PROSPECTUS
FIRSTMARK PARTNERS
CONTRARIAN VALUE FUND
808 South 74th Plaza Suite #113
Omaha, Nebraska 68114-4666
(402) 391-3375
February 10, 1999
THE FUND AND INVESTMENT OBJECTIVE
Contrarian Value Fund (the "Fund") is a non-diversified series of Firstmark
Partners (the "Trust"), an open-end management investment company. The Trust
was organized in Delaware as a business trust and may offer shares of beneficial
interest in a number of separate series, each series representing a distinct
fund with its own investment objectives and policies. At present, there is only
one series authorized by the Trust, which series has been designated as the
Contrarian Value Fund. The Fund's primary investment objective is to seek
capital appreciation by primarily investing in a core portfolio of 20-30 common
stocks which the Fund's adviser believes to be undervalued in the marketplace.
Receipt of income is a secondary objective, as some investments may yield
dividends, interest or other income.
FUND SHARE PURCHASE
Capital shares of the Fund may be purchased directly at net asset value as next
determined after receipt of order. The Board of Trustees has established $5,000
as the minimum initial purchase. Subsequent investments in the Fund must be at
least $500. Lower minimums may be available to investors purchasing shares of
the Fund through certain brokerage firms.
ADDITIONAL INFORMATION
This Prospectus, which should be held for future reference, is designed to set
forth concisely the information that you should know before you invest. A
"Statement of Additional Information" containing more information about the Fund
has been filed with the Securities and Exchange Commission. Such Statement is
dated February 10, 1999 and has been incorporated by reference into the
Prospectus. A copy of the Statement may be obtained without charge, by writing
to the Fund or by calling the telephone number shown above.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any State Securities Commission, not has the
Securities and Exchange Commission or any State Securities Commission passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contray is a criminal offense.
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TABLE OF CONTENTS
ABOUT THE FUND
Fund Expenses 3
The Fund 4
Investment Objective 4
Risk Factors 4
Security Selection Criteria 5
Investment Strategy and Practices 5
Portfolio Turnover Policy 6
Non-Diversification Policy 6
Temporary Defensive Position 6
Repurchase Agreements 7
Tax Status 7
Investment Restrictions 7
MANAGEMENT OF THE FUND
Investment Adviser 8
Advisory Fee 9
Fund Administration 9
Advisory and Administration Agreements 9
Management of the Fund 10
Remuneration of Officers and Trustees 11
Organization and Capital Structure 11
INVESTING IN THE FUND
Pricing of Shares 12
Purchase of Shares and Reinvestment 12
Redemption of Shares 13
Retirement Plans 14
Brokerage 14
Shareholders Meetings 14
Reports to Shareholders 14
OTHER FUND INFORMATION
Custodian and Transfer Agent 14
Auditors 15
Legal Opinion 15
Litigation 15
Additional Information 15
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FUND EXPENSES
Set forth below is a table containing information regarding the annual expenses
which may be incurred by the Fund. The purpose of this table is to assist an
investor in understanding the various costs and expenses that a shareholder in
the Fund will bear directly or indirectly.
Shareholder Transaction Expenses:
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Loads None
Redemption Fees None
Exchange Fees None
IRA Trustee Fees None
Annualized Fund Operating Expenses:
Management Fees 1.25%
12b-1 Fees None
Other Expenses* 0.50%
Total Operating Expenses 1.75%
The Fund and the Investment Adviser may enter into arrangements with brokerage
firms and financial institutions under which shares of the Fund may be purchased
or sold. Investors may be charged a transaction fee if they effect transactions
in Fund shares through a broker or agent.
*Fees payable under the Administration Agreement between the Fund and the
Investment Adviser are fixed at 0.50% of the Fund's average daily net assets.
The following is an example that illustrates the expenses paid on a $1,000
investment over various time periods assuming (a) 5% annual rate of return and
(b) redemption at the end of each time period. This example should not be
considered a representation of past or future expenses or performance. Actual
expenses may be greater or less than those shown.
1 Year 3 Years
$18 $55
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THE FUND
Contrarian Value Fund (the "Fund") is an open-end, non-diversified portfolio
of Firstmark Partners (the "Trust"). The Trust was organized on November 12,
1998 as a Delaware business trust and is authorized to issue an indefinite
number of shares of beneficial interest. The Trust's registered office is 1209
Orange Street, Wilmington, Delaware 19801. Mail may be addressed to Trust's
principal executive office at 808 South 74th Plaza Suite #113, Omaha, Nebraska
68114-4666.
INVESTMENT OBJECTIVE
Contrarian Value Fund's primary objective is to seek capital appreciation
through investment in common stocks. The Fund seeks to accomplish this bjective
by primarily investing in a core portfolio of 20-30 common stocks which the
Fund's adviser believes to be undervalued in the marketplace. Under normal
circumstances, the Fund pursues its objective by investing in common stocks
selected primarily for their capital appreciation potential. However, the
Fund may reduce its commitment to common stocks when, in the opinion of the
Adviser, investment considerations warrant such action. Receipt of income is a
secondary objective, as some investments may yield dividends, interest or other
income. Potential investors should be aware that risks exist in all types of
investments and there can be no assurance that the Fund will be successful in
achieving its investment objectives.
RISK FACTORS
Generally: Risks associated with the Fund's performance will be those due to
broad market declines along with business and financial risks from difficulties
which occur to particular companies while in the Fund's portfolio. It therefore
must be realized, as is true of almost all general common stock funds, the two
most fundamental risks associated with the Fund, are poor stock selection by the
Adviser, and the risk that the value of the common stocks it holds might
decrease in value.
Non-Diversification: The Fund will be operated as a non-diversified investment
company which means it may invest a relatively high percentage of its assets in
a limited number of common stocks. As a result, the gains or losses on a single
stock will have a greater impact on the Fund's Net Asset Value (NAV).
Therefore, the Fund's shares may be more susceptible to adverse change in value
than would be the shares of a diversified investment company. The policy of the
fund, as stated above, is therefore one of selective investments rather than
broad diversification. The fund is not intended to be a complete investment
program on its own.
Lack of Operating History and Experience: Firstmark Partners (and its first
series, the Contrarian Value Fund) is a newly organized investment company
with no history of operations. None of the principals, officers, or directors
of the investment adviser, Firstock Financial Services, Inc., have ever
registered, operated, or supervised the operations of investment companiesin the
past, and there is no assurance that there past business experiences will enable
them to successfully manage the assets of the Fund in the future.
Reliance on Technical Analysis: Although the Adviser's investment strategy
utilizes both fundamental as well as technical analysis, the Adviser places
greater emphasis on the use of technical analysis than it does fundamental
analysis. In the opinion of the Adviser, one of the advantages of technical
analysis is that it may be possible to draw logical conclusions about the
future value of a security with only limited access to fundamental facts. Yet,
the Adviser also acknowledges, one of the disadvantages of technical analysis is
that it may never offer more than a set of possibilities, or probabilities at
best, about the future value of a security, neither of which may be correct.
There can be no assurance that the Adviser will be successful in its application
of its technical analysis techniques or strategies while using them in trying to
achieve the funds objective.
Definitions of Fundamental and Thecnical Analysis: According to Barron's
Dictionary of Finance and Investment Terms, fundamental analysis is "analysis of
the balance sheet and income statements of companies in order to forecast their
future stock price movements. Fundamental analysts consider past records of
assets, earnings, sales, products, management and markets in predicting future
trends in these indicators of a company's success of failure." technical
analysis is defined as "research into the demand and supply for securities
and commodities based on trading volume and price studies. Technical analysts
use charts or computer programs to identify and project price trends in a
market, security or commodity future. Most analysis is done for short- or
intermediate-term, but some technicians also predict long-term cycles based on
charts and other data. Unlike FUNDAMENTAL ANALYSIS, technical analysis is not
concerned with the financial position of a company."
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SECURITY SELECTION CRITERIA
The Fund, under normal circumstances, will primarily invest in, but is not
limited to, those common stocks contained in the Standard & Poors 500 Composite
Index (S&P500). The index generally tracks 400 industrial company stocks, 20
transportation stocks, 40 financial company stocks, and 40 public utilities.
This index is dynamic and changes over time. The inclusion of stocks in the
index and the publication of the index itself are services of the Standard &
Poors Corporation.
In selecting investments for the Fund, the Adviser will use both fundamental and
technical analysis in its analysis of possible securities to be considered for
purchase. Although the Adviser uses both fundamental and technical analysis
in determining what stocks to buy, the decision of when to buy a stock
is based soley on technical analysis. Therefore, under normal circumstances,
a stock will not be considered for purchase if, in the opinion of the Adviser,
the stock does not show favorable technical characteristics.
INVESTMENT STRATEGY AND PRACTICES
The Adviser pursues a flexible investment strategy in the selection of
securities, not limited to any particular investment sector, industry or company
size. The Adviser uses a disciplined approach to stock selection to help it
attempt to identify companies whose stocks are, in the opinion of the Adviser,
either undervalued or currently mispriced in the marketplace. The Adviser's
assessment of a company's stock that may be out of favor may differ from the
investment approach followed by other mutual funds. To some extent, during
periods of above average market volatility, the Fund may buy or sell stock or
other securities seeking short term capital appreciation.
Stock selections are made in part based on the Adviser's opinion regarding the
future appreciation and sustainability of a company's stock price. Under normal
circumstances, the portfolio will consist of between 20 and 30 stocks.
Generally, it is the intent of the Fund, to have each stock position represent
between four and five percent of the Fund's total net assets at the time of
purchase.
The Adviser continually reviews investment alternatives and may implement
portfolio changes as more attractive investment opportunities become available.
If a company's stock price appreciates to a level that, in the opinion of the
Adviser, appears not sustainable, the position is generally sold to realize the
existing profits and avoid a potential price correction. If the Adviser
identifies a new stock that it considers to be a better investment than a
current holding, the Adviser will generally consider selling the current holding
to add the new stock. The Adviser anticipates the Fund's portfolio generally
will be fully invested in common stocks. However, the fund may reduce its
commitment to common stocks when in the opinion of the Adviser, investment
considerations warrant such action.
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Under normal circumstances, technical analysis is the primary methodology used
by the Adviser in determining when a stock should be sold. However, once a
position has, in the opinion of the Adviser, appreciated substantially, the
Adviser may, under normal circumatances, place a "sell stop" order, at the
discretion of the Adviser, somewhere below the current market price of the stock
as a way of protecting the gain already in the position. Should the value of
the stock continue to appreciate, the "sell stop" may by raised accordingly at
the discretion of the Adviser. Any position that has declined 10% from its
original purchase price is re-examined and may be considered as a potential sale
candidate.
PORTFOLIO TURNOVER POLICY
The annual rate of portfolio turnover for the Fund is unknown since the fund has
no operating history and therefore no actual portfolio turnover rate presently
exists. The Fund's investment adviser expects to actively trade the portfolio
in pursuit of the Fund's investment objective and investments may be sold
without regard to length of time the Fund has held a position when, in the
opinion of the investment adviser, investment considerations warrant such
action. Although the Fund cannot accurately predict its portfolio turnover
rate, it is not expected to exceed 150%, wherein turnover is computed by
dividing the lesser of the Fund's total purchases or sales of securities within
the period by the average monthly portfolio value of the Fund during such
period. There are no limits on the rate of portfolio turnover. Higher
portfolio turnover rates, rates in excess of 100%, and short-term trading may
result in higher brokerage costs to the Fund and may result in the acceleration
of net taxable capital gains to shareholders.
NON-DIVERSIFICATION POLICY
The Fund is classified as being non-diversified which means that it may not
invest more than 25% of its assets in the securities of any one issuer and, with
respect to 50% of its total assets, the Fund may not invest more than 5% of its
total assets in the securities of any one issuer. Thus, the Fund may invest up
to 25% of its total assets in the securities of each of any two issuers.
However, under normal circumstances, the Fund anticipates maintaining a
portfolio, of between 20 and 30 approximately equally weighted positions. The
Fund, therefore, may be more susceptible to risk of loss than a more widely
diversified fund as a result of a single business, economic, political, or
regulatory occurrence. The policy of the Fund, in the hope of achieving its
objective as stated above, is therefore one of selective investments rather than
broad diversification. The Fund seeks only enough diversification to maintain
its federal non-taxable status under Sub-Chapter M of the Internal Revenue Code.
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TEMPORARY DEFENSIVE POSITION
When, in the judgement of the Adviser, market conditions a temporary defensive
posture, the Fund may invest up to 100% of its assets in short-term debt
securities and money market instruments, including securities issued by the U.S.
Government, its agencies or instrumentalities and repurchase agreements secured
thereby, commercial paper, certificates of deposit bank or savings and loan
association interest-bearing demand accounts. The adoption of such defensive
position does not constitute a change in the Fund's investment objective.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements. Repurchase agreements are
transactions in which the Fund purchases securities and commits to sell the
securities to the original seller (a member bank of the Federal Reserve System
or securities dealers who are members of a national securities exchange or are
market makers in U.S. Government securities) at an agreed upon date and price
reflecting a market rate of interest unrelated to the coupon rate or maturity of
the purchased securities. Repurchase agreements offer a means of generation
income from excess cash the Fund might otherwise hold un invested. Repurchase
agreements carry certain risks not associated with direct investments in
securities. Delays in payment or losses could result if the other party to the
agreement defaults or becomes bankrupt.
TAX STATUS
Under the provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as
amended, the Fund intends to pay out substantially all of its investment income
and realized capital gains. As a result, the Fund intends to be relieved of
federal income tax on the amounts distributed to shareholders. In order to
qualify as a "regulated investment company" under Sub-Chapter M, at least 90% of
the Fund's income must be derived from dividends, interest, and gains from
securities transactions. No more than 50% of the Fund assets may be held in
security holdings that exceed 5% of the total assets of the Fund at time of
purchase. Distribution of any net long-term capital gains realized by the Fund
will be taxable to the shareholder as long-term capital gains regardless of the
length of time Fund shares have been held by the investor. All income realized
by the Fund, including short-term capital gains, will be taxable to the
shareholder as ordinary income. Dividends from net income will be made annually
or more frequently at the discretion of the Fund's Board of Trustees and will
automatically be reinvested in additional Fund shares at net asset value, unless
shareholder has elected to receive payment in the form of cash. Dividends
received shortly after purchase of shares by an investor will have the effect of
reducing the per share net asset value of the shares by the amount of such
dividends or distributions and, although in effect a return of capital, are
subject to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemptions) paid
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement you must certify on the Shareholder Purchase
Application supplied by the Fund, that your Social Security or Taxpayer
Identification Number is correct and that you are not currently subject to back-
up withholding or otherwise certify that you are exempt from back-up
withholding.
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INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment restrictions. These
restrictions cannot be changed without approval by the holders of a majority of
the outstanding voting securities of the Fund. As defined in the Investment
Company Act of 1940 (the "Act"), the "vote of a majority of the outstanding
voting securities" means the lesser of the vote of (i) 67% of the shares of the
Fund at a meeting where more than 50% of the outstanding shares are present in
person or by proxy or (ii) more than 50% of the outstanding shares of the Fund.
The Fund may not:
(a) Act as underwriter for securities of other issuers except insofar as the
Fund may be deemed an underwriter in selling its own portfolio
securities.
(b) Borrow money or purchase securities on margin except for temporary or
emergency (not leveraging) purposes, including the meeting of redemption
requests that might otherwise require the untimely disposition of
securities, in an aggregate amount not exceeding 25% of the value of the
Fund's total assets at the time any borrowing is made. While the Fund's
borrowings are in excess of 5% of its total assets, the Fund will not
purchase any additional portfolio securities.
(c) Sell securities short.
(d) Invest in securities of other investment companies except as part of a
merger, consolidation, or purchase of assets approved by the Fund's
shareholders or by purchases with no more than 10% of the Fund's assets
in the open market involving only customary broker's commissions.
(e) Make investments in commodities, commodity contracts or real estate
although the Fund may purchase and sell securities of companies which
deal in real estate or interests therein.
(f) Make loans. The purchase of a portion of a readily marketable issue of
publicly distributed bonds, debentures or other debt securities will not
be considered the making of a loan.
(g) Acquire more than 10% of the securities of any class of another issuer,
treating all preferred securities of an issuer as a single class and all
debt securities as a single class, or acquire more than 10% of the
voting securities of another issuer.
(h) Invest in companies for the purpose of acquiring control.
(i) Purchase or retain securities of any issuer if those officers, directors
or trustees of the Fund or its Investment Adviser individually owns more
than 1/2 of 1% of any class of security or collectively own more than 5%
of such class of securities of such issuer.
(j) Pledge, mortgage or hypothecate any of its assets.
(k) Invest in securities which may be subject to registration under the
Securities Act of 1933 prior to sale to the public or which are not at
the time of purchase readily saleable.
(l) Invest more than 10% of the total Fund assets, taken at market value at
the time of purchase, in securities of companies with less than three
years' continuous operation, including the operations of any
predecessor.
(m) Issue senior securities.
(n) Acquire any securities of companies within one industry if, as a result
of such acquisition, more than 25% of the value of the Fund's total
assets would be invested in securities of companies within such
industry.
<PAGE>
In connection with its investment objective and policies the Fund may, however,
invest in the following types of securities which can involve certain risks:
U.S. Government Securities: The Fund may purchase securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities. Such
securities will typically include, without limitation, U.S. Treasury
securities such as Treasury Bills, Treasury Notes or Treasury Bonds that differ
in their interest rates, maturities and times of issuance. Bank Obligations:
The Fund may invest in bank obligations, including certificates of deposit, time
deposits, banker's acceptances and other short-term obligations of banks,
savings and loan associations and other banking institutions.
INVESTMENT ADVISER
The Trust retains Firstock Financial Services, Inc., located at 808 South 74th
Plaza Suite #113, Omaha, Nebraska 68114-4666, as its Investment Adviser.
Firstock Financial Services, Inc. (the "Investment Adviser") is a Nebraska
corporation founded in August 1986. The company is registered as an Investment
Adviser with the Securities and Exchange Commission under the Investment
Advisers Act of 1940. The corporation is controlled and wholly owned by Mark H.
Baumann and Jane A. Baumann. The Investment Adviser has been actively in the
business of rendering investment advisory services to businesses and individuals
since 1995 and is currently providing investment advisory services to over 100
businesses and individuals.
Mark H. Baumann has the direct responsibility for the overall strategic
management of the Fund's portfolio and its administration. Mr. Baumann founded
Firstock Financial Service, Inc. in 1986, has served as Chairman of the Board
and Chief Executive Officer since the company's inception. Mr. Baumann is a
Chartered Financial Analyst (CFA), and Certified Financial Planner (CFP)
licensee. He graduated from the University of Nebraska--Lincoln in 1983 where
he earned a B.S. degree in Education. From January 1989 through July 1998 Mr.
Baumann was also a registered representative with Robert Thomas Securities, Inc.
Jane A. Baumann, a registered nurse with Nebraska Health Systems, is not
actively involved in the business of the Adviser. Both Mark and Jane Baumann
serve as Trustees to the Fund.
ADVISORY FEE
The Fund will be managed by Firstock Financial Services, Inc. The Investment
Adviser will be paid a fee of 1.25% per year on the net assets of the Fund. All
fees are computed on the average daily closing net asset value of the Fund and
are payable monthly. Such fee is higher than the fee paid by most other funds.
Notwithstanding, the Investment Adviser may at its discretion, forgo
sufficient fees which would have the effect of lowering the Fund's expense ratio
and increasing the yield to shareholders.
FUND ADMINISTRATION
In addition to its fee for serving as the Fund's Investment Adviser, Firstock
Financial Services, Inc. will receive a fee for serving as the Fund's
administrator. The fee will be paid monthly at an annual rate of 0.50% of the
Fund's average daily net assets.
The Investment Adviser has retained Mutual Shareholder Services, to serve as the
Fund's transfer agent, dividend paying agent and shareholder service agent, to
provide accounting and pricing services to the Fund, and to assist the
Investment Adviser in providing executive, administrative and regulatory
services to the Fund. The Investment Adviser will pay the Transfer Agent's fees
for these services.
<PAGE>
ADVISORY AND ADMINISTRATION AGREEMENTS
On November 20, 1998 the shareholders of the Fund and the Board of Trustees
unanimously approved an investment advisory contract (the "Advisory Agreement")
and a separate administration contract (the "Administration Agreement") with
Firstock Financial Services, Inc. The Advisory Agreement and the Administration
Agreement are effective through the end of the Fund's first fiscal year.
Thereafter, both agreements may be continued for successive periods not to
exceed one year, provided that such continuance is specifically approved
annually by (a) the Fund's Board of Trustees or (b) vote of the holders of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
the Fund. In either event, the continuance must be approved by a majority of
the Board of Trustees who are not "interested persons" of the Trust (as defined
by the 1940 Act) or the Investment Adviser, by vote cast in person at a meeting
called for the purpose of voting on such approval.
Under the Advisory Agreement, Firstock Financial Services, Inc. will determine
what securities will be purchased, retained or sold by the Fund on the basis of
a continuous review of its portfolio. Mr. Baumann, will have the direct
responsibility of managing the composition of the Fund's portfolio in accordance
with the Fund's investment objective. Pursuant to its contract with the Fund,
the Investment Adviser is (i) required to render research, statistical and
advisory services to the Fund, (ii) make specific recommendations based on the
Fund's investment requirements, and (iii) pay salaries of the Fund's employees
who may be officers, directors or employees of the Investment Adviser. Excepting
these items, the Fund pays all other fees and expenses incurred in conducting
its business affairs. The Investment Adviser has paid the initial
organizational costs of the Fund and will reimburse the Fund for any and all
losses incurred because of purchase reneges.
Under the Administration Agreement, the Investment Adviser will render all
administrative and supervisory services to the Fund. The Adviser will oversee
the maintenance of all books and records with respect to the Fund's securities
transactions and the Fund's book of accounts in accordance with all applicable
federal and state laws and regulations. The Adviser will also arrange for the
preservation of journals, ledgers, corporate documents, brokerage account
records and other records which are required pursuant to Rule 31a-1 promulgated
under the 1940 Act. In accordance with the Administration Agreement, the
Adviser is also responsible for the equipment, staff, office space and
facilities necessary to perform its obligations. The Fund will assume all other
expenses except to the extent of those paid by the Adviser.
The Investment Adviser assumes and shall pay all ordinary expenses of the Fund.
Examples of such expenses include: (a) organizational costs, (b) compensation of
the Investment Adviser's personnel, (c) compensation of any of the Fund's
trustees, officers or employees who are not interested persons of the Investment
Adviser or its affiliates, (d) fees and expenses of registering the Fund's
shares under the federal securities laws and of qualifying its shares under
applicable state Blue Sky laws, including expenses attendant upon renewing such
registrations and qualifications, (e) insurance premiums, (f) fidelity bonds,
(g) accounting and bookkeeping costs and expenses necessary to maintain the
Fund's books and records, (h) outside auditing and ordinary legal expenses, (i)
all costs associated with shareholders meetings and the preparation and
dissemination of proxy solicitation materials, (j) costs of printing and
distribution of the Fund's Prospectus and other shareholder information to
existing shareholders, (k) charges, if any, of custodian and dividend disbursing
agent's fees, (l) industry association fees, and (m) costs of independent
pricing services and calculation of daily net asset value. The Adviser may, at
its discretion, assume any additional expenses ordinarily assumed by the Fund
when it determines that such action is in the best interest of the shareholders.
Any extraordinary and non-recurring expenses shall be paid by the Fund.
<PAGE>
The Investment Adviser may act as an investment adviser and administrator to
other persons, firms, or corporations (including investment companies), and may
have numerous advisory clients besides the Fund.
The Advisory Agreement and the Administration Agreement are terminable on 60
days' written notice, without penalty, by a vote of a majority of the Fund's
outstanding shares or by vote of a majority of the Fund's entire Board of
Trustees, or by the Investment Adviser on 60 days' written notice, and
automatically terminates in the event of its assignment.
MANAGEMENT OF THE FUND
The business of the Fund is managed under the direction of its Board of Trustees
in accordance with Section 3.2 of the Declaration of Trust of Firstmark
Partners, which Declaration of Trust has been filed with the Securities and
Exchange Commission and is available upon request. Pursuant to Section 2.6 of
the Declaration of Trust, the trustees shall elect officers including a
president, secretary and treasurer. The Board of Trustees retains the power to
conduct, operate and carry on the business of the Fund and has the power to
incur and pay any expenses which, in the opinion of the Board of Trustees, are
necessary or incidental to carry out any of the Fund's purposes. The trustees,
officers, employees and agents of the Fund, when acting in such capacities,
shall not be subject to any personal liability except for his or her own bad
faith, willful misfeasance, gross negligence or reckless disregard of his or her
duties. The trustees and officers together with their principal occupations
during the past five years are as follows:
Name and Address Position Principal Occupation Past 5 Years
*Mark H. Baumann Trustee Chairman & CEO
President & Treasurer Firstock Financial Services, Inc.
of the Trust Registered Representative
Robert Thomas Securities, Inc.
*Jane A. Baumann Trustee Registered Nurse
Secretary of the Trust Nebraska Health Systems
Gary L. Teel Trustee Independent Sales Agent
Imation Corporation
John R. Wingender, Jr., Ph.D. Trustee Professor of Finance
Creighton University
Robin R. Richardson Trustee Accountant, CPA
Richardson & Associates P.C.
<PAGE>
*Trustees of the Fund who are considered "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940 by virtue of their
affiliation with the Investment Adviser.
REMUNERATION OF OFFICERS AND TRUSTEES
The Fund does not compensate trustees affiliated with the Investment Adviser
except as they may benefit through payment of the Advisory and Administrative
fees. The Fund will reimburse those officers and trustees not affiliated with
the Investment Adviser to compensate for travel expenses associated with
performance of their duties.
ORGANIZATION AND CAPITAL STRUCTURE
The Trust was organized on November 12, 1998 as a Delaware business trust and is
authorized to issue an unlimited number of shares of beneficial interest. At
present there is only one series authorized by the Trust, which series has been
designated as the Contrarian Value Fund. The Board of Trustees may authorize
the creation of an additional series without shareholder approval. All shares,
when issued, will be fully paid and non-assessable and will be redeemable and
freely transferable. All shares have equal voting rights and can be issued as
full or fractional shares. A fractional share has pro rata the same kind of
rights and privileges as a full share. The shares possess no preemptive or
conversion rights.
Each shareholder has one vote for each share held irrespective of the relative
net asset value of the shares. Each share has equal dividend, distribution and
liquidation rights. The voting rights of the shareholders are non-cumulative, so
that holders of more than 50% of the shares can elect all trustees being
elected. On some issues, such as election of trustees, all shares of the Fund
vote together as one series. In the event that the Trust authorizes additional
series of shares as separate funds, on issues affecting only a particular fund,
the shares of the affected fund will vote as a separate series. An example of
such an issue would be a fundamental investment restriction pertaining to only
one fund.
The Board of Trustees of the Trust is responsible for managing the business and
affairs of the Fund. The Board of Trustees consists of five members: Mark H.
Baumann, Jane A. Baumann, Gary L. Teel, John R. Wingender Jr., and Robin R.
Richardson.
As of the date of this offering, all of the outstanding voting shares of the
Fund were owned by the following Trustees and other holders of beneficial
interest:
Holders of Interest Shares Percent of Class
Mark H. Baumann* 10,000 100%
*Mark H. Baumann is considered a control person as defined in Section 2(a)(9) of
the Investment Company Act of 1940.
PRICING OF SHARES
The net asset value of the Fund's shares is determined as of the close of
business of the New York Stock Exchange on each business day of which that
Exchange is open (presently 4:00 p.m.); Monday through Friday exclusive of
Washington's Birthday, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving, Christmas and New Year's Day. The price is determined by dividing
the value of its securities, plus any cash and other assets less all
liabilities, excluding capital surplus, by the number of shares outstanding.
The market value of securities listed on a national exchange is determined to be
the last recent sales price on such exchange. Listed securities that have not
recently traded and over-the-counter securities are valued at the last bid price
in such market. Short-term paper (debt obligations that mature in less than 60
days) are valued at amortized cost which approximates market value. Other
assets are valued at fair market value as determined in good faith by the Board
of Trustees.
<PAGE>
PURCHASE OF SHARES AND REINVESTMENT
The offering price of the shares offered by the Fund is at the Net Asset Value
("NAV") per share next determined after receipt of the purchase order by the
Fund and is computed in the manner described under the caption "Pricing of
Shares" in this Prospectus. The Fund reserves the right to terminate the
offering of the shares made by this Prospectus at any time and to refuse
purchase applications when, in the judgment of management, such termination or
refusal is in the best interests of the Fund. The Fund does not intend to issue
share certificates to its shareholders whereby shares of the Fund shall be
considered "uncertificated securities" as defined under Rule 17f-1 of the
Securities Exchange Act of 1934. The Fund and the Investment Adviser may enter
into arrangements with brokerage firms and financial institutions under which
shares of the Fund may be purchased or sold. Investors may be charged a
transaction fee if they effect transactions in Fund shares through a broker or
agent.
Initial Investments: Initial purchase of shares of the Fund may be made by
application submitted to the Contrarian Value Fund, 1301 East Ninth Street,
Suite 3600, Cleveland, Ohio 44114. Checks should be made payable to "Contrarian
Value Fund." For the convenience of investors, a Share Purchase Application
is provided with this Prospectus. The minimum initial purchase of shares is
$5,000 which is due and payable three (3) business days after the purchase date.
Lower minimums may be available to investors purchasing shares of the Fund
through certain brokerage firms. Investors may be charged a transaction fee if
the effect purchase orders through certain brokerage firms. The Fund
anticipates initially registering in California, Colorado, Florida, Iowa,
Nebraska, and New York and therefore will be restricted to residents of those
states at the time of purchase. There will be no solicitation out of those
states of potential shareholders until registration under the Blue Sky laws
of the state of residence have been met. Should an order to purchase shares
be canceled because your check does not clear, you will be responsible for any
resulting losses or fees incurred by the Fund or the Transfer Agent in the
transaction. Furthermore, the Fund reserves the right to limit the amount of
investments and to refuse to sell to any person.
Subsequent Purchases: Subsequent purchases may be made by mail and are due and
payable three (3) business days after the purchase date. The minimum is $500.
Reinvestments: The Fund will automatically retain and reinvest dividends and
capital gains distributions and use same for the purchase of additional shares
for the shareholder at net asset value as of the close of business on the
distribution date. A shareholder may at any time by letter or forms supplied by
the Fund direct the Fund to pay dividends and/or capital gains distributions,
if any, to such shareholder in cash.
Fractional Shares: Full and/or fractional shares will be issued by the Fund.
Fractional shares will be issued to three decimal places as purchased from the
Fund. The Fund will maintain an account for each shareholder of shares for
which no certificates have been issued.
<PAGE>
REDEMPTION OF SHARES
You may redeem shares of the Fund on each day that the Fund is open for business
by sending a written request to the Transfer Agent. The request must state the
number of shares or the dollar amount to be redeemed and your account number.
The request must be signed exactly as your name appears on the Fund's account
records. If the shares to be redeemed have a value of $25,000 or more, your
signature must be guaranteed by a national bank or a member of the New York
Stock Exchange. A notary public is not an acceptable guarantor. In some
instances shareholders may also redeem shares by placing a wire redemption
through a securities broker-dealer. Some broker-dealers may impose a fee on the
shareholder for this service. It is the responsibility of broker-dealers to
properly transmit wire redemption orders.
The redemption price a shareholder will receive is the net asset value per share
next determined after receipt by the Transfer Agent of your redemption request.
Because the net asset value of the Fund's shares will fluctuate, the proceeds
received by the shareholder may be more or less than his cost of such shares,
depending upon the net asset value per share at the time of redemption and the
difference should be treated by the shareholder as a capital gain or loss for
federal income tax purposes.
Payment by the Fund will ordinarily be made within three business days after
tender. The Fund may suspend the right of redemption or postpone the date of
payment if: The New York Stock Exchange is closed for other than customary
weekend or holiday closings, or when trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission or when the
Securities and Exchange Commission has determined that an emergency exists,
making disposal of fund securities or valuation of net assets not reasonably
practicable. The Fund intends to make payments in cash, however, if the Board
of Trustees believes that economic conditions exist which would make such
practice detrimental to the best interests of the Fund, redemption may be
accomplished through distribution of portfolio securities of the Fund known as
"payments in kind".
The Fund and the Investment Adviser may enter into arrangements with brokerage
firms and financial institutions under which shares of the Fund may be purchased
or sold. Investors may be charged a transaction fee if they effect transactions
in Fund shares through a broker or agent.
RETIREMENT PLANS
Generally, shares of the Fund may be purchased directly by existing retirement
plans, including IRAs, 401(k)s, Keogh Plans, or Qualified Pension and Profit
Sharing Plans which allow for such investment. At this time the Fund has have
made no provisions for interested and eligible individuals to establish any such
plans or accounts directly with the Fund.
BROKERAGE TRANSACTIONS
The Investment Adviser may select selected broker-dealers to execute portfolio
transactions for the Fund, provided that the commissions, fees, or other
remuneration received by such party in exchange for executing such transactions
are reasonable and fair compared to those paid to other broker-dealers in
connection with comparable transactions. The Fund requires all broker-dealers
to effect transactions in portfolio securities in such a manner as to get prompt
and reliable execution of the orders at the most favorable price. The Adviser
will use its best judgment in determining which broker-dealers can provide the
best net price and execution. The Adviser may select broker-dealers who, in
addition to meeting the primary requirements of execution and price, may also
make available shares of the Fund, execute transactions for other accounts
advised by the Adviser, or offer electronic interface services, provided they
have the execution capability and that their commission rates are comparable to
those of other broker-dealers. Other than as set forth above, the Fund has no
fixed policy, formula, method, or criteria which it uses in allocating its
brokerage business. The Board of Trustees will evaluate and review semiannually
the reasonableness of brokerage commissions paid by the Fund.
<PAGE>
SHAREHOLDERS MEETINGS
Annual meetings of shareholders will not be held unless called by the
shareholders pursuant to Delaware Business Trust Act or unless required by the
1940 Act and the rules and regulations promulgated thereunder. Special meetings
of the shareholders may be held from time to time when called upon by (i) the
Chairman of the Board of Trustees, if one exists, the President and two or more
trustees, (ii) by one or more shareholders holding ten percent or more of the
shares entitled to vote on matters presented to the meeting, or (iii) if the
annual meeting is not held within any thirteen month period, upon application of
any shareholder, a court of competent jurisdiction may summarily order that such
meeting be held. In addition, the 1940 Act requires a shareholder vote on all
investment advisory contracts and amendments thereto. Shareholder inquiries
should be directed to the Fund's transfer agent at 1301 East Ninth Street, Suite
3600, Cleveland, Ohio 44114.
REPORTS TO SHAREHOLDERS
The Fund sends all shareholders annual reports containing audited financial
statements and other periodic reports, at least semiannually, containing
unaudited financial statements.
CUSTODIAN AND TRANSFER AGENT
The Investment Adviser has retained Mutual Shareholder Services (MSS), 1301 East
Ninth Street, Suite 3600, Cleveland, Ohio 44114, to provide administrative,
accounting and pricing, dividend disbursing, shareholder servicing and transfer
agent services. MSS maintains shareholder records, answers shareholder
inquiries concerning their accounts, process purchases and redemptions of the
Fund's shares. All shareholder inquiries should be directed to MSS at the above
address, or you may telephone toll free (800) 446-2987.
The Custodian acts as the depository for the Fund, is responsible for
safekeeping its portfolio securities, collects all income and other payments
with respect to portfolio securities, disburses monies at the Fund's request and
maintains records in connection with its duties. The Investment Adviser has
retained Fifth Third Bank, Fifth Third Center, Cincinnati, Ohio 45263 as
Custodian of the Fund's assets.
AUDITORS
McCurdy & Associates CPA's, Inc., independent certified public accountants,
27955 Clemens Road, Westlake, Ohio 44145, have been selected as the auditor of
the Fund. McCurdy & Associates CPA's, Inc. has no direct or indirect financial
interest in the Fund or the Adviser.
<PAGE>
LEGAL OPINION
The legality of the shares offered hereby have been passed upon by Anderson,
Berkshire, Lauritsen & Brower, 8805 Indian Hills Drive, Suite 200, Omaha,
Nebraska 68114.
LITIGATION
As of the date of this prospectus, there was no pending or threatened litigation
involving the Fund in any capacity whatsoever.
ADDITIONAL INFORMATION
This Prospectus omits certain information contained in the registration
statement on file with the Securities & Exchange Commission. The registration
statement may be inspected without charge at the principal office of the
Commission in Washington, D.C. and copies of all or part thereof may be obtained
upon payment of the fee prescribed by the Commission. Shareholders may also
direct inquiries to the Fund by phone or at the address given on cover of this
Prospectus.
<PAGE>
CONTRARIAN VALUE FUND
SHARE PURCHASE APPLICATION
Mail to Minimum Investments
Contrarian Value Fund Initial $5,000
1301 East Ninth Street, Suite 3600 Subsequent $500
Cleveland, Ohio 44114
1) Please complete for one of the following four types of accounts:
A) Individual Account
First Name MI Last Name Social Security Number
B) Joint Accounts
First Name MI Last Name Social Security Number
First Name MI Last Name Social Security Number
C) Custodial Accounts
Custodian's First Name MI Custodian's Last Name
Minor's First Name MI Minor's Last Name Minor's Soc Sec #
D) All Other Accounts
Name of Account Tax Identification #
____________________________________________
(Use this second line if you need it)
2) Biographical and other information about your new account:
Address_______________________________________________________________
City________________________________ State________ Zip____________
Home Phone________________________ Bus Phone______________________
<PAGE>
3) Investment Information:
Amount of Investment $____________
Please make payable to Contrarian Value Fund
4) Distribution Options:
Dividends and capital gains may be reinvested or paid by check. If no
options are selected below, both dividends and capital gains will be reinvested.
Dividends: Reinvest [ __ ] Pay in Cash [ __ ]
Capital Gains: Reinvest [ __ ] Pay in Cash [ __ ]
5) Taxpayer Identification Number and Certification: (signature required)
Part 1. Employer ID Number or Social Security # ________________________
Part 2. Backup Withholding: Check if you are NOT subject to backup
withholding under the provisions of Section 3406(a) (1) (C) of the Internal
Revenue Code [ __ ]
I am a U.S. Citizen Yes [__] No [__]
Certification - Under the penality of perjury, I certify that the
information provided on this form is true, correct and complete.
Signature ________________________________ Date _______________
6) Signature and Agreement: (signature required)
I/we, the undersigned, have received, a printed or downloaded a copy of the
current Prospectus of the Contrarian Value Fund and are purchasing Fund
shares in accordance with its provisions. I/we further certify that the
undersigned is of legal age and has full legal capacity to make this
purchase. The purchase price shall be the net asset value next determined
following receipt of the applacation by the Fund, if the application is
accepted. This application cannot be processed unless accompanied by
payment.
Signature of Owner, Trustee or Custodian: _______________________________
Signature of Joint Owner (if joint account): _______________________________
<PAGE>
BOARD OF TRUSTEES
Mark H. Baumann
Jane A. Baumann
John R. Wingender Jr.
Robin R. Richardson
Gary L. Teel
INVESTMENT ADVISER
Firstock Financial Services, Inc.
808 South 74th Plaza
Suite #113
Omaha, Nebraska, 68114-4666
INDEPENDENT AUDITORS
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, Ohio 44145
CUSTODIAN
Fifth Third Bank
Fifth Third Center
Cincinnati, Ohio 45263
LEGAL COUNSEL
Anderson, Berkshire, Lauritsen & Brower
8805 Indian Hills Drive
Suite 200
Omaha, Nebraska 68114
TRANSFER AGENT AND DIVIDEND PAYING AGENT
Mutual Shareholder Services
1301 East Ninth Street
Suite 3600
Cleveland, Ohio 44114
No person has been authorized to give any information or to make any
representation with respect to the Fund other than those contained in this
Prospectus, and information or representations not herein contained, if given or
made, must not be relied upon as having been authorized by the Fund. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy in any jurisdiction to any person to whom it is unlawful to make such an
offer or solicitation in such jurisdiction.
<PAGE>
FIRSTMARK PARTNERS
CONTRARIAN VALUE FUND
808 South 74th Plaza Suite #113
Omaha, Nebraska 68114-4666
(402) 391-3375 (216) 687-1000
PART B
STATEMENT OF ADDITIONAL INFORMATION
February 10, 1999
This Statement is not a prospectus, but should be read in conjunction with the
Fund's current prospectus dated February 10, 1999. To obtain the Prospectus,
please write the Fund or call either of the telephone numbers that are shown
above.
<PAGE>
TABLE OF CONTENTS
ABOUT THE FUND
The Fund 3
Investment Objective 3
Risk Factors 3
Security Selection Criteria 4
Investment Strategy and Practices 4
Portfolio Turnover Policy 5
Non-Diversification Policy 5
Temporary Defensive Position 5
Repurchase Agreements 6
Tax Status 6
Investment Restrictions 6
MANAGEMENT OF THE FUND
Investment Adviser 7
Advisory Fee 8
Fund Administration 8
Mutual Shareholder Services 8
Advisory and Administration Agreements 9
Management of the Fund 10
Remuneration of Officers and Trustees 11
Organization and Capital Structure 11
INVESTING IN THE FUND
Pricing of Shares 12
Purchase of Shares and Reinvestment 12
Redemption of Shares 13
Payments in Kind 13
Performance Information 14
Retirement Plans 15
Brokerage 15
Shareholders Meetings 16
Reports to Shareholders 16
OTHER FUND INFORMATION
Custodian and Transfer Agent 16
Auditors 16
Legal Opinion 17
Litigation 17
Miscellaneous Information 17
Financial Statements 17
APPENDIX
Independent Auditor's Report 18
Statements of Assets and Liabilities 19
Notes to Financial Statements 20
<PAGE>
THE FUND
Contrarian Value Fund (the "Fund")is an open-end, non-diversified portfolio of
Firstmark Partners (the "Trust"). The Trust was organized on November 12,
1998 as a Delaware business trust and is authorized to issue an indefinite
number of shares of beneficial interest. The Trust's registered office is
1209 Orange Street, Wilmington, Delaware 19801. Mail may be addressed to Trust's
principal executive office at 808 South 74th Plaza Suite #113, Omaha, Nebraska
68114-4666.
INVESTMENT OBJECTIVE
Contrarian Value Fund's primary objective is to seek capital appreciation
through investment in common stocks. The Fund seeks to accomplish this
objective by primarily investing in a core portfolio of 20-30 common stocks
which the Fund's adviser believes to be undervalued in the marketplace. Under
normal circumstances, the Fund pursues its objective by investing in common
stocks selected primarily for their capital appreciation potential. However,
the Fund may reduce its commitment to common stocks when, in the opinion of the
Adviser, investment considerations warrant such action. Receipt of income is a
secondary objective, as some investments may yield dividends, interest or other
income. Potential investors should be aware that risks exist in all types of
investments and there can be no assurance that the Fund will be successful in
achieving its investment objectives.
RISK FACTORS
Generally: Risks associated with the Fund's performance will be those due to
broad market declines along with business and financial risks from difficulties
which occur to particular companies while in the Fund's portfolio. It therefore
must be realized, as is true of almost all general common stock funds, the two
most fundamental risks associated with the Fund, are poor stock selection by the
Adviser, and the risk that the value of the common stocks it holds might
decrease in value.
Non-Diversification: The Fund will be operated as a non-diversified investment
company which means it may invest a relatively high percentage of its assets in
a limited number of common stocks. As a result, the gains or losses on a single
stock will have a greater impact on the Fund's Net Asset Value (NAV).
Therefore, the Fund's shares may be more susceptible to adverse change in value
than would be the shares of a diversified investment company. The policy of the
fund, as stated above, is therefore one of selective investments rather than
broad diversification. The fund is not intended to be a complete investment
program on its own.
Lack of Operating History and Experience: Firstmark Partners (and its first
series, the Contrarian Value Fund) is a newly organized investment company with
no history of operations. None of the principals, officers, or directors of the
investment adviser, Firstock Financial Services, Inc., have ever registered,
operated, or supervised the operations of investment companies in the past, and
there is no assurance that there past business experiences will enable them to
successfully manage the assets of the Fund in the future.
Reliance on Technical Analysis: Although the Adviser's investment strategy
utilizes both fundamental as well as technical analysis, the Adviser places
greater emphasis on the use of technical analysis than it does fundamental
analysis. In the opinion of the Adviser, one of the advantages of technical
analysis is that it may be possible to draw logical conclusions about the
future value of a security with only limited access to fundamental facts. Yet,
the Adviser also acknowledges, one of the disadvantages of technical analysis is
that it may never offer more than a set of possibilities, or probabilities at
best, about the future value of a security, neither of which may be correct.
There can be no assurance that the Adviser will be successful in its application
of its technical analysis techniques or strategies while using them in trying to
achieve the funds objective.
Definitions of Fundamental and Thecnical Analysis: According to Barron's
Dictionary of Finance and Investment Terms, fundamental analysis is "analysis of
the balance sheet and income statements of companies in order to forecast their
future stock price movements. Fundamental analysts consider past records of
assets, earnings, sales, products, management and markets in predicting future
trends in these indicators of a company's success of failure." technical
analysis is defined as "research into the demand and supply for securities
and commodities based on trading volume and price studies. Technical analysts
use charts or computer programs to identify and project price trends in a
market, security or commodity future. Most analysis is done for short- or
intermediate-term, but some technicians also predict long-term cycles based on
charts and other data. Unlike FUNDAMENTAL ANALYSIS, technical analysis is not
concerned with the financial position of a company."
<PAGE>
SECURITY SELECTION CRITERIA
The Fund, under normal circumstances, will primarily invest in, but is not
limited to, those common stocks contained in the Standard & Poors 500 Composite
Index (S&P500). The index generally tracks 400 industrial company stocks, 20
transportation stocks, 40 financial company stocks, and 40 public utilities.
This index is dynamic and changes over time. The inclusion of stocks in the
index and the publication of the index itself are services of the Standard &
Poors Corporation.
In selecting investments for the Fund, the Adviser will use both fundamental and
technical analysis in its analysis of possible securities to be considered for
purchase. Although the Adviser uses both fundamental and technical analysis
in determining what stocks to buy, the decision of when to buy a stock
is based soley on technical analysis. Therefore, under normal circumstances,
a stock will not be considered for purchase if, in the opinion of the Adviser,
the stock does not show favorable technical characteristics.
INVESTMENT STRATEGY AND PRACTICES
The Adviser pursues a flexible investment strategy in the selection of
securities, not limited to any particular investment sector, industry or company
size. The Adviser uses a disciplined approach to stock selection to help it
attempt to identify companies whose stocks are, in the opinion of the Adviser,
either undervalued or currently mispriced in the marketplace. The Adviser's
assessment of a company's stock that may be out of favor may differ from the
investment approach followed by other mutual funds. To some extent, during
periods of above average market volatility, the Fund may buy or sell stock or
other securities seeking short term capital appreciation.
Stock selections are made in part based on the Adviser's opinion regarding the
future appreciation and sustainability of a company's stock price. Under normal
circumstances, the portfolio will consist of between 20 and 30 stocks.
Generally, it is the intent of the Fund, to have each stock position represent
between four and five percent of the Fund's total net assets at the time of
purchase.
The Adviser continually reviews investment alternatives and may implement
portfolio changes as more attractive investment opportunities become available.
If a company's stock price appreciates to a level that, in the opinion of the
Adviser, appears not sustainable, the position is generally sold to realize the
existing profits and avoid a potential price correction. If the Adviser
identifies a new stock that it considers to be a better investment than a
current holding, the Adviser will generally consider selling the current holding
to add the new stock. The Adviser anticipates the Fund's portfolio generally
will be fully invested in common stocks. However, the fund may reduce its
commitment to common stocks when in the opinion of the Adviser, investment
considerations warrant such action.
<PAGE>
Under normal circumstances, technical analysis is the primary methodology used
by the Adviser in determining when a stock should be sold. However, once a
position has, in the opinion of the Adviser, appreciated substantially, the
Adviser may, under normal circumatances, place a "sell stop" order, at the
discretion of the Adviser, somewhere below the current market price of the stock
as a way of protecting the gain already in the position. Should the value of
the stock continue to appreciate, the "sell stop" may by raised accordingly at
the discretion of the Adviser. Any position that has declined 10% from its
original purchase price is re-examined and may be considered as a potential sale
candidate.
PORTFOLIO TURNOVER POLICY
The annual rate of portfolio turnover for the Fund is unknown since the fund has
no operating history and therefore no actual portfolio turnover rate presently
exists. The Fund's investment adviser expects to actively trade the portfolio
in pursuit of the Fund's investment objective and investments may be sold
without regard to length of time the Fund has held a position when, in the
opinion of the investment adviser, investment considerations warrant such
action. Although the Fund cannot accurately predict its portfolio turnover
rate, it is not expected to exceed 150%, wherein turnover is computed by
dividing the lesser of the Fund's total purchases or sales of securities within
the period by the average monthly portfolio value of the Fund during such
period. There are no limits on the rate of portfolio turnover. Higher
portfolio turnover rates, rates in excess of 100%, and short-term trading may
result in higher brokerage costs to the Fund and may result in the acceleration
of net taxable capital gains to shareholders.
NON-DIVERSIFICATION POLICY
The Fund is classified as being non-diversified which means that it may not
invest more than 25% of its assets in the securities of any one issuer and, with
respect to 50% of its total assets, the Fund may not invest more than 5% of its
total assets in the securities of any one issuer. Thus, the Fund may invest up
to 25% of its total assets in the securities of each of any two issuers.
However, under normal circumstances, the Fund anticipates maintaining a
portfolio, of between 20 and 30 approximately equally weighted positions. The
Fund, therefore, may be more susceptible to risk of loss than a more widely
diversified fund as a result of a single business, economic, political, or
regulatory occurrence. The policy of the Fund, in the hope of achieving its
objective as stated above, is therefore one of selective investments rather than
broad diversification. The Fund seeks only enough diversification to maintain
its federal non-taxable status under Sub-Chapter M of the Internal Revenue Code.
<PAGE>
TEMPORARY DEFENSIVE POSITION
When, in the judgement of the Adviser, market conditions a temporary defensive
posture, the Fund may invest up to 100% of its assets in short-term debt
securities and money market instruments, including securities issued by the U.S.
Government, its agencies or instrumentalities and repurchase agreements secured
thereby, commercial paper, certificates of deposit bank or savings and loan
association interest-bearing demand accounts. The adoption of such defensive
position does not constitute a change in the Fund's investment objective.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements. Repurchase agreements are
transactions in which the Fund purchases securities and commits to sell the
securities to the original seller (a member bank of the Federal Reserve System
or securities dealers who are members of a national securities exchange or are
market makers in U.S. Government securities) at an agreed upon date and price
reflecting a market rate of interest unrelated to the coupon rate or maturity of
the purchased securities. Repurchase agreements offer a means of generation
income from excess cash the Fund might otherwise hold un invested. Repurchase
agreements carry certain risks not associated with direct investments in
securities. Delays in payment or losses could result if the other party to the
agreement defaults or becomes bankrupt.
TAX STATUS
Under the provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as
amended, the Fund intends to pay out substantially all of its investment income
and realized capital gains. As a result, the Fund intends to be relieved of
federal income tax on the amounts distributed to shareholders. In order to
qualify as a "regulated investment company" under Sub-Chapter M, at least 90% of
the Fund's income must be derived from dividends, interest, and gains from
securities transactions. No more than 50% of the Fund assets may be held in
security holdings that exceed 5% of the total assets of the Fund at time of
purchase. Distribution of any net long-term capital gains realized by the Fund
will be taxable to the shareholder as long-term capital gains regardless of the
length of time Fund shares have been held by the investor. All income realized
by the Fund, including short-term capital gains, will be taxable to the
shareholder as ordinary income. Dividends from net income will be made annually
or more frequently at the discretion of the Fund's Board of Trustees and will
automatically be reinvested in additional Fund shares at net asset value, unless
shareholder has elected to receive payment in the form of cash. Dividends
received shortly after purchase of shares by an investor will have the effect of
reducing the per share net asset value of the shares by the amount of such
dividends or distributions and, although in effect a return of capital, are
subject to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemptions) paid
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement you must certify on the Shareholder Purchase
Application supplied by the Fund, that your Social Security or Taxpayer
Identification Number is correct and that you are not currently subject to back-
up withholding or otherwise certify that you are exempt from back-up
withholding.
<PAGE>
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment restrictions. These
restrictions cannot be changed without approval by the holders of a majority of
the outstanding voting securities of the Fund. As defined in the Investment
Company Act of 1940 (the "Act"), the "vote of a majority of the outstanding
voting securities" means the lesser of the vote of (i) 67% of the shares of the
Fund at a meeting where more than 50% of the outstanding shares are present in
person or by proxy or (ii) more than 50% of the outstanding shares of the Fund.
The Fund may not:
(a) Act as underwriter for securities of other issuers except insofar as the
Fund may be deemed an underwriter in selling its own portfolio
securities.
(b) Borrow money or purchase securities on margin except for temporary or
emergency (not leveraging) purposes, including the meeting of redemption
requests that might otherwise require the untimely disposition of
securities, in an aggregate amount not exceeding 25% of the value of the
Fund's total assets at the time any borrowing is made. While the Fund's
borrowings are in excess of 5% of its total assets, the Fund will not
purchase any additional portfolio securities.
(c) Sell securities short.
(d) Invest in securities of other investment companies except as part of a
merger, consolidation, or purchase of assets approved by the Fund's
shareholders or by purchases with no more than 10% of the Fund's assets
in the open market involving only customary broker's commissions.
(e) Make investments in commodities, commodity contracts or real estate
although the Fund may purchase and sell securities of companies which
deal in real estate or interests therein.
(f) Make loans. The purchase of a portion of a readily marketable issue of
publicly distributed bonds, debentures or other debt securities will not
be considered the making of a loan.
(g) Acquire more than 10% of the securities of any class of another issuer,
treating all preferred securities of an issuer as a single class and all
debt securities as a single class, or acquire more than 10% of the
voting securities of another issuer.
(h) Invest in companies for the purpose of acquiring control.
(i) Purchase or retain securities of any issuer if those officers, directors
or trustees of the Fund or its Investment Adviser individually owns more
than 1/2 of 1% of any class of security or collectively own more than 5%
of such class of securities of such issuer.
(j) Pledge, mortgage or hypothecate any of its assets.
(k) Invest in securities which may be subject to registration under the
Securities Act of 1933 prior to sale to the public or which are not at
the time of purchase readily saleable.
(l) Invest more than 10% of the total Fund assets, taken at market value at
the time of purchase, in securities of companies with less than three
years' continuous operation, including the operations of any
predecessor.
(m) Issue senior securities.
(n) Acquire any securities of companies within one industry if, as a result
of such acquisition, more than 25% of the value of the Fund's total
assets would be invested in securities of companies within such
industry.
In connection with its investment objective and policies the Fund may, however,
invest in the following types of securities which can involve certain risks:
U.S. Government Securities: The Fund may purchase securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities. Such
securities will typically include, without limitation, U.S. Treasury
securities such as Treasury Bills, Treasury Notes or Treasury Bonds that differ
in their interest rates, maturities and times of issuance. Bank Obligations:
The Fund may invest in bank obligations, including certificates of deposit, time
deposits, banker's acceptances and other short-term obligations of banks,
savings and loan associations and other banking institutions.
<PAGE>
INVESTMENT ADVISER
The Trust retains Firstock Financial Services, Inc., located at 808 South 74th
Plaza Suite #113, Omaha, Nebraska 68114-4666, as its Investment Adviser.
Firstock Financial Services, Inc. (the "Investment Adviser") is a Nebraska
corporation founded in August 1986. The company is registered as an Investment
Adviser with the Securities and Exchange Commission under the Investment
Advisers Act of 1940. The corporation is controlled and wholly owned by Mark H.
Baumann and Jane A. Baumann. The Investment Adviser has been actively in the
business of rendering investment advisory services to businesses and individuals
since 1995 and is currently providing investment advisory services to over 100
businesses and individuals.
Mark H. Baumann has the direct responsibility for the overall strategic
management of the Fund's portfolio and its administration. Mr. Baumann founded
Firstock Financial Service, Inc. in 1986, has served as Chairman of the Board
and Chief Executive Officer since the company's inception. Mr. Baumann is a
Chartered Financial Analyst (CFA), and Certified Financial Planner (CFP)
licensee. He graduated from the University of Nebraska--Lincoln in 1983 where
he earned a B.S. degree in Education. From January 1989 through July 1998 Mr.
Baumann was also a registered representative with Robert Thomas Securities, Inc.
Jane A. Baumann, a registered nurse with Nebraska Health Systems, is not
actively involved in the business of the Adviser. Both Mark and Jane Baumann
serve as Trustees to the Fund.
ADVISORY FEE
The Fund will be managed by Firstock Financial Services, Inc. The Investment
Adviser will be paid a fee of 1.25% per year on the net assets of the Fund. All
fees are computed on the average daily closing net asset value of the Fund and
are payable monthly. Such fee is higher than the fee paid by most other funds.
Notwithstanding, the Investment Adviser may at its discretion, forgo
sufficient fees which would have the effect of lowering the Fund's expense ratio
and increasing the yield to shareholders.
FUND ADMINISTRATION
In addition to its fee for serving as the Fund's Investment Adviser, Firstock
Financial Services, Inc. will receive a fee for serving as the Fund's
administrator. The fee will be paid monthly at an annual rate of 0.50% of the
Fund's average daily net assets.
The Investment Adviser has retained Mutual Shareholder Services, to serve as the
Fund's transfer agent, dividend paying agent and shareholder service agent, to
provide accounting and pricing services to the Fund, and to assist the
Investment Adviser in providing executive, administrative and regulatory
services to the Fund. The Investment Adviser will pay the Transfer Agent's fees
for these services.
<PAGE>
MUTUAL SHAREHOLDER SERVICES
Mutual Shareholder Services, (MSS), 1301 East Ninth Street, Suite 3600,
Cleveland, Ohio 44114, a division of Maxus Information Systems Inc., an Ohio
corporation, is retained by the Investment Adviser to maintain the records of
each shareholder's account, process purchases and redemptions of the Fund's
shares and act as dividend and distribution disbursing agent. MSS also provides
administrative services to the Fund, calculates daily net asset value per share
and maintains such books and records as are necessary to enable MSS to perform
its duties. For the performance of these services, the Investment Adviser will
pay MSS a fee which will vary with the number of States in which the Fund elects
to do business; a fee for transfer agency and shareholder services at the annual
rate per shareholder account of the Fund (subject to a minimum fee); and a
monthly fee for accounting and pricing services which will vary according to the
Fund's average net assets during such month (subject to a minimum fee). Maxus
is a wholly owned subsidiary of Resource Management, Inc., an Ohio corporation
with interests primarily in the financial services industry.
ADVISORY AND ADMINISTRATION AGREEMENTS
On November 20, 1998 the shareholders of the Fund and the Board of Trustees
unanimously approved an investment advisory contract (the "Advisory Agreement")
and a separate administration contract (the "Administration Agreement") with
Firstock Financial Services, Inc. The Advisory Agreement and the Administration
Agreement are effective through the end of the Fund's first fiscal year.
Thereafter, both agreements may be continued for successive periods not to
exceed one year, provided that such continuance is specifically approved
annually by (a) the Fund's Board of Trustees or (b) vote of the holders of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
the Fund. In either event, the continuance must be approved by a majority of
the Board of Trustees who are not "interested persons" of the Trust (as defined
by the 1940 Act) or the Investment Adviser, by vote cast in person at a meeting
called for the purpose of voting on such approval.
Under the Advisory Agreement, Firstock Financial Services, Inc. will determine
what securities will be purchased, retained or sold by the Fund on the basis of
a continuous review of its portfolio. Mr. Baumann, will have the direct
responsibility of managing the composition of the Fund's portfolio in accordance
with the Fund's investment objective. Pursuant to its contract with the Fund,
the Investment Adviser is (i) required to render research, statistical and
advisory services to the Fund, (ii) make specific recommendations based on the
Fund's investment requirements, and (iii) pay salaries of the Fund's employees
who may be officers, directors or employees of the Investment Adviser. Excepting
these items, the Fund pays all other fees and expenses incurred in conducting
its business affairs. The Investment Adviser has paid the initial
organizational costs of the Fund and will reimburse the Fund for any and all
losses incurred because of purchase reneges.
Under the Administration Agreement, the Investment Adviser will render all
administrative and supervisory services to the Fund. The Adviser will oversee
the maintenance of all books and records with respect to the Fund's securities
transactions and the Fund's book of accounts in accordance with all applicable
federal and state laws and regulations. The Adviser will also arrange for the
preservation of journals, ledgers, corporate documents, brokerage account
records and other records which are required pursuant to Rule 31a-1 promulgated
under the 1940 Act. In accordance with the Administration Agreement, the
Adviser is also responsible for the equipment, staff, office space and
facilities necessary to perform its obligations. The Fund will assume all other
expenses except to the extent of those paid by the Adviser.
<PAGE>
The Investment Adviser assumes and shall pay all ordinary expenses of the Fund.
Examples of such expenses include: (a) organizational costs, (b) compensation of
the Investment Adviser's personnel, (c) compensation of any of the Fund's
trustees, officers or employees who are not interested persons of the Investment
Adviser or its affiliates, (d) fees and expenses of registering the Fund's
shares under the federal securities laws and of qualifying its shares under
applicable state Blue Sky laws, including expenses attendant upon renewing such
registrations and qualifications, (e) insurance premiums, (f) fidelity bonds,
(g) accounting and bookkeeping costs and expenses necessary to maintain the
Fund's books and records, (h) outside auditing and ordinary legal expenses, (i)
all costs associated with shareholders meetings and the preparation and
dissemination of proxy solicitation materials, (j) costs of printing and
distribution of the Fund's Prospectus and other shareholder information to
existing shareholders, (k) charges, if any, of custodian and dividend disbursing
agent's fees, (l) industry association fees, and (m) costs of independent
pricing services and calculation of daily net asset value. The Adviser may, at
its discretion, assume any additional expenses ordinarily assumed by the Fund
when it determines that such action is in the best interest of the shareholders.
Any extraordinary and non-recurring expenses shall be paid by the Fund.
The Investment Adviser may act as an investment adviser and administrator to
other persons, firms, or corporations (including investment companies), and may
have numerous advisory clients besides the Fund.
The Advisory Agreement and the Administration Agreement are terminable on 60
days' written notice, without penalty, by a vote of a majority of the Fund's
outstanding shares or by vote of a majority of the Fund's entire Board of
Trustees, or by the Investment Adviser on 60 days' written notice, and
automatically terminates in the event of its assignment.
MANAGEMENT OF THE FUND
The business of the Fund is managed under the direction of its Board of Trustees
in accordance with Section 3.2 of the Declaration of Trust of Firstmark
Partners, which Declaration of Trust has been filed with the Securities and
Exchange Commission and is available upon request. Pursuant to Section 2.6 of
the Declaration of Trust, the trustees shall elect officers including a
president, secretary and treasurer. The Board of Trustees retains the power to
conduct, operate and carry on the business of the Fund and has the power to
incur and pay any expenses which, in the opinion of the Board of Trustees, are
necessary or incidental to carry out any of the Fund's purposes. The trustees,
officers, employees and agents of the Fund, when acting in such capacities,
shall not be subject to any personal liability except for his or her own bad
faith, willful misfeasance, gross negligence or reckless disregard of his or her
duties. The trustees and officers together with their principal occupations
during the past five years are as follows:
Name and Address Position Principal Occupation Past 5
Years
*Mark H. Baumann Trustee Chairman & CEO
2525 S. 48th Street President & Treasurer Firstock Financial Services
Omaha, NE 68106 of the Trust Registered Representative
Age: 42 Robert Thomas Securities, Inc.
*Jane A. Baumann Trustee Registered Nurse
2525 S. 48th Street Secretary of the Trust Nebraska Health Systems
Omaha, NE 68106
Age: 40
<PAGE>
Gary L. Teel Trustee Independent Sales Agent
8305 Parker Court Imation Corporation
Omaha, NE 68114
Age: 61
John R. Wingender, Jr., Ph.D. Trustee Professor of Finance
2121 La Platte Road Creighton University
Bellevue, NE 68123
Age: 48
Robin R. Richardson Trustee Accountant, CPA
12512 Burt Street Richardson & Associates P.C.
Omaha, Nebraska 68154
Age: 50
*Trustees of the Fund who are considered "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940 by virtue of their
affiliation with the Investment Adviser. Mark H. Baumann and Jane A. Baumann
are husband and wife.
REMUNERATION OF OFFICERS AND TRUSTEES
The Fund does not compensate trustees affiliated with the Investment Adviser
except as they may benefit through payment of the Advisory and Administrative
fees. The Fund will reimburse those officers and trustees not affiliated with
the Investment Adviser to compensate for travel expenses associated with
performance of their duties.
ORGANIZATION AND CAPITAL STRUCTURE
The Trust was organized on November 12, 1998 as a Delaware business trust and is
authorized to issue an unlimited number of shares of beneficial interest. At
present there is only one series authorized by the Trust, which series has been
designated as the Contrarian Value Fund. The Board of Trustees may authorize
the creation of an additional series without shareholder approval.
All shares, when issued, will be fully paid and non-assessable and will be
redeemable and freely transferable. All shares have equal voting rights and can
be issued as full or fractional shares. A fractional share has pro rata the same
kind of rights and privileges as a full share. The shares possess no preemptive
or conversion rights.
Each shareholder has one vote for each share held irrespective of the relative
net asset value of the shares. Each share has equal dividend, distribution and
liquidation rights. The voting rights of the shareholders are non-cumulative, so
that holders of more than 50% of the shares can elect all trustees being
elected. On some issues, such as election of trustees, all shares of the Fund
vote together as one series. In the event that the Trust authorizes additional
series of shares as separate funds, on issues affecting only a particular fund,
the shares of the affected fund will vote as a separate series. An example of
such an issue would be a fundamental investment restriction pertaining to only
one fund.
<PAGE>
The Board of Trustees of the Trust is responsible for managing the business and
affairs of the Fund. The Board of Trustees consists of five members: Mark H.
Baumann, Jane A. Baumann, Gary L. Teel, John R. Wingender Jr., and Robin R.
Richardson.
As of the date of this offering, all of the outstanding voting shares of the
Fund were owned by the following Trustees and other holders of beneficial
interest:
Holders of Interest Shares Percent of Class
Mark H. Baumann* 10,000 100%
*Mark H. Baumann is considered a control person as defined in Section 2(a)(9) of
the Investment Company Act of 1940.
PRICING OF SHARES
The net asset value of the Fund's shares is determined as of the close of
business of the New York Stock Exchange on each business day of which that
Exchange is open (presently 4:00 p.m.); Monday through Friday exclusive of
Washington's Birthday, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving, Christmas and New Year's Day. The price is determined by dividing
the value of its securities, plus any cash and other assets less all
liabilities, excluding capital surplus, by the number of shares outstanding.
The market value of securities listed on a national exchange is determined to be
the last recent sales price on such exchange. Listed securities that have not
recently traded and over-the-counter securities are valued at the last bid price
in such market. Short-term paper (debt obligations that mature in less than 60
days) are valued at amortized cost which approximates market value. Other
assets are valued at fair market value as determined in good faith by the Board
of Trustees.
PURCHASE OF SHARES AND REINVESTMENT
The offering price of the shares offered by the Fund is at the Net Asset Value
("NAV") per share next determined after receipt of the purchase order by the
Fund and is computed in the manner described under the caption "Pricing of
Shares" in this Prospectus. The Fund reserves the right to terminate the
offering of the shares made by this Prospectus at any time and to refuse
purchase applications when, in the judgment of management, such termination or
refusal is in the best interests of the Fund. The Fund does not intend to issue
share certificates to its shareholders whereby shares of the Fund shall be
considered "uncertificated securities" as defined under Rule 17f-1 of the
Securities Exchange Act of 1934. The Fund and the Investment Adviser may enter
into arrangements with brokerage firms and financial institutions under which
shares of the Fund may be purchased or sold. Investors may be charged a
transaction fee if they effect transactions in Fund shares through a broker or
agent.
Initial Investments: Initial purchase of shares of the Fund may be made by
application submitted to the Contrarian Value Fund, 1301 East Ninth Street,
Suite 3600, Cleveland, Ohio 44114. Checks should be made payable to
"Contrarian Value Fund." For the convenience of investors, a Share Purchase
Application is provided with this Prospectus. The minimum initial purchase of
shares is $5,000 which is due and payable three (3) business days after the
purchase date. Lower minimums may be available to investors purchasing
shares of the Fund through certain brokerage firms. Investors may be charged a
transaction fee if the effect purchase orders through certain brokerage
firms. The Fund anticipates initially registering in California, Colorado,
Florida, Iowa, Nebraska, and New York and therefore will be restricted to
residents of those states at the time of purchase. There will be no solicitation
out of those states of potential shareholders until registration under
the Blue Sky laws of the state of residence have been met. Should an order to
purchase shares be canceled because your check does not clear, you will be
responsible for any resulting losses or fees incurred by the Fund or the
Transfer Agent in the transaction. Furthermore, the Fund reserves the right to
limit the amount of investments and to refuse to sell to any person.
<PAGE>
Subsequent Purchases: Subsequent purchases may be made by mail and are due and
payable three (3) business days after the purchase date. The minimum is $500.
Reinvestments: The Fund will automatically retain and reinvest dividends and
capital gains distributions and use same for the purchase of additional shares
for the shareholder at net asset value as of the close of business on the
distribution date. A shareholder may at any time by letter or forms supplied by
the Fund direct the Fund to pay dividends and/or capital gains distributions, if
any, to such shareholder in cash.
Fractional Shares: Full and/or fractional shares will be issued by the Fund.
Fractional shares will be issued to three decimal places as purchased from the
Fund. The Fund will maintain an account for each shareholder of shares for
which no certificates have been issued.
REDEMPTION OF SHARES
You may redeem shares of the Fund on each day that the Fund is open for business
by sending a written request to the Transfer Agent. The request must state the
number of shares or the dollar amount to be redeemed and your account number.
The request must be signed exactly as your name appears on the Fund's account
records. If the shares to be redeemed have a value of $25,000 or more, your
signature must be guaranteed by a national bank or a member of the New York
Stock Exchange. A notary public is not an acceptable guarantor. In some
instances shareholders may also redeem shares by placing a wire redemption
through a securities broker-dealer. Some broker-dealers may impose a fee on the
shareholder for this service. It is the responsibility of broker-dealers to
properly transmit wire redemption orders.
The redemption price a shareholder will receive is the net asset value per share
next determined after receipt by the Transfer Agent of your redemption request.
Because the net asset value of the Fund's shares will fluctuate, the proceeds
received by the shareholder may be more or less than his cost of such shares,
depending upon the net asset value per share at the time of redemption and the
difference should be treated by the shareholder as a capital gain or loss for
federal income tax purposes.
Payment by the Fund will ordinarily be made within three business days after
tender. The Fund may suspend the right of redemption or postpone the date of
payment if: The New York Stock Exchange is closed for other than customary
weekend or holiday closings, or when trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission or when the
Securities and Exchange Commission has determined that an emergency exists,
making disposal of fund securities or valuation of net assets not reasonably
practicable. The Fund intends to make payments in cash, however, if the Board
of Trustees believes that economic conditions exist which would make such
practice detrimental to the best interests of the Fund, redemption may be
accomplished through distribution of portfolio securities of the Fund known as
"payments in kind".
<PAGE>
The Fund and the Investment Adviser may enter into arrangements with brokerage
firms and financial institutions under which shares of the Fund may be purchased
or sold. Investors may be charged a transaction fee if they effect transactions
in Fund shares through a broker or agent.
PAYMENTS IN KIND
Payment of the net redemption proceeds may be made either in cash or in
portfolio securities (selected in the discretion of the Investment Adviser under
supervision of the Board of Trustees and taken at their value used in
determining the net asset value), or partly in cash and partly in portfolio
securities. However, payments will be made wholly in cash unless the Board of
Trustees believes that economic conditions exist which would make such a
practice detrimental to the best interests of the Fund. If payment for shares
redeemed is made wholly or partly in portfolio securities, brokerage costs may
be incurred by the investor in converting the securities to cash.
PERFORMANCE INFORMATION
The Fund's total returns are based on the overall dollar or percentage change in
value of a hypothetical investment in the Fund, assuming all dividends and
distributions are reinvested. Average annual total return reflects the
hypothetical annually compounded return that would have produced the same
cumulative total return if the Fund's performance had been constant over the
entire period presented. Because average annual total returns tend to smooth
out variations in the Fund's returns, investors should recognize that they are
not the same as actual year-by-year returns.
For the purposes of quoting and comparing the performance of the Fund to that of
other mutual funds and to other relevant market indices in advertisements,
performance will be stated in terms of average annual total return. Under
regulations adopted by the Securities and Exchange Commission, funds that intend
to advertise performance must include average annual total return quotations
calculated according to the following formula:
P (1+T) n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5, or 10)
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1-, 5-, or 10- year period, at the end of such period
(or fractional portion thereof).
Under the foregoing formula, the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication, and will cover 1, 5, and
10 year periods of the Fund's existence or shorter periods dating from the
commencement of Fund registration. In calculating the ending redeemable value,
all dividends and distributions by the Fund are assumed to have been reinvested
at net asset value as described in the Prospectus on the reinvestment dates
during the period. Additionally, redemption of shares is assumed to occur at
the end of each applicable time period.
<PAGE>
The foregoing information should be considered in light of the Fund's investment
objectives and policies, as well as the risks incurred in the Fund's investment
practices. Future results will be affected by the future composition of the
Fund's portfolio, as well as by changes in the general level of interest rates,
and general economic and other market conditions.
The Fund may also advertise total return (a "nonstandardized quotation") which
is calculated differently from average annual total return. A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions.
A nonstandardized quotation may also indicate average annual compounded rates of
return over periods other than those specified for average annual total return.
A nonstandardized quotation of total return will always be accompanied by the
Fund's average annual total return as described above.
The performance quotations described above are based on historical earnings and
are not intended to indicate future performance.
To help investors better evaluate how an investment in the Fund might satisfy
their investment objective, advertisements regarding the Fund may discuss
various measures of Fund performance, including current performance ratings
and/or rankings appearing in financial magazines, newspapers and publications
which track mutual fund performance. Advertisements may also compare
performance (using the calculation methods set forth herein) to performance as
reported by other investments, indices and averages. When advertising current
ratings or rankings, the Fund may use the following publications or indices to
discuss or compare Fund performance:
Lipper Mutual Fund Performance Analysis measures total return and average
current yield for the mutual fund industry and ranks individual mutual fund
performance over specified time periods assuming reinvestment of all
distributions, exclusive of sales loads. The Fund may provide comparative
performance information appearing in the Small Company Growth Funds category.
In addition, the Fund may use comparative performance information of relevant
indices, including the S&P 500 Index, the Dow Jones Industrial Average, the
Russell 2000 Index, the NASDAQ Composite Index and the Value Line Composite
Index. The S&P 500 Index is an unmanaged index of 500 stocks, the purpose of
which is to portray the pattern of common stock price movement. The Dow Jones
Industrial Average is a measurement of general market price movement for 30
widely held stocks listed on the New York Stock Exchange. The Russell 2000
Index, representing approximately 11% of the U.S. equity market, is an unmanaged
index comprised of the 2,000 smallest U.S. domiciled publicly-traded common
stocks in the Russell 3000 Index (an unmanaged index of the 3,000 largest U.S.
domiciled publicly-traded common stocks by market capitalization representing
approximately 98% of the U.S. publicly-traded equity market). The NASDAQ
Composite Index is an unmanaged index which averages the trading prices of more
than 3,000 domestic over-the-counter companies. The Value Line Composite Index
is an unmanaged index comprised of approximately 1,700 stocks, the purpose of
which is to portray the pattern of common stock price movement.
In assessing such comparisons of performance an investor should keep in mind
that the composition of the investments in the reported indices and averages is
not identical to the Fund's portfolio, that the averages are generally unmanaged
and that the items included in the calculations of such averages may not be
identical to the formula used by the Fund to calculate its performance. In
addition, there can be no assurance that the Fund will continue this performance
as compared to such other averages.
<PAGE>
RETIREMENT PLANS
Generally, shares of the Fund may be purchased directly by existing retirement
plans, including IRAs, 401(k)s, Keogh Plans, or Qualified Pension and Profit
Sharing Plans which allow for such investment. At this time the Fund has have
made no provisions for interested and eligible individuals to establish any such
plans or accounts directly with the Fund.
BROKERAGE TRANSACTIONS
The Investment Adviser may select selected broker-dealers to execute portfolio
transactions for the Fund, provided that the commissions, fees, or other
remuneration received by such party in exchange for executing such transactions
are reasonable and fair compared to those paid to other broker-dealers in
connection with comparable transactions. The Fund requires all broker-dealers
to effect transactions in portfolio securities in such a manner as to get prompt
and reliable execution of the orders at the most favorable price. The Adviser
will use its best judgment in determining which broker-dealers can provide the
best net price and execution. The Adviser may select broker-dealers who, in
addition to meeting the primary requirements of execution and price, may also
make available shares of the Fund, execute transactions for other accounts
advised by the Adviser, or offer electronic interface services, provided they
have the execution capability and that their commission rates are comparable to
those of other broker-dealers. Other than as set forth above, the Fund has no
fixed policy, formula, method, or criteria which it uses in allocating its
brokerage business. The Board of Trustees will evaluate and review semiannually
the reasonableness of brokerage commissions paid by the Fund.
SHAREHOLDERS MEETINGS
Annual meetings of shareholders will not be held unless called by the
shareholders pursuant to Delaware Business Trust Act or unless required by the
1940 Act and the rules and regulations promulgated thereunder. Special meetings
of the shareholders may be held from time to time when called upon by (i) the
Chairman of the Board of Trustees, if one exists, the President and two or more
trustees, (ii) by one or more shareholders holding ten percent or more of the
shares entitled to vote on matters presented to the meeting, or (iii) if the
annual meeting is not held within any thirteen month period, upon application of
any shareholder, a court of competent jurisdiction may summarily order that such
meeting be held. In addition, the 1940 Act requires a shareholder vote on all
investment advisory contracts and amendments thereto. Shareholder inquiries
should be directed to the Fund's transfer agent at 1301 East Ninth Street, Suite
3600, Cleveland, Ohio 44114.
REPORTS TO SHAREHOLDERS
The Fund sends all shareholders annual reports containing audited financial
statements and other periodic reports, at least semiannually, containing
unaudited financial statements.
CUSTODIAN AND TRANSFER AGENT
The Investment Adviser has retained Mutual Shareholder Services (MSS), 1301 East
Ninth Street, Suite 3600, Cleveland, Ohio 44114, to provide administrative,
accounting and pricing, dividend disbursing, shareholder servicing and transfer
agent services. MSS maintains shareholder records, answers shareholder
inquiries concerning their accounts, process purchases and redemptions of the
Fund's shares. All shareholder inquiries should be directed to MSS at the above
address, or you may telephone toll free (800) 446-2987.
The Custodian acts as the depository for the Fund, is responsible for
safekeeping its portfolio securities, collects all income and other payments
with respect to portfolio securities, disburses monies at the Fund's request and
maintains records in connection with its duties. The Investment Adviser has
retained Fifth Third Bank, Fifth Third Center, Cincinnati, Ohio 45263 as
Custodian of the Fund's assets.
<PAGE>
AUDITORS
McCurdy & Associates CPA's, Inc., independent certified public accountants,
27955 Clemens Road, Westlake, Ohio 44145, have been selected as the auditor of
the Fund. McCurdy & Associates CPA's, Inc. has no direct or indirect financial
interest in the Fund or the Adviser.
LEGAL OPINION
The legality of the shares offered hereby have been passed upon by Anderson,
Berkshire, Lauritsen & Brower, 8805 Indian Hills Drive, Suite 200, Omaha,
Nebraska 68114.
LITIGATION
As of the date of this prospectus, there was no pending or threatened litigation
involving the Fund in any capacity whatsoever.
MISCELLANEOUS INFORMATION
This Statement of Additional Information and the Prospectus do not contain all
the information included in the Trust's registration statement filed with the
Securities and Exchange Commission under the Securities Act with respect to the
securities offered hereby, certain portions of which have been omitted pursuant
to the rules and regulations of the Securities and Exchange Commission. The
registration statement, including the exhibits filed therewith, may be examined
at the offices of the Securities and Exchange Commission in Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.
FINANCIAL STATEMENTS
The audited Statement of Assets and Liabilities of the Fund as of February 8,
1999 is attached as an Appendix to this Statement of Additional Information.
<PAGE>
APPENDIX
To The Shareholders and Trustees
Firstmark Partners Trust:
We have audited the accompanying statement of assets and liabilities of the
Firstmark Partners Trust (comprised of the Contrarian Value Fund) as of February
8, 1999. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. Our procedures included
confirmation of cash held by the custodian as of February 8, 1999, by
correspondence with the custodian. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the
Contrarian Value Fund as of February 8, 1999, in conformity with generally
accepted accounting principles.
/s/ McCurdy & Associates
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
February 8, 1999
<PAGE>
FIRSTMARK PARTNERS TRUST
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 8, 1999
Contrarian
Value Fund
ASSETS:
Cash in Bank $100,000
Total Assets $100,000
LIABILITIES: $ 0
Total Liabilities $ 0
NET ASSETS $100,000
NET ASSETS CONSIST OF:
Capital Paid In $100,000
OUTSTANDING SHARES
Unlimited Number of Shares
Authorized Without Par Value 10,000
NET ASSET VALUE PER SHARE $10.00
OFFERING PRICE PER SHARE $10.00
See Accountants' Audit Report
<PAGE>
FIRSTMARK PARTNERS TRUST
NOTES TO FINANCIAL STATEMENTS
February 8, 1999
1. ORGANIZATION
Firstmark Partners Trust (the "Trust") is an open-end management investment
company organized as a business trust under the laws of the State of
Delaware by a Declaration of Trust dated November 12, 1998. The Declaration
of Trust provides for an unlimited number of authorized shares of beneficial
interest without par value, which may, without shareholder approval, be
divided into an unlimited number of series of such shares, and which
presently consist of one series of shares for the Contrarian Value Fund (the
"Fund").
The Fund uses an independent custodian and transfer agent. No transactions
other than those relating to organizational matters and the sale of 10,000
Shares of the Contrarian Value Fund have taken place to date.
2. RELATED PARTY TRANSACTIONS
As of February 8, 1999, all of the outstanding shares of the Fund were owned
by Mark H. Baumann. A shareholder who beneficially owns, directly or
indirectly, more than 25% of the Fund's voting securities may be deemed a
"control person" (as defined in the 1940 Act) of the Fund. Mark H. Baumann
is the President of the Fund.
Firstock Financial Services, Inc., the Fund's investment adviser and
administrator, is registered as an investment adviser under the Investment
Advisers Act of 1940. Firstock Financial Services, Inc. is owned by Mark H.
Baumann.
As adviser, Firstock Financial Services, Inc. receives from the Fund as
compensation for its services to the Fund an annual fee of 1.25% of the
Fund's net assets. This fee is higher than that paid by most other
investment companies. The fee is paid monthly and calculated on the average
daily closing net asset value of the Fund.
As administrator, Firstock Financial Services, Inc. receives from the Fund
as compensation for its services to the Fund, an annual fee of 0.50% of the
Fund's net assets. This fee is paid monthly and calculated on the average
daily closing net asset value of the Fund
The Fund pays all expenses not assumed by the Adviser, including brokerage
fees and commissions and will pay the expenses of Trustees not affiliated
with the Adviser. The Adviser will pay expenses of registration of the Fund
and of the shares of the Fund with the Securities and Exchange Commission
and the various states, charges of the custodian, dividend and transfer
agent, outside auditing and legal expenses, liability insurance premiums
on property or personnel (including officers and trustees), maintenance of
trust existence such as the filing of reports required by state law, any
<PAGE>
FIRSTMARK PARTNERS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 8, 1999
2. RELATED PARTY TRANSACTIONS (Cont'd)
taxes payable by the Fund, interest payments relating to Fund borrowings,
costs of preparing, printing and mailing registration statements,
prospectuses, periodic reports and other documents furnished to shareholders
and regulatory authorities, fees and expenses of legal counsel, and costs
of printing share certificates, portfolio pricing services and shareholder
meetings.
From time to time, the Adviser may waive receipt of its fees and/or
voluntarily assume certain fund expenses, which would have the effect of
lowering the Fund's expense ratio and increasing yield to investors during
the time such amounts are waived or assumed. The Fund will not be required
to pay the Manager for any amounts voluntarily waived or assumed, nor will
the Fund be required to reimburse the Manager for any amounts waived or
assumed during a prior fiscal year.
3. CAPITAL STOCK AND DISTRIBUTION
At February 8, 1999, an unlimited number of shares were authorized and
paid in capital amounted to $100,000 for the Contrarian Value Fund.
Transactions in capital stock were as follows:
Shares Sold:
Contrarian Value Fund 10,000
Shares Redeemed:
Contrarian Value Fund 0
Net Increase:
Contrarian Value Fund 10,000
Shares Outstanding:
Contrarian Value Fund 10,000
