures assume reinvestment of all distributions and do not reflect brokerage
commissions incurred if purchasing the stocks in the open market.
Management of the Fund
Board of Trustees. Overall responsibility for management and supervision of the
Fund rests with the Fund's Board of Trustees. The Trustees approve all
significant agreements between the Fund and the persons and companies that
furnish services to the Fund, including agreements with the Fund's custodian,
transfer agent, investment adviser and administrator. The day to day operations
of the fund are delegated to the Adviser. The Statement of Additional
Information contains background information regarding each of the Fund's
Trustees and executive officers.
Adviser - Upright Financial Corporation. Upright Financial Corporation ("UFC" or
the "Adviser") is responsible for selection and management of the stocks and
other investments in the Fund's portfolio. The Adviser is a registered
investment adviser, under the Investment Advisers Act of 1940 and was founded in
1990 by David Y.S. Chiueh, the president and sole stockholder of the Investment
Adviser. The Adviser's office is located at 615 West Mount Pleasant Avenue,
Livingston, New Jersey 07039. For its services, the Fund pays the Adviser an
annual fee of 1.5% of its average daily net assets. This 1.5% charge is higher
than other funds of this type, however the total operating fees are expected to
be lower than other funds.
Research and management for the Fund's portfolio of securities is provided by a
team of analysts and portfolio managers. Members of the team meet regularly to
discuss holdings, investment strategy, prospective investments and portfolio
composition. David Y.S. Chiueh serves as the senior portfolio manager for the
Fund. The Adviser also provides administrative services for the Fund, subject to
the supervision and direction of the Board of Trustees of the Fund. The
administrative services, including furnishing certain internal executive and
administrative services, providing office space, responding to shareholder
inquiries, monitoring the financial, accounting and administrative transactions
of the Fund, furnishing corporate secretarial services, which include assisting
in the preparation of materials for meetings of the Board of Trustees,
coordinating the preparation of annual and semi-annual reports, preparation of
tax returns and generally assisting in monitoring compliance procedures for the
Fund. For providing these services to the Fund, UFC receives a monthly fee
calculated at an annual rate of .45% of the Fund's average daily net assets.
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Custodian. The Fifth Third Bank Corporation (the"Custodian"), 38 Fountain Square
Plaza, Cincinnati, Ohio 45263, serves as custodian for the Fund. All of the
Fund's assets are held at an account with the Fifth Third. The Custodian settles
all securities trades and collects dividends and interest due to the Fund.
Custody does not involve advice or decisions as to the purchase or sale of
portfolio securities.
Transfer Agent. The Maxus Information System, Inc. DBA Mutual Shareholder
Services (the "Transfer Agent"), serves as the transfer agent, dividend paying
agent and shareholder service agent for the Fund. The Transfer Agent is located
at 1301 East Ninth Street, 36th Floor, Cleveland, OH 44114. In addition to
maintaining all shareholder accounts, the Transfer Agent prepares and mails
confirmation forms and statements of account to shareholders for all purchases
and redemptions of fund shares. The Investment Adviser (not the Fund) pays the
Transfer Agent for these services.
Distributor. The Maxus Securities Corp. 1301 East Ninth Street, Suite 3600,
Cleveland, Ohio 44114, serves as the Fund's distributor.
Net Asset Value
The Fund is open for business on each day that the New York Stock Exchange
(NYSE) is open.
The Fund's net asset value per share (NAV) is normally determined as of 4:00
p.m., eastern time. The Fund's net asset value is calculated by subtracting its
liabilities from its total assets and dividing the result by the total number of
shares outstanding on that same day. Fund liabilities include accrued expenses
and dividends payable, and its total assets include the market value of the
portfolio securities as well as income accrued but not yet received. The public
offering price of shares of the Fund is based on net asset value and calculated
by applying the sales charge to the net asset value. Since the Fund does not
charge a redemption fee, the NAV is the redemption price of shares of the Fund.
Purchase of Shares
In order to invest in the Fund, an investor must first complete and sign an
account application, which is included in this prospectus and send payment for
the shares by check or wire. Completed and signed applications should be mailed
or transmitted by facsimile to the fund at (216) 875-8992.
Orders for the purchase of shares received when the Fund is open for business,
before 4:00 p.m. eastern time, will be executed at the NAV determined that day
plus the applicable sales charge. The minimum initial investment for
non-qualified accounts is $2,000 and the minimum for additional purchases is
$100.
For information about investing in the Fund through a tax-deferred retirement
plan, such as an Individual Retirement Account ("IRA"), Keogh Plan, a Simplified
Employee Pension IRA ("SEP-IRA") or a profit sharing and money purchase plan, an
investor should telephone the Fund at 1-216-687-1000 or write to the Fund at the
address set forth above. Investors should consult their own tax advisers about
the establishment of retirement plans.
Purchases by Mail. If the Investor desires to purchase shares by mail, a check
made payable to the Upright Growth Fund should be sent along with the completed
account application to the Fund. Checks should be drawn on a U.S. bank. Send
your purchase order to:
Upright Growth Fund
c/o Mutual Shareholder Services
1301 East Ninth Street, 36th Floor
Cleveland, OH 44114
Purchases by Wire. To make initial or subsequent purchases by wire, investors
should contact the Fund's transfer agent , Mutual Shareholder Services, at (216)
687-1000 to obtain an account number. Complete and sign the application form and
mail it to the Fund at the above address. Instruct your bank to follow
instructions when wiring funds:
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Wire to: Fifth Third Bank
ABA Number 42000314
Credit: Upright Growth Fund
Fund's Account Number 729-36895
Shareholder Account Number
Shareholder Name______________
Purchases through Brokers-Dealers. You may purchase shares of the Fund through a
broker-dealer or other financial institution that may charge a transaction fee.
Such fees and services may vary among broker-dealers, and such broker-dealers
may impose higher initial or subsequent investment requirements than those
established by the Fund. Broker-dealers are responsible for forwarding payment
for fund shares promptly to transfer agent, Maxus Information Systems, Inc. DBA
Mutual Shareholder Services.
Automatic Purchase Plan. This plan allows investors to purchase on a regular
monthly basis. The minimum initial investment for participants in this plan is
$1000. Under this plan, on a preset day of the month, a draft is drawn on the
investor's bank account in any amount of $100 or more specified by the investor.
The proceeds of the draft are immediately invested in shares of the Fund at the
NAV plus the applicable sales charge determined on the date of investment.
General. The Fund reserves the right to reject any purchase order and to suspend
the offering of shares for a period of time. However, shareholders would
generally be given the right to reinvest dividends during a time when sales were
suspended. The Fund also reserves the right to cancel any purchase due to
nonpayment; waive or lower the investment minimums; modify the conditions of
purchase at any time; and reject any check not made directly payable to the
Upright Growth Fund. Investors who purchase or redeem shares of the fund through
broker-dealers or financial advisors may be subject to service fees imposed by
those broker-dealers or financial advisors for the services they provide.
Sales Charge
The sales charge for the shares of the Fund are outlined below:
Investment As a % of offering price Net amount invested
Up to $49,999 3.00% 3.09%
$50,000-99,999 2.50% 2.56%
$100,000-249,999 2.25% 2.30%
$250,000-499,999 1.75% 1.78%
$500,000-749,999 1.50% 1.52%
750,000-999,999 1.25% 1.27%
$1 million and up .75% .76%
Sales Charge Waiver. The following persons or entities may purchase shares of
the Fund at net asset value without payment of any sales charge, (1) any
investor purchasing shares upon the recommendation of a financial adviser to
which the investor pays a fee for services relating to investment selection; (2)
any employee or representative of UFC, one of its affiliates or a broker-dealer
with a selling group agreement with UFC; (3) any trustee of the Trust; (4) any
company exchanging shares with the Fund pursuant to a merger, acquisition or
exchange offer; (5) any investment advisory client of the Adviser who has, in
writing, given investment discretion to UFC, to the extent the investment is
from the account managed by the Adviser or UFC; (6) registered investment
companies.
<PAGE>
Rights of Accumulation. You may qualify for a reduced sales charge if the
aggregate value of shares previously purchased and the shares currently being
purchased in the account is over a breakpoint. Investments may be combined to
include those held by you, your spouse, and your children under age 21 or
members of a qualified group. A "qualified group" is one that has a purpose
other than buying Fund shares at a discount. To qualify for the reduced sales
charge, at time of purchase, you must provide your representative with enough
information to make a proper determination.
Letter of Intent. The Letter of Intent will allow you to qualify for the reduced
sales charge immediately by promising to invest an amount qualifying for a
certain breakpoint with 13 months from the date of the letter. The minimum
initial investment under a Letter of Intent is 5% of the amount indicated in the
Letter of Intent.
How to Redeem Shares
You can arrange to take money out of your fund account any time by selling some
or all of your shares. Your shares will be sold at the next share price
calculated after your order is received. You must redeem your shares by mailing
or transmitting your request to:
Upright Growth Fund
c/o Mutual Shareholder Services
1301 East Ninth Street, 36th Floor
Cleveland, OH 44114
Facsimile: (216) 875-8992
Redemption proceeds are mailed within five business days after a request is
received in good order except that the mailing or wiring of redemption proceeds
on shares purchased by personal, corporate or government check may be delayed
until it has been determined that collected funds have been received for the
purchase of such shares, which may take up to 15 days from the purchase date.
The clearing period does not apply to purchases made by wire or by cashier's,
treasurer's, or certified check. The Fund's bank may charge for a wire transfer
fee.
Signature Guarantees. A signature guarantee is designed to protect you and the
Fund by verifying your signature. You will need one to: (1) establish certain
services after the account is opened; (2) redeem over $50,000 by written
request; (3) redeem or exchange shares when proceeds are: (i) being mailed to an
address other than the address of record, (ii) made payable to other than the
registered owner(s), or (iii) being sent to a bank account other than the bank
account listed on your Fund account; (4) transfer shares to another owner; (5)
send us written instructions asking us to wire redemption proceeds (unless
previously authorized). These requirements may be waived or modified in certain
circumstances. Acceptable guarantors are all eligible guarantor institutions as
defined by the Securities Exchange Act of 1934 such as : commercial banks which
are FDIC members; trust companies; credit unions, savings associations, firms
which are members of a domestic stock exchange; and foreign branches of any of
the above. We cannot accept guarantees from institutions or individuals who do
not provide reimbursement in the case of fraud, such as notaries public.
Minimum Account Balance. If an investor's account balance falls below $1500, the
investor will be given thirty days notice to reestablish the minimum balance. If
you do not increase your balance, the Fund reserves the right to close your
account and send the proceeds to you. The shares will be redeemed at the NAV on
the day your account is closed.
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Description of Certain Investment Policies
Restricted and Illiquid Securities. The Fund may invest up to 15% of its assets
in securities that are determined by the Adviser, under the supervision of the
Board of Trustees, to be illiquid. This means that the securities may be
difficult to sell promptly at an acceptable price. The sale of some illiquid
securities and some other securities may be subject to legal restrictions. These
securities may present a greater risk of loss than other types of securities and
therefore the Fund is limited as to the percentage of illiquid securities that
it will hold.
When Issued Securities and Delayed Delivery Transactions. The Fund may purchase
securities on a when-issued basis, and it may purchase or sell securities for
delayed delivery. These transactions occur when securities are purchased or sold
by the fund with payment and delivery taking place in the future to secure what
is considered an advantageous yield and price to the Fund at the time of
entering into the transaction. Although the Fund has not established any limit
on the percentage of its assets that may be committed in connection with such
transactions, the fund will maintain a segregated account with its custodian of
cash, cash equivalents, U.S. Government securities or other high grade liquid
debt securities denominated in U.S. dollars or non-U.S. currencies in an
aggregate amount equal to the amount of its commitment in connection with such
purchase transactions.
Foreign Securities. The Fund may invest up to 25% of the Fund's assets in
securities of foreign issuers which are not publicly traded in the U.S. and may
also invest in foreign securities in domestic markets through depository
receipts (ADR's) without regard to this limitation. These securities may involve
additional risks not associated with securities of domestic companies, including
exchange rate fluctuations, political or economic instability, expropriation or
confiscatory taxes. Issuers of foreign securities are subject to different
accounting, reporting and disclosure requirements.
Borrowing and Leverage. The Fund may borrow up to one third of its total assets
for temporary or emergency purposes such as clearing trades or processing
redemptions, and for increasing portfolio holdings. The Fund must maintain
continuous asset coverage of 300% with respect to borrowings and sell within
three days sufficient portfolio holdings to restore such coverage if it should
decline to less than 300%, even if such liquidations are disadvantageous from an
investment standpoint. Leveraging may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value.
Money borrowed also will be subject to interest and other costs which may
include commitment fees and/or the cost of maintaining minimum average balances.
These expenses may exceed the income received from the securities purchased with
borrowed funds.
A Fund may at times borrow money by means of reverse repurchase agreements.
Reverse repurchase agreements generally involve the sale by a Fund of securities
held by it and an agreement to repurchase the securities at an agreed-upon
price, date, and interest payment. Reverse repurchase agreements will increase a
Fund's overall investment exposure and may result in losses.
Options, Warrants and Short Sales. The Fund may write, purchase and sell put and
covered call options, and may engage in strategies employing combinations
thereof. A put option constitutes a hedge against a decline in the price of a
security owned by the Fund. A call option constitutes a hedge against an
increase in the price of a security which the Fund has sold short. Gains and
losses realized from options depend on the manager's ability to predict the
direction of stock prices, interest rates and other economic factors. Options
may fail as hedging techniques in cases where the price movements of the
securities underlying the options do not follow the price movements of the
stocks subject ot the hedge. The Fund may invest up to 10% of its assets in
warrants. A warrant is an option to purchase, within a specified time period, a
stated number of shares of common stock at a specified price. Warrants permit
the Fund to participate in an anticipated increase in the market value of a
security without having to purchase the security to which the warrants relate.
Warrants convey no rights to dividends or voting rights, but only an option to
purchase equity securities of the issuer at a fixed price.
The Fund may seek to enhance investments through short sale transactions (up to
25% of the fund's total assets) in stocks listed on one or more exchanges or in
unlisted securities. Short selling involves the sale of borrowed securities. At
the time the short sale is effected, the Fund incurs an obligation to replace
the security borrowed at whatever its price may be at the time the fund
purchases it for delivery to the lender. The Fund may make short sales "against
the box" where the fund sells short a security it already owns, for the purpose
of either protecting or deferring unrealized gains of portfolio securities.
During such time that a short position is open, the Fund would maintain in a
segregated account with the fund's custodian, an amount of cash or U.S.
Government securities equal to the difference between the market value of the
securities sold short at the time of the short sale, and any cash or U.S.
Government securities originally deposited with the broker in connection with
the short sale (excluding the proceeds of the short sale). In addition, until
the Fund replaces the borrowed securities, it must maintain daily the segregated
amount at such a level that the amount deposited in it plus the amount
originally deposited with the broker as collateral will equal the greater of the
current market value of the securities sold short and amount will not be less
than the market value of the securities at the time they were sold short.
<PAGE>
Portfolio Turnover. The portfolio turnover rate for any year is determined by
dividing the lesser of sales or purchases by the Fund's monthly average net
assets, and multiplying by 100. The portfolio turnover rate will vary from year
to year depending on the market conditions. Given the Fund's investment
objective, the portfolio turnover rate should not exceed 150%. Higher portfolio
turnover activity can result in higher brokerage costs of the Fund.
Fundamental Investment Policies. The Fund's investment objective, to seek long
term capital growth is a fundamental policy. This means that this policy may not
be changed without a vote of the holders of a majority of the Fund's shares. All
other policies stated in this prospectus, other than those identified in this
paragraph may be changed without shareholder approval. Additional fundamental
policies include the following: (1) With respect to 75% of its assets, the Fund
may not invest more than 5% of its total assets in any one issuer and may not
own more than 10% of the outstanding voting securities of a single issuer; (2)
the Fund may not invest more than 25% of its total assets in one industry; and
(3) the Fund may not borrow in amounts exceeding 33 1/3% of its assets. A
complete list of both fundamental and non-fundamental policies is in the Fund's
Statement of Additional Information.
Dividends and Distributions
Shareholders should not expect income from this Fund. However, the Fund
distributes substantially all of its net income and net capital gains to
shareholders annually to qualify as a regulated investment company. Dividends
from net investment income and distributions from capital gains, if any, are
normally declared in December and paid after the end of the year. Dividends and
distributions declared by the Fund will be reinvested unless you choose an
alternative payment option on the application form. Dividends not reinvested are
paid by check.
Tax Information
As with any investment, you should consider how your investment in the Fund will
be taxed. If your account is not a tax-deferred retirement account, you should
be aware of these tax consequences. For federal tax purposes, the Fund's income
and short-term capital gain distributions are taxed as dividends; long-term
capital gain distributions are taxed as long-term capital gains. Your
distributions may also be subject to state income tax. The distributions are
taxable when they are paid, whether you take them in cash or participate in the
dividend reinvestment program. In January, the Fund will mail shareholders a
form indicating the federal tax status of your dividend and capital gain
distributions.
Redemptions from the Fund will result in a short or long term capital gain or
loss, depending on how long you have owned the shares. The Fund will mail a form
indicating the trade date and proceeds from all redemptions.
When investors purchase shares just before the Fund pays a distribution from the
NAV, the share price of each Fund may reflect undistributed income, capital
gains or unrealized appreciation of securities. Any distributions from these
amounts that are distributed to the investor , no matter how long the investor
has held their shares, will be fully taxable, even if the net asset value of the
shares is reduced below the price you paid for your shares.
The Taxpayer Relief Act of 1997 made certain changes to capital gains tax rates.
Under the law, taxpayers in all brackets will have an advantage when it comes to
capital gains tax rates. The Fund will provide information relating to the
portion of any fund distribution that is eligible for the reduced capital gains
tax rate.
<PAGE>
General Information
The Fund is a portfolio of Upright Investments Trust, which was organized on
March 4, 1998 as a Delaware business trust. An investor in the Fund is entitled
to one vote for each full share held and a fractional vote for each fractional
share held. There will normally be no meetings of investors for the purpose of
electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by investors. Any Trustee may be
removed from office upon the vote of shareholders holding at least a majority of
the Fund's outstanding shares at a meeting called for that purpose. A meeting
will be called for the purpose of voting on the removal of a Trustee at the
written request of holders of 10% of the Fund's outstanding shares.
The expenses borne by the Fund include, brokerage commissions for portfolio
transactions, taxes (if any), advisory fee, administration fee, expenses of
registering and qualifying shares for sale (blue sky fees), fees of Trustees who
are not "interested persons" of the Advisor or Administrator, custodian fees,
auditors expenses, ongoing legal expense, if any, and the fidelity bond
premiums. For the fiscal year ending September 30, 1999, the Advisor has agreed
to waive the management fee and/or reimburse the Fund's operating expenses to
the extent necessary to ensure that the total operating expenses do not exceed
1.95%.
The Fund will send investors a semi-annual report and an audited annual report,
each of which includes a list of the securities held by the Fund. In an effort
to conserve on the Fund's printing and mailing costs, the Fund plans to
consolidate the mailing of its financial reports by household. This means that a
household having multiple accounts with the identical address of record will
receive a single copy of each report. Any shareholder who does not want
consolidation to apply to his or her account should contact the Fund.
Shareholder inquiries should be made by calling or writing the Fund at the
address on the cover page of this prospectus.
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus, the statement of
additional information or the Fund's official sales literature in connection
with the offering of shares of the Fund, and if given or made, such other
information or representations must not be relied upon as having been authorized
by the Fund. This prospectus does not constitute an offer of shares in any state
which, or to any person to whom, such offer may not lawfully be made.
Upright Growth Fund
Investment Adviser and Administrator
Upright Financial Corporation
615 West Mt. Pleasant Avenue
Livingston, NJ 07039
Custodian
Fifth Third Bank Corporation
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Independent Accountants
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, OH 44145
Transfer Agent
Mutual Shareholder Services
1301 East Ninth Street, 36th Floor
Cleveland, OH 44114
Underwriter
Maxus Securities Corp.,
1301 East Ninth Street, Suite 3600
Cleveland, OH 44114
January 8, 1999
<PAGE>
UPRIGHT GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
January 8, 1999
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Fund's Prospectus dated January 8, 1999, which
may be obtained by writing the Fund at Upright Growth Fund c/o Mutual
Shareholder Services, 1301 East Ninth St, 36th Floor Cleveland, OH 44114 or
calling the Fund at 1-216-687-1000. The Fund is a portfolio of Upright
Investments Trust.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Management of the Trust
Investment Management and Administration
Performance
Taxes and Distributions
Description of the Trust
Investment Adviser and Administrator
Upright Financial Corporation
615 West Mt. Pleasant Avenue
Livingston, NJ 07039
Custodian
Fifth Third Bank Corporation
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Transfer Agent
Mutual Shareholder Services
1301 East Ninth Street, 36th Floor
Cleveland, OH 44114
Independent Accountants
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, OH 44145
Underwriter
Maxus Securities Corp.,
1301 East Ninth Street, Suite 3600
Cleveland, OH 44114
<PAGE>
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus.
Fundamental Policies. The Fund's fundamental investment policies and limitations
cannot be changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the Fund. The
other investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed by a vote of a
majority of the Trustees of the Fund. The following are the fund's fundamental
investment limitations set forth in their entirety. The Fund may not:
(1) with respect to 75% of the fund's total assets, purchase the securities of
any issuer (other than securities issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities) if, as a result, (a) more than 5% of
the Fund's total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% or the outstanding voting securities of
that issuer;
(2) issue senior securities, except as permitted under the Investment Company
Act of 1940;
(3) borrow in amounts exceeding 33 1/3% of its total assets at the time of
borrowing;
(4) underwrite any issue of securities (except to the extent that the Fund may
be deemed to be an underwriter within the meaning of the Securities Act of 1933
in the disposition of restricted securities);
(5) Invest more than 25% of its total assets in securities of companies
principally engaged in any one industry, (other than securities issued or
guaranteed by the U.S. government or any of its agencies or instrumentalities);
(6) purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business);
(7) purchase or sell commodities or commodities futures contracts; and
(8) lend money, except that it may purchase and hold debt securities publicly
distributed or traded or privately place and may enter into repurchase
agreements. The Fund will not lend securities if such a loan would cause more
than 33 1/3% of the value of its total net assets to then be subject to such
loans.
Non-Fundamental Policies. The following are non-fundamental investment
limitations and therefore, may be changed by the Board of Trustees, without a
shareholder vote. The Fund may not:
<PAGE>
(9) Invest more than 10% of its total assets in warrants to purchase common
stock, provided that warrants acquired in units or attached ;
(10) Invest in companies for the purpose of exercising control or management;
(11) Invest more than 15% of its net assets illiquid securities;
(12) Invest in oil, gas or other mineral exploration or development programs or
leases;
(13) Purchase the securities of open-end or closed-end investment companies
except in compliance with the Investment Company Act of 1940;
(14) Invest more than 25% of its net assets in foreign securities which are not
traded on U.S. exchanges;
(15) Purchase a call option or a put option if the aggregate premium paid for
all call and put options then held exceeds 15% of its net assets (less the
amount by which any such positions are in-the-money), covered options writing
(sell) are not subject to this 15% limitation; and
(16) Make short sales of securities in an aggregate amount greater than 25% of
net assets. The value of the securities of any one issuer that have been shorted
by the Fund is limited to the lesser of 3% of the securities of any class of the
issuer. Short sales "against the box" where the Fund sells short a security it
already owns or owns at least an equal amount of such securities, is not subject
to this 25% limitation.
American Depository Receipts. ("ADR's") are certificates evidencing ownership of
shares of a foreign issuer. These certificates are issued by depository banks
and generally trade on an established market in the United States or elsewhere.
The underlying shares are held in trust by a custodian bank or similar financial
institution in the issuers home country. The depository bank may not have
physical custody of the underlying securities at all times and may charge fees
for various services, including forwarding dividends and interest and corporate
actions. ADRs are an alternative to directly purchasing the underlying foreign
securities in their national markets and currencies. However, ADRs continue to
be subject to many of the risks associated with investing directly in foreign
securities. These risks include foreign exchange risk as well as the political
and economic risks associated with investing directly in foreign securities.
ADRs are not subject to the 25% limitation on purchases of foreign securities.
Firm Commitment Agreements. The Fund may enter into firm commitment agreements
("when-issued" purchases) for the purchase of securities at an agreed upon price
on a specified future date. The Fund will not enter into such agreements for the
purpose of investment leverage. Liability for the purchase price and all the
rights and risks of ownership of the securities accrue to the Fund at the time
it becomes obligated to purchase the securities, although delivery and payment
occur at a later date, generally within 45 days of the date of the commitment to
purchase. Accordingly, if the market price of the security should decline, the
effect of the agreement would be to obligate the fund to purchase the security
at a price above the current market price on the date of delivery and payment.
During the time the Fund is obligated to purchase such securities, it will
maintain with the Custodian a segregated account with U.S. Government
Securities, cash or cash equivalents of an aggregate current value sufficient to
make payment for the securities.
Option Transactions. The Fund may invest in option transactions involving
individual securities and market indices. An option involves either (a) the
right or the obligation to buy or sell a specific instrument at a specific price
until the expiration date of the option, or (b) the right to receive payments or
the obligation to make payments representing the difference between the closing
price of a market index and the exercise price of the option expressed in
dollars times a specified multiple until the expiration date of the option.
Options are sold (written) on securities and market indices. The purchaser of an
option on a security pays the seller (the writer) a premium for the right
granted but is not obligated to buy or sell the underlying security. The
purchaser of an option on a market index pays the seller a premium for the right
granted, and in return the seller of such an option is obligated to make the
payment. A writer of an option may terminate the obligation prior to expiration
of the option by making an offsetting purchase of an identical option. Options
are traded on organized exchanges and in the over-the-counter market. Options on
securities which the Fund sells (writes) will be covered or secured, which means
that it will own the underlying security (for a call option); will segregate
with the Custodian high quality liquid debt obligations equal to the option
exercise price (for a put option); or (for an option on a stock index) will hold
a portfolio of securities substantially replicating the movement of the index
(or, to the extent it does not hold such a portfolio, will maintain a segregated
account with the Custodian of high quality liquid debt obligations equal to the
market value of the option, marked to market daily). When the Fund writes
options, it may be required to maintain a margin account, to pledge the
underlying securities or U.S. government obligations or to deposit liquid high
quality debt obligations in a separate account with the Custodian.
<PAGE>
The principal reason for the Fund to write a put would be to earn the premium
income. The put option writer has the potential to gain a profit as long as the
price of the underlying security remains above the exercise price, however, in
return for receipt of the premium, the Fund has assumed the obligation to
purchase the underlying security from the buyer of the put option at the
exercise price, even though the security may fall below the exercise price, at
any time during the option period. If the secondary market is not liquid for a
put option a Fund has written, however, the Fund must continue to be prepared to
pay the strike price while the option is outstanding, regardless of price
changes, and must continue to set aside assets to cover its position.
The purchase and writing of options involves certain risks; for example, the
possible inability to effect closing transactions at favorable prices and an
appreciation limit on the securities set aside for settlement, as well as (in
the case of options on a stock index) exposure to an indeterminate liability.
The purchase of options limits the Fund's potential loss to the amount of the
premium paid and can afford the Fund the opportunity to profit from favorable
movements in the price of an underlying security to a greater extent than if
transactions were effected in the security directly. However, the purchase of an
option could result in the Fund losing a greater percentage of its investment
than if the transaction were effected directly. When the Fund writes a covered
call option, it will receive a premium, but it will give up the opportunity to
profit from a price increase in the underlying security above the exercise price
as long as its obligation as a writer continues, and it will retain the risk of
loss should the price of the security decline. When the Fund writes a covered
put option, it will receive a premium, but it will assume the risk of loss
should the price of the underlying security fall below the exercise price. When
the Fund writes a covered put option on a stock index, it will assume the risk
that the price of the index will fall below the exercise price, in which case
the Fund may be required to enter into a closing transaction at a loss. An
analogous risk would apply if the Fund writes a call option on a stock index and
the price of the index rises above the exercise price.
Foreign Securities. The Fund may invest in foreign equity securities including
common stock, preferred stock and common stock equivalents issued by foreign
companies, and foreign fixed income securities. Foreign fixed income securities
include corporate debt obligations issued by foreign companies and debt
obligations of foreign governments or international organizations. This category
may include floating rate obligations, variable rate obligations, Yankee dollar
obligations (U.S. dollar denominated obligations issued by foreign companies and
traded on U.S. markets) and Eurodollar obligations (U.S. dollar denominated
obligations issued by foreign companies and traded on foreign markets).
Foreign government obligations generally consist of debt securities supported by
national, state or provincial governments or similar political units or
governmental agencies. Such obligations may or may not be backed by the national
government's full faith and credit and general taxing powers. Investments in
foreign securities also include obligations issued by international
organizations. International organizations include entities designated or
supported by governmental entities to promote economic reconstruction or
development as well as international banking institutions and related government
agencies. Examples are the International Bank for Reconstruction and Development
(the World Bank), the European Coal and Steel Community, the Asian Development
Bank and the InterAmerican Development Bank. In addition, investments in foreign
securities may include debt securities denominated in multinational currency
units of an issuer (including international issuers). An example of a
multinational currency unit is the European Currency Unit. A European Currency
Unit represents specified amounts of the currencies of certain member states of
the European Economic Community, more commonly known as the Common Market.
<PAGE>
Purchases of foreign securities are usually made in foreign currencies and, as a
result, the Fund may incur currency conversion costs and may be affected
favorably or unfavorably by changes in the value of foreign currencies against
the U.S. dollar. In addition, there may be less information publicly available
about a foreign company then about a U.S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. Other risks associated with
investments in foreign securities include changes in restrictions on foreign
currency transactions and rates of exchanges, changes in the administrations or
economic and monetary policies of foreign governments, the imposition of
exchange control regulations, the possibility of expropriation decrees and other
adverse foreign governmental action, the imposition of foreign taxes, less
liquid markets, less government supervision of exchanges, brokers and issuers,
difficulty in enforcing contractual obligations, delays in settlement of
securities transactions and greater price volatility. In addition, investing in
foreign securities will generally result in higher commissions than investing in
similar domestic securities.
PORTFOLIO TRANSACTIONS
The amended Advisory Agreement "Advisory Agreement" between the Fund and the
Adviser requires that the Adviser, in executing portfolio transactions and
selecting brokers and dealers, seek the best overall terms available. In this
regard, the Adviser will seek the most favorable price and execution for the
transaction given the size and risk involved. In placing executions and paying
brokerage commissions, the Adviser considers the financial responsibility and
reputation of the broker or dealer, the range and quality of the brokerage and
research services made available to the Fund and the professional services
rendered, including execution, clearance procedures, wire service quotations,
assistance with the placement of sales for the Fund and ability to provide
supplemental performance, statistical and other research information for
consideration, analysis and evaluation by the Adviser's staff. Under the
Advisory Agreement, the Adviser is permitted, in certain circumstances, to pay
a higher commission than might otherwise be obtained in order to acquire
brokerage and research services.
The Adviser must determine in good faith, however, that such commission is
reasonable in relation to the value of the brokerage and research services
provided -- viewed in terms of that particular transaction or in terms of all
the accounts over which investment discretion is exercised. In such case, the
Board of Trustees will review the commissions paid by the Fund to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits obtained. The advisory fee paid to the Adviser would
not be reduced by reason of its receipt of such brokerage and research services.
To the extent that research services of value are provided by broker/dealers
through or with whom the Fund places portfolio transactions the Adviser may be
relieved of expenses which it might otherwise bear. In addition, the Adviser may
use such research in servicing its other fiduciary accounts and not all services
received may be used by the Adviser in connection with its services to the Fund.
However, the Fund may also benefit from research services received by the
Adviser in connection with transactions effected on behalf of other fiduciary
accounts.
On occasions when the Adviser deems the purchase or sale of a security to be in
the best interests of the Fund as well as other fiduciary accounts, the Adviser
may aggregate the securities to be sold or purchased for the Fund with those to
be sold or purchased for other accounts in order to obtain the best net price
and most favorable execution. In such event, the allocation will be made by the
Adviser in the manner considered to be most equitable and consistent with its
fiduciary obligations to all such fiduciary accounts, including the Fund. In
some instances, this procedure could adversely affect the Fund but the Adviser
deems that any disadvantage in the procedure would be outweighed by the
increased selection available and the increased opportunity to engage in volume
transactions.
<PAGE>
MANAGEMENT OF THE FUND
The Trustees and Officers of the Fund, their current business addresses and
principal occupations during the last five years are set forth below. Trustees
that have an asterisk before their name are "interested persons" of the Trust as
defined in the Investment Company Act of 1940, as amended.
<TABLE>
<S> <C> <C>
Name and address Positions held with Age and Principal Occupation(s)
Trust During Past Five Years
*David Y.S. Chiueh Trustee and President Age 40. Founded Upright Financial
615 West Mt. Pleasant Avenue Corporation in 1990 and serves as Chief
Livingston, New Jersey 07039 Executive Officer. Prior to this service, he
served as a financial planner. Mr. Chiueh
received a Masters Degree in Business
Administration from the Rutgers University in
1988. He is a Certified Financial Planner and
has been a registered investment adviser since
1990
*Chaur Nan Yeh Trustee and Vice Age 50. Mr. Yeh serves a research analyst
615 West Mt. Pleasant Avenue President with Upright Financial Corporation. He is Vice
Livingston, New Jersey 07039 President of the FMY Services, Inc., an
engineering consulting firm, since 1987. He
received a Masters Degree in Engineering from
New York University in 1975.
Wellman Wu Trustee Age 56. Mr. Wu is the president of Kam Kuo Food
Kam Man Food Inc. Corporation in New Jersey. He has served as
511 Old Post Road president since 1996. Prior to that position,
Edison, NJ 08817 Mr. Wu served as Vice President for the Kam Man
Food Inc. in New York since 1972. Mr. Wu
graduated from the School of Commerce in Hong
Kong in 1963.
Bing B. Chen Trustee Age 41. Mr. Chen serves as president of the
Great China Chartering Agency Great China Chartering & Agency Corp., a
253 Washington Street shipping brokerage firm. Prior to December,
Jersey City, NJ 07302 1997, Mr. Chen served as vice-president of
Great China Chartering & Agency Corp. Mr. Chen
received his masters degree of science from the
State University of New York at Maritime
College.
</TABLE>
The Fund does not pay any direct remuneration to any Trustee who is an
"interested person" of the Fund, or any officer employed by the Adviser or its
affiliates. It is anticipated that the Trustees of the Fund who not "interested
persons" of the Fund will receive compensation in the amount of $100.00 per
meeting attended.
The following table sets forth information estimating the compensation of each
current Trustee of the Fund for his or her services.
<TABLE>
<S> <C> <C> <C> <C>
Trustees Aggregate Pension or Retirement Estimated Annual Total Compensation
compensation from Benefits Benefits Upon From the Fund
the Fund Retirement From the
Fund
David Chiueh 0 0 0 0
Chaur Nan Yeh 0 0 0 0
Wellman Wu 400.00 0 0 400.00
Bing B. Chen 400.00 0 0 400.00
</TABLE>
Investment Advisory and Administrative Services
<PAGE>
Upright Financial Corporation serves as the Fund's investment adviser and as the
Fund's Administrator. In addition to the services described in the Fund's
prospectus, the Adviser and/or the Administrator will compensate all personnel,
Officers and Trustees of the Fund if such persons are employees of the Adviser
or its affiliates.
For the services and facilities provided to the Fund by the Adviser, the Fund
pays the Adviser a monthly fee based upon the daily average net assets of such
Fund for such calendar month equal to 1.5% on assets of the Fund. For the
administrative services provided to the Fund, the Fund pays a monthly fee equal
to .45% of the Fund's net assets.
The Board of Trustees of the Fund (including a majority of the Trustees who are
not "interested persons" of the Fund) approved the Advisory Agreement on March
22, 1998 and the amended Advisory Agreement on September 8, 1998 and November
18, 1998. The Advisory Agreement provides that it will continue initially for
two years, and from year to year thereafter as long as it is approved at least
annually both (i) by a vote of a majority of the outstanding voting securities
of the Fund (as defined in the Investment Company Act of 1940) or by the Board
of Trustees of the Fund, and (ii) by a vote of a majority of the Trustees who
are not parties to the Advisory Agreement or "interested persons" of any party
thereto, cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement may be terminated on 60 days written notice by
either party and will terminate automatically if it is assigned. The Advisory
Agreement provides in substance that the Adviser shall not be liable for any
action or failure to act in accordance with its duties thereunder in the absence
of willful misfeasance, bad faith or gross negligence on the part of the Adviser
or of reckless disregard of its obligations thereunder.
The Adviser has adopted a Code of Ethics which regulates the personal securities
transactions of the Adviser's investment personnel and other employees and
affiliates with access to information regarding securities transactions of the
Fund. The Code of Ethics requires investment personnel to disclose personal
securities holdings upon commencement of employment and all subsequent trading
activity.
Mr. David Chiueh owns 100% stock of the Adviser, Upright Financial Corporation.
Distributor. The Maxus Securities Corp. serves as the principal underwriter for
the Fund's shares.
PERFORMANCE INFORMATION
Total Return. The Fund may advertise performance in terms of average annual
total return for 1, 5 and 10-year periods, or for such lesser periods as the
Fund has been in existence. Average annual total return is computed by finding
the average annual compounded rates of return over the periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
n
P(1 + T) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
and assumes all dividends and distributions by the Fund are reinvested at the
price stated in the prospectus on the reinvestment dates during the period.
In addition to average annual total returns, the Fund may quote unaveraged or
cumulative total returns reflecting the change in value of an investment over a
specified period. Total returns and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
<PAGE>
Distribution Rate. The Fund may quote its distribution rate along with the above
described standard total return and yield information. The distribution rate is
calculated by annualizing the latest distribution and dividing the result by the
offering price per share as of the end of the period to which the distribution
relates. A distribution can include gross investment income from debt
obligations purchased at a premium and in effect include a portion of the
premium paid. A distribution can also include gross short-term capital gains
without recognition of any unrealized capital losses. Further, a distribution
can include income from the sale of options by the Fund even though such option
income is not considered investment income under generally accepted accounting
principles.
Because a distribution can include such premiums and capital gains, the amount
of the distribution may be susceptible to control by the Adviser through
transactions designed to increase the amount of such items. Also, because the
distribution rate is calculated in part by dividing the latest distribution by
net asset value, the distribution rate will increase as the net asset value
declines. A distribution rate can be greater than the yield rate calculated as
described above.
Comparative Performance. The Fund's performance may be compared to that of other
similar mutual funds. These comparisons may be expressed as mutual fund rankings
prepared by Lipper Analytical Services, Inc. ("Lipper"), which monitors mutual
fund performance. The Fund's performance may also be compared to other mutual
funds tracked by financial or business publications and periodicals.
TAXES AND DISTRIBUTIONS
Each investor should consult a tax advisor regarding the effect of federal,
state and local taxes on an investment in the Fund.
Taxation of the Fund. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code (the "Code"). To
qualify as a regulated investment company, the Fund must, among other things,
(a) derive at least 90% of its gross income from dividends, interest, payments
with respect to securities loans, gains from the sale or other disposition of
stock, securities or foreign currencies, or other income derived with respect to
its business of investing in such stock or securities; (b) satisfy certain
diversification requirements at the close of each quarter of the Fund's taxable
year.
If the Fund qualifies as a regulated investment company and distributes at least
90% of its net investment income, the Fund will not be subject to Federal income
tax on the income so distributed. However, the Fund would be subject to
corporate income tax on any undistributed income other than tax-exempt income
from municipal securities.
Taxation of the Shareholder. Taxable distributions generally are included in a
shareholder's gross income for the taxable year in which they are received.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month will be deemed to have been received
on December 31 if paid by the Fund during the following January.
Distributions by the Fund will result in a reduction in the fair market value of
the Fund's shares. Should a distribution reduce the fair market value below a
shareholders cost basis, such distribution nevertheless would be taxable to the
shareholder as ordinary income or long-term capital gain, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares of the Fund just prior to a distribution. The price of such shares
includes the amount of any forthcoming distribution so that those investors may
receive a return of investment upon distribution which will nevertheless be
taxable to them.
<PAGE>
A redemption of shares is a taxable event and, accordingly, a capital gain or
loss may be recognized. If a shareholder receives a distribution taxable as
long-term capital gain and redeems shares which he has not held for more than
six months, any loss on the redemption (not otherwise disallowed as attributable
to an exempt-interest dividend) will be treated as long-term capital loss to the
extent of the long-term capital gain previously recognized.
Dividends. A portion of the Fund's income may qualify for the dividends-received
deduction available to corporate shareholders to the extent that the Fund's
income is derived from qualifying dividends. Because the Fund may earn other
types of income, such as interest, income from securities loans, non-qualifying
dividends, and short-term capital gains, the percentage of dividends from the
Fund that qualifies for the deduction generally will be less than 100%. The Fund
will notify corporate shareholders annually of the percentage of Fund dividends
that qualifies for the dividend received deductions. A portion of the Fund's
dividends derived from certain U.S. government obligations may be exempt from
state and local taxation. Gains (losses) attributable to foreign currency
fluctuations are generally taxable as ordinary income, and therefore will
increase (decrease) dividend distributions. Short-term capital gains are
distributed as dividend income. The Fund will send each shareholder a notice in
January describing the tax status of dividends and capital gain distributions
for the prior year.
Capital Gain Distributions. Long-term capital gains earned by the Fund on the
sale of securities and distributed to shareholders are federally taxable as
long-term capital gains, regardless of the length of time shareholders have held
their shares. If a shareholder receives a long-term capital gain distribution on
shares of the Fund, and such shares are held six months or less and are sold at
a loss, the portion of the loss equal to the amount of the long-term capital
gain distribution will be considered a long-term loss for tax purposes.
Short-term capital gains distributed by the Fund are taxable to shareholders as
dividends, not as capital gains.
DESCRIPTION OF THE TRUST
Organization. Upright Growth Fund is a portfolio of Upright Investments Trust,
an open-end management investment company organized as a Delaware business trust
on March 4, 1998. The Declaration of Trust provides that the Trust shall not
have any claim against shareholders except for the payment of the purchase price
of shares and requires that each agreement entered into or executed by the Trust
or the Trustees include a provision limiting the obligations created thereby to
the Trust and its assets.
Voting Rights. The Fund's capital consists of shares of beneficial interest. As
a shareholder, you receive one vote for each dollar value of net asset value you
own. The shares have no preemptive or conversion rights; the voting and dividend
rights and the right of redemption are described in the Prospectus. Shares are
fully paid and non-assessable, except as set forth under the heading
"Shareholder and Trustee Liability" above. Shareholders representing 10% or more
of the trust or a fund may, as set forth in the Declaration of Trust, call
meetings of the Trust for any purpose related to the Trust including for the
purpose of voting on the removal of one or more Trustees.
Year 2000. The Fund believes that the year 2000 issue will not pose significant
operational problems for the Fund. Also the Fund believes that the year 2000
issue will not have a material adverse effect on the Fund's future financial
condition, liquidity or results of operations during 1999 and in the future.
Auditor. McCurdy & Associates CPA's , Inc., 27955 Clemens Road, Westlake, Ohio
serves as the Trust's independent accountant. The independent accountant
examines financial statements for the Fund and provides other audit, tax and
related services.
