<PAGE> 1
Filed pursuant to Rule 497(c)
Registration Nos: 333-65829
811-9067
PROSPECTUS
dated January 31, 2000
KIRR, MARBACH PARTNERS FUNDS, INC.
KIRR, MARBACH PARTNERS VALUE FUND
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-870-8039
The investment objective of the Kirr, Marbach Partners Value
Fund (the "Fund") is long-term capital growth. The Fund invests
primarily in a diversified portfolio of common stocks and other equity
securities of companies that the Fund's investment adviser, Kirr,
Marbach & Company, LLC (the "Adviser"), believes are currently trading
at a price that does not fully reflect the value of the company.
This Prospectus contains information you should consider
before you invest in the Fund. Please read it carefully and keep it for
future reference.
--------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") NOR
ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE
SECURITIES OFFERED BY THIS PROSPECTUS, NOR HAS THE SEC OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page No.
--------
<S> <C>
HIGHLIGHTS AND RISKS........................................................................................1
PERFORMANCE INFORMATION.....................................................................................2
FEES AND EXPENSES OF THE FUND...............................................................................3
INVESTMENT OBJECTIVE........................................................................................4
HOW THE FUND INVESTS........................................................................................4
FUND MANAGEMENT.............................................................................................5
HOW TO PURCHASE SHARES......................................................................................6
HOW TO REDEEM SHARES............................................. ..........................................8
VALUATION OF FUND SHARES...................................................................................10
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN................................................................10
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT...................................................11
FINANCIAL HIGHLIGHTS.......................................................................................11
</TABLE>
-----------------------------
In deciding whether to invest in the Fund, you should rely only on
information in this Prospectus or the Statement of Additional Information (the
"SAI"). The Fund has not authorized others to provide additional information.
The Fund does not authorize the use of this Prospectus in any state or
jurisdiction in which such offering may not legally be made.
<PAGE> 3
HIGHLIGHTS AND RISKS
WHAT ARE THE GOALS OF THE FUND?
The Fund's goal is long-term capital growth. This goal is sometimes
referred to as the Fund's investment objective. The Fund attempts to achieve
this goal by choosing investments that the Adviser believes will increase in
value. Current income from dividends or interest is not an important factor in
selecting investments for the Fund. The Fund cannot guarantee that it will
achieve its goal. For more information, see "Investment Objective" and "How the
Fund Invests."
WHAT WILL THE FUND INVEST IN?
The Fund invests primarily in common stocks. The Fund may also invest
in preferred stocks and foreign securities in pursuing its investment objective.
In trying to achieve its goal, the stocks selected for the Fund will be those
the Adviser believes are currently undervalued, i.e., those stocks trading at a
discount to intrinsic value. The Fund will normally invest at least a majority
of its assets in the common stocks of medium capitalization companies. The Fund
may also invest in the common stocks of small capitalization and large
capitalization companies. For more information, see "How the Fund Invests."
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
The main risks of investing in the Fund are:
- Stock Market Risk: Equity funds like the Fund are subject
to stock market risks and significant
fluctuations in value. If the stock
market declines in value, the Fund is
likely to decline in value. Increases
or decreases in value of stocks are
generally greater than for bonds or
other debt investments.
- Mid-Cap/Small-Cap Risk: Medium capitalization and small
capitalization companies may not have
the size, resources or other assets of
large capitalization companies. These
medium capitalization and small
capitalization companies may be
subject to greater market risks and
fluctuations in value than large
capitalization companies and may not
correspond to changes in value of the
stock market in general.
- Stock Selection Risk: The stocks selected by the Adviser may
decline in value or not increase in
value when the stock market in general
is rising.
- Liquidity Risk: The Adviser may not be able to sell
stocks at an optimal time or price.
- Foreign Investment Risk: The Fund's foreign investments may
increase or decrease in value
depending on foreign exchange rates,
foreign political and economic
developments and U.S. and foreign laws
relating to foreign investments.
Many foreign securities are less
liquid and their prices are more
volatile than comparable U.S.
securities. From time to time foreign
securities may be difficult to
liquidate rapidly without adverse
price effects. The costs of foreign
investing also tend to be higher than
the costs of investing in domestic
securities. In addition, a number of
European countries have entered into
an economic and monetary union which
may have adverse effects on foreign
securities if the union does not take
effect as planned, if a country
withdraws from the union or if the
accounting and trading systems used by
the Fund do not recognize the new
currency adopted in the union.
You should be aware that you may lose money by investing in the Fund.
Because of the Fund's focus on value investing, it may not be a complete
investment program for the equity portion of your portfolio.
1
<PAGE> 4
IS THE FUND AN APPROPRIATE INVESTMENT FOR ME?
The Fund is suitable for long-term investors only. The Fund is not a
short-term investment vehicle. An investment in the Fund may be appropriate if:
- your goal is long-term capital growth;
- you want to allocate some portion of your long-term investments
to value investing;
- you do not require current income from this investment; and
- you are willing to accept short-term to intermediate-term
fluctuations in value to seek possible higher long-term returns.
PERFORMANCE INFORMATION
The performance information that follows gives some indication of the
risks of an investment in the Fund by comparing the Fund's performance with a
broad measure of market performance. Please remember that the Fund's past
performance does not reflect how the Fund may perform in the future.
1999 CALENDAR YEAR TOTAL RETURN
[GRAPH]
BEST AND WORST QUARTERLY RETURNS
<TABLE>
<CAPTION>
BEST WORST
<S> <C>
15.24% (14.35)%
(2nd quarter, 1999) (3rd quarter, 1999)
<CAPTION>
TOTAL RETURNS AS OF 12/31/99
1 YEAR
<S> <C>
Fund 0.23%
S&P 500 Index(1) 21.04%
Value Line Index(2) 0.22%
S&P 400 Midcap Index(3) 14.72%
</TABLE>
- ---------------------------
(1) The S&P 500 Index is an unmanaged, capitalization-weighted index generally
representative of the U.S. market for large capitalization stocks.
(2) The Value Line Index is an unmanaged, equally-weighted index which includes
1700 U.S. stocks.
2
<PAGE> 5
(3) The S&P 400 Midcap Index is an unmanaged, capitalization-weighted index
generally representative of the U.S. market for medium capitalization
stocks.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment)
<TABLE>
<S> <C>
Exchange Fee (1)......................................................................... $5.00
</TABLE>
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)(2)
<TABLE>
<S> <C>
Management Fees(3)....................................................................... 1.00%
Distribution and Service (12b-1) Fees(4)................................................. 0.25%
Other Expenses(3)........................................................................ 1.76%
Total Annual Fund Operating Expenses(3).................................................. 3.01%
Fee Waiver/Expense Reimbursement(3)...................................................... 1.51%
Net Expenses............................................................................. 1.50%
</TABLE>
- ------------
(1) If you exchange shares of the Fund for shares of the Firstar Money Market
Fund by telephone, you will be charged a $5 service fee.
(2) Fund operating expenses are deducted from Fund assets before computing the
daily share price or making distributions. As a result, they will not
appear on your account statement, but instead reduce the amount of total
return you receive.
(3) Until February 28, 2001, the Adviser has contractually agreed to waive its
management fee and/or reimburse the Fund's other expenses to the extent
necessary to ensure that the total annual operating expenses do not exceed
1.50% of its average net assets. After such date, the total operating
expense limitations may be terminated or revised at any time. Any waiver
or reimbursement is subject to later adjustment to allow the Adviser to
recoup amounts waived or reimbursed, including initial organization costs
of the Fund, to the extent actual fees and expenses for a period are less
than the expense limitation cap, provided, however, that the Adviser shall
only be entitled to recoup such amounts for a period of three years from
the date such amount was waived or reimbursed. For additional information,
see "Fund Management."
(4) Because Rule 12b-1 fees are paid out of the Fund's assets on an on-going
basis, over time these fees will increase the cost of your investment and
could cost long-term investors of the Fund more than other types of sales
charges. For more information, see "Distribution and Shareholder Servicing
Plan."
EXAMPLE
The following Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Please note that the one-year number
is based on the Fund's net expenses resulting from the expense cap agreement
described above. The three-, five- and ten-year numbers are based on the Fund's
expenses before any waiver or reimbursements. Although your actual costs may be
higher or lower, based on these assumptions your costs would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
$153 $798 $1,489 $3,439
</TABLE>
3
<PAGE> 6
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital growth.
HOW THE FUND INVESTS
The Fund seeks to achieve its investment objective by investing
primarily in common stocks of companies with medium market capitalizations. A
medium capitalization company would typically have a market capitalization of
between $500 million to $5 billion. Under normal circumstances, 50% or more of
the Fund's investments will consist of common stocks of medium capitalization
companies. The Fund may also invest in small capitalization companies with a
market capitalization of less than $500 million and, from time to time, large
capitalization companies with a market capitalization of more than $5 billion.
The Adviser generally follows a value approach to investing for the
Fund. Accordingly, the Fund will focus on securities of companies that the
Adviser believes are undervalued relative to their intrinsic worth and possess
certain characteristics that the Adviser believes will lead to a higher market
price over time. In identifying securities for the Fund, the Adviser uses a
number of proprietary and non-proprietary sources, including computerized
fundamental databases, brokerage and other industry contacts and on-premise
management interviews and site visits. In the research process, the Adviser
reviews certain attributes that it believes a security should have for the Fund
to invest in it, such as:
- Strong, shareholder-oriented management;
- Strong balance sheet and financial characteristics;
- Low price to earnings ratio;
- Low price to earnings growth (i.e., growth at a reasonable
current price);
- Low price to free cash flow ratio;
- Current price reflects substantial discount from the
liquidation or sale value of its underlying assets;
- Positive change in company and/or industry fundamentals; and
- Lack of following by a significant number of analysts or out
of favor.
The securities the Adviser selects typically possess some but not all of the
above attributes. Because of the Fund's focus on value investing, it may not be
a complete investment program for the equity portion of your portfolio.
The Fund has no minimum holding period for its investments and will
sell securities whenever the Adviser believes it is consistent with the Fund's
investment objective. The Fund typically sells a security when the Adviser
believes it has achieved its target price, shows deteriorating fundamentals or
falls short of the Adviser's expectations. The Fund will attempt to maximize
investment returns. Potential tax consequences to Fund shareholders will be a
secondary consideration when it sells securities. Investors may realize taxable
capital gains as a result of frequent trading of the Fund's assets and the Fund
incurs transaction costs in connection with buying and selling securities. Tax
and transaction costs lower the Fund's effective return for investors.
Under normal circumstances, the Fund expects to be substantially fully
invested in common stocks and other equity securities and will invest at least
65% of its total assets in common stocks and other equity securities. Other
equity securities will primarily be preferred stocks and depositary receipts.
Common stocks are units of ownership of a corporation. Preferred stocks are
stocks that often pay dividends at a specified rate and have preference over
common stocks in dividend payments and liquidation of assets. Some preferred
stocks may be convertible into common stock.
4
<PAGE> 7
In pursuing its investment objective, the Fund may invest up to 20% of
its total assets in American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs") or other foreign instruments. ADRs are receipts typically
issued by a U.S. bank or trust company evidencing ownership of the underlying
foreign security and denominated in U.S. dollars. EDRs are European receipts
evidencing a similar arrangement.
To respond to adverse market, economic, political or other conditions,
the Adviser may hold cash and/or invest all or a portion of the Fund's assets in
money market instruments, which are short-term fixed income securities issued by
private and governmental institutions. Money market instruments include:
- Commercial paper;
- Short-term U.S. government securities;
- Repurchase agreements;
- Banker's acceptances;
- Certificates of deposit;
- Time deposits; and
- Other short-term fixed income securities.
If these temporary, defensive strategies are used, it is impossible to predict
when or for how long the Adviser may employ these strategies for the Fund. To
the extent the Fund engages in this temporary, defensive strategy, the Fund may
not achieve its investment objective.
The Fund may invest up to 25% of its total assets in fixed income
securities and, pending investment or to pay redemption requests and expenses of
the Fund, the Fund may hold a portion of its assets in short-term money market
securities and cash. The Fund may also invest a limited amount of assets in
illiquid securities. See the Fund's SAI for additional information.
FUND MANAGEMENT
ADVISER
The Fund has entered into an Investment Advisory Agreement with the
Adviser under which the Adviser manages the Fund's investments and business
affairs, subject to the supervision of the Fund's Board of Directors. The
Adviser, 621 Washington Street, Columbus, Indiana 47201, is an Indiana limited
liability company and has been serving clients since 1975. As of December 31,
1999, the Adviser managed approximately $520.9 million for individual and
institutional clients. Under the Investment Advisory Agreement, the Fund pays
the Adviser an annual management fee of 1.00% of the Fund's average daily net
assets. The advisory fee is accrued daily and paid monthly. Until December 31,
1999, the Adviser waived its management fee and reimbursed the Fund's other
expenses so that the Fund's total operating expenses (on an annual basis) did
not exceed 1.50% of its average daily net assets. Until February 28, 2001, the
Adviser has contractually agreed to continue to waive its management fee and/or
reimburse the Fund's other expenses to the extent necessary to ensure that the
Fund's total annual operating expenses do not exceed 1.50% of its average daily
net assets. After such time, the Adviser may voluntarily waive all or a portion
of its management fee and/or reimburse all or a portion of Fund operating
expenses. The Adviser will waive fees and/or reimburse expenses on a monthly
basis and the Adviser will pay the Fund by reducing its fee. Any waivers or
reimbursements will have the effect of lowering the overall expense ratio for
the Fund and increasing its overall return to investors at the time any such
amounts were waived and/or reimbursed. Any such waiver or reimbursement is
subject to later adjustment during the term of the Investment Advisory Agreement
to allow the Adviser to recoup amounts waived or reimbursed, including initial
organization costs of the Fund, provided, however, that the Adviser shall only
be entitled to recoup such amounts for a period of three years from the date
such amount was waived or reimbursed.
5
<PAGE> 8
Under the Investment Advisory Agreement, not only is the Adviser
responsible for management of the Fund's assets, but also for portfolio
transactions and brokerage.
PORTFOLIO MANAGERS. The Fund will be managed on a team basis, with the
following individuals acting as leaders of the team:
MARK D. FOSTER. Chief Investment Officer of the Adviser, Mr. Foster
received a Bachelor of Science degree in finance from Ball State University in
1979. Prior to joining the Adviser, Mr. Foster managed equity investments for
Merchants Investment Counseling, Inc. Mr. Foster joined the Adviser in 1987 as a
portfolio manager and has served in his current position since 1997. Mr. Foster
is a Chartered Financial Analyst.
GREGG T. SUMMERVILLE. Chief Investment Strategist of the Adviser, Mr.
Summerville earned a Bachelor of Arts and Masters of Business Administration in
finance from Indiana University in 1969 and 1972, respectively. Prior to joining
the Adviser, Mr. Summerville was an analyst and later a portfolio manager for
Mellon Bank and worked for Cummins Engine Company where he researched securities
for that company's pension fund. Mr. Summerville joined the Adviser as a
portfolio manager in 1981 and has served in his present position since 1990. Mr.
Summerville is a Chartered Financial Analyst.
CUSTODIAN
Firstar Bank, N.A., Third Floor, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, acts as custodian of the Fund's assets.
TRANSFER AGENT AND ADMINISTRATOR
Firstar Mutual Fund Services, LLC, Third Floor, 615 East Michigan
Street, Milwaukee, Wisconsin 53202 acts as transfer agent for the Fund (the
"Transfer Agent") and as the Fund's administrator.
DISTRIBUTOR
Rafferty Capital Markets, Inc., 1311 Mamaroneck Avenue, White Plains,
New York 10605, a registered broker-dealer and member of the National
Association of Securities Dealers, Inc., acts as distributor of the Fund's
shares (the "Distributor").
HOW TO PURCHASE SHARES
Shares of the Fund may be purchased at net asset value (as described
below) through any dealer which has entered into a sales agreement with the
Distributor, in its capacity as principal underwriter of shares of the Fund, or
through the Distributor directly. The Transfer Agent may also accept purchase
applications.
Payment for Fund shares should be made by check or money order in U.S.
dollars drawn on a U.S. bank, savings and loan or credit union. The minimum
initial investment in the Fund is $25,000. Subsequent investments of at least
$1,000 may be made by mail or by wire. For investors using the Automatic
Investment Plan, as described below, the minimum investment is $5,000 with a
minimum monthly investment of $250. These minimums can be changed or waived by
the Fund at any time. Shareholders will be given at least 30 days' notice of any
increase in the minimum dollar amount of subsequent investments.
NET ASSET VALUE
Shares of the Fund are sold on a continual basis at the net asset value
per share next computed following receipt of an order in proper form (as
described below under "Initial Investment" and "Subsequent Investment") by a
dealer, the Distributor or the Transfer Agent, as the case may be. Net asset
value per share is calculated once daily as of the close of trading (currently
4:00 p.m., Eastern Standard Time) on each day the New York Stock Exchange (the
"NYSE") is open. See "Valuation of Fund Shares."
6
<PAGE> 9
INITIAL INVESTMENT - MINIMUM $25,000
You may purchase Fund shares by completing the enclosed shareholder
application and mailing it and a check or money order payable to "Kirr, Marbach
Partners Funds, Inc." to your securities dealer, the Distributor or the Transfer
Agent, as the case may be. The minimum initial investment is $25,000. If mailing
to the Distributor or Transfer Agent, please send to the following address:
Firstar Mutual Fund Services, LLC, P.O. Box 701, Milwaukee, Wisconsin
53201-0701. In addition, overnight mail should be sent to the following address:
Kirr, Marbach Partners Funds, Inc., Firstar Mutual Fund Services, LLC, Third
Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202. The Fund does not
consider the U.S. Postal Service or other independent delivery services to be
its agents. Therefore, deposit in the mail or with such services, or receipt at
the Transfer Agent's post office box, of purchase applications does not
constitute receipt by the Transfer Agent or the Fund. Do not mail letters by
overnight courier to the post office box.
If the securities dealer you have chosen to purchase Fund shares
through has not entered into a sales agreement with the Distributor, such dealer
may, nevertheless, offer to place your order for the purchase of Fund shares.
Purchases made through such dealers will be effected at the net asset value next
determined after receipt by the Fund of the dealer's order to purchase shares.
Such dealers may also charge a transaction fee, as determined by the dealer.
That fee may be avoided if shares are purchased through a dealer who has entered
into a sales agreement with the Distributor or through the Transfer Agent.
If your check does not clear, you will be charged a $20 service fee.
You will also be responsible for any losses suffered by the Fund as a result.
Neither cash nor third-party checks will be accepted. All applications to
purchase Fund shares are subject to acceptance by the Fund and are not binding
until so accepted. The Fund reserves the right to decline or accept a purchase
order application in whole or in part.
WIRE PURCHASES
You may also purchase Fund shares by wire. The following instructions
should be followed when wiring funds to the Transfer Agent for the purchase of
Fund shares:
Wire to: Firstar Bank, N.A.
ABA Number: 075000022
Credit: Firstar Mutual Fund Services, LLC
Account: 112-952-137
Further Credit: Kirr, Marbach Partners Funds, Inc.
(shareholder account number)
(shareholder name/account registration)
Please call 1-800-870-8039 prior to wiring any funds to notify the
Transfer Agent that the wire is coming and to verify the proper wire
instructions so that the wire is properly applied when received. The Fund is not
responsible for the consequences of delays resulting from the banking or Federal
Reserve wire system.
TELEPHONE PURCHASES
The telephone purchase option allows investors to make subsequent
investments directly from a bank checking or savings account. To establish the
telephone purchase option on your account, complete the appropriate section in
the shareholder application. Only bank accounts held at domestic financial
institutions that are Automated Clearing House ("ACH") members may be used for
telephone transactions. This option will become effective approximately 15
business days after the application form is received by the Transfer Agent.
Purchases must be in amounts of $1,000 or more and may not be used for initial
purchases of the Fund's shares. To have Fund shares purchased at the offering
price determined at the close of regular trading on a given date, the Transfer
Agent must receive both your purchase order and payment by Electronic Funds
Transfer through the ACH system prior to the close of regular trading on such
date. Most transfers are completed within one business day. Subsequent
investments may be made by calling 1-800-870-8039.
7
<PAGE> 10
PURCHASING SHARES THROUGH FINANCIAL INTERMEDIARIES
If you purchase shares through a financial intermediary (such as a
broker-dealer), certain features of the Fund relating to such transactions may
not be available or may be modified. In addition, certain operational policies
of the Fund, including those related to settlement and dividend accrual, may
vary from those applicable to direct shareholders of the Fund and may vary among
intermediaries. You should consult your financial intermediary for more
information regarding these matters. Certain financial intermediaries may charge
you transaction fees for their services. You will not be charged such fees
directly by the Fund if you purchase your Fund shares directly from the Fund
without the intervention of a financial intermediary. The Fund may, however,
compensate financial intermediaries for assistance under the Fund's Distribution
and Shareholder Service Plan (i.e., Rule 12b-1 plan) or otherwise.
AUTOMATIC INVESTMENT PLAN - MINIMUM $5,000
The Automatic Investment Plan ("AIP") allows you to make regular,
systematic investments in the Fund from your bank checking or NOW account. The
minimum initial investment for investors using the AIP is $5,000 with a monthly
minimum investment of $250. To establish the AIP, complete the appropriate
section in the shareholder application. You should consider your financial
ability to continue in the AIP until the minimum initial investment amount is
met because the Fund has the right to close an investor's account for failure to
reach the minimum initial investment. For additional information on the AIP,
please see the SAI.
INDIVIDUAL RETIREMENT ACCOUNTS
You may invest in the Fund by establishing a tax-sheltered individual
retirement account ("IRA"). The Fund offers the Traditional IRA and Roth IRA.
For additional information on IRA options, please see the SAI.
SUBSEQUENT INVESTMENTS - MINIMUM $1,000
Additions to your account may be made by mail or by wire. Any
subsequent investment must be for at least $1,000. When making an additional
purchase by mail, enclose a check payable to "Kirr, Marbach Partners Funds,
Inc." and the Additional Investment Form provided on the lower portion of your
account statement. To make an additional purchase by wire, please call
1-800-870-8039 for complete wiring instructions.
HOW TO REDEEM SHARES
IN GENERAL
Investors may request redemption of part or all of their Fund shares at
any time at the next determined net asset value. See "Valuation of Fund Shares."
No redemption request will become effective until a redemption request is
received in proper form (as described below) by the Transfer Agent. An investor
should contact the Transfer Agent for further information concerning redemption
of Fund shares. The Fund normally will mail your redemption proceeds the next
business day and, in any event, no later than seven days after receipt of a
redemption request in good order. However, when a purchase has been made by
check, the Fund may hold payment on redemption proceeds until it is reasonably
satisfied that the check has cleared, which may take up to 12 days. Redemptions
may be made by written request, telephone or wire. You may also redeem Fund
shares using the Fund's exchange privilege, as discussed in the SAI.
Redemptions may also be made through brokers or dealers. Such
redemptions will be effected at the net asset value next determined after
receipt by the Fund of the broker or dealer's instruction to redeem shares. Some
brokers or dealers may charge a fee in connection with such redemptions.
Investors who have an Individual Retirement Account must indicate on
their redemption requests whether or not federal income tax should be withheld.
Redemption requests failing to make an election will be subject to withholding.
8
<PAGE> 11
Your account may be terminated by the Fund on not less than 30 days'
notice if, at the time of any redemption of shares in your account, the value of
the remaining shares in the account falls below $25,000. Upon any such
termination, a check for the proceeds of redemption will be sent to you within
seven days of the redemption.
WRITTEN REDEMPTION
For most redemption requests, an investor need only furnish a written,
unconditional request to redeem his or her shares at net asset value to the
Transfer Agent: Firstar Mutual Fund Services, LLC, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701. Overnight mail should be sent to Kirr, Marbach Partners
Funds, Inc., Firstar Mutual Fund Services, LLC, Third Floor, 615 East Michigan
Street, Milwaukee, Wisconsin 53202. Requests for redemption must (i) be signed
exactly as the shares are registered, including the signature of each owner, and
(ii) specify the number of shares or dollar amount to be redeemed. Redemption
proceeds made by written redemption request may also be wired to a commercial
bank that you have authorized on your account application. The Transfer Agent
will charge a $12 service fee for wire transactions. Additional documentation
may be requested from corporations, executors, administrators, trustees,
guardians, agents or attorneys-in-fact. The Fund does not consider the U.S.
Postal Service or other independent delivery services to be its agents.
Therefore, deposit in the mail or with such services, or receipt at the Transfer
Agent's post office box of redemption requests does not constitute receipt by
the Transfer Agent or the Fund. Do not mail letters by overnight courier to the
post office box. Any written redemption requests received within 15 days after
an address change must be accompanied by a signature guarantee.
TELEPHONE REDEMPTION
Shares of the Fund may also be redeemed by calling the Transfer Agent
at 1-800-870-8039. Redemption requests by telephone are available for
redemptions of $1,000 or more. Redemption requests for less than $1,000 must be
in writing. In order to utilize this procedure, an investor must have previously
elected this option in writing, which election will be reflected in the records
of the Transfer Agent, and the redemption proceeds must be mailed directly to
the investor or transmitted to the investor's predesignated account via wire or
ACH transfer. Funds sent via ACH are automatically credited to your account
within three business days. There is currently no charge for this service. To
change the designated account, send a written request with signature(s)
guaranteed to the Transfer Agent. To change the address, call the Transfer Agent
or send a written request with signature(s) guaranteed to the Transfer Agent.
Additional documentation may be requested from corporations, executors,
administrators, trustees, guardians, agents or attorneys-in-fact. No telephone
redemption requests will be allowed within 15 days of such a change. The Fund
reserves the right to limit the number of telephone redemptions by an investor.
Once made, telephone redemptions may not be modified or canceled.
The Transfer Agent will use reasonable procedures to ensure that
instructions received by telephone are genuine. These procedures may include
requiring some form of personal identification prior to acting upon telephone
instructions, recording telephonic transactions and/or sending written
confirmation of such transactions to investors. Assuming procedures such as the
above have been followed, neither the Fund nor the Transfer Agent will be liable
for any loss, cost or expense for acting upon an investor's instructions or for
any unauthorized telephone redemption. The Fund reserves the right to refuse a
telephone redemption request if so advised.
REDEEMING SHARES THROUGH FINANCIAL INTERMEDIARIES
If you redeem shares through a financial intermediary (such as a
broker-dealer), such financial intermediary may charge you transaction fees for
their services. You will not be charged such fees if you redeem your Fund shares
directly through the Fund without the intervention of a financial intermediary.
SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") allows you to make automatic
withdrawals from your account at regular intervals. Redemptions for the purpose
of satisfying such withdrawals may reduce or even exhaust your account. If the
amount remaining in your account is not sufficient to make a SWP payment, the
remaining amount will be redeemed and the SWP will be terminated. Please see the
SAI for more information.
9
<PAGE> 12
SIGNATURE GUARANTEES
Signature guarantees are required for: (i) redemption requests to be
mailed or wired to a person other than the registered owner(s) of the shares;
(ii) redemption requests to be mailed or wired to other than the address that
appears of record and (iii) any redemption request if a change of address has
been received by the Fund or the Transfer Agent within the last 15 days. A
signature guarantee may be obtained from any eligible guarantor institution, as
defined by the SEC. These institutions include banks, saving associations,
credit unions, brokerage firms and others. Please note that a notary public
stamp or seal is not acceptable.
REDEMPTION IN KIND
The Fund has reserved the right to redeem in kind (i.e., in securities)
any redemption request during any 90-day period in excess of the lesser of: (i)
$250,000 or (ii) 1% of the Fund's net asset value being redeemed. Please see
the SAI for more information.
MONEY MARKET EXCHANGE
The Fund has established a program which permits Fund shareholders to
exchange Fund shares for shares of the Firstar Money Market Fund. This exchange
privilege is a convenient way to buy shares in a money market fund in order to
respond to changes in your goals or in market conditions. Please see the SAI for
more information on the exchange privilege.
VALUATION OF FUND SHARES
Net asset value for the Fund is calculated by taking the value of the
Fund's total assets, including interest or dividends accrued, but not yet
collected, less all liabilities, and dividing by the total number of shares
outstanding. The result, rounded to the nearest cent, is the net asset value per
share. The net asset value per share is determined as of the close of regular
trading (generally 4:00 p.m. Eastern Standard Time) on each day the NYSE is open
for business. Net asset value is not determined on days the NYSE is closed. The
price at which a purchase order or redemption request is effected is based on
the next calculation of net asset value after the order is placed. The Fund's
net asset value may not be calculated on days during which the Fund receives no
orders to purchase shares and no shares are tendered for redemption. In
determining net asset value, expenses are accrued and applied daily and
investments for which market quotations are readily available are valued at
market value. Any investments for which market quotations are not readily
available are valued at fair value as determined in good faith by the Board of
Directors of the Fund.
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Fund has adopted a plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "12b-1 Plan"), which authorizes it to pay
the Distributor and certain financial intermediaries (such as broker-dealers)
who assist in distributing Fund shares or who provide shareholder services to
Fund shareholders a distribution and shareholder servicing fee of up to 0.25% of
its average daily net assets (computed on an annual basis). To the extent
expenses are incurred under the 12b-1 Plan, the 12b-1 Plan has the effect of
increasing the Fund's expenses from what they would otherwise be. Because Rule
12b-1 fees are paid out of the Fund's net assets on an on-going basis, over time
these fees will increase the cost of your investment and could cost long-term
investors of the Fund more than paying other types of sales charges. For
additional information on the 12b-1 Plan, please see the SAI.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
For federal income tax purposes, all dividends paid by the Fund and
distributions of net realized short-term capital gains are taxable as ordinary
income whether reinvested or received in cash unless you are exempt from
taxation or entitled to a tax deferral. Distributions paid by a Fund from net
realized long-term capital gains, whether received in cash or reinvested in
additional shares, are taxable as a capital gain. The capital gain holding
period (and the applicable tax rate) is determined by the length of time the
Fund has held the security and not the length of time you have held shares in
the Fund. The Fund expects that, because of its investment objective, its
distributions will consist primarily of long- and short-term capital gains.
Investors are informed annually as to the amount and nature of all dividends and
10
<PAGE> 13
capital gains paid during the prior year. Such capital gains and dividends may
also be subject to state or local taxes. If you are not required to pay taxes on
your income, you are generally not required to pay federal income taxes on the
amounts distributed to you.
The Fund intends to pay dividends and distribute capital gains, if any,
at least annually. When a dividend or capital gain is distributed, the Fund's
net asset value decreases by the amount of the payment. If you purchase shares
shortly before a distribution, you will be subject to income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) remains the same. All dividends and capital gains distributions will
automatically be reinvested in additional Fund shares at the then prevailing net
asset value unless an investor specifically requests that either dividends or
capital gains or both be paid in cash. An investor may change an election by
telephone, subject to certain limitations, by calling the Transfer Agent at
1-800-870-8039.
Investors requesting to have dividends and/or capital gains paid in
cash may choose to have such amounts mailed or sent via electronic funds
transfer ("EFT"). Transfers via EFT generally take up to three business days to
reach the investor's bank account.
If an investor elects to receive distributions and dividends by check
and the post office cannot deliver such check, or if such check remains uncashed
for six months, the Fund reserves the right to reinvest the distribution check
in the shareholder's account at the Fund's then current net asset value per
share and to reinvest all subsequent distributions in shares of the Fund.
If you do not furnish the Fund with your correct social security number
or taxpayer identification number, the Fund is required by federal law to
withhold federal income tax from your distributions and redemption proceeds at a
rate of 31%.
An exchange of Fund shares for shares pursuant to the Fund's exchange
privilege is treated the same as an ordinary sale and purchase for federal
income tax purposes and you will realize a capital gain or loss. An exchange is
not a tax-free transaction.
This section is not intended to be a full discussion of federal income
tax laws and the effect of such laws on you. There may be other federal, state
or local tax considerations applicable to a particular investor. You are urged
to consult your own tax advisor.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the period from December 31, 1998 (commencement
of operations) to September 30, 1999. Certain information reflects financial
results for a single Fund share. The total returns in the table represent the
rate that an investor would have earned on an investment in the Fund for the
stated period (assuming reinvestment of all dividends and distributions). This
information has been audited by KPMG LLP, whose report, along with the Fund's
financial statements, are included in the Fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
Per share data:
<S> <C> <C>
Net asset value, beginning of period.................................................... $10.00
Income from investment operations:
Net investment income................................................................... 0.04
Net realized and unrealized gain on investments......................................... (0.13)
------
Total from investment operations........................................................ (0.09)
------
Net asset value, end of period.......................................................... $9.91
=====
Total return................................................................................. (0.90)%(1)
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
Supplemental data and ratios:
<S> <C> <C>
Net assets, end of period............................................................... $18,172,971
Ratio of expenses to average net assets:
Before expense reimbursement.......................................................... 3.01%(2)
After expense reimbursement........................................................... 1.50%(2)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement.......................................................... (0.76)%(2)
After expense reimbursement........................................................... 0.75%(2)
Portfolio turnover rate................................................................. 77.79%
</TABLE>
- ------------
(1) Not annualized.
(2) Annualized.
12
<PAGE> 15
<TABLE>
<CAPTION>
DIRECTORS CUSTODIAN
<S> <C>
Mark D. Foster FIRSTAR BANK, N.A.
Mickey Kim Third Floor
Jeffrey N. Brown 615 E. Michigan Street
Mark E. Chesnut Milwaukee, Wisconsin 53202
John F. Dorenbusch
ADMINISTRATOR, TRANSFER AGENT
PRINCIPAL OFFICERS AND DIVIDEND-DISBURSING AGENT
Mark D. Foster, President FIRSTAR MUTUAL FUND SERVICES, LLC
Mickey Kim, Vice President, Treasurer and Secretary Third Floor
615 E. Michigan Street
INVESTMENT ADVISER Milwaukee, Wisconsin 53202
KIRR, MARBACH & COMPANY, LLC INDEPENDENT ACCOUNTANTS
621 Washington Street
Columbus, Indiana 47201 KPMG LLP
303 E. Wacker Drive
DISTRIBUTOR Chicago, Illinois 60601
RAFFERTY CAPITAL MARKETS, INC. LEGAL COUNSEL
1311 Mamaroneck Avenue
White Plains, New York 10605 GODFREY & KAHN, S.C.
780 N. Water Street
Milwaukee, Wisconsin 53202
</TABLE>
The SAI for the Fund contains additional information about the Fund.
Additional information about the Fund's investments is contained in the Fund's
annual and semi-annual reports to shareholders. The Fund's annual report
provides a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the last fiscal year. The
Fund's SAI, which is incorporated by reference into this Prospectus, annual
reports and semi-annual reports are available without charge upon request to the
address or toll-free telephone number noted on the cover page of this
Prospectus. These documents may also be obtained from certain financial
intermediaries, including the Fund's Distributor, who purchase and sell Fund
shares. Shareholder inquiries and requests for other information about the Fund
can be directed to the Fund at the address and toll-free telephone number on the
cover page of this Prospectus.
Information about the Fund (including the SAI) can be reviewed and
copied at the SEC's Public Reference Room in Washington, D.C. Please call the
SEC at 1-202-942-8090 for information relating to the operation of the Public
Reference Room. Reports and other information about the Fund are available on
the EDGAR Database on the SEC's Internet site at http://www.sec.gov or upon
payment of a duplicating fee, by emailing or writing the Public Reference Room
of the SEC at [email protected] or Washington, D.C. 20549-0102.
The Fund's 1940 Act File Number is 811-9067.
13
