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As filed with the Securities and Exchange Commission on: June 17, 1998
File No: 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
FFP NEW HORIZONS FUND, INC.
(Exact Name of Registrant as specified in charter)
15455 Conway Road, Chesterfield, Missouri, 63017
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (314) 537-1040
Name and Addresses of agent for service:
Roy M. Henry
FFP Advisory Services, Inc.
15455 Conway Road
Chesterfield, Missouri, 63017
(314) 537-1040
With Copies to
Susan E. Bryant, Esq. Robert C. Bright, Esq.
Bright & Barnes Bright & Barnes
Six Forest Park Drive Two Leadership Square
Post Office Box 444 211 North Robinson, Suite 810
Farmington, CT 06034-0444 Oklahoma City, Oklahoma 73102
(860) 674-0111 (405) 236-8016
Fax: (860) 674-0011 Fax: (405) 232-1660
Approximate Date of Proposed Public Offering: As soon as practicable after this
registration statement is declared effective.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
hereby registers an indefinite number of shares of common stock, par value $.001
per share, under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to Section 8(a) may
determine.
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FFP NEW HORIZONS FUND, INC.
CROSS REFERENCE SHEET
(Pursuant to Rule 495)
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Form N-1A
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Item # Item Location in Prospectus
PART A - PROSPECTUS
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1. Front and Back Cover Pages Front and back cover pages
Risk/Return Summary: Investments, Risks, and
2. Performance Summary
3. Risk/Return Summary: Fee Table N/A
Investment Objectives, Principal Investment
4. Strategies, and Related Risks Description of the Portfolios
5. Management's Discussion of Fund Performance N/A
6. Management, Organization, and Capital Structure Management of the Portfolios
7. Shareholder Information Fund Shares
8. Distribution Arrangements Distribution of Shares
9. Financial Highlights Information N/A
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PART B - STATEMENT OF ADDITIONAL INFORMATION
<C> <S> <C>
Cover Page and Table of
10. Cover Page and Table of Contents Contents
11. Fund History History of the Fund
Description of the Fund, its
Description of the Fund and its Investments and Portfolios and their Investments
12. Risks and Risks
13. Management of the Fund Management of the Fund
Control Persons and Principal
14. Control Persons and Principal Holders of Securities Holders of Securities
Investment Advisory and Other
15. Investment Advisory and Other Services Services
Brokerage Allocation and Other
16. Brokerage Allocation and Other Practices Practices
Capital Stock and Other
17. Capital Stock and Other Securities Securities
Purchase, Redemption and
18. Purchase, Redemption and Pricing of Shares Pricing of Shares
19. Taxation of the Fund Taxation of the Fund
20. Underwriters Underwriters
21. Calculation of Performance Data Calculation of Performance Data
22. Financial Statements Financial Statements
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PART C-OTHER INFORMATION
Information required to be included in Part C of this Registration Statement
is included in that Part under the applicable Item number.
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FFP NEW HORIZONS FUND, INC.
15455 Conway Road
Chesterfield, Missouri 63017
FFP New Horizons Fund, Inc. is a management investment company, sometimes
called a mutual fund. It is divided into the following different series or
Portfolios.
FFP Millennium Jupiter Portfolio
FFP Millennium Venus Portfolio
FFP Millennium Mercury Portfolio
FFP Discovery Jupiter Portfolio
FFP Discovery Venus Portfolio
FFP Discovery Mercury Portfolio
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this Prospectus is -------------------, 1998
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TABLE OF CONTENTS
SUMMARY 1
Portfolios 1
Principal Investment Strategies 1
Summary of Principal Risks 1
DESCRIPTION OF THE PORTFOLIOS 2
Investment Objectives 2
Implementation of Objectives 3
Additional Risks 6
MANAGEMENT OF THE PORTFOLIOS 7
Investment Adviser 7
Portfolio Management 7
Legal Proceedings 8
FUND SHARES 8
Purchase and Redemption of Shares 8
Net Asset Value 8
Dividends and Distributions 9
Tax Matters 9
DISTRIBUTION OF SHARES 9
Underwriter 9
Sales Charges 9
Distribution and Service Plan 9
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SUMMARY
Portfolios
The Portfolios offered by this Prospectus are as follows:
* FFP Millennium Jupiter Portfolio seeks to obtain a return that is
consistent with low to moderate risk by investing primarily in actively
managed equity and fixed income assets.
* FFP Millennium Venus Portfolio seeks to obtain a return that is consistent
with moderate risk by investing primarily in actively managed equity and
fixed income assets.
* FFP Millennium Mercury Portfolio seeks to obtain a return that is
consistent with moderate to high risk by investing primarily in actively
managed equity assets.
* FFP Discovery Jupiter Portfolio seeks to obtain a return that is consistent
with low to moderate risk by investing primarily in passively managed
equity and fixed income assets.
* FFP Discovery Venus Portfolio seeks to obtain a return that is consistent
with moderate risk by investing primarily in passively managed equity and
fixed income assets.
* FFP Discovery Mercury Portfolio seeks to obtain a return that is consistent
with moderate to high risk by investing primarily in passively managed
equity assets.
You may invest in the Portfolios only through your variable annuity contract
or variable life policy.
Principal Investment Strategies
Each of the Portfolios will seek to achieve its objective by
* investing primarily in shares of publicly available, investment companies,
including open-end management investment companies (mutual funds), closed-
end funds and unit investment trusts; and
** For the Millenium Portfolios - applying an actively managed strategy by
investing primarily in assets that are actively managed.
** For the Discovery Portfolios - applying a more passively managed
strategy by investing primarily in assets that are passively managed
and/or that are managed to track a certain stock or bond index.
Summary of Principal Risks
* There is no assurance that the investment adviser will achieve the
investment objective described above for any Portfolio.
* The investment adviser manages the Portfolios as long-term investments,
usually at least five to seven years. You should expect to keep your
variable annuity or variable life payments in a Portfolio at least five
to seven years. If you keep your investment in the Portfolios for a
shorter period, you may receive a return on your investment that is less
than what you would receive if you kept it in the Portfolio longer.
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* The investment adviser may select certain investments that have a
greater potential return but are more volatile and have more risk than
other types of investments, particularly for the Mercury Portfolios.
* Since the Portfolios purchase shares of other mutual funds, there is a
risk that there could be a duplication of some costs.
* There is a risk that a Portfolio may not be able to sell the shares it
holds in a mutual fund as quickly as it could sell securities held by it
directly. The investment adviser has agreed to take a number of
precautions to limit any duplication of fees and to protect the
liquidity of the Portfolios.
* All securities fluctuate in value. The value of your investment in a
Portfolio at any given time, may be less than the amount you originally
invested in it. If you liquidate your investment in a Portfolio when
the value is low, you may receive less than the variable annuity or
variable life payments you invested in the Portfolio.
* The investment adviser may purchase foreign securities for the
Portfolios. Foreign securities have some unique risks due to the
different markets in which they trade.
* Securities designed to track a certain index may not always follow the
index exactly.
* The mutual funds in which the Portfolios invest may also use
strategies and acquire securities that involve risks to the Portfolios.
DESCRIPTION OF THE PORTFOLIOS
Investment Objectives
The following Portfolios have the investment objectives stated below;
these investment objectives are fundamental, which means that the
investment adviser cannot change them, except with the consent of
shareholders as provided by Rules of the Securities and Exchange
Commission:
* FFP Millennium Jupiter Portfolio seeks to obtain a return that is
consistent with low to moderate risk by investing primarily in actively
managed equity and fixed income assets.
* FFP Millennium Venus Portfolio seeks to obtain a return that is
consistent with moderate risk by investing primarily in actively managed
equity and fixed income assets.
* FFP Millennium Mercury Portfolio seeks to obtain a return that is
consistent with moderate to high risk by investing primarily in actively
managed equity assets.
* FFP Discovery Jupiter Portfolio seeks to obtain a return that is
consistent with low to moderate risk by investing primarily in passively
managed equity and fixed income assets.
* FFP Discovery Venus Portfolio seeks to obtain a return that is
consistent with moderate risk by investing primarily in passively
managed equity and fixed income assets.
* FFP Discovery Mercury Portfolio seeks to obtain a return that is
consistent with moderate to high risk by investing primarily in
passively managed equity assets.
The Portfolios are asset allocation funds. That means that the investment
adviser invests the assets of each Portfolio with the goal of achieving
targeted rates of return with different levels of risk. Each Portfolio is
designed for investors with different tolerance for risk. The Portfolios
with higher risk try to achieve higher returns than those with lower risk.
The investment adviser
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manages the Jupiter Portfolios with the goal of limiting volatility and risk
so that the Portfolios are appropriate for persons with low risk tolerance.
The investment adviser manages the Venus Portfolios to achieve a higher
return, but with greater risk. The Venus Portfolios are intended for persons
with a moderate tolerance for risk. The investment adviser manages the
Mercury Portfolios to achieve a higher return, but with higher risk, so that
the Mercury Portfolios are appropriate for persons who have a moderate to
high tolerance for risk.
Implementation of Objectives
Assets.
* General. For purposes of the Portfolios' investment objectives, 'equity
assets' include equity securities as well as interests in investment
companies, which hold at least 65% of their assets in equities.
Similarly, 'fixed income assets' include interests in fixed income
securities and interests in investment companies, which hold at least 65%
of their assets in fixed income securities.
* Investments. Each of the Portfolios will seek to achieve its objective by
investing primarily in shares of publicly available, investment
companies. Under normal market conditions, the investment adviser
expects that it will invest 100% of the net assets of each Portfolio in
a combination of shares of open-end management investment companies
(mutual funds), closed-end funds and unit investment trusts. The
investment adviser expects that 55% to 75% of the assets of the
Discovery Mercury Portfolio, 65% to 85% of the assets of the Discovery
Venus Portfolio and 70% to 90% of the assets of the Discovery Jupiter
Portfolio will be mutual funds. The investment adviser expects that the
balance of the assets of the Discovery Portfolios will be unit
investment trusts. The investment adviser expects that the Millenium
Portfolios may invest approximately 75% to 95% of their assets in mutual
funds, up to 15% in closed end funds and up to 10% in unit investment
trusts. The investment adviser may change these percentages at any
time. The investment adviser divides the assets of the Portfolios among
different types of investments based on what the investment adviser
believes is necessary for the Portfolios to meet their investment
objectives. The investment adviser will change the amount of assets in
each category as current market conditions and other economic factors
change.
* Defensive Positions. Under extraordinary market conditions, the investment
adviser may not follow the normal strategies for investing the assets of
the Portfolio. The investment adviser may take temporary defensive
actions to respond to the adverse market, economic, political or other
conditions. Defensive actions may prevent a Portfolio from achieving
its investment objective.
Principal Strategies.
* Purchase of Funds through Variable Annuity Contracts or Variable Life
Insurance Policies. You may only invest in the Portfolios through
variable annuity contracts and variable life policies that you may
purchase from insurance companies. The number of investment options
available to you under those contracts or policies is limited. The
investment adviser
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believes that by offering Portfolios that invest in a number of different
assets, your risks of investing are spread over a number of investments
rather than being limited to a few. It is the goal of the investment
adviser to reduce the risk to you by diversifying the assets of each
Portfolio among a large number of investments. There is no assurance that
the investment adviser will achieve this goal or any of the investment
objectives of the Portfolios.
* Modern Portfolio Theory. The investment adviser manages all the Portfolios
using what is called Modern Portfolio Theory. Using this theory, the
investment adviser decides how to divide the assets of the Portfolios
among various asset classes - equities (primarily stocks, both foreign
and domestic), fixed income (primarily bonds) and money markets - to
achieve a targeted rate of return. Equity asset classes are generally
divided by sectors such as technology, and not by style, such as growth
or value. The investment adviser may have 30 to 40 different asset
classes to allow the investment adviser to diversify the assets to reduce
risk. The targeted return is determined based on the risk level of the
Portfolio - the lower the risk, the lower the targeted return. The
investment adviser then selects the investments that it believes will
maximize the return for the risks assumed.
* Millenium Portfolios. The investment adviser selects assets for the
Millenium Portfolios that the investment adviser believes will exceed
the targeted return. The Millenium Portfolios expect to invest
primarily in actively managed mutual funds. These Portfolios will
invest in unit investment trusts and in closed end funds only when the
investment adviser cannot find suitable mutual funds in the asset class.
* Discovery Portfolios. The investment adviser uses a "pure" strategy for
the Discovery Portfolios by investing in assets that seek to match the
return of the index or indices that represent the asset classes
selected. The investment adviser expects that these Portfolios will
purchase interests in mutual funds, which are passively managed to
replicate selected indices and in unit investment trusts which hold
securities listed on selected domestic or foreign stock exchanges.
* Review of Asset Classes. The investment adviser will review the amount of
assets assigned to each asset class for each Portfolio periodically, but
at least quarterly. The investment adviser will also review the
assigned asset classes any time the markets or economic factors change
materially. The investment adviser will conduct this review using
Modern Portfolio Theory to determine if the investment adviser needs to
adjust the percentage of assets of a Portfolio assigned to each asset
class to meet the objectives of the Portfolio. There is no limit on the
amount of assets of each Portfolio that the investment adviser will
invest in each asset class.
* Review of Holdings. The investment adviser will review the assets of each
Portfolio actually held in each asset class to be sure they match the
desired percentages, at least monthly and more often if the market or
economic factors change significantly. The review will determine if the
investment adviser needs to buy or sell assets of a particular asset
class so that the percentages in each class remain at the desired
levels. The investment adviser will review the specific investments
held by the Portfolios regularly to assure that those investments
continue to meet the criteria established by the investment adviser for
selecting investments.
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* Portfolio Turnover. The investment adviser may buy and sell securities for
the Portfolio frequently, which increases its "portfolio turnover rate."
That rate is the percentage of all the assets of a Portfolio that are
bought and sold during a year. The higher the portfolio turnover rate,
the higher will be the related transaction costs charged to the
Portfolio. The investment adviser expects that the potentially improved
performance that the investment adviser seeks to achieve from frequent
transactions will offset the higher costs; however, higher transaction
costs can reduce the return of the Portfolio. Higher turnover can also
affect the amount of short-term capital gains earned by a Portfolio. If
a Portfolio has too much short-term capital gain, the Portfolio will
incur a tax liability, which can reduce the return of the Portfolio.
The investment adviser will monitor the short-term capital gains to
prevent the tax liability. The investment adviser does not expect that
the turnover rate for any Portfolio will exceed 125%.
* Foreign Securities. The Portfolios will purchase interests in foreign
securities through the purchase of open-end funds (mutual funds) or
closed end funds that invest in foreign securities. Certain closed end
funds hold securities of various foreign markets with the goal of
obtaining the same return as the stock market index for that foreign
market. Investments in foreign securities are subject to risks in
addition to the normal risks of investments. The value of foreign
securities will change as the exchange rate for currency in that country
changes. Some countries do not have the same kinds of laws that protect
the purchasers of securities, as do countries with more established
markets such as the United States. Therefore, there is more risk in
purchasing securities issued by companies in those countries.
Securities issued in countries that have emerging (newer) markets may
fluctuate greatly in value and may be more difficult to sell quickly,
than securities issued in countries with well established markets. In
addition, there may be less information available about foreign issuers,
higher transaction costs, settlement delays, and governmental
restrictions or controls that can adversely affect the value of foreign
securities.
* High-Risk, High-Yield Securities. The Portfolios may invest in mutual
funds, which invest more than 25% of their assets in high-yield,
high-risk bonds (often called "junk bonds"). The Portfolios will invest
no more than 30% of their assets in these mutual funds. Junk bonds are
bonds that are issued by small companies or companies with limited
assets or short operating histories. These companies are more likely
than more established or larger companies to default on the bonds and
not pay back the full principal amount. Third parties may not be
willing to purchase the bonds from the mutual funds, which means they
may be difficult to sell and some may be considered illiquid. Because
of these risks, the companies issuing the junk bonds pay higher interest
rates than companies issuing higher grade bonds. The higher interest
rates can give investors a higher return on their investment.
* Illiquid and Restricted Securities. Each Portfolio may invest up to 15% of
its assets in securities which it cannot easily sell or which it cannot
sell quickly (within seven days) without taking a reduced price for
them. We call these securities "illiquid securities." In addition, a
Portfolio may invest in securities that the Portfolio cannot sell unless
the Portfolio meets certain requirements under the law or under the
terms of the agreements that related to the initial sale of the
securities. We call these securities "restricted securities."
Restricted securities include securities purchased under Rules of the
Securities and Exchange Commission for private offerings and certain
securities sold to qualified purchasers. It may take the investment
adviser more time to sell illiquid or restricted securities than it
would
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take it to sell other securities. The Portfolio might be forced to sell
the securities at a discount or be unable to sell securities at all that
are losing value.
Additional Risks
* Market Risks. Although the investment adviser seeks a certain return for
each Portfolio, there is no assurance that the investment adviser will
achieve that return or meet the investment objective of the Portfolio.
The Portfolios will invest in securities that may fluctuate in value
based on the market. At any given time, your interest in a Portfolio
may be worth more or less than what you invested in the Portfolio. The
different types of securities purchased and investment techniques used
by a Portfolio involve varying amounts of risk. For example a drop in
demand for products in certain parts of the market, such as computers,
will lower the value of the stock of those companies. Changes in
interest rates charged by the federal reserve and the lending banks will
affect the value of fixed income securities or bonds. The asset
allocation strategies based on Modern Portfolio Theory, used by the
investment adviser in managing the Portfolios are intended to reduce
market risks by diversifying the assets of the Portfolios.
* Volatility. Some securities fluctuate in value more than others making
them more volatile. Over time, securities that are more volatile tend
to provide higher returns than less volatile securities. If you hold
securities that are volatile for short periods of time, you may have a
loss on them when you sell them. The investment adviser manages the
Portfolios to achieve a targeted return over a period of at least five
to seven years. This means that you should expect to keep your
investment in the Portfolios for at least five to seven years. If you
remove your assets before that time, you may receive less than your
original investment. This risk is greater for the Mercury Portfolios
that seek to achieve higher returns since they may allocate a higher
percentage of assets to securities that are more volatile.
* Investment in Mutual Funds. The Portfolios intend to invest primarily in
shares of other mutual funds. This could result in duplication of
certain fees; however, the investment adviser has agreed that it will
not purchase shares of any mutual fund if the sales charges paid by the
Portfolio in purchasing the mutual fund plus the distribution fees paid
by the Portfolios would exceed 1.5% of the net assets in the Portfolio.
Rules of the Securities and Exchange Commission limit the amount of
shares that the investment adviser can buy in a single mutual fund.
Currently, all Portfolios or other entities advised by the investment
adviser or affiliated with the Portfolios, together, cannot hold more
than 3% of the outstanding shares of any single mutual fund. This
restriction could limit the ability of the investment adviser to find a
sufficient number of mutual funds in a given asset class that meet the
investment adviser's selection criteria. Rules of the Securities and
Exchange Commission also provide that a mutual fund may refuse to
liquidate more than 1% of its assets at a given time. This rule could
limit the ability of the investment adviser to liquidate assets quickly
if there is a downturn in the market or a drop in the value of that
mutual fund. Under certain circumstances, when a Portfolio decides to
sell (or redeem) its shares of a mutual fund, the mutual fund may decide
to pay for the redemption by giving the Portfolio securities rather than
cash. The securities may be difficult to sell resulting in less cash
immediately available to the Portfolio.
* Mixed and Shared Funding. The Portfolios will sell their shares to
insurance companies as investments under both variable annuity contracts
and variable life policies. We call this mixed
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funding. The Portfolios may also sell shares to more than one insurance
company. We call this shared funding. Under certain circumstances,
there could be conflicts between the interests of the different
insurance companies, or conflicts between the different kinds of
insurance products using the Portfolios. If conflicts arise, the
insurance company with the conflict might be forced to redeem all of its
interest in the Portfolio. If the Portfolio is required to sell a large
percentage of its assets to pay for the redemption, it may be forced to
sell the assets at a discounted price. The Board of Directors will
monitor the interests of the insurance company shareholders for conflicts
to attempt to avoid problems.
MANAGEMENT OF THE PORTFOLIOS
Investment Adviser
Background. FFP Advisory Services, Inc. is the investment adviser for each
Portfolio. The principal office of the investment adviser is located at
15455 Conway Road, Chesterfield, Missouri 63017. The investment adviser has
been registered as an investment adviser with the Securities and Exchange
Commission since 1985. As of March 31, 1998, the investment adviser was
managing over $500 million for its clients.
Advisory Agreement. The investment adviser has entered into an Investment
Advisory Agreement with the Fund on behalf of each Portfolio. The Investment
Advisory Agreement authorizes the investment adviser to direct the investment
of the assets of the Portfolios based on each of the investment objectives of
the Portfolio. The investment adviser selects the assets to be purchased and
sold for each Portfolio, selects the broker-dealer or broker-dealers through
which the assets are purchased and sold, and negotiates payment of
commissions, if any, to those broker-dealers. The investment adviser follows
the policies set by the Board of Directors for the Portfolios. This
Prospectus and the Statement of Additional Information describe these
policies. (See the back cover of this prospectus to find out how to get a
free copy of the Statement of Additional Information.) The investment
adviser receives a fee, monthly, from each Portfolio for management of the
assets of the Portfolio. The investment adviser calculates the fee based on
the average daily net assets of each Portfolio. The amount is equal to an
annual rate of 1.5% of the average daily net assets of the Portfolio.
The investment adviser is also responsible for the operation of each
Portfolio, including the supervision of other entities that provide services
to the Portfolios such as custodians, accountants and transfer agents. The
investment adviser is entitled to reimbursement for all expenses it incurs in
carrying out its obligations under the Investment Advisory Agreement. The
Portfolios are responsible for all direct expenses such as fees of
custodians, accountants, directors and transfer agents. The investment
adviser has agreed to reimburse each Portfolio or waive reimbursement for any
expenses (other than brokerage commissions) a Portfolio incurs that exceed an
annual rate of .25% of the average daily net assets of the Portfolio. The
investment adviser may cancel this agreement at any time.
Portfolio Management
Christina Stovall is primarily responsible for the day-to-day management of
the Portfolios. Ms. Stovall has been in the financial services industry
since 1978. She joined First Financial
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Planners in March 1996 where she is currently the Administrative Manager of
the CASA Money Management Services. Before joining First Financial Planners,
she was a financial advisor with Prudential Securities (March 1994 to
February 1996) and a registered Client Service Associate with Smith Barney
Shearson, Inc. (July 1988 to March 1994). Members of an advisory group
assist Ms. Stovall in developing the research systems used to implement the
investment strategies for the Portfolios.
Legal Proceedings
Neither the Fund nor any of the Portfolios is involved in any legal
proceedings. The Fund is not aware of any litigation that has been
threatened. The investment adviser, the underwriter and their parent, are
involved in several legal matters which they consider part of the ordinary
course of business. First Financial Planners, Inc. believes that it has good
defenses to any of the concerns stated in these matters and does not believe
that the other parties will win the full amounts they are claiming. In the
opinion of First Financial Planners, none of these matters involve any
amounts that would affect the ability of the investment adviser or the
underwriter to carry out their duties for the Fund even if the court were to
grant the complaining parties all that they are seeking in these matters.
FUND SHARES
Purchase and Redemption of Shares
Since the Portfolios are available only through variable annuity contracts
and variable life policies, only insurance companies may purchase and sell
(redeem) shares of the Portfolios. The insurance companies will purchase and
sell shares for you when you direct them to do so under the terms of your
variable annuity contract or variable life policy. The prospectus for your
contract or policy describes these procedures. You may obtain a copy of that
prospectus, free of charge, from your insurance company or from the person
who sold you the variable annuity contract or variable life policy. The
Portfolios reserve the right to suspend the offer of shares, or to reject any
specific request to purchase shares from a Portfolio. The Portfolios may
suspend its obligation to redeem shares or postpone payment for redemption's
when the New York Stock Exchange is closed or when trading is restricted on
the Exchange for any reason, including emergency circumstances established by
the Securities and Exchange Commission. The Portfolios reserve the right to
pay for large sales of shares by issuing a proportionate share of the assets
of the Portfolio under Rules of the Securities and Exchange Commission.
Net Asset Value
The investment adviser calculates the value of each share of each Portfolio
(net asset value per share) at 4:15 p.m. every day that the New York Stock
Exchange is open for business. If the New York Stock Exchange closes before
4:00 p.m., the net asset value is calculated 15 minutes after the Exchange
closes. The investment adviser determines the value of all assets held by
the Portfolio at the end of the day, subtracts all liabilities and divides
the total by the total number of shares outstanding. The investment adviser
provides this value to the insurance company, which uses it to calculate the
value of your interest in your variable annuity contract or variable life
policy. The investment adviser determines the value of the assets of the
Portfolio by obtaining market quotations, where available, usually from
pricing services. Short-term debt instruments
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maturing in less than 60 days are valued at amortized cost. Securities for
which market quotations are not available are valued at their fair value as
determined, in good faith, by the investment adviser. The assets of the
Portfolios include dividends and interest that is accrued, but not collected.
Liabilities include accrued liabilities.
Dividends and Distributions
The insurance companies generally direct that all dividends and distributions
of the Portfolios be reinvested in the Portfolios under the terms of the
variable annuity contract or variable life policy.
Tax Matters
Each Portfolio intends to qualify as a regulated investment company for
federal income tax purposes by satisfying the requirements under Subchapter M
of the Internal Revenue Code. Subchapter M requirements relate to matters
such as diversification of the assets of each Portfolio, sources of the
income of each Portfolio and distribution of Portfolio income. If a
Portfolio meets the requirements of Subchapter M, the ordinary income and net
realized capital gains of that Portfolio that is distributed to you,
generally will not be taxed. The prospectus for your variable annuity
contract or variable life policy describes the tax treatment of your
investment in your variable annuity contract or variable life policy.
DISTRIBUTION OF SHARES
Underwriter
FFP Securities, Inc., an affiliate of the investment adviser, has been
designated the underwriter of the Portfolio's shares. The underwriter will
be responsible for the sale of the shares to the insurance companies that
offer the Portfolios in their variable annuity contracts and variable life
policies. The underwriter will also provide certain services to the persons,
like you, who select the Portfolios for investment under their variable
annuity contracts and variable life policies.
Sales Charges
You will not have to pay any fees or sales charges for investing in a
Portfolio or for withdrawing money from a Portfolio. You may have to pay
sales charges on payments you make to your variable annuity contract or
variable life policy or on amounts you withdraw from the contract or policy.
The prospectus for those contracts or policies describes those charges.
Distribution and Service Plan
The Fund has adopted a Distribution and Service Plan on behalf of each
Portfolio. Under the Plan, the Portfolios will pay fees to the underwriter
based on the shares of the Portfolios that are being serviced by the
underwriter. The fees will compensate the underwriter and its registered
representatives for marketing shares of the Portfolios and for providing
investment advisory and similar services to you and other persons who have
assets in the Portfolios. The investment adviser and/or the underwriter may
pay some or all of the fees they receive under the Distribution and Service
Plan or under the Investment Advisory Agreement to third parties, such
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as banks, broker-dealers or the insurance companies offering the variable
annuity contracts and variable life policies. They will pay the fees for
services these entities provide to the Portfolios, the insurance companies
and you. The fees are equal to an annual rate of .75% of the average daily
net assets of each Portfolio. Since the Portfolios pay the fees on an
ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of charges.
10
<PAGE> 15
This Prospectus sets forth concisely the information about the Fund and each
Portfolio that you should know before you invest money in a Portfolio.
Please read this prospectus carefully and keep it for future reference. The
Fund has prepared and filed with the Securities and Exchange Commission
(Commission) a Statement of Additional Information that contains more
information about the Fund and the Portfolios. You may obtain a free copy of
the Statement of Additional Information from your registered representative
who offers you the variable annuity contract or variable life policy. You
may also obtain copies by calling the Fund at 1-800-925-3371 or by writing to
the Fund at the following address:
FFP NEW HORIZONS FUND, INC.
15455 Conway Road
Chesterfield, Missouri 63017
The Commission maintains a Web site (http://www.sec.gov) on the Internet that
contains the Statement of Additional Information, which is incorporated into
this Prospectus by reference, and other information about the Fund and this
offering. You can also review and copy those materials at the Public
Reference Room of the Securities and Exchange Commission in Washington, D.C.
You may obtain information on the operation of the public reference room by
calling the Commission at 1-800-SEC-0330 (1-800-732-0330).
Information about the purchase and sale of the Portfolio shares and the
related costs is included in the prospectus for the variable annuity
contracts or variable life policies, which offer the Portfolios as
investments.
<PAGE> 16
STATEMENT OF ADDITIONAL INFORMATION
FOR
FFP NEW HORIZONS FUND, INC.
AND ITS PORTFOLIOS:
FFP MILLENNIUM JUPITER PORTFOLIO
FFP MILLENNIUM VENUS PORTFOLIO
FFP MILLENNIUM MERCURY PORTFOLIO
FFP DISCOVERY JUPITER PORTFOLIO
FFP DISCOVERY VENUS PORTFOLIO
FFP DISCOVERY MERCURY PORTFOLIO
This Statement of Additional Information is not a prospectus. It contains
information that supplements the information in the prospectus dated
, 1998, for the Fund and its Portfolios. It also contains
- - ----------
additional information that may be of interest to you. The prospectus
incorporates this Statement of Additional Information by reference. You may
obtain a free copy of the prospectus from your registered representative who
offered or sold you your variable annuity contract or variable life insurance
policy that uses the Portfolios for investment. You may also obtain copies
by calling 1-800-925-3371 or by writing to:
FFP NEW HORIZONS FUND, INC.
15455 CONWAY ROAD
CHESTERFIELD, MISSOURI 63017
<PAGE> 17
<TABLE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<S> <C>
HISTORY OF THE FUND 1
DESCRIPTION OF THE FUND, ITS PORTFOLIOS
AND THEIR INVESTMENTS AND RISKS 1
The Fund and its Portfolios 1
Investment Strategies and Risks 1
Other Strategies and Related Risks 4
Nonsignificant Strategies and Risks 4
Policies 6
Temporary Defensive Positions 7
Portfolio Turnover 7
MANAGEMENT OF THE FUND 8
Responsibilities of Directors 8
Management Information 8
Compensation of Management 9
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 9
Control Persons and Principal Holders 9
Management Ownership 10
INVESTMENT ADVISORY AND OTHER SERVICES 10
Investment Adviser 10
Principal Underwriter 11
Service Agreements 11
Rule 12b-1 Plan 11
BROKERAGE ALLOCATION AND OTHER PRACTICES 12
Brokerage Transactions 12
Transactions with Affiliates 14
Brokerage Selection 14
Research Services 14
Bunching and Allocation of Trades 15
CAPITAL STOCK AND OTHER SECURITIES 15
Capital Stock 15
PURCHASE, REDEMPTION AND PRICING OF SHARES 18
Purchase of Shares 18
Offering Price 18
Redemption in Kind 19
i
<PAGE> 18
TAXATION OF THE FUND 19
UNDERWRITERS 20
Distribution of Securities 20
Compensation 20
CALCULATION OF PERFORMANCE DATA 20
FINANCIAL STATEMENTS 21
</TABLE>
ii
<PAGE> 19
HISTORY OF THE FUND
The Fund was formed as a corporation under Maryland Law on May 21, 1998. It
has no prior operations or investment history.
DESCRIPTION OF THE FUND, ITS PORTFOLIOS
AND THEIR INVESTMENTS AND RISKS
THE FUND AND ITS PORTFOLIOS
The Fund is an open-end, management investment company. It is divided into
different series, each of which has its own assets, investment objectives and
policies. Each is managed separately, using distinct strategies appropriate
to its objectives and policies. The Fund currently has six Portfolios. The
Fund may authorize additional Portfolios in the future. The Portfolios are
all diversified, which means that for 75% of the assets of the Funds, no more
than 5% are invested in any one issuer and no Portfolio will own more than
10% of any single issuer. Since the Portfolios will invest in investment
companies, for purposes of this restriction, issuer means a single investment
company or other entity and does not mean indirect interests in securities of
issuers held by those investment companies. The Fund cannot change its
classification as an open-end, management investment company without the
consent of a majority of its shareholders. A Portfolio cannot change to
nondiversified without the approval of a majority of the shareholders of that
Portfolio.
INVESTMENT STRATEGIES AND RISKS
GENERAL. The prospectus for the Portfolios describes the principal
strategies the investment adviser will use in managing the Portfolios and the
risks of those strategies. This Section provides more detail about some of
those strategies and about strategies that the investment adviser does not
consider principal strategies.
DETERMINATION OF LIMITS. There are a number of limits and restrictions on
the amount of certain securities that the investment adviser can acquire for
the Portfolios described in this Statement of Additional Information and in
the prospectus. The investment adviser determines whether a Portfolio
complies with a limit or restriction at the time that the investment adviser
purchases an asset or security subject to the limit or restriction. If the
percentage changes after the initial purchase due to changes in the relative
value of securities in the Portfolio or a drop in the net asset value of the
entire Portfolio, the Portfolio will not be in violation of the limit or
restriction. The investment adviser will seek to structure the next
purchases or sales of assets by the Portfolio to remedy the violation, as
long as the transaction does not compromise the best interests of the
Portfolio. However, the investment adviser must monitor the limitation on
illiquid securities at all times and at no time may the Portfolio exceed the
limit. If the limit is exceeded, the investment adviser must take whatever
steps it can to reduce the amount of illiquid securities to less than 15% of
the net assets of the Portfolio.
ASSET ALLOCATION. The investment adviser uses an investment strategy known
as Modern Portfolio Theory to select asset classes in which a Portfolio will
invest and to determine the percentage of its total assets a Portfolio should
hold in each asset class to meet its objectives.
1
<PAGE> 20
The investment adviser continues to review each Portfolio regularly, at least
quarterly, using Modern Portfolio Theory, to determine if the investment adviser
should change or adjust the desired percentage of assets to be held in each
class. The investment adviser reviews the percentage of assets each Portfolio
actually holds in each asset class at least monthly to determine if the assets
need to be rebalanced to meet the desired percentages in each class. Finally,
the investment adviser reviews the specific investments held by a Portfolio to
determine whether the investments held by the Portfolio still meet the
investment adviser's standards. The investment adviser reviews all aspects
if there is any significant change in the markets or in the economy. There
is no assurance that this procedure will result in the Portfolios meeting
their investment objectives.
MODERN PORTFOLIO THEORY. Modern Portfolio Theory does not attempt to predict
the future of, or time, markets, but recommends a percentage of different
asset classes (such as equities - including foreign and domestic, growth and
value stocks; fixed income - including U.S. government, corporate investment
grade and junk bonds; and money market instruments) that should be held to
achieve specified returns over time. The investment philosophy underlying
Modern Portfolio Theory, is the belief that it is difficult to predict future
movements in market prices, and that the highest investment return has
historically been achieved over the long term by investing in assets divided
among different classes in a balanced manner. The focus is away from
individual securities to a consideration of all the assets held. The goal is
to reduce risk by investing in a broadly diversified portfolio of
investments. However, Modern Portfolio Theory goes beyond just selecting a
number of different types of securities to finding types of securities that
are distinctly different and offset each other. Each asset class is
considered for a Portfolio, based on the impact that the asset class will
have on both the volatility and return characteristics of the overall assets
of the Portfolio.
ASSET CLASSES. The investment adviser uses Modern Portfolio Theory to select
asset classes for both the Millennium and Discovery Portfolios,. The
investment adviser currently has selected asset classes that include 17
foreign country classes, 14 domestic sector classes, 3 domestic equity index
based classes and 2 bond classes for the Portfolios. Each Portfolio may have
up to 15% of its assets in any one of those asset classes. The specific
allocation among the asset classes for the assets of each Portfolio is based
on the desired risk level and related return desired for that Portfolio. The
investment adviser then applies an actively managed strategy to the Millenium
Portfolios and a passively-managed strategy to the Discovery Portfolios in
selecting specific investments for the Portfolios.
PORTFOLIO INVESTMENTS. Under normal market conditions, the investment
adviser expects that it will invest 100% of the net assets of each Portfolio
in a combination of shares of open-end management investment companies
(mutual funds), closed-end management investment companies (closed-end funds)
and unit investment trusts. The following table provides an estimate of the
amount of securities of each Portfolio that will be held in each of the
different types of investment companies:
2
<PAGE> 21
<TABLE>
<CAPTION>
MILLENIUM DISCOVERY
------------------------------ -------------------------------
TYPE OF SECURITY MERCURY VENUS JUPITER MERCURY VENUS JUPITER
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Open End Mutual Funds 75-95% 75-95% 75-95% 55-75% 65-85% 70-90%
- - -----------------------------------------------------------------------------------------------------------------------
Closed End Funds 0-15% 0-15% 0-15% 0-5% 0-5% 0-5%
- - -----------------------------------------------------------------------------------------------------------------------
Unit Investment Trusts 0-10% 0-10% 0-10% 25-45% 15-35% 10-30%
- - -----------------------------------------------------------------------------------------------------------------------
Cash/Cash Equivalents 0-5% 0-5% 0-5% 0-5% 0-5% 0-5%
</TABLE>
The actual allocation will depend on the securities available from time to
time in the various asset classes and the performance of the securities
acquired.
SELECTION OF INVESTMENTS. The investment adviser uses quantitative
techniques to analyze and rank the funds it considers for investment by a
Portfolio. The investment adviser analyses the mutual funds by reviewing
their historic total return, volatility and operating expenses over various
times and under different market conditions. Among other factors, the
investment adviser considers the amount and kind of assets held by the fund,
the experience of persons responsible for management of the assets, and the
fund's investment strategies and policies.
STANDARD & POOR'S DEPOSITARY RECEIPTS. The Discovery Portfolios may invest
in Standard & Poor's Depositary Receipts. Standard & Poor's Depositary
Receipts are interests in a unit investment trust that acquires securities
and cash that it believes will replicate the performance of the Standard &
Poor's 500 stock index. The investment adviser may purchase Standard &
Poor's Depositary Receipts directly from the unit investment trust, which
offers them in larger units, called Creation Units or in the secondary
market. To redeem, a Portfolio must accumulate enough Standard & Poor's
Depositary Receipts to equal a Creation Unit. On redemption of a Creation
Unit, a Portfolio will receive securities and cash equal in value to the
purchase price of a Creation Unit that day. The holder of the Standard &
Poor's Depositary Receipts cannot redeem them individually, except at the
termination of the unit investment trust. Currently, there is a secondary
market for the Depositary Receipts. They are listed and traded on the
American Stock Exchange in the same manner as other listed securities. There
is no assurance that the secondary market will always be available. There is
also no assurance that the Standard & Poor's Depositary Receipts will track
the stock index they are designed to track.
INDEX-RELATED INVESTMENTS. Each Portfolio may invest in other instruments
that are similar to the Standard & Poor's Depositary Receipts, but are
designed to replicate other stock indices. These other instruments include
units of beneficial interest in the Diamonds Fund, a closed end fund which
invests in securities designed to track the Dow Jones Industrial Average.
The Portfolios participate in foreign markets primarily through the purchase
of World Equity Benchmark Shares which are shares of closed end funds that
invest in foreign markets. Each of these funds invests in securities listed
on a single stock exchange of a foreign country with the goal of duplicating
the return of an index that represents that exchange. The investment adviser
uses these instruments to participate in up to 17 different foreign stock
markets.
3
<PAGE> 22
OTHER STRATEGIES AND RELATED RISKS
GENERAL. In addition to the principal strategies described above and in the
prospectus, the investment adviser may use other strategies and investment
techniques to increase the return or to provide additional protection to the
Portfolios. The mutual funds in which the Portfolios invest may also use
these strategies.
BORROWING. The Portfolios may borrow money for temporary or emergency
purposes, such as when necessary to cover unanticipated redemptions from the
Portfolios. In addition the Portfolios may borrow money from banks for
leveraging, subject to certain restrictions described under POLICIES, in this
Section. Borrowing money increases the assets that a Portfolio has available
to invest. If the investments are profitable, the return for the Portfolio
is enhanced. However, if the investments lose value, the losses are
exaggerated. While borrowing can increase potential returns of a Portfolio,
borrowing exaggerates the amount of losses of a Portfolio if there is a
downturn in the market.
SECURITIES LENDING. Each Portfolio may lend its securities or other assets
to increase its income, subject to the restrictions described under POLICIES,
below. Lending securities means that the Portfolio enters into a transaction
with a third party in which the Portfolio lends securities that the Portfolio
owns to the third party for a fee. The Portfolio holds other assets of the
borrower as collateral to insure the repayment of the securities loaned.
Lending Portfolio securities may result in losses to the Portfolio if the
borrower does not repay the securities loaned and the Portfolio is unable to
sell the collateral for an amount equal to the value of the loaned
securities.
NONSIGNIFICANT STRATEGIES AND RISKS
The investment adviser does not anticipate using the strategies listed below
for the Portfolios unless the investment adviser decides to purchase
securities other than management investment companies. If the investment
adviser decides to do so, the prospectus and the Statement of Additional
Information will be appropriately amended. The mutual funds in which the
Portfolios invest may use these strategies without limitation.
DERIVATIVES. A derivative is a financial instrument, the value of which is
"derived" from or based on some other asset, such as another security or an
index of securities. Derivatives include futures, options, forward
contracts, swaps, structured notes, and collateralized mortgage obligations.
The Portfolios do not expect to use derivatives, including futures or options
in managing the assets of the Portfolios. The funds in which the Portfolios
invest may use derivatives for hedging purposes as well as for increasing
income.
Options. Options give the purchaser the right to buy or sell a security at a
specified price for a specified period of time. Puts give the holder the
right to force a party to buy a security at a specified price. Call options
are the obligation to sell securities at a specified price when a third party
demands. If the party who is subject to a call owns the security, the call
is referred to as "covered." If the person will have to buy the security to
meet the call, the call is uncovered. Options to purchase securities, put
options and covered call options are generally not subject to high risk, but
do have the risk that the security will not be worth the stated price or the
option
4
<PAGE> 23
will expire without having any value. Under these circumstances, the
purchaser of the option would lose the fee paid for the option. Uncovered
call options can be highly risky.
Futures. Funds may enter into futures contracts for commodities, securities or
securities indices. Futures contracts are two-party agreements that require
both parties to perform. One must purchase and one must sell the commodity,
security or index position at a specified price and specified time in the
future. At the time the futures contract is executed, the parties generally
pay only a portion of the full amount that will be due on the settlement
date, which is called margin. Futures are subject to higher risks than
options, however, since the parties must complete the transaction at
settlement. The security, commodity or index may have dropped significantly
in value by the settlement date. Furthermore, since futures require only a
small payment of margin to enter into the transaction, the risks are similar
to those in borrowing, discussed below. The funds may also purchase options
on futures and futures on currency or foreign securities. These have all the
risks of foreign transactions, futures, and options.
WHEN ISSUED AND DELAYED DELIVERY SECURITIES. Persons may enter into
transactions where they agree to buy or sell at some time in the future,
specific equity securities at a stated price or debt securities at a stated
yield. These are called delayed-delivery securities. A person may also
agree to purchase a security that has not yet been issued but that will be
issued some time in the future. These securities are called when-issued
securities. Delayed delivery and when issued securities can provide benefits
where the value increases before the date of delivery or issuance. The
purchaser may also receive fees or premiums for entering into these
transactions. The risks involved in these transactions, however, include the
risk that the assets set aside to meet the commitment lose value and there
are insufficient assets to meet the commitment to purchase. A purchaser
might be forced to liquidate assets prematurely or at a loss to meet its
obligations. There is also a risk that the security may lose value before it
is delivered or issued resulting in a loss to the purchaser.
REPURCHASE AGREEMENTS. The funds may enter into repurchase agreements with
domestic banks and broker-dealers. Under a repurchase agreement, the
purchaser acquires a debt instrument for a relatively short time. The seller
of the debt instrument agrees to repurchase the instrument and the purchaser
agrees to resell the instrument at a fixed price and time. The purchaser
receives collateral from the seller to back up the seller's agreement to
repurchase. There is a risk that the seller may refuse to repurchase the
instruments. Although the purchaser holds collateral, the collateral may not
be worth the amount paid by the purchaser for the instrument or the purchaser
may have difficulty selling the collateral.
ASSET-BACKED SECURITIES. The funds may purchase securities, which consist of
a share of a specified pool of assets. The assets usually consist of
consumer loans, such as credit card debt, automobile loans, home equity loans
or recreational vehicle loans. Under these arrangements, the purchaser would
acquire a share of the loans and receive a share of the principal and
interest payments that the consumers pay on the loans. The value of these
kinds of securities are reduced if the consumers default on the loans or if
the consumers repay the loans earlier than predicted, since it reduces the
interest earned on the loans.
ZERO COUPON AND PAY-IN-KIND BONDS. The funds may invest in zero coupon
securities and pay-in-kind bonds. Zero coupon bonds are debt securities that
pay no cash interest but are sold at
5
<PAGE> 24
substantial discounts off their face value. The price of the bonds increases as
they approach maturity. At maturity, the bonds pay the full face value.
Pay-in-kind bonds pay all or a portion of their interest in additional debt or
equity securities. Zero coupon bonds and pay-in-kind bonds fluctuate more in
value when interest rates change than do bonds, which pay a fixed rate of
interest in cash until maturity. The value of zero coupon bonds and pay-in kind
bonds appreciate more during periods of declining interest rates and depreciate
more during periods of rising interest rates than they do during times of steady
interest rates.
POLICIES
The following policies are fundamental. This means that they cannot be
changed without the consent of a majority of the shareholders of the
Portfolio (see the discussion under Voting Rights in the Section on CAPITAL
STOCK AND OTHER SECURITIES to see how a majority vote is determined under
Rules of the Securities and Exchange Commission):
SENIOR SECURITIES. The Portfolios may not sell securities that the
Securities and Exchange Commission considers "senior securities" under its
statutes and rules. Senior securities are generally stock, warrants or debt
instruments that give the holders a priority over holders of the shares of
the Portfolio in the distribution of the assets of the Portfolio or the
payment of dividends by the Portfolio. The Portfolios may undertake
activities that the Securities and Exchange Commission, by interpretation or
by rule, has determined do not involve issuing senior securities. These
activities include borrowing money subject to the restrictions described
below, or paying for shares that are redeemed by distributing a share of
assets as described in the Section on PURCHASE, REDEMPTION AND PRICING OF
SHARES.
BORROWING MONEY. A Portfolio may borrow money from banks, but only for
temporary periods of time or for emergencies. The amount a Portfolio may
borrow for temporary periods or emergency purposes cannot exceed 5% of the
value of the assets of the Portfolio at the time the Portfolio borrows the
money. A Portfolio may borrow for leveraging purposes, that is, for the
purpose of increasing the amount of money the Portfolio has to invest. A
Portfolio may also use derivatives to increase the amount it has to invest.
If a Portfolio borrows for leveraging purposes, it must be sure the value of
the net assets of the Portfolio at the time of the borrowing (including the
amounts borrowed), equal at least three times the amount (300%) of all
outstanding borrowings. The Portfolios may not borrow for other purposes.
UNDERWRITING SECURITIES OF OTHER ISSUERS. The Portfolios will not underwrite
securities issued by third parties. The Securities Act of 1933 and rules
issued under that Act treat the Portfolios as underwriters of restricted
securities that the Portfolios purchase and then sell. The restriction on
underwriting by the Portfolios will not prevent the Portfolios from
purchasing and selling restricted securities under those provisions of the
Securities Act of 1933.
CONCENTRATING INVESTMENTS. The Portfolios will not invest more than 25% in
value of their respective net assets in any single industry or group of
industries. For purposes of this restriction, the investment adviser will
not consider mutual funds, closed end funds or unit investment trusts as a
single industry simply based on the fact they are the same kind of investment
vehicle. The investment adviser will include a Portfolio's investment in a
fund as investment in an industry only if more than 25% of the assets of the
fund are concentrated in that
6
<PAGE> 25
industry. The investment adviser does not include in this restriction
securities issued by the U.S. government or any of its agencies or issued by an
entity that is considered an instrumentality of the U.S. government.
REAL ESTATE AND COMMODITIES. The Portfolios will not invest directly in real
estate or commodities. Although the Portfolios do not currently anticipate
doing so, the Portfolios may acquire securities or other financial
instruments that are backed by real estate or commodities such as futures on
commodities. The Portfolios may also purchase securities of companies that
engage in the real estate business such as real estate investment trusts or
in the commodities business. It is possible that the Portfolios could
acquire an interest in real estate or commodities through a default by the
issuer of securities backed by real estate or commodities or by a default of
the issuer of a bond secured by real estate or commodities. If that should
occur, the Portfolio would attempt to sell the real estate or the commodities
as soon as practicable without materially affecting the value of the asset.
MAKING LOANS. The Portfolios may not lend cash held by them; however, they
may purchase bonds or other debt instruments. The Portfolios may lend
securities held by them as described above under Securities Lending. The
Portfolios must limit the value of loaned securities plus all other assets
that are loaned, plus any assets subject to repurchase agreements, to one
third of the total net assets of the Portfolio.
NONFUNDAMENTAL POLICIES. The Portfolios have adopted other restrictions and
limitations described above or in the prospectus. Unless stated otherwise,
the Board of Directors of the Fund may change any of those restrictions and
limitations without shareholder approval. Generally, you will receive notice
of any change by the delivery of an updated prospectus or by notice from the
insurance company issuing your variable annuity contract or variable life
insurance policy.
TEMPORARY DEFENSIVE POSITIONS
DEFENSIVE STRATEGIES. Under extraordinary market conditions, the investment
adviser may not follow the normal strategies for investing the assets of the
Portfolio. The investment adviser may take temporary defensive actions to
respond to adverse market, economic, political or other conditions, such as
putting up to 100% of the net assets in cash or money market instruments.
Money market instruments include U.S. Government obligations, repurchase
agreements, certificates of deposit, banker's acceptances, bank deposits,
other financial institution obligations, commercial paper and other
short-term commercial obligations. Defensive strategies may prevent a
Portfolio from meeting its objectives, but the strategies may limit the
losses of a Portfolio in times of severe economic or market downturns.
PORTFOLIO TURNOVER
As described in the prospectus, the investment adviser may buy and sell
securities for the Portfolio frequently, if the investment adviser believes
the transactions are necessary to meet the objectives of the Portfolios.
This increases the Portfolio turnover rate for the Portfolio, which can
increase costs. The Portfolios have only recently been formed and have no
prior operating
7
<PAGE> 26
history; therefore, they have no prior Portfolio turnover rates to report. The
investment adviser does not expect that the turnover rate for any Portfolio will
exceed 125%.
MANAGEMENT OF THE FUND
RESPONSIBILITIES OF DIRECTORS
The Board of Directors of the Fund provides broad supervision over the
affairs of the Fund and the Portfolios as provided by the Investment Company
Act of 1940, the General Laws of the State of Maryland governing
corporations, the Articles of Incorporation of the Fund and its Bylaws. The
directors approve contracts with the investment adviser, underwriter,
custodians and other service providers on behalf of the Portfolios. The
directors also set broad policies for the management of the Portfolios.
MANAGEMENT INFORMATION
The directors and officers of the Fund and their respective backgrounds are
as follows:
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION CURRENT POSITIONS
NAME AND ADDRESS AGE FUND PAST 5 YEARS WITH AFFILIATES
<C> <C> <C> <S> <C>
Roy M. Henry<F*> 58 Director Employed in the Financial Chairman of the Board of
President services and financial planning Directors and President,
fields for more than the past 5 FFP Advisory Services, Inc.,
years as chief executive officer FFP Securities, Inc. and First
of First Financial Planners, Inc. Financial Planners, Inc.
and all subsidiaries; registered
principal of FFP Securities, Inc.;
and registered investment adviser
representative of FFP Advisory
Services, Inc.
Christopher V. Meitz 26 Vice President Compliance officer of First Sr. Vice President -
Assistant Financial Planners, Inc., Compliance of First
Secretary registered representative of FFP Financial Planners, Inc.
Assistant Securities, Inc.; and registered
Treasurer investment adviser
representative of FFP Advisory
Services, Inc. 4/95 to present;
Assistant manager, Camelot
Music, Florissant, MO, 8/92 -
5/95; student 8/90 - 6/95.
8
<PAGE> 27
<C> <C> <C> <S> <C>
Bryan P. Davis 26 Secretary Compliance Director, First Director and Sr.
Treasurer Financial Planners, Inc. since Vice President, First
1/95; registered representative of Financial Planners, Inc.
FFP Securities, Inc., since 1/94; and FFP Advisory Services,
registered principal of FFP Inc., Chief financial
Securities, Inc. since 2/94 and officer, FFP
registered financial principal of Securities, Inc.
FFP Securities, Inc. since 5/95;
Student 3/92 -6/93.
To be named Director
To be named Director
To be named Director
To be named Director
<FN>
<F*> Designates persons who are interested persons as defined by the Rules of the
Securities and Exchange Commission.
</TABLE>
Each of the above persons holds the same positions with other mutual funds in
the Fund Complex.
COMPENSATION OF MANAGEMENT
The table below describes the compensation estimated to be paid by the Fund
during the current fiscal year to each of the directors who is a not an
interested person of the Fund. None of the officers or directors who is an
interested person of the Fund receives compensation from the Fund.
<TABLE>
<CAPTION>
TOTAL
AGGREGATE PENSION OR ESTIMATED COMPENSATION
COMPENSATION RETIREMENT ANNUAL BENEFITS FROM FUND AND
NAME FROM FUND BENEFITS ACCRUED UPON RETIREMENT FUND COMPLEX
<S> <C> <C> <C> <C>
[To be provided by amendment]
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
CONTROL PERSONS AND PRINCIPAL HOLDERS
As of the date of this prospectus, First Financial Planners, Inc., a Missouri
corporation, owns all of the outstanding shares of the Fund. First Financial
Planners, Inc. owns all of the outstanding stock of FFP Advisory Services,
Inc. and FFP Securities, Inc., the investment adviser and underwriter,
respectively, of the Portfolios. Roy M. Henry and his wife, Meredith jointly
own 69.44% of the outstanding shares of Class A Common stock of First
Financial Planners, Inc. through a trust and therefore indirectly control the
Fund. First Financial Planners, Inc. has agreed to vote any shares it owns
in the Fund in the same proportion as the shares owned by unaffiliated
shareholders after the effective date of registration of the Fund.
9
<PAGE> 28
The following persons own 5% or more of the outstanding Class A shares of
First Financial Planners, Inc., and therefore indirectly own shares of the
Fund:
Wesley Krebill
Joyce Krebill
Dominic Pisciotta
Barbara Pisciotta
MANAGEMENT OWNERSHIP
All outstanding shares of the Fund and its Portfolios are currently held by
First Financial Planners, Inc.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The Fund and FFP Advisory Services, Inc., a Missouri corporation, have
entered into an Investment Advisory Agreement appointing FFP Advisory
Services, Inc., the investment adviser for each Portfolio. The investment
adviser is responsible for the management of the assets of each Portfolio
based on the investment objectives and policies of each Portfolio.
First Financial Planners, Inc. owns all of the outstanding stock of the
investment adviser and of FFP Securities, Inc., the underwriter for the Fund.
First Financial Planners, Inc. was incorporated in 1983 and is a holding
company. See the discussion under CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES for information on the ownership and control of First Financial
Planners, Inc. See also the table under MANAGEMENT OF THE FUND for
information about the officers and directors of the Fund who hold positions
as officers or directors with the investment adviser, the underwriter and
their parent, First Financial Planners, Inc.
The investment adviser receives a fee equal to an annual rate of 1.5% of the
average daily net assets of the Portfolio. The investment adviser calculates
the fee each day that the New York Stock Exchange is open for business based
on the net asset value determined for that day. The fee accrues daily and is
paid monthly.
In addition, the investment adviser is entitled to reimbursement for all
expenses it incurs in carrying out its obligations under the Investment
Advisory Agreement, including a portion of its overhead that is allocated to
the management of the Portfolios. The portion of the investment adviser's
overhead allocated to the Fund is calculated using a percentage of the
salaries of persons employed by the investment adviser equal to the
percentage of time those employees spend on the Fund's activities. The
investment adviser may also include an allocable portion of other overhead
costs, such as the cost of facilities and equipment used in managing the
Portfolios.
Costs that a Portfolio incurs directly are charged to that Portfolio.
Overhead and other costs and expenses that the Fund incurs on behalf of all
the Portfolios are charged to the individual
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Portfolios based on the ratio of their respective average daily net assets
during the period for which the fees were incurred. The investment adviser has
agreed to reimburse each Portfolio or waive reimbursement for any expenses
(other than brokerage commissions) a Portfolio incurs that exceed an annual rate
of .25% of the average daily net assets of the Portfolio. The investment
adviser may discontinue this policy at any time.
The Fund has only recently been formed and no fees have been paid to the
investment adviser under the Investment Advisory Agreement as of the date of
this Statement of Additional Information.
PRINCIPAL UNDERWRITER
FFP Securities, Inc. has entered into an agreement with the Fund to serve as
the underwriter for shares of the Fund. The underwriter is not entitled to
compensation under the Underwriting Agreement. FFP Securities, Inc.
maintains its principal office at 15455 Conway Road, 2nd Floor, Chesterfield,
Missouri 63017. See the discussion under CONTROL PERSONS AND PRINCIPAL
HOLDERS OF SECURITIES for information on the relationships among the
underwriter, the investment adviser and their affiliates and shareholders.
See also the table under MANAGEMENT OF THE FUND for information on the
officers and directors of the Fund who hold positions as officers or
directors with the underwriter and its affiliates.
SERVICE AGREEMENTS
[Information on the custodian, transfer agent and fund administrator will be
provided by amendment]
The Fund has hired the firm of Moore Stephens Smith Wallace, L.L.C., Advisors
and Accountants, to serve as auditors of the Fund. The auditors will audit
the accounts of the Fund on an annual basis and provide statements as
required for registration and reporting of the Fund under the applicable
securities laws. It is estimated that their fees for the initial filings and
reporting of the Fund will be approximately $3,000. The Fund renegotiates
fees annually with the auditors.
RULE 12b-1 PLAN
As described in the prospectus, the Fund has adopted a Distribution and
Service Plan on behalf of each Portfolio under the provisions of Rule 12b-1
of the Securities and Exchange Commission. Under the plan the Portfolios may
pay fees up to an annual rate of .75% of the average daily net assets of each
Portfolio, to any broker-dealer, including the underwriter of the Fund, for
services to the shareholders of the Portfolios. Shareholders include ongoing
education about the Portfolios, contact with the shareholders concerning the
Fund, asset allocation and the appropriateness of the investments. The Fund
currently anticipates paying the full fee to FFP Securities, Inc. for
shareholder servicing. All or a portion of the fee may be paid by FFP
Securities, Inc. to its registered representatives who provide the
educational and other services to the contract or policy holders.
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The Fund may also use the fees under the Distribution and Service Plan to
reimburse certain service costs paid by insurance companies who offer the
shares under their variable annuity contracts or variable life insurance
policies.
In adopting the Distribution and Service Plan, the Board of Directors of the
Fund decided that the plan would benefit the Fund and its shareholders,
including the holders of the variable annuity contracts or variable life
insurance policies. The directors considered various factors, including the
nature of the services provided by the broker-dealers, the likelihood that
the services would increase the amount of assets held by the Fund, the total
fees to be charged to shareholders by the Fund and the types and costs of
similar services provided by other mutual funds similarly situated. The Fund
intends that the broker-dealers who receive these fees will use them to
educate investors about their interest in the Fund, assist the holders of the
variable annuity contracts or variable life insurance policies in asset
allocation concepts with respect to their purchase of shares of the Fund and
provide an ongoing source of information about the Fund and the Portfolios to
those persons. The Board of Directors determined that such services would
encourage persons to invest in the Portfolios and would encourage those with
assets in the Portfolios to keep those assets to the extent they remain
suitable for the holder.
To the extent FFP Securities, Inc. receives fees from the Portfolios, the
investment adviser and its officers, may have an indirect benefit.
BROKERAGE ALLOCATION AND OTHER PRACTICES
BROKERAGE TRANSACTIONS
GENERAL. The investment adviser purchases securities for each Portfolio in
different ways depending on the type of security and the market for it. The
following describes the way in which different kinds of securities would be
purchased by the Portfolios, however, at the present time, the investment
adviser expects that the Portfolios will only be purchasing investment
company securities including mutual funds, closed end funds and unit
investment trusts.
MUTUAL FUND SHARES. The investment adviser will purchase Shares of mutual
funds directly from the mutual fund distributor or through FFP Securities,
Inc. The investment adviser does not expect that the Portfolios will pay any
sales commissions on the purchase of shares of mutual funds for the
Portfolios. The Portfolios may be charged costs for transactions effected
through FFP Securities, Inc. The investment adviser has agreed, that if a
Portfolio pays any sales load for the purchase of mutual fund shares, the
total of all sales loads paid by the Portfolio will not exceed an amount
equal to an annual rate of 1.5% of the average daily net assets of the
Portfolio. For purposes of this limitation, the investment adviser will
include all fees paid by the Portfolio under the Distribution and Service
Plan the Fund has adopted under Rule 12b-1.
UNIT INVESTMENT TRUSTS AND CLOSED END FUNDS. Shares of unit investment
trusts and closed end funds may be purchased directly from the issuer at the
time of the initial offering. Otherwise, shares are purchased in the
secondary market. Some of these securities are listed on exchanges and they
would be purchased in the same manner as equity securities listed on those
exchanges (see Equities below).
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EQUITIES. The investment adviser will purchase equity securities such as
stock, from broker-dealers on either a principal or an agency basis. A
principal basis means the broker-dealer holds the security in inventory and
sells it at a mark-up over the price it pays for the security. Although the
broker-dealer does not usually charge a commission on the principal
transaction, the price of the security will reflect an increase over the
broker-dealer's cost that represents compensation to it. Mark-ups generally
cannot exceed 5% of the price of the security, but different rules apply when
the broker has held the security in inventory for a long time.
In an agency transaction, the broker-dealer does not own the security itself,
but will find the security for the Portfolio from someone who is willing to
sell it. The investment adviser will generally purchase and sell securities
listed on the stock exchanges from broker-dealers who have seats on the
exchange. The investment adviser will generally purchase and sell securities
traded in the over-the-counter-market from broker-dealers who make a market in
those securities (market makers). The broker-dealer will generally add a
commission to the price of the security to compensate it for its efforts in
finding the security for the Portfolio. Commissions for these transactions
generally average approximately six cents per share, but may increase to a much
higher amount if the security is difficult to find or the transaction is very
small.
The investment adviser may also use matching services to purchase and sell
equity securities. These services generally attempt to match buy and sell
orders for securities that it receives. Matching services do not attempt to
find the security for the Portfolio, but will simply match buy orders with
sell orders for the same security. Matching services generally charge a low
commission on the transaction, equal to a few cents per share, but they
cannot guarantee the availability or the price of the securities sought to be
purchased or sold.
Under limited circumstances, a Portfolio may acquire equity securities from
the issuer of the security through an underwriter or selling dealer in an
initial public offering or secondary offering by the issuer. The price of
these securities is generally fixed in the offering in the same manner as for
fixed income securities, described below. Alternatively, commissions may be
charged uniformly for the purchase of these securities and paid to the
underwriter who pays a portion to the selling dealers.
On rare occasions, one Portfolio wants to purchase a security that another
Portfolio is selling. The Portfolios have adopted a policy that allows the
Portfolios to purchase or sell securities to and from each other. These
transactions must comply with Rules of the Securities and Exchange Commission
that try to ensure that both Portfolios to the transaction are treated
equitably.
FIXED INCOME SECURITIES. Fixed income securities are often purchased
directly from the issuer through an underwriter or selling dealer in an
initial offering of the security. The price for the security is set for the
offering. There is no additional compensation added for the underwriter or
broker-dealer selling the security. The issuer generally pays a commission
to the underwriter out of the proceeds of the offering and the underwriter
pays (reallows) a portion of that commission to the other selling dealers.
Fixed income securities may also be purchased in the market from
broker-dealers acting as principal or through broker-dealers acting on an
agency basis in the same manner as equity securities.
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OPTIONS AND FUTURES. Commodities, futures and options on futures are
purchased through commodity brokers and generally include a commission based
on the size of the transaction. Options on equities are purchased through
the broker-dealers who buy and sell the equities. These brokers also receive
commissions on the transactions.
TRANSACTIONS WITH AFFILIATES
The Portfolios will use FFP Securities, Inc. to purchase and sell securities
for them on an agency basis. FFP Securities, Inc. does not act as a market
maker for securities and will not be acting as principal in most transactions
made on behalf of the Portfolios. FFP Securities, Inc. will generally be
reimbursed for its costs in effecting transactions for the Portfolios, but
will not receive commission on the transactions. In any event, FFP
Securities, Inc. may not receive commissions that would exceed the usual and
customary broker's commission that would be charged if the transaction were
done on an exchange, or 2 per cent of the sales price if the sale is part of
a secondary distribution of the security or 1 percent of the sales price if
it is done otherwise.
BROKERAGE SELECTION
The investment adviser is responsible for selecting the broker dealers
through which Portfolio securities are purchased. The investment adviser
uses its judgment to decide which broker dealer firm, commodity broker or
other firm will provide the best service to the Portfolio for each security a
Portfolio wants to buy or sell. In deciding which firms provide the best
service or 'best execution' the investment adviser considers a number of
factors, including the cost of the service, the price of the security through
that firm, the overall financial quality of the firm, the firm's capacity for
handling the transaction, the speed with which the transaction will be
completed, research provided by the firm on behalf of the Portfolios, the
quality of the reporting for the transaction and any other services the firm
may provide. Best execution does not mean the lowest price available or
lowest commission, but means the combination of the factors discussed above,
which is appropriate for the specific transaction. The Board of Directors
has overall responsibility for assuring that the investment adviser obtains
best execution for Portfolio transactions and for monitoring commissions paid
to broker-dealers by the Portfolios. The investment adviser may use its
affiliate, FFP Securities, Inc., for some of the transactions in the
securities purchased or sold by the Portfolios.
RESEARCH SERVICES
The investment adviser may select broker-dealers to execute trades for the
Portfolios which broker-dealers provide research and other services to the
investment adviser. These services may include research information,
analyses and reports about securities, statistical data, advice on the value
of securities, as well as equipment or services that provide access directly
to such data through third parties. Agreements with these broker-dealers may
provide that to the broker-dealer may use a portion of the commissions paid
by the Portfolios to offset the costs of these services. The investment
adviser will use research services in managing the assets of the Portfolios.
The investment adviser may also use the research services in managing
accounts of clients other than the Portfolios. The investment adviser must
at all times assure that the
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brokerage services of these broker-dealers meet the standards for best execution
discussed above. The Board of Directors of the Fund must also oversee these
arrangements to assure that they meet the standards imposed by the Securities
and Exchange Commission for best execution and that the research services
conform to the guidelines established by the Securities and Exchange Commission
for such services.
BUNCHING AND ALLOCATION OF TRADES
Although the investment adviser will make investment decisions independently
for each Portfolio, there will be occasions when more than one client of the
investment adviser including other Portfolios will be purchasing or selling
the same security. There are occasions when the price for purchasing the
security, or the commissions the Portfolios would pay on the transaction,
would be lower if all the trades are combined (bunched or aggregated) in one
order. The investment adviser will bunch trades of different Portfolios when
placing an order with a broker-dealer where the investment adviser believes
the aggregation is in the best interests of each Portfolio or client.
There may be other occasions where the investment adviser is unable to
purchase all the securities required to fill all the orders of the Portfolios
and other clients. The investment adviser must allocate the securities among
the Portfolios and clients in a manner that is fair to all parties. The
investment adviser has adopted procedures for bunching and allocating
securities of its clients. These procedures are intended to treat each
client equitably and to assure that the best interests of the Portfolios are
protected. There may be situations where one Portfolio may be disadvantaged
in an isolated case, however the investment adviser believes that all
Portfolios will benefit from the procedures over time.
CAPITAL STOCK AND OTHER SECURITIES
CAPITAL STOCK
SERIES AND CLASSES OF SHARES. The Fund has the authority to issue an
aggregate of 1,000,000,000 shares of Capital Stock, par value $.001 per
share. The 1,000,000,000 shares are classified in the following series,
called Portfolios:
100,000,000 in the FFP Millennium Jupiter Portfolio
100,000,000 in the FFP Millennium Venus Portfolio
100,000,000 in the FFP Millennium Mercury Portfolio
100,000,000 in the FFP Discovery Jupiter Portfolio
100,000,000 in the FFP Discovery Venus Portfolio
100,000,000 in the FFP Discovery Mercury Portfolio
The remaining 400,000,000 shares may be classified in one or more additional
Portfolios as the Board of Directors may determine, in its sole discretion.
The shares are not divided into classes, however, the Board of Directors may
classify or reclassify any unissued shares of the Portfolios into separate
classes by the adoption of a resolution designating the relative rights and
preferences of the shares of each such class.
RESTRICTIONS ON PURCHASE AND SALE. You may only purchase shares as
investments under variable annuity contracts or variable life insurance
policies. Only insurance companies offering
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the variable annuity contracts or variable life insurance policies that use the
Portfolios for investments may purchase shares of the Portfolios. The insurance
companies purchase shares at the direction of the owners of the variable annuity
contract or variable life insurance policy. The insurance companies sell shares
back to the Fund at the direction of the owners of the variable annuity
contracts or variable life insurance policies. The shareholders cannot transfer
the shares to third parties. The Fund does not issue certificates for shares of
the Portfolios.
DIVIDEND RIGHTS. The Board of Directors may, from time to time, declare and
pay dividends and distributions on the shares of each Portfolio, in such form
and in such amount, as the Board of Directors, in its sole discretion
determines. The Board of Directors may declare dividends monthly, annually,
or at other times as it determines. The Board of Directors attempts to
declare dividends so that the Portfolios comply with the requirements of the
Internal Revenue Code for qualifying as regulated investment companies, but
they are not required to do so and will not be held liable if they do not
meet those requirements. The Portfolios will generally pay all dividends and
distributions in cash, though under extraordinary circumstances, they may pay
in additional shares. The Portfolios will value dividends or distributions
that it pays in securities at the current net asset value of the securities
determined on the day of payment.
A Portfolio pays dividends and distributions only to shareholders of that
Portfolio. The Board of Directors establishes a date and a time for
determining the shareholders to whom payment of the dividend or distribution
are made (record date). Dividends and distributions are allocated among the
shareholders of a Portfolio in proportion to the number of shares of the
Portfolio held by each shareholder on the record date; except, however, if
there are separate classes of shares that bear different expenses, the
dividend or distribution is adjusted for those charges and allocated among
shareholders of each specific class of shares of the Portfolio. The
Portfolios will not pay dividends or distributions on shares for which the
Portfolio has not received payment or a completed purchase order as of the
record date.
VOTING RIGHTS. Each shareholder is entitled to one vote for each full share
and a fractional vote for each fractional share held in the name of the
shareholder on the books of the Fund. The shareholders of the Portfolios are
the insurance companies issuing the respective variable annuity contracts or
variable life insurance policies that offer the Portfolios as investments.
Under Rules of the Securities and Exchange Commission, the insurance
companies under most circumstances, must pass the voting rights through to
the owners of the variable annuity contracts or variable life insurance
policies. The prospectus for the variable annuity contracts or variable life
insurance policies describes if and how voting rights are passed to you.
On matters affecting the Fund, all shareholders of all Portfolios vote and
matters generally require approval of a majority of the shareholders of all
of the Portfolios to pass. Certain matters such as fee issues that are
different for each Portfolio may require a separate vote by each Portfolio or
class of a Portfolio. In addition, the Board of Directors may decide, on any
matter put to a vote of shareholders, that the issue affects only a single
Portfolio or class of a Portfolio. Under those circumstances, the Board of
Directors may require that the shareholders of the Portfolio or class vote
separately on the matter.
The remaining directors may fill vacancies on the Board of Directors as long
as at least two thirds of the directors after the vacancies are filled, were
elected by shareholders. If at any time
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less than a majority of the directors were elected by shareholders, the Fund
must call a meeting of shareholders within 60 days to elect directors. All of
the current directors of the Fund were elected by shareholders.
Most issues will pass if they are approved by a majority of the shareholders
present at a meeting that is properly called and at which a quorum is
present. Rules of the Securities and Exchange Commission state that the Fund
or a Portfolio may do the following only if approved by a 'majority of
shareholders' as defined by Rules of the Securities and Exchange Commission:
* execute an investment advisory or subadvisory contract or any amendment to
it;
* adopt or amend a service or distribution plan under Rule 12b-1 of the
Securities and Exchange Commission;
* amend any policy that the Portfolio has stated is fundamental;
* change a Portfolio to nondiversified; or
* change the fees charged by the Portfolio.
The Investment Company Act of 1940, which is the law governing mutual funds,
defines a majority vote of shareholders for the purpose of voting on these
matters to mean the vote in person or by proxy of shareholders holding 67% or
more of the shares of the Portfolio present in person or by proxy at a
meeting of shareholders, if the holders of more than 50% of the outstanding
shares are represented in person or by proxy at the meeting. In the
alternative, the vote of a majority of shareholders means the vote in person
or by proxy of shareholders holding more than 50% of all the outstanding
shares. The Portfolio can use whichever method is less, to determine if the
matter has passed.
The presence in person or by proxy of the holders of one-third of the shares
entitled to vote at a meeting of shareholders of the Fund, or if the meeting
is of a Portfolio or class, the presence of holders of one-third of the
shares of the Portfolio or class, constitutes a quorum. Once a quorum is met
at a properly called meeting of shareholders, all business may be addressed.
LIQUIDATION RIGHTS. Each share of a Portfolio represents an equal
proportionate interest in the assets of the Portfolio, subject to the
liabilities of the particular Portfolio. If the Board of Directors
establishes classes of shares in a Portfolio, each class would be charged
with its respective expenses. Shares of one Portfolio do not have any rights
with respect to the assets of any other Portfolio. In the event any
Portfolio is liquidated, the shareholders of the Portfolio will receive a
proportionate share of the assets of the Portfolio reduced by the liabilities
of the Portfolio. If the Portfolio has been divided into classes, the amount
available for liquidation is determined by class. Shareholders of any class
of a Portfolio will receive their proportionate share of the net assets of
the class. If the Fund is liquidated, all Portfolios and classes of
Portfolios will be liquidated in the same manner. In no event will the fact
that a shareholder owns shares in one Portfolio entitle that shareholder to
participate in a distribution of the assets of any other Portfolio.
PREEMPTIVE AND CONVERSION RIGHTS. Shares have no preemptive or conversion
rights.
REDEMPTION. The Fund does not have the right to redeem shares from
shareholders except at the request of shareholders.
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LIABILITIES AND ASSESSMENTS. The Fund will not issue shares unless it has
received full payment for those shares. The shares are not subject to
assessments for any additional costs of the Fund or the Portfolios.
AUTHORITY OF BOARD OF DIRECTORS. Under the Articles of Incorporation of the
Fund, the Board of Directors has full power and authority to establish and
amend the preferences, rights, voting powers, restrictions, limitations on
dividends, qualifications, terms and conditions of redemption, of the shares
of the Portfolios, as the Board of Directors, in its sole discretion,
determines from time to time. Certain provisions of the laws and rules
governing mutual funds limit this authority. Therefore, under most
circumstances, changes that would materially, adversely affect shareholders
require the approval of shareholders or would only apply to shares issued
after the change has been adopted by the directors and the shareholders have
been notified.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASE OF SHARES
As discussed above, shares may only be purchased as investments under
variable annuity contracts or variable life insurance policies. Only
insurance companies offering the variable annuity contracts or variable life
insurance policies that use the Portfolios for investments may purchase
shares of the Portfolios. The insurance companies purchase shares at the
direction of the owners of the variable annuity contract or variable life
insurance policy as described in the prospectus for the applicable variable
annuity contract or variable life insurance policy. There are no sales
charges for the purchase of shares and there are no special plans for the
purchase of shares. Purchase orders from the insurance companies generally
must be received by 4:00 p.m. or the close of business of the New York Stock
Exchange, if earlier, to be purchased at the net asset value determined for
the Portfolio for that day. Under certain circumstances, the Portfolio may
accept purchase orders at the net asset value determined for that day if the
order is received from the insurance company after the deadline, but before
the opening of the New York Stock Exchange on the next business day. The
insurance company must have received the order directing the investment in
the Portfolio from the annuity or life insurance policy owner before the
close of the New York Stock Exchange.
OFFERING PRICE
As described in the prospectus, the investment adviser calculates the value
of each share of each Portfolio (net asset value per share) at 4:15 p.m.
every day that the New York Stock Exchange is open for business. If the New
York Stock Exchange closes before 4:00 p.m., the net asset value is
calculated 15 minutes after the Exchange closes. The investment adviser
determines the value of all assets held by the Portfolio at the end of the
day, subtracts all liabilities and divides the total by the total number of
shares outstanding. The investment adviser determines the value of the
assets of the Portfolio by assigning to each security its current market
price for that day. The Board of Directors has adopted a valuation schedule
for each of the securities that are included in the Portfolios, indicating
how the price should be determined. In general, prices for the mutual fund
shares will be obtained from . Prices for other securities
that are listed on the stock exchanges or are otherwise actively traded will
be obtained from , a pricing service. Short-term debt
instruments maturing in less than 60 days are valued at amortized cost.
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Securities for which market quotations are not available are valued at their
fair value. Where possible, the investment adviser will obtain two or more
independent market quotations for each illiquid or other security that does
not have a readily determined market value. The investment adviser may use
other reasonable methods to determine the value of securities for which there
is no ready market. The value of the assets of the Portfolio so determined
is then increased by any accrued but uncollected dividends or interest earned
on the securities it holds. The total value is then reduced by all
liabilities including accrued, but unpaid liabilities such as the investment
advisory fee.
The following is a specimen price-make-up sheet showing how the Portfolios
calculate the total offering price per share, for the date of the balance
sheet of the Fund.
[to be provided by amendment]
REDEMPTION IN KIND
Each Portfolio has the right under the Fund's Articles of Incorporation to
issue securities owned by the Portfolio as payment for shares tendered for
redemption. The Fund intends to file a notice on behalf of the Portfolios
under Rule 18f-1 of the Securities and Exchange Commission. Under that
notice, the Fund will agree that, irrespective of its ability to redeem
shares by issuing securities, each Portfolio will pay any shareholder cash
for redemptions during any ninety-day period up to the lesser of $250,000 or
1% of the net asset value of the Portfolio at the beginning of the ninety day
period.
TAXATION OF THE FUND
Each Portfolio intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986. If a Portfolio fails to
qualify as a regulated investment company under Subchapter M, the Portfolio
would be taxed on its net investment income and net capital gains without
being able to deduct dividends and distributions paid to shareholders. The
tax liability would reduce amounts available for distribution under your
variable annuity contract or variable life insurance policy and would reduce
the total return of the Portfolio. The Portfolios make every effort to meet
the requirements of Subchapter M which include earning 90% of their income
from dividends, interest, and gains from the sale of securities; distributing
at least 90% of their net income during each year and meeting diversification
tests.
The variable annuity contract or variable life insurance policy you have
purchased must also meet certain requirements to allow the deferral of income
tax on earnings of the Portfolio through the annuity contract or life
insurance policy. One of those requirements is that the assets of the
annuity contract or life insurance policy be adequately diversified as
defined by the Internal Revenue Code and interpretations and regulations
under the Code. This diversification requirement is different from the
diversification requirement under Subchapter M.
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UNDERWRITERS
DISTRIBUTION OF SECURITIES
The only purchasers of the shares of the Portfolios are insurance companies
who issue the variable annuity contracts or variable life insurance policies
that include the Portfolios as investments. The insurance companies purchase
shares on your behalf when you direct the insurance company to invest your
money in a Portfolio under your variable annuity contract or variable life
insurance policy. Rules of the Securities and Exchange Commission require
all sales of the shares of the Portfolios to be sold through an underwriter.
Therefore, the Fund, on behalf of the Portfolios, has entered into an
underwriting agreement with FFP Securities, Inc., an affiliate of the
investment adviser appointing FFP Securities to serve as the underwriter for
the sale of shares to the insurance companies. The underwriter has agreed to
use its best efforts to sell the shares of the Portfolios on a continuous
basis, without compensation.
COMPENSATION
The underwriter is not entitled to and has not received any commissions or
other compensation under the terms of the underwriting agreement for selling
the shares of the Portfolios. The underwriter may receive service fees under
the Fund's Distribution and Service Plan described above in the Section
INVESTMENT ADVISORY AND OTHER SERVICES - Rule 12b-1 Plan.
CALCULATION OF PERFORMANCE DATA
The Portfolios have only recently been formed and do not have a sufficient
operating history to advertise performance. The performance of the
Portfolios depends on a number of factors, including the success of the
investment adviser in selecting securities that meet the objectives of the
Portfolios. The performance of the Portfolios varies daily as net earnings
and the value of the assets in the Portfolio vary.
You may compare the performance of the Portfolios to that of other funds that
are comparable to the Portfolios or to indices which represent the asset
classes in which the assets of the Portfolios are invested. You may also use
financial publications and other sources to obtain a complete view of the
performance of the Portfolios. When comparing performance, you should
consider all factors that are relevant to performance, such as the securities
that make up the index used or that are held by funds to which the Portfolios
are compared, the actual type of assets held by other funds to which the
Portfolios are compared, and the methods used to value the assets of other
funds. You should also remember that indices do not incur any costs and
therefore the performance reported for an index may be higher than that of a
Portfolio which has management, service and other costs and expenses.
The Portfolio may use information provided by financial services and/or
indices in advertising or sales materials. The financial services include:
* Lipper Analytical Services, Inc.
* Standard & Poor's Daily stock Price Index of 500 Common stocks
* Morningstar, Inc.
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<PAGE> 39
Advertisements and other sales literature for the Portfolios may quote total
returns which are calculated for periods other than 1-, 5- and 10-year
periods required by the Rules of the Securities and Exchange Commission or
may quote returns that do not reflect the deduction of all expenses incurred
by a Portfolio. The investment adviser may use these returns in advertising
if the investment adviser believes the nonstandard returns are useful.
Nonstandard returns are always accompanied by total returns calculated as
required by Rules of the Securities and Exchange Commission, which require
performance to be calculated for 1-, 5- and 10-year periods with the
deduction of all expenses and the assumption that all dividends and
distributions are reinvested.
You should distinguish the performance of the Portfolios from the return of
the Portfolio you receive through your variable annuity contract or variable
life insurance policy. The fees and charges of your contract or policy
reduce those rates of return. Total returns for each Portfolio through the
variable annuity contract or variable life insurance policy are available
from the insurance companies from which you purchased you contract or policy.
FINANCIAL STATEMENTS
[To be provided by amendment]
21
<PAGE> 40
<TABLE>
PART C: OTHER INFORMATION
<CAPTION>
ITEM 23. EXHIBITS
<C> <S>
a. (EX-99.b(1)) Articles of Incorporation of FFP Horizons Fund, Inc.
b. Bylaws of FFP Horizons Fund, Inc.<F*>
c. Included in a and b, above.
d. Investment Advisory Agreement between FFP Horizons Fund, Inc. and
FFP Advisory Services, Inc.<F*>
e. Underwriting Agreement between FFP Horizons Fund, Inc. and FFP
Securities, Inc.<F*>
f. None
g. Custodian agreement between FFP Horizons Fund, Inc. and the
Custodian<F*>
h. None
i. Opinion of Bright & Barnes, A Professional Corporation<F*>
j. None
k. None
l. Subscription of First Financial Planners<F*>
m. Distribution and Service Plan of FFP Horizons Fund, Inc. for each
of its Portfolios<F*>
n. (EX-27.7) Financial Data Schedule
o. 18f-3 plan<F*>
<FN>
<F*> To be provided by amendment
</TABLE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Roy M. and Meredith E. Henry own 100% of the Roy M. Henry and Meredith E.
Henry Living Trust, a Missouri trust, which owns 69.44% of the Class A
(voting) common stock of First Financial Planners, Inc., a Missouri
Corporation which owns 100% of the outstanding voting common stock of the
following Missouri Corporations which are included in the consolidated
financial statements of First Financial Planners, Inc.:
FFP New Horizons Fund, Inc.
FFP Advisory Services, Inc.
FFP Securities, Inc.
FFP Tax & Accounting, Inc.
FFP Insurance Services, Inc.
FFP Estate Plans, Inc.
FFP Travel Services, Inc.
FFP Real Estate Services, Inc.
FFP Energy Services, Inc.
US Discount, Inc.
FFP Financial Planning Development, Inc.
InvestWatch, Inc.
FFP Securities of Alabama, Inc., an Alabama corporation
FFP Securities of Massachusetts, Inc., a Massachusetts corporation
FFP Securities of Mississippi, Inc., a Mississippi corporation
FFP Securities of Nevada, Inc., a Nevada corporation
FFP Securities of New Mexico, Inc., a New Mexico corporation
FFP Securities of Ohio, Inc., an Ohio corporation
FFP Securities of Texas, Inc., a Texas corporation.
<PAGE> 41
First Financial Planners, Inc. and Roy M. Henry are general partners of the
following Missouri limited partnerships and the percentage ownership of First
Financial Planners, Inc. as a limited partner is indicated in brackets where
that interest is 5% or greater:
Occasion Unique [7.67%]
Occasion Unique - deux [7.43%]
Occasion Unique - trois [8.58%]
Occasion Unique - quatre [9.41%]
Occasion Unique - cinq [11.62%]
Occasion Unique - six [6.81%]
Occasion Unique - sept [7.26%]
Occasion Unique - huit
Credit d'Impots
Credit d'Impots - deux
First Financial Planners, Inc. Subordinate Note Offering A
First Financial Planners, Inc. Subordinate Note Offering B
First Financial Planners, Inc. Subordinate Note Offering C
First Financial Planners, Inc. Subordinate Note Offering D
First Financial Planners, Inc. Subordinate Note Offering E
First Financial Planners, Inc. Subordinate Investment Note Offering
Government Backed Note Investment Note Offering
FFP Real Estate Services, Inc. Government Collateralized
Investment Note Offering
FFP Energy Services, Inc. Government Collateralized Investment Note Offering
Stock de Premier Order-cinq (Blue Chip Stock-Five)
Stock de Premier Order-dix (Blue Chip Stock-Ten)
Stock de Premier Order-Five/Ten (Blue Chip Stock - Five/Ten)
3D Seismic Energy Partners 1996A, L.P. [12%]
3D Seismic Energy Partners 1997A, L.P. [12%]
High Tech Energy Partners 1997 II [12%]
High Tech Energy Partners 1997 III [12%]
High Tech Energy Partners 1998 I [12%]
High Tech Energy Partners 1998 II [12%]
First Financial Planners, Inc. is a general partner of the following Missouri
Limited Partnerships and owns 80% of the outstanding limited partnership
interests:
The Select S&P Industrial 15 [80%]
The Value Line Growth 25 [80%]
FFP Advisory Services, Inc. is a general partner of Municipal Growth Shares,
L.P., a Missouri Limited Partnership and owns 80% of the outstanding limited
partnership interests.
FFP Securities, Inc. is a general partner of New Realty Shares, a Missouri
Limited Partnership, and owns 80% of the outstanding limited partnership
interests.
Roy M. Henry owns 85% of Venture Capital Marketing Associates, Inc., a
Missouri corporation
Roy M. Henry owns 100% of: R&M Planning, Inc., a Missouri corporation
<PAGE> 42
ITEM 25. INDEMNIFICATION
The officers and directors of the Fund may be indemnified under the
provisions of the Articles of Incorporation of the Fund and under the
corporate laws of the State of Maryland. Those provisions generally
indemnify the officers and directors for any liabilities or claims made by
any parties against them other than acts constituting willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of their office. The Fund is authorized to advance reasonable
costs to the officers and directors in any matter involving a claim against
such officer or director, if it is determined that the party is reasonably
likely to be entitled to indemnification. The underwriting agreement and
investment advisory agreement entered into by the Fund on behalf of the
Portfolios with FFP Securities, Inc. and FFP Advisory Services, Inc.,
respectively, provides for indemnification of the underwriter and investment
adviser, their officers, directors and controlling persons for liabilities
incurred in connection with performing their duties under those agreements
except for acts resulting from the willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
their obligations under those agreements. The directors have adopted a policy
that indemnification must be in compliance with the provisions of the
Investment Company Act of 1940.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of FFP
New Horizons Fund, Inc., pursuant to the above-described provisions, or
otherwise, FFP New Horizons Fund, Inc. has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Fund of expenses incurred or paid
by a director, officer or controlling person of the Fund in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Fund 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 the Fund is against
public policy as expressed in the Securities Act of 1933 and the Fund will be
governed by the court's final adjudication of such issue.
<PAGE> 43
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
<TABLE>
<CAPTION>
OTHER BUSINESS, PROFESSION,
NAME AND POSITION WITH VOCATION OR EMPLOYMENT OTHER POSITIONS AS OFFICER OR
INVESTMENT ADVISER SINCE JANUARY 1, 1996 DIRECTOR
<S> <C>
Roy M. Henry,<F*> President and President and Director of FFP
Chief Executive Officer Securities, Inc., First Financial
Planners, Inc., FFP Estate
Plans, Inc.
Robert H. Rodermund, Jr.<F*> Sr. Sr. Vice President/Secretary
Vice President and Secretary FFP Securities, Inc.; Vice
Chairman and Secretary First
Financial Planners, Inc.
Robin Rodermund<F*> Sr Vice
President
Christopher V. Meitz,
compliance officer
Bryan P. Davis, chief financial
officer
<FN>
<F*> Robin Rodermund is the daughter of Roy Henry and Robin and Robert Rodermund
are husband and wife.
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) FFP New Horizons Fund II, Inc.
FFP New Horizons Fund II, Inc.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
BUSINESS ADDRESS UNDERWRITER FUND
<S> <C> <C>
Roy M. Henry, Director President, Chief
Executive officer Director and President
Robert H. Rodermund, Jr. Sr. Vice President/Secretary
Bryan P. Davis Director and Secretary
Christopher V. Meitz Director
</TABLE>
(c) None
<PAGE> 44
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Fund will be kept by Robin Rodermund, FFP
Advisory Services, Inc., 15455 Conway Road, Chesterfield, Missouri.
ITEM 29. MANAGEMENT SERVICES
None
ITEM 30. UNDERTAKINGS
See Item 25.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Fund has duly caused this registration statement to
be signed on its behalf by the undersigned, duly authorized, in the City of
Chesterfield, and State of Missouri on the 8th day of June, 1998.
Fund: FFP NEW HORIZONS FUND, INC.
/s/ ROY M. HENRY
---------------------------------------
By Roy M. Henry, President and Director
Pursuant to the requirements of the Securities Act of 1933 this registration
statement has been signed below by the following persons in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ CHRISTOPHER V. MEITZ
Christopher V. Meitz Director June 8. 1998
/s/ BRYAN P. DAVIS
Bryan P. Davis Director June 8. 1998
</TABLE>
<PAGE> 45
EXHIBIT INDEX
27.7 Financial Data Schedule
99.b(1) Articles of Incorporation of FFP Horizons Fund, Inc.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements that have yet to be filed and is qualified in its entirety by
reference to those financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
ARTICLES OF INCORPORATION
OF
FFP NEW HORIZONS FUND, INC.
The undersigned, Robert C. Bright, hereby adopts the following Articles of
Incorporation on behalf of FFP New Horizons Fund, Inc.:
1. INCORPORATOR. Robert C. Bright, whose address is 211 North
Robinson, Suite 810, Oklahoma City, Oklahoma 73102, states that
he is the sole Incorporator of this Corporation; and
(i) he is over eighteen years of age; and
(ii) he is forming this Corporation under the General Laws of the
State of Maryland.
2. NAME. The name of the Corporation is FFP NEW HORIZONS FUND, INC.
3. PURPOSE. The Corporation is formed for the purpose of acting as an
open-end, management investment company as defined by the Investment
Company Act of 1940, as amended, and to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon,
corporations of a similar character by the General Laws of the State of
Maryland now or hereafter in force.
4. ADDRESS. The address of the principal office of the Corporation in
the State of Maryland is 300 East Lombard Street, Suite 1400,
Baltimore, Maryland 21202.
5. RESIDENT AGENT. The name and address of the resident agent of the
Corporation in the State of Maryland is The Corporation Trust
Incorporated, 300 East Lombard Street, Suite 1400, Baltimore,
Maryland 21202.
6. AUTHORIZED CAPITAL.
(i) The Corporation has the authority to issue an aggregate of
1,000,000,000 shares of Capital Stock (Shares).
(ii) The 1,000,000,000 Shares are classified in the following series
(Portfolios):
100,000,000 in the FFP Millennium Jupiter Portfolio
100,000,000 in the FFP Millennium Venus Portfolio
100,000,000 in the FFP Millennium Mercury Portfolio
100,000,000 in the FFP Discovery Jupiter Portfolio
100,000,000 in the FFP Discovery Venus Portfolio
100,000,000 in the FFP Discovery Mercury Portfolio
400,000,000 Shares may be classified in one or more additional
Portfolios as the Board of Directors may determine, in its
sole discretion, as evidenced by resolution adopted by the
Board of Directors. The Board of Directors may classify or
<PAGE> 2
reclassify any unissued Shares of the Portfolios into separate
classes by the adoption of a resolution of the Board
designating the relative rights and preferences of the Shares
of each such Class.
(iii) The par value of each Share of each Portfolio is $0.001.
(iv) The aggregate value of all Shares is $100,000,000.
7. PREFERENCES, RIGHTS, POWERS, RESTRICTIONS OF SHARES. The
Board of Directors has full power and authority to establish and amend
the preferences, rights, voting powers, restrictions, limitations as to
dividends, qualifications, terms and conditions of redemption of the
Shares of the Portfolios as the Board of Directors, in its sole
discretion, determines from time to time by resolution adopted by it.
Until any change is made by the Board of Directors, each Share of each
Portfolio of the Corporation has the following preferences, rights,
powers, restrictions, limitations, qualifications and terms and
conditions of redemption:
(i) DIVIDENDS AND DISTRIBUTIONS.
(a) Authority to Declare. The Board of Directors may, from time
to time, declare and pay dividends and distributions on the Shares
of each Portfolio, in such form and in such amount, as the Board of
Directors, in its sole discretion determines. The Board of
Directors may declare dividends daily or less frequently. It may
declare dividends by adopting a standing resolution once or more
often, as it decides in its discretion.
(b) Source of Dividends. All dividends on Shares of a Portfolio
shall be paid only out of the income of that Portfolio; capital
gains distributions on Shares of a Portfolio shall be paid only out
of the capital gains of that Portfolio; in each case, after
providing for actual and accrued liabilities of the Portfolio.
Dividends and distributions may be paid in cash, property,
additional Shares or any combination of cash, property and Shares,
as the Board of Directors determines. Dividends or distributions
paid in Shares will be paid at the current net asset value of the
Shares as defined in these Articles.
(c) Allocation among Shareholders. Dividends and distributions
on Shares of a Portfolio may be paid only to the Shareholders of
that Portfolio. The Board of Directors will establish a date and
a time for determining the Shareholders to whom payment of the
dividend or distribution will be made (record date). Dividends
and distributions will be allocated among the Shareholders of a
Portfolio in proportion to the number of Shares of the Portfolio
held by each Shareholder on the record date; except, however, if
there are separate Classes of Shares that bear different expenses,
the dividend or distribution will be adjusted for those charges and
allocated among Shareholders of each specific Class of Shares of
the Portfolio. The Board of Directors may declare that no
dividend or distribution will be paid on Shares for which payment
or a completed purchase order has not been received by the
Corporation as of the record date.
(d) Tax Qualification. In addition to the above, the Board of
Directors has the power and authority to declare and pay any
dividends or distributions that it believes, in its sole
discretion, to be necessary or prudent to enable the Corporation
and each Portfolio
8
<PAGE> 3
to qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended (Code) or under any successor
statute or any comparable state or federal statute, and the
regulations promulgated under any such statutes. The Board of
Directors also has the power and authority to take any action it
reasonably believes necessary to avoid incurring any liability on
behalf of the Corporation or any Portfolio for federal income tax
for any tax year. Nothing in this Article requires the Board of
Directors to declare and pay dividends or distributions to avoid
the payment of federal income tax or to qualify the Corporation
as a regulated investment company under the Code.
(ii) REDEMPTION BY THE CORPORATION. The Corporation may redeem
all the Shares of any Shareholder who holds less than a certain,
specified minimum amount of Shares in the Corporation or a
Portfolio, if authorized by resolution of the Board of Directors.
The Corporation may also redeem any Shares if the Board of
Directors, in its discretion, decides that the redemption is
necessary to prevent the Corporation from being classified as a
personal holding company as defined in the Code. A Shareholder
must be given reasonable notice of the Corporation's intention to
redeem and, if applicable, be given the right to purchase
additional Shares to meet the specified minimum. Any redemption
of Shares must be at the net asset value of the Shares determined
for the date of redemption.
(iii) REDEMPTION BY SHAREHOLDERS. Any Shareholder has the right
to redeem some or all of his, her or its Shares by tendering
those Shares to the Corporation at such times and places, and
subject to such conditions, as the Board of Directors specifies
in a resolution adopted by it. Shares generally will be redeemed
at the net asset value of the Shares determined on the date of
redemption, subject to any charges the Board of Directors might
impose on redemption. The Board of Directors may redeem Shares
by a distribution of the Corporation's or a Portfolio's assets in
kind, if a redemption in cash would adversely affect the
Corporation. Any distribution of assets in kind must meet any
applicable regulatory requirements, A Shareholder's right to
redeem Shares may be suspended or delayed in the event the
Corporation is required to do so by any regulatory authority
having jurisdiction over the Corporation. A Shareholder's right
to redemption may also be suspended or delayed if the Corporation
does not have funds or property legally available to make the
redemption.
(iv) VOTING RIGHTS. Each Shareholder is entitled to one vote for
each full Share and a fractional vote for each fractional Share
held in the name of the Shareholder on the books of the
Corporation. The presence in person or by proxy of the holders
of one-third of the Shares entitled to vote at a meeting of
Shareholders of the Corporation, or if the meeting is of a
Portfolio or Class, the presence of holders of one-third of the
Shares of the Portfolio or Class, will constitute a quorum,
unless applicable law or the Bylaws requires a greater
percentage. Once a quorum is met at a properly called meeting of
Shareholders, matters may be approved as follows:
(a) Corporate Matters. On matters requiring approval of all
Shareholders of the Corporation, each Portfolio will vote
separately and matters will require approval of all of the
Portfolios to be approved. Each Portfolio will vote based on the
vote of a
9
<PAGE> 4
majority of its Shareholders casting votes, unless a larger
percentage is required under applicable laws or rules, or under the
Bylaws of the Corporation or by resolution of the Board of
Directors.
(b) Portfolio or Class Matters. On certain matters, applicable
laws or rules, or the Bylaws of the Corporation, may require that
a separate vote be taken by a Portfolio or a Class of a
Portfolio. In addition, the Board of Directors may decide, on
any matter put to a vote of Shareholders, that it affects only a
single Portfolio or Class of a Portfolio. In any of those
circumstances, the matter will be submitted separately to the
Portfolio or Class. The matter will be approved by the Portfolio
or Class if it is approved by a majority of the Shareholders of
the affected Portfolio or Class casting votes, unless a larger
percentage is required under applicable laws or rules, or under
the Bylaws of the Corporation or by resolution of the Board of
Directors.
(v) NET ASSET VALUE. The net asset value per Share of a Portfolio
or Class of a Portfolio will be determined, from time to time, by
the Board of Directors as required by the Investment Company Act
of 1940 (1940 Act). Generally, the net asset value will be
determined by taking the value of the assets of the Portfolio or
Class, deducting the liabilities of the Portfolio or Class
(accrued and actual, but exclusive of capital stock and surplus).
The net asset value per Share is then calculated by taking the
net asset value of the Portfolio or Class and dividing that
amount by the number of Shares outstanding in the Portfolio or
Class. The assets and liabilities of a Portfolio or Class are
determined as set forth in subsections VI And VII, below.
(vi) ASSETS. All consideration received by the Corporation for the
sale and/or issuance of Shares of a particular Portfolio, and all
assets in which the consideration is invested or reinvested, all
income, earnings, profits, and proceeds from the consideration
and assets, including any proceeds from the sale, exchange or
liquidation of the assets, and any amounts earned on, or payments
from, any reinvestment of those proceeds, in whatever form,
irrevocably belong to that Portfolio. In addition, any assets,
earnings, payments, income, profits or other amounts received by
the Corporation, which are not readily identifiable as belonging
to a particular Portfolio, will be allocated by the Board of
Directors among the Portfolios in any manner that the Board of
Directors, in its sole discretion, deems fair and equitable. Any
such allocation by the Board of Directors will be conclusive and
binding on the Shareholders of all Portfolios, for all purposes,
and all items so allocated irrevocably belong to the Portfolio to
which they are allocated.
(vii) LIABILITIES. All expenses, costs, charges and reserves
attributable to a particular Portfolio will be charged to and
borne by that Portfolio. In addition, any general liabilities,
expenses, costs, charges or reserves of the Corporation, which
are not readily identifiable as belonging to a particular
Portfolio, will be allocated by the Board of Directors among the
Portfolios in any manner that the Board of Directors, in its sole
discretion, deems fair and equitable. Any such allocation by the
Board of Directors will be conclusive and binding on the
Shareholders of all Portfolios, for all purposes, and all items
so allocated irrevocably belong to the Portfolio to which they
are allocated.
10
<PAGE> 5
(viii) INCOME. The Board of Directors has full power and discretion,
to the extent not inconsistent with the laws of the State of
Maryland, to determine which amounts received by a Portfolio will
be treated as income and which will be treated as capital. Any
such allocation by the Board of Directors will be conclusive and
binding for all purposes.
(ix) LIQUIDATION. In the event any Portfolio is liquidated, the
Shareholders of the Portfolio will receive a proportionate share
of the assets of the Portfolio reduced by the liabilities of the
Portfolio. If the Portfolio has been divided into Classes, the
amount available for liquidation will be determined by Class.
Shareholders of any Class of a Portfolio will receive their
proportionate share of the net assets of the Class. If the
Corporation is liquidated, all Portfolios and Classes of
Portfolios will be liquidated in the same manner. In no event
will the fact that a Shareholder owns Shares in one Portfolio
entitle that Shareholder to participate in a distribution of the
assets of any other Portfolio.
8. DIRECTORS. The number of directors shall be as set forth in the
Bylaws of the Corporation, but shall not be less than three (3). The
following persons shall serve as Directors of the Corporation until the
first annual meeting of shareholders and until their successors are
duly elected and qualify:
Roy M. Henry
Christopher V. Meitz
Bryan P. Davis
9. ADDITIONAL POWERS.
(i) POWERS OF DIRECTORS. In addition to the specific powers and
authority granted to the Board of Directors by these Articles,
the Board of Directors may exercise all powers and authority and
do all acts that may be done by Directors of a Corporation under
the laws of the State of Maryland. These powers will only be
limited by the specific provisions of these Articles, the Bylaws
of the Corporation, the laws of the State of Maryland, the 1940
Act or any other statute or rule to which the Corporation is
subject.
(ii) ISSUANCE OF SECURITIES. The Board of Directors has full
authority to authorize the issuance of additional Shares in a
Portfolio from time to time, provided, however, that if Shares
are issued in a Portfolio, which has Shares outstanding, the
Shares are issued at the net asset value per Share. The Board of
Directors is authorized to establish new Portfolios and Classes
of Portfolios with such rights and preferences as it determines
in its discretion. The Board of Directors may authorize the
issuance of Shares in those Portfolios or Classes upon such terms
and conditions and with such rights as the Board of Directors
determines, provided they are consistent with the provisions of
any applicable statutes and regulations, these Articles and the
Bylaws of the Corporation. The Board of Directors may authorize
the issuance of convertible securities in any Portfolio or Class
and may authorize the granting of rights of conversion into
another Portfolio or Class to any Shareholder, subject to such
terms and conditions as the Board of Directors determines, and
subject to the requirements of applicable law.
11
<PAGE> 6
(iii) BYLAWS. The Board of Directors has full authority to adopt,
amend and rescind any and all Bylaws of the Corporation without
the consent of the Shareholders of the Corporation, unless the
authority is restricted in the Bylaws. The Shareholders, by the
vote of Shareholders holding a majority of the outstanding Shares
of the Corporation, have the right to repeal or amend any Bylaw
that has been adopted by the Board of Directors.
(iv) CONTRACTS WITH AFFILIATES. The Corporation or any Portfolio
may enter into any contract for any purpose with any entity
having common directors or officers with the Corporation or
otherwise affiliated with the Corporation (Affiliates),
including, but not limited to, contracts for services as
administrator, custodian, transfer agent, disbursing agent,
investment adviser, manager, underwriter, distribution or similar
services. The terms and conditions, methods of authorization,
renewal, amendment and termination of contracts with Affiliates
will be determined at the discretion of the Board of Directors,
except where applicable statutes or rules, or these Articles or
the Bylaws of the Corporation provide otherwise. No such
contract will be voidable or be invalidated as a result of the
existence of the affiliation, nor will any person holding common
positions be liable merely because of the relationship between
the entities for any loss or expense to the Corporation under or
by reason of the contract. Nothing in this section, however,
will protect any person from any liability to the Corporation or
its Portfolios or any of their Shareholders for which the person
would otherwise be liable due to willful misfeasance, bad faith,
gross negligence or reckless disregard of duties imposed by the
contract.
(v) INDEMNIFICATION. The Corporation and its Portfolios is
authorized to indemnify the directors, officers, employees,
agents and other persons who serve in similar capacities of the
Corporation, and any persons who have served in those positions
in the past to the full extent allowed by applicable law. The
Corporation and its Portfolios is also authorized to advance
costs and expenses to those persons in connection with any
threatened liability to the full extent allowed by law.
(vi) BOOKS AND RECORDS. The books and records of the Corporation
may be kept at any location within or without the State of
Maryland as the Board of Directors decides.
(vii) ANNUAL MEETINGS OF SHAREHOLDERS. The Corporation is not
required to hold annual meetings of Shareholders in any year in
which the Corporation is not required to elect directors under
the 1940 Act.
(viii) AMENDMENTS. The Corporation may amend these Articles as
allowed by the General Laws of the State of Maryland. The
Corporation is expressly authorized to amend the contract rights
of any outstanding Shares, subject to obtaining any approval of
the Shareholders holding those Shares required by applicable law.
(ix) DURATION. The duration of the Corporation shall be perpetual.
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IN WITNESS WHEREOF, the undersigned has signed these Articles of
Incorporation on this 20th day of May, 1998 and by his signature hereby
acknowledges
(i) that these Articles and the execution of them are his act;
(ii) that to the best of his knowledge, information, and belief, the
matters and facts set forth herein are true in all material
respects; and
(iii) he makes these statements under the penalties of perjury.
/s/ROBERT C. BRIGHT
- - -----------------------------------------
Robert C. Bright
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