STONERIDGE FUNDS
PROSPECTUS DATED OCTOBER 8, 1999
STONERIDGE EQUITY FUND
STONERIDGE SMALL CAP EQUITY FUND
STONERIDGE BOND FUND
c/o Unified Fund Services, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
(800) 441-6978
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
STONERIDGE EQUITY FUND.........................................................1
STONERIDGE SMALL CAP EQUITY FUND...............................................1
STONERIDGE BOND FUND...........................................................3
HOW THE FUNDS HAVE PERFORMED ..................................................4
FEES AND EXPENSES OF THE FUNDS.................................................4
HOW TO BUY SHARES..............................................................5
HOW TO REDEEM SHARES...........................................................6
DETERMINATION OF NET ASSET VALUE...............................................7
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................................8
MANAGEMENT OF THE FUND.........................................................8
YEAR 2000 ISSUE................................................................9
<PAGE>
STONERIDGE EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the StoneRidge Equity Fund is capital
appreciation over the long term.
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks of medium and large
capitalization U.S. companies (those with market capitalizations of $2 billion
or more) that the Fund's adviser believes will outperform other stocks. In
making stock selections, the adviser first uses a proprietary computer ranking
system which focuses on earnings, the adviser's assessment (using quantitative
screening techniques) of whether the stock is valued appropriately by the market
and technical factors (such as the performance of the stock compared to other
stocks over various time periods). To make its final selections, the adviser
then examines fundamental characteristics (such as industry conditions and
outlook, market position and management's ability and reputation) of the
companies and technical aspects (such as price and volume behavior) of the
stocks. The Fund will normally invest at least 65% of its assets in equity
securities of U.S. companies.
The Fund may sell a stock if the adviser believes the company's
prospects have declined, if the adviser learns negative information about the
company's underlying fundamentals, or to rebalance the composition of the Fund's
portfolio.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o COMPANY RISK. The value of the Fund may decrease in response to the
activities and financial prospects of an individual company in the Fund's
portfolio. The value of an individual company can be more volatile than the
market as a whole.
o MARKET RISK. Overall stock market risks may also affect the value of the
Fund. Factors such as domestic economic growth and market conditions,
interest rate levels, and political events affect the securities markets.
o VOLATILITY RISK. Common stocks tend to be more volatile than other
investment choices.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
o The Fund is not a complete investment program.
o As with any mutual fund investment, the Fund's returns will vary and you
could lose money.
IS THE FUND RIGHT FOR YOU? The Fund may be a suitable investment for:
o long term investors seeking a Fund with a total return investment strategy
o investors willing to accept price fluctuations in their investment
o investors who can tolerate the greater risks associated with common stock
investments
STONERIDGE SMALL CAP EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the StoneRidge Small Cap Equity Fund is
capital growth over the long term.
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks of small capitalization
U.S. companies (those with a market capitalization between $50 million and $2
billion) that the Fund's adviser believes will outperform other stocks. In
making stock selections, the adviser first uses a proprietary computer ranking
system which focuses on earnings, the adviser's assessment (using quantitative
screening techniques) of whether the stock is valued appropriately by the market
and technical factors (such as the performance of the stock compared to other
stocks over various time periods). To make its final selections, the adviser
then examines fundamental characteristics (such as industry conditions and
outlook, market position and management's ability and reputation) of the
companies and technical aspects (such as price and volume behavior) of the
stocks. In addition, it is possible that a significant portion of the Fund's
portfolio may be invested in initial public offerings (IPOs). The adviser will
select IPOs based on the above-described fundamental characteristics of the
companies. The Fund will normally invest at least 65% of its assets in equity
securities of small capitalization U.S. companies.
The Fund may sell a stock if the adviser believes the company's
prospects have declined, if the adviser learns negative information about the
company's underlying fundamentals, or to rebalance the composition of the Fund's
portfolio.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o SMALL COMPANY RISK. The risks associated with investing in smaller
companies include:
o The earnings and prospects of smaller companies are more volatile than
larger companies.
o Smaller companies may experience higher failure rates than do larger
companies.
o The trading volume of securities of smaller companies is normally less than
that of larger companies and, therefore, may disproportionately affect
their market price, tending to make them fall more in response to selling
pressure than is the case with larger companies.
o Smaller companies may have limited markets, product lines or financial
resources and may lack management depth. These factors could negatively
affect the price of the stock and reduce the value of the Fund.
o IPO RISK. Most IPOs involve a high degree of risk not normally associated
with an investment in more seasoned companies. o Because most IPOs involve
smaller companies, the risk factors described above apply to IPOs. o
Investors in IPOs can be affected by substantial dilution in the value of
their shares, by sales of additional shares and by concentration of control
in existing management and principal shareholders.
o Stock prices of IPOs can also be highly unstable, due to the absence of a
prior public market, the small number of shares available for trading and
limited investor information.
o The IPO market tends to favor certain industry sectors. As a result, the
Fund may invest a significant portion of its assets in those favored
sectors (such as technology or communications). Companies within a sector
may share common characteristics and are likely to react similarly to
negative market, regulatory or economic developments. A negative
development that affects one stock in a sector could affect the value of
all stocks in the Fund's portfolio that are in that sector.
o LIQUIDITY RISK. Smaller companies are subject to liquidity risk. Liquidity
risk is the risk that certain securities may be difficult or impossible to
sell at the time and price that the investment adviser would like to sell.
The adviser may have to lower the price, sell other securities instead or
forego an investment opportunity, any of which could have a negative effect
on fund management or performance.
o COMPANY RISK. The value of the Fund may decrease in response to the
activities and financial prospects of an individual company in the Fund's
portfolio. The value of an individual company can be more volatile than the
market as a whole.
o MARKET RISK. Overall stock market risks may also affect the value of the
Fund. Factors such as domestic economic growth and market conditions,
interest rate levels, and political events affect the securities markets.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
o The Fund is not a complete investment program.
o As with any mutual fund investment, the Fund's returns will vary and you
could lose money.
IS THE FUND RIGHT FOR YOU? The Fund may be suitable for:
o long-term investors seeking a fund with a growth investment strategy
o investors willing to accept price fluctuations in their investment
o investors who can tolerate the risks associated with common stock
investments
o investors willing to accept the greater market price fluctuations of
smaller companies
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STONERIDGE BOND FUND
INVESTMENT OBJECTIVE
The investment objective of the StoneRidge Bond Fund is income consistent
with preservation of capital.
PRINCIPAL STRATEGIES
The Fund invests primarily in a broad range of investment grade fixed
income securities. These include bonds, notes, mortgage-backed securities,
corporate debt, government securities, municipal securities, and short term
obligations, such as commercial paper and repurchase agreements. The Fund's
advisor typically selects intermediate term fixed income securities (those with
maturities of three to ten years), based on the available yield at various
maturity levels. The Fund will normally invest at least 65 % if its assets in
fixed income securities.
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
o INTEREST RATE RISK. The value of your investment may decrease when interest
rates rise.
o DURATION RISK. Prices of fixed income securities with longer effective
maturities are more sensitive to interest rate changes than those with
shorter effective maturities.
o CREDIT RISK. The issuer of the fixed income security may not be able to
make interest and principal payments when due. Generally, the lower the
credit rating of a security, the greater the risk that the issuer will
default on its obligation.
o PREPAYMENT AND EXTENSION RISK. As interest rates decline, the issuers of
securities held by the Fund may prepay principal earlier than scheduled,
forcing the Fund to reinvest in lower yielding securities. As interest
rates increase, slower than expected principal payments may extend the
average life of fixed income securities, locking in below-market interest
rates and reducing the value of these securities. There is a greater risk
that the Fund will lose money due to prepayment and extension risks because
the Fund invests in mortgage-backed securities.
o GOVERNMENT RISK. It is possible that the U.S. Government would not provide
financial support to its agencies or instrumentalities if it is not
required to do so by law. If a U.S. Government agency or instrumentality in
which the Fund invests defaults and the U.S. Government does not stand
behind the obligation, the Fund's share price or yield could fall.
o The United States Government's guarantee of ultimate payment of principal
and timely payment of interest of the United States Government securities
owned by a Fund does not imply that the Fund's shares are guaranteed or
that the price of the Fund's shares will not fluctuate.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
o The Fund is not a complete investment program.
o As with any mutual fund investment, the Fund's returns will vary and you
could lose money.
IS THIS FUND RIGHT FOR YOU?
The Fund may be a suitable investment for:
o long term investors seeking a fund with an income and capital preservation
strategy
o investors seeking to diversify their holdings with bonds and other fixed
income securities
o investors seeking higher potential returns than a money market fund.
o investors willing to accept price fluctuations in their investments.
<PAGE>
GENERAL
EACH FUND may from time to time take temporary defensive positions that
are inconsistent with the Fund's principal investment strategies in attempting
to respond to adverse market, economic, political, or other conditions. For
example, any Fund may hold all or a portion of its assets in money market
instruments, securities of no-load mutual funds or repurchase agreements. If a
Fund invests in shares of another mutual fund, the shareholders of the Fund
generally will be subject to duplicative management fees. As a result of
engaging in these temporary measures, the Funds may not achieve their investment
objectives.
ALTHOUGH IT IS NOT A PRINCIPAL STRATEGY, THE EQUITY FUND may invest in
initial public offerings (IPOs). The risks of investing in IPOs are described
above in connection with the Small Cap Fund
The investment objective and strategies of any Fund may be changed without
shareholder approval.
HOW THE FUNDS HAVE PERFORMED
Although past performance of a fund is no guarantee of how it will
perform in the future, historical performance may give you some indication of
the risk of investing in the fund because it demonstrates how its returns have
varied over time. The Bar Chart and Performance Table that would otherwise
appear in this prospectus have been omitted because each Fund is recently
organized and has a limited performance history.
FEES AND EXPENSES OF THE FUNDS
The tables describe the fees and expenses that you may pay if you buy and hold
shares of a Fund.
<TABLE>
<S> <C> <C> <C>
SMALL CAP
SHAREHOLDER FEES EQUITY FUND EQUITY FUND BOND FUND
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases NONE NONE NONE
Maximum Deferred Sales Charge (Load) NONE NONE NONE
Redemption Fee NONE NONE NONE
SMALL CAP
ANNUAL FUND OPERATING EXPENSES EQUITY FUND EQUITY FUND BOND FUND
(expenses that are deducted from Fund assets)
Management Fee 0.60 % 1.00 % 0.40 %
Distribution and/or Service (12b-1) Fees None None None
Other Expenses1 0.30 % 0.30% 0.30 %
Total Annual Fund Operating Expenses 0.90 % 1.30 % 0.70 %
Fee Waiver 2 None 0.05 % 0.05%
Net Expenses 0.90 % 1.25 % 0.65 %
</TABLE>
1 "Other Expenses" are based on estimated amounts for the current fiscal
year.
2 The Funds' adviser has contractually agreed to waive fees and/or reimburse
expenses through December 31, 2000 to maintain "Net Expenses" as follows:
Equity Fund, 0.90 %; Small Cap Equity Fund, 1.25 %; Bond Fund, 0.65 %.
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Example:
This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated, reinvest dividends and distributions, and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
Equity Fund Small Cap Equity Fund Bond Fund
1 Year $92 $128 $67
3 Year $288 $405 $215
HOW TO BUY SHARES
INITIAL PURCHASE
The minimum initial investment in each Fund is $10,000 ($2,000 for
qualified retirement accounts and medical savings accounts. The minimum initial
investment in each Fund is $1,000 for shareholders participating in the
continuing automatic investment plan. To the extent investments of individual
investors are aggregated into an omnibus account established by an investment
adviser, broker or other intermediary, the account minimums apply to the omnibus
account, not to the account of the individual investor.
BY MAIL
You may make your initial investment by following these steps:
o complete and sign the investment application form which accompanies this
Prospectus;
o draft a check made payable to the appropriate Fund;
o mail the application and check to:
U.S. Mail: Overnight:
StoneRidge Funds StoneRidge Funds
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
BY WIRE
You may also purchase shares of a Fund by wiring federal funds from your bank,
which may charge you a fee for doing so. To wire money, you must call Unified
Fund Services, Inc., the Funds' transfer agent, at (800)-441-6978 to set up your
account and obtain an account number. You should be prepared at that time to
provide the information on the application. Then, provide your bank with the
following information for purposes of wiring your investment:
Firstar Bank, N.A.
ABA #0420-0001-3
Attn: StoneRidge Funds
D.D.A.# 821 602 935
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You must mail a signed application to Firstar Bank, N.A., the Funs'
custodian, at the above address in order to complete your initial wire purchase.
Wire orders will be accepted only on a day on which the Fund, custodian and
transfer agent are open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the Fund.
Any delays which may occur in wiring money, including delays which may occur in
processing by the banks, are not the responsibility of the Fund or the Transfer
agent. There is presently no fee for the receipt of wired funds, but the Fund
may charge shareholders for this service in the future.
ADDITIONAL INVESTMENTS
You may purchase additional shares of any Fund (subject to a minimum
$1,000) by mail, wire, or automatic investment. Each additional mail purchase
request must contain:
o your name
o the name of your account(s),
o your account number(s),
o the name of the Fund
o a check made payable to the Fund
Send your purchase request to the address listed above. A bank wire should be
sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
TAX SHELTERED RETIREMENT PLANS
Since the Funds are oriented to longer term investments, shares of the
Funds may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and
profit sharing plans (for employees); tax deferred investment plans (for
employees of public school systems and certain types of charitable
organizations); and other qualified retirement plans. Contact the Transfer agent
for the procedure to open an IRA or SEP plan and more specific information
regarding these retirement plan options. Please consult with your attorney or
tax adviser regarding these plans. You must pay custodial fees for your IRA by
redemption of sufficient shares of the Fund from the IRA unless you pay the fees
directly to the IRA custodian. Call the Transfer agent about the IRA custodial
fees.
OTHER PURCHASE INFORMATION
Each Fund may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred by the Funds. If you are already a shareholder, the Funds can
redeem shares from any identically registered account in the Funds as
reimbursement for any loss incurred. You may be prohibited or restricted from
making future purchases in the Funds.
HOW TO REDEEM SHARES
You may receive redemption payments in the form of a check or federal
wire transfer. Presently there is no charge for wire redemptions; however, the
Funds may charge for this service in the future. Any charges for wire
redemptions will be deducted from the shareholder's Fund account by redemption
of shares. If you redeem your shares through a broker/dealer or other
institution, you may be charged a fee by that institution.
BY MAIL - You may redeem any part of your account in a Fund at no charge by
mail. Your request should be addressed to:
StoneRidge Funds
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
"Proper order" means your request for a redemption must include:
o the Fund name and account number,
o account name(s) and address,
o the dollar amount or number of shares you wish to redeem.
This request must be signed by all registered share owner(s) in the
exact name(s) and any special capacity in which they are registered. The Funds
may require that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Funds or Unified Fund Services, Inc., you
may be required to furnish additional legal documents to insure proper
authorization.
BY TELEPHONE - You may redeem any part of your account in a Fund by
calling the transfer agent at (800) 441-6978. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the transfer agent and the custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The Funds may terminate the telephone redemption and exchange
procedures at any time. During periods of extreme market activity it is possible
that shareholders may encounter some difficulty in telephoning the Funds,
although neither the Funds nor the transfer agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Funds by
telephone, you may request a redemption or exchange by mail.
ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the transfer agent at (800) 441-6978. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Funds may suspend
redemptions or postpone payment dates.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund may require you to redeem all of your shares in the Fund on
30 days' written notice if the value of your shares in the Fund is less than
$10,000 due to redemption, or such other minimum amount as the Fund may
determine from time to time. An involuntary redemption constitutes a sale. You
should consult your tax adviser concerning the tax consequences of involuntary
redemptions. You may increase the value of your shares in the Fund to the
minimum amount within the 30 day period. Your shares are subject to redemption
at any time if the Board of Trustees determines in its sole discretion that
failure to so redeem may have materially adverse consequences to all or any of
the shareholders of the Funds.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the applicable Fund's net
asset value per share (NAV). The NAV is calculated at the close of trading
(normally 4:00 p.m. Eastern time) on each day the New York Stock Exchange is
open for business (the Stock Exchange is closed on weekends, Federal holidays
and Good Friday). The NAV is calculated by dividing the value of the Fund's
total assets (including interest and dividends accrued but not yet received)
minus liabilities (including accrued expenses) by the total number of shares
outstanding.
The Funds' assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued at their fair
value.
Requests to purchase and sell shares are processed at the NAV next
calculated after we receive your order in proper form.
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Each Fund typically distributes substantially all of its net investment
income in the form of dividends and taxable capital gains to its shareholders
[annually]. These distributions are automatically reinvested in the applicable
Fund unless you request cash distributions on your application or through a
written request. Dividends paid by the Funds may be eligible in part for the
dividends received deduction for corporations.
TAXES
In general, selling shares of a Fund and receiving distributions
(whether reinvested or taken in cash) are taxable events. Depending on the
purchase price and the sale price, you may have a gain or a loss on any shares
sold. Any tax liabilities generated by your transactions or by receiving
distributions are your responsibility. Because distributions of long term
capital gains are subject to capital gains taxes, regardless of how long you
have owned your shares, you may want to avoid making a substantial investment
when a Fund is about to make a long term capital gains distribution.
Early each year, the Funds will mail to you a statement setting forth
the federal income tax information for all distributions made during the
previous year. If you do not provide your taxpayer identification number, your
account will be subject to backup withholding.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult with your tax adviser about your
investment.
MANAGEMENT OF THE FUNDS
StoneRidge Investment Partners, LLC, 7 Great Valley Parkway, Suite 290,
Malvern, PA 19355, serves as investment adviser to the Funds. In this capacity,
Stoneridge Investment Partners is responsible for the selection and ongoing
monitoring of the securities in each Fund's investment portfolio and managing
the Funds' business affairs. StoneRidge Investment Partners, LLC was formed in
1999. Each Fund is authorized to pay the adviser an annual fee as follows:
Equity Fund, 0.60 %; Small Cap Equity Fund, 1.00 %;Bond Fund, 0.40
A team of investment professionals is responsible for the day-to-day
management of the Equity Fund and the Small Cap Equity Fund. This team is
comprised of the following individuals:
Joseph E. Stocke, CFA Mr. Stocke, a managing director and co-founder of the
adviser, was Chief Investment Officer and head of equity investment at Meridian
Investment Company. Mr. Stocke has over 16 years of investment experience and
was with Meridian from 1983 to 1999.
Philip H. Brown II, CFA Mr. Brown is a managing director and co-founder of
the adviser. Prior to co-founding the adviser, Mr. Brown was President of
Meridian Investment Company where, in addition to his responsibilities as
president, he had portfolio management and analytical responsibilities for
equity portfolios. He was with Meridian from 1983 to 1999 and has over 28 years
of investment experience.
Lester Rich, CFA Mr. Rich, a managing director and co-founder of the
adviser, was an equity portfolio manager at Meridian Investment Company. Mr.
Rich has over 16 years of investment experience and was with Meridian from 1990
until 1999.
Daniel H. Cook Mr. Cook, a managing director and co-founder of the adviser,
was an equity portfolio manager at Meridian Investment Company. Mr. Cook was
with Meridian from 1986 to 1999 and has over 13 years of investment experience.
David M. Killian is responsible for the day-to-day management of the Bond
Fund. Prior to joining the adviser in 1999, he was Vice President and fixed
income portfolio manager for First Union National Bank, where he managed nearly
$1 billion for individual clients. Mr. Killian joined First Union in 1993 and
has seven years of investment experience. YEAR 2000 ISSUE
Like other mutual funds, financial and business organizations and
individuals around the world, the Funds could be adversely affected if the
computer systems used by the Funds' adviser or the Funds' various service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Issue."
The Funds' adviser has taken steps that it believes are reasonably
designed to address the Year 2000 Issue with respect to computer systems that
are used and to obtain reasonable assurances that comparable steps are being
taken by the Funds' major service providers. At this time, however, there can be
no assurance that these steps will be sufficient to avoid any adverse impact on
the Funds. In addition, the Funds' adviser cannot make any assurances that the
Year 2000 Issue will not affect the companies in which the Funds invest or
worldwide markets and economies.
<PAGE>
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated into this prospectus by
reference, contains detailed information on Fund policies and operations.
Shareholder reports contain management's discussion of market conditions,
investment strategies and performance results as of the Funds' latest
semi-annual or annual fiscal year end.
Call the Funds at 800 441-6978 to request free copies of the SAI and
the Funds' annual and semi-annual reports, to request other information about
the Funds and to make shareholder inquiries.
You may also obtain information about the fund (including the SAI and
other reports) from the Securities and Exchange Commission on their Internet
site at http://www.sec.gov or at their Public Reference Room in Washington, D.C.
Call the SEC at 800-SEC-0330 for room hours and operation. You may also obtain
fund information by sending a written request and duplicating fee to the Public
Reference Section of the SEC, Washington, D.C. 20549-6609.
<PAGE>
StoneRidge Equity Fund
StoneRidge Small Cap Equity Fund
StoneRidge Bond Fund
STATEMENT OF ADDITIONAL INFORMATION
October 8, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of StoneRidge Funds dated
October 8, 1999. A free copy of the Prospectus can be obtained by writing the
Transfer Agent at 431 North Pennsylvania Street, Indianapolis, Indiana 46204, or
by calling 1-800-441-6978.
TABLE OF CONTENTS PAGE
DESCRIPTION OF THE TRUST AND THE FUND..........................................1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS.................................................................2
INVESTMENT LIMITATIONS.........................................................7
THE INVESTMENT ADVISER.........................................................9
TRUSTEES AND OFFICERS.........................................................10
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................12
DETERMINATION OF SHARE PRICE..................................................13
INVESTMENT PERFORMANCE........................................................13
CUSTODIAN.....................................................................15
TRANSFER AGENT................................................................15
ACCOUNTANTS...................................................................16
DISTRIBUTOR...................................................................16
ADMINISTRATOR.................................................................16
FINANCIAL STATEMENTS..........................................................17
<PAGE>
DESCRIPTION OF THE TRUST AND THE FUND
The StoneRidge Equity Fund, StoneRidge Small Cap Equity Fund, and
StoneRidge Bond Fund (each a "Fund" or collectively, the "Funds") were organized
as diversified series of AmeriPrime Advisors Trust (the "Trust") on August 3,
1999. The Trust is an open-end investment company established under the laws of
Ohio by an Agreement and Declaration of Trust dated August 3, 1999 (the "Trust
Agreement"). The Trust Agreement permits the Trustees to issue an unlimited
number of shares of beneficial interest of separate series without par value.
Each Fund is one of a series of funds currently authorized by the Trustees. The
investment adviser to each Fund is StoneRidge Investment Partners, LLC (the
"Adviser").
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will been titled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
Prior to the public offering of the Funds, Highcrest Partners, L.P. (an
affiliate of the Funds' adviser), 3421 Saint Davids Road, Newtown Square, PA
19073, purchased all of the outstanding shares of the Equity fund and the Small
Cap Equity Fund and may be deemed to control those Funds. As the controlling
shareholder, Highcrest Partners, LP would control the outcome of any proposal
submitted to the shareholders for approval, including changes to a Fund's
fundamental policies or the terms of the management agreement with the adviser.
After the public offering commences, it is anticipated that Highcrest Partners,
LP will no longer control the Funds.
For information concerning the purchase and redemption of shares of the
Funds, see "How to Buy Shares" and "How to Redeem Shares" in the Funds'
Prospectus. For a description of the methods used to determine the share price
and value of each Fund's assets, see "Determination of Net Asset Value" in the
Funds' Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the investments the
Funds may make and some of the techniques they may use.
A. Equity Securities. Equity securities are common stocks, preferred
stocks, convertible preferred stocks, convertible debentures, American
Depositary Receipts ("ADR's"), rights and warrants. Convertible preferred stock
is preferred stock that can be converted into common stock pursuant to its
terms. Convertible debentures are debt instruments that can be converted into
common stock pursuant to their terms. Warrants are options to purchase equity
securities at a specified price valid for a specific time period. Rights are
similar to warrants, but normally have shorter durations. A Fund may not invest
more than 5% of its net assets at the time of purchase in rights and warrants.
B. Corporate Debt Securities. Each Fund may invest in corporate debt
securities. These are bonds or notes issued by corporations and other business
organizations, including business trusts, in order to finance their credit
needs. Corporate debt securities include commercial paper which consists of
short term (usually from one to two hundred seventy days) unsecured promissory
notes issued by corporations in order to finance their current operations. The
Adviser considers corporate debt securities to be of investment grade quality if
they are rated BBB or higher by Standard & Poor's Corporation ("S&P"), Baa or
higher by Moody's Investors Services, Inc. ("Moody's"), or if unrated,
determined by the Adviser to be of comparable quality. Investment grade debt
securities generally have adequate to strong protection of principal and
interest payments. In the lower end of this category, credit quality may be more
susceptible to potential future changes in circumstances and the securities have
speculative elements. The Equity Fund and the Small Cap Equity Fund will not
invest in securities rated below investment grade. If the rating of a security
by S&P or Moody's drops below investment grade, the Adviser will dispose of the
security as soon as practicable (depending on market conditions) unless the
Adviser determines based on its own credit analysis that the security provides
the opportunity of meeting the Fund's objective without presenting excessive
risk. The Bond Fund will not invest more than 5% of the value of its net assets
in securities that are below investment grade. If, as a result of a downgrade,
the Fund holds more than 5% of the value of its net assets in securities rated
below investment grade, the Fund will take action to reduce the value of such
securities below 5%.
C. Municipal Securities. The Bond Fund may invest in municipal
securities. These are long and short term debt obligations issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their political subdivisions, agencies, instrumentalities and
authorities, as well as other qualifying issuers (including the U.S. Virgin
Islands, Puerto Rico and Guam), the income from which is exempt from regular
federal income tax and exempt from state tax in the state of issuance. Municipal
securities are issued to obtain funds to construct, repair or improve various
public facilities such as airports, bridges, highways, hospitals, housing,
schools, streets and water and sewer works, to pay general operating expenses or
to refinance outstanding debts. They also may be issued to finance various
private activities, including the lending of funds to public or private
institutions for construction of housing, educational or medical facilities or
the financing of privately owned or operated facilities. Municipal securities
consist of tax exempt bonds, tax exempt notes and tax exempt commercial paper.
Municipal notes, which are generally used to provide short term capital needs
and have maturities of one year of less, include tax anticipation notes, revenue
anticipation notes, bond anticipation notes and construction loan notes. Tax
exempt commercial paper typically represents short term, unsecured, negotiable
promissory notes. The Fund may invest in other municipal securities such as
variable rate demand instruments.
The two principal classifications of municipal securities are
"general obligation" and "revenue" bonds. General obligation bonds are backed by
the issuer's full credit and taxing power. Revenue bonds are backed by the
revenues of a specific project, facility or tax. Industrial development revenue
bonds are a specific type of revenue bond backed by the credit of the private
issuer of the facility, and therefore investments in these bonds have more
potential risk that the issuer will not be able to meet scheduled payments of
principal and interest.
The Adviser considers municipal securities to be of
investment grade quality if they are rated BBB or higher by S&P, Baa or higher
by Moody's, or if unrated, determined by the Adviser to be of comparable
quality. Investment grade debt securities generally have adequate to strong
protection of principal and interest payments. In the lower end of this
category, credit quality may be more susceptible to potential future changes in
circumstances and the securities have speculative elements. The Equity Fund and
the Small Cap Equity Fund will not invest in securities rated below investment
grade. If the rating of a security by S&P or Moody's drops below investment
grade, the Adviser will dispose of the security as soon as practicable
(depending on market conditions) unless the Adviser determines based on its own
credit analysis that the security provides the opportunity of meeting the Fund's
objective without presenting excessive risk. The Bond Fund will not will invest
more than 5% of the value of its net assets in securities that are below
investment grade. If, as a result of a downgrade, the Fund holds more than 5% of
the value of its net assets in securities rated below investment grade, the Fund
will take action to reduce the value of such securities below 5%.
D. U.S. Government Securities. U.S. government securities may be backed
by the credit of the government as a whole or only by the issuing agency. U.S.
Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
E. Mortgage-Backed Securities. Mortgage-backed securities represent an
interest in a pool of mortgages. These securities, including securities issued
by FNMA and GNMA, provide investors with payments consisting of both interest
and principal as the mortgages in the underlying mortgage pools are repaid.
Unscheduled or early payments on the underlying mortgages may shorten the
securities' effective maturities. The average life of securities representing
interests in pools of mortgage loans is likely to be substantially less than the
original maturity of the mortgage pools as a result of prepayments or
foreclosures of such mortgages. Prepayments are passed through to the registered
holder with the regular monthly payments of principal and interest, and have the
effect of reducing future payments. To the extent the mortgages underlying a
security representing an interest in a pool of mortgages are prepaid, the Bond
Fund may experience a loss (if the price at which the respective security was
acquired by the Fund was at a premium over par, which represents the price at
which the security will be sold upon prepayment). In addition, prepayments of
such securities held by the Bond Fund will reduce the share price of the Fund to
the extent the market value of the securities at the time of prepayment exceeds
their par value. Furthermore, the prices of mortgage-backed securities can be
significantly affected by changes in interest rates. Prepayments may occur with
greater frequency in periods of declining mortgage rates because, among other
reasons, it may be possible for mortgagors to refinance their outstanding
mortgages at lower interest rates. In such periods, it is likely that any
prepayment proceeds would be reinvested by the Bond Fund at lower rates of
return.
F. Collateralized Mortgage Obligations (CMOs). The Bond Fund may invest
in CMOs. CMOs are securities Collateralized by mortgages or mortgage-backed
securities. CMOs are issued with a variety of classes or series, which have
different maturities and are often retired in sequence. CMOs may be issued by
governmental or non-governmental entities such as banks and other mortgage
lenders. Non-government securities may offer a higher yield but also may be
subject to greater price fluctuation than government securities. Investments in
CMOs are subject to the same risks as direct investments in the underlying
mortgage and mortgage-backed securities. In addition, in the event of a
bankruptcy or other default of an entity who issued the CMO held by a Fund, the
Fund could experience both delays in liquidating its position and losses.
G. Zero Coupon and Pay in Kind Bonds. Corporate debt securities and
municipal obligations include so-called "zero coupon" bonds and "pay-in-kind"
bonds. Zero coupon bonds do not make regular interest payments. Instead they are
sold at a deep discount from their face value. Each Fund will accrue income on
such bonds for tax and accounting purposes, in accordance with applicable law.
This income will be distributed to shareholders. Because no cash is received at
the time such income is accrued, the Fund may be required to liquidate other
portfolio securities to satisfy its distribution obligations. Because a zero
coupon bond does not pay current income, its price can be very volatile when
interest rates change. In calculating its dividend, the Funds take into account
as income a portion of the difference between a zero coupon bond's purchase
price and its face value. Certain types of CMOs pay no interest for a period of
time and therefore present risks similar to zero coupon bonds.
The Federal Reserve creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the coupon payments and the
principal payment from an outstanding Treasury security and selling them as
individual securities. A broker-dealer creates a derivative zero by depositing a
Treasury security with a custodian for safekeeping and then selling the coupon
payments and principal payment that will be generated by this security
separately. Examples are Certificates of Accrual on Treasury Securities (CATs),
Treasury Investment Growth Receipts (TIGRs) and generic Treasury Receipts (TRs).
These derivative zero coupon obligations are not considered to be government
securities unless they are part of the STRIPS program. Original issue zeros are
zero coupon securities issued directly by the U.S. government, a government
agency, or by a corporation.
Pay-in-kind bonds allow the issuer, at its option, to make current
interest payments on the bonds either in cash or in additional bonds. The value
of zero coupon bonds and pay-in-kind bonds is subject to greater fluctuation in
response to changes in market interest rates than bonds which make regular
payments of interest. Both of these types of bonds allow an issuer to avoid the
need to generate cash to meet current interest payments. Accordingly, such bonds
may involve greater credit risks than bonds which make regular payment of
interest. Even though zero coupon bonds and pay-in-kind bonds do not pay current
interest in cash, the applicable Fund is required to accrue interest income on
such investments and to distribute such amounts at least annually to
shareholders. Thus, a Fund could be required at times to liquidate other
investments in order to satisfy its dividend requirements.
No Fund will invest more than 5% of its net assets in pay-in-kind bonds.
H. Financial Service Industry Obligations. Financial service industry
obligations include among others, the following:
(1) Certificates of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial bank or a
savings and loan association to repay funds deposited with it for a definite
period of time (usually from fourteen days to one year) at a stated or variable
interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association for a
specified period of time at a stated interest rate. Time Deposits are considered
to be illiquid prior to their maturity.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which has been
drawn on it by a customer, which instruments reflect the obligation both of the
bank and of the drawer to pay the face amount of the instrument upon maturity.
I. Asset-Backed and Receivable-Backed Securities. Asset-backed and
receivable-backed securities are undivided fractional interests in pools of
consumer loans (unrelated to mortgage loans) held in a trust. Payments of
principal and interest are passed through to certificate holders and are
typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guaranty, or senior/subordination. The degree of
credit enhancement varies, but generally amounts to only a fraction of the
asset-backed or receivable-backed security's par value until exhausted. If the
credit enhancement is exhausted, certificateholders may experience losses or
delays in payment if the required payments of principal and interest are not
made to the trust with respect to the underlying loans. The value of these
securities also may change because of changes in the market's perception of the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans or the financial institution providing the credit enhancement.
Asset-backed and receivable-backed securities are ultimately dependent upon
payment of consumer loans by individuals, and the certificateholder generally
has no recourse against the entity that originated the loans. The underlying
loans are subject to prepayments which shorten the securities' weighted average
life and may lower their return. As prepayments flow through at par, total
returns would be affected by the prepayments: if a security were trading at a
premium, its total return would be lowered by prepayments, and if a security
were trading at a discount, its total return would be increased by prepayments.
No Fund will invest more than 5% of its net assets in asset-backed or
receivable-backed securities.
J. Loans of Portfolio Securities. Each Fund may make short and long
term loans of its portfolio securities. Under the lending policy authorized by
the Board of Trustees and implemented by the Adviser in response to requests of
broker-dealers or institutional investors which the Adviser deems qualified, the
borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time to vote on
any matter which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral. No loan of securities will be made if, as a result, the aggregate
amount of such loans would exceed 5% of the value of the Fund's net assets.
K. Foreign Securities. The Equity Fund and Small Cap Equity Fund may
invest in foreign equity securities through the purchase of American Depository
Receipts. American Depository Receipts are certificates of ownership issued by a
U.S. bank as a convenience to the investors in lieu of the underlying shares
which it holds in custody. The Bond Fund may invest in dollar denominated
foreign fixed-income securities issued by foreign companies, foreign governments
or international organizations and determined by the Adviser to be comparable in
quality to investment grade domestic securities. No Fund will invest in a
foreign security if, immediately after a purchase and as a result of the
purchase, the total value of foreign securities owned by the Fund would exceed
10% of the value of the total assets of the Fund. To the extent that a Fund does
invest in foreign securities, such investments may be subject to special risks,
such as changes in restrictions on foreign currency transactions and rates of
exchange, and changes in the administrations or economic and monetary policies
of foreign governments.
L. Repurchase Agreements. Each Fund may invest in repurchase agreements
fully collateralized by obligations issued by the U.S. Government or by agencies
of the U.S. governmnet ("U.S. Government obligations"). A repurchase agreement
is a short term investment in which the purchaser (i.e., a Fund) acquires
ownership of a U.S. Government obligation (which may be of any maturity) and the
seller agrees to repurchase the obligation at a future time at a set price,
thereby determining the yield during the purchaser's holding period (usually not
more than seven days from the date of purchase). Any repurchase transaction in
which a Fund engages will require full collateralization of the seller's
obligation during the entire term of the repurchase agreement. In the event of a
bankruptcy or other default of the seller, a Fund could experience both delays
in liquidating the underlying security and losses in value. However, the Funds
intend to enter into repurchase agreements only with the Trust's custodian,
other banks with assets of $1 billion or more and registered securities dealers
determined by the Adviser to be creditworthy.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of each Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Funds; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of each Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Funds from entering
into reverse repurchase transactions, provided that the Funds have an asset
coverage of 300% for all borrowings and repurchase commitments of the Funds
pursuant to reverse repurchase transactions.
2. Senior Securities. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Funds will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Funds from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Funds from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. No Fund will invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to each Fund and are Non-Fundamental (see "Investment Restrictions"
above).
1. Pledging. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Funds except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. No Fund will purchase any security while borrowings
(including reverse repurchase agreements) representing more than one third of
its total assets are outstanding.
3. Margin Purchases. No Fund will purchase securities or evidences of
interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.
4. Options. The Funds will not purchase or sell puts, calls, options or
straddles.
5. Illiquid Investments. The Funds will not invest in securities for
which there are legal or contractual restrictions on resale and other illiquid
securities.
THE INVESTMENT ADVISER
The investment adviser to the Funds is StoneRidge Investment Partners,
L.L.C., 7 Great Valley Parkway, Suite 290, Malvern, PA 19355, (the "Adviser").
Joseph E. Stocke, CFA, Philip H. Brown II, Lester Rich, CFA and Daniel H. Cook
are the controlling members of the Adviser.
Under the terms of the management agreement (the "Agreement"), the
Adviser manages each Fund's investments subject to approval of the Board of
Trustees. As compensation for its management services and agreement to pay each
Fund's expenses, each Fund is obligated to pay the Adviser a fee (based on
average daily net assets) computed and accrued daily and paid monthly at the
following annual rates: StoneRidge Equity Fund, 0.60%; StoneRidge Small Cap
Equity Fund, 1.00%; StoneRidge Bond Fund, 0.40%. The Adviser has contractually
agreed to waive fees and/or reimburse expenses through December 31, 2000 to
maintain each Fund's total operating expenses as follows: Equity Fund, 0.90 %;
Small Cap Equity Fund, 1.25 %; Bond Fund, 0.65 %.
The Adviser retains the right to use the name "StoneRidge" in
connection with another investment company or business enterprise with which the
Adviser is or may become associated. The Trust's right to use the name
"StoneRidge" automatically ceases ninety days after termination of the Agreement
and may be withdrawn by the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of each Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of each
Fund believes that there would be no material impact on each Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Funds may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Trust.
The names of the Trustees and executive officers of the Trust are shown below.
Each Trustee who is an "interested person" of the Trust, as defined in the
Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
==================================== ---------------- ======================================================================
NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
==================================== ---------------- ======================================================================
*Kenneth D. Trumpfheller President and President, Treasurer and Secretary of AmeriPrime Financial Services,
Age: 41 Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
1793 Kingswood Drive Inc., the Fund's distributor, since 1994. President and Trustee of
Suite 200 AmeriPrime Funds and AmeriPrime Insurance Trust. Prior to December,
Southlake, Texas 76092 1994, a senior client executive with SEI Financial Services
==================================== ---------------- ======================================================================
Paul Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
Age: 40 Treasurer Financial Services, Inc. and AmeriPrime Financial Securities, Inc.;
1793 Kingswood Drive Treasurer and Secretary of AmeriPrime Funds and AmeriPrime Insurance
Suite 200 Trust. Various positions with Fidelity Investments from 1987 to
Southlake, Texas 76092 1998; most recently Fund Reporting Unit Manager.
==================================== ---------------- ======================================================================
Mark W. Muller Trustee Account Manager for Clarion Technologies, a manufacturer of
Age: 35 automotive, heavy truck, and comsumer goods, from 1996 to present.
175 Westwood Drive From 1986 to 1996, an engineer for Sicor, a telecommunication
Suite 300 hardware company.
Southlake, Texas 76092
==================================== ================ ======================================================================
Richard J. Wright, Jr. Trustee Various positions (most recently Program Manager) with Texas
Age 37 Instruments, a technology company, from 1985 to present.
8505 Forest Lane
MS 8672
Dallas, Texas 75243
==================================== ================ ======================================================================
</TABLE>
<PAGE>
The following table estimates the Trustees' compensation for the first
full fiscal year. Trustee fees are Trust expenses and each series of the Trust
pays a portion of the Trustee fees.
<TABLE>
<S> <C> <C>
==================================== ----------------------- ==================================
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST (THE TRUST IS
NAME FROM TRUST NOT IN A FUND COMPLEX)
==================================== ----------------------- ==================================
Kenneth D. Trumpfheller 0 0
==================================== ----------------------- ==================================
Mark W. Muller $6,000 $6,000
==================================== ======================= ==================================
Richard J. Wright $6,000 $6,000
==================================== ======================= ==================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for each Fund's portfolio decisions and the placing
of each Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for each Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. Consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and subject to its obligation of seeking best qualitative execution, the
Adviser may give consideration to sales of shares of the Trust as a factor in
the selection of brokers and dealers to execute portfolio transactions.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Funds and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Funds effect securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Funds. Although research services and other information are useful to the Funds
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Funds
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
While each Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to other
firms. StoneRidge Investment Partners, L.L.C. will not receive reciprocal
brokerage business as a result of the brokerage business placed by the Funds
with others.
When a Portfolio and another of the Adviser's clients seek to purchase
or sell the same security at or about the same time, the Adviser may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Portfolios because of the increased volume of the
transaction. If the entire blocked order is not filled, the Portfolio may not be
able to acquire as large a position in such security as it desires or it may
have to pay a higher price for the security. Similarly, the Portfolio may not be
able to obtain as large an execution of an order to sell or as high a price for
any particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. The allocation may be adjusted by the Adviser, taking into account such
factors as the size of the individual orders and transaction costs, when the
Adviser believes an adjustment is reasonable.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in each Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
Each Fund may periodically advertise "average annual total return."
"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
for the period indicated that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates that the maximum sales load is
deducted from the initial $1,000 and that a complete redemption occurs at the
end of the applicable period. If each Fund has been in existence less than one,
five or ten years, the time period since the date of the initial public offering
of shares will be substituted for the periods stated.
A Fund's "yield" is determined in accordance with the method defined by
the Securities and Exchange Commission. A yield quotation is based on a 30 day
(or one month) period and is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
Yield = 2[(a-b/cd+1)6-1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Solely for the purpose of computing yield, dividend income recognized
by accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day prior
to the start of the 30-day (or one month) period for which yield is being
calculated, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest). With respect to the treatment of
discount and premium on mortgage or other receivable-backed obligations which
are expected to be subject to monthly paydowns of principal and interest, gain
or loss attributable to actual monthly paydowns is accounted for as an increase
or decrease to interest income during the period and discount or premium on the
remaining security is not amortized.
Each Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from average
annual total return. A non-standardized 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
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for average annual total return. In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. These non-standardized quotations do not include the effect of
the applicable sales load which, if included, would reduce the quoted
performance. A non-standardized quotation of total return will always be
accompanied by the Fund's average annual total return as described above.
Each Fund's investment performance will vary depending upon market
conditions, the composition of that Fund's portfolio and operating expenses of
that Fund. These factors and possible differences in the methods and time
periods used in calculating non-standardized investment performance should be
considered when comparing each Fund's performance to those of other investment
companies or investment vehicles. The risks associated with each Fund's
investment objective, policies and techniques should also be considered. At any
time in the future, investment performance may be higher or lower than past
performance, and there can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of any of the
Funds may be compared to indices of broad groups of unmanaged securities
considered to be representative of or similar to the portfolio holdings of the
Funds or considered to be representative of the stock market in general. These
may include the Standard & Poor's 500 Stock Index, the NASDAQ Composite Index or
the Dow Jones Industrial Average.
In addition, the performance of any of the Funds may be compared to
other groups of mutual funds tracked by any widely used independent research
firm which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of any of the Funds. Performance rankings and
ratings reported periodically in national financial publications such as
Barron's and Fortune also may be used.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street M.L 6118, Cincinnati, Ohio 45202,
is Custodian of the Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Funds' transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' Inquiries concerning their accounts, processes purchases and
redemptions of the Funds' shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified provides the Funds with fund accounting services, which
includes certain monthly reports, record-keeping and other management-related
services. For its services as fund accountant, Unified receives an annual fee
from the Adviser equal to 0.0275% of each Fund's assets up to $100 million
(subject to various monthly minimum fees, the maximum being $2,100 per month for
assets of $20 to $100 million).
<PAGE>
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the first fiscal year. McCurdy & Associates performs an annual audit of the
Funds' financial statements and provides financial, tax and accounting
consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Funds. The Distributor is obligated to sell the shares of the Funds on a best
efforts basis only against purchase orders for the shares. Shares of the Funds
are offered to the public on a continuous basis.
ADMINISTRATOR
The Funds retain AmeriPrime Financial Services, Inc., 1793
Kingswood Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage
the Funds' business affairs and provide the Funds with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. The Administrator receives a monthly fee from the Adviser equal to
an annual average rate of 01.0% of each Fund's average daily net assets up to
fifty million dollars, 0.075% of each Fund's average daily net assets from fifty
to one hundred million dollars and 0.050% of each fund's average daily net
assets over one hundred million dollars.
<PAGE>
FINANCIAL STATEMENTS
AMERIPRIME ADVISORS TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 24, 1999
StoneRidge
StoneRidge Small Cap StoneRidge
Equity Fund Equity Fund Bond Fund
----------- ----------- -----------
ASSETS:
Cash in Bank $50,000 $50,000 $ 0
Total Assets $50,000 $50,000 $ 0
LIABILITIES: $ 0 $ 0 $ 0
Total Liabilities $ 0 $ 0 $ 0
NET ASSETS $50,000 $50,000 $ 0
NET ASSETS CONSIST OF:
Capital Paid In $50,000 $50,000 $ 0
OUTSTANDING SHARES
Unlimited Number of Shares
Authorized Without Par Value 5,000 5,000 0
NET ASSET VALUE PER SHARE $10.00 $10.00 $10.00
See Accountants' Audit Report
AMERIPRIME ADVISORS TRUST
NOTES TO FINANCIAL STATEMENTS
September 24, 1999
1. ORGANIZATION
Ameriprime Advisors Trust (the "Trust") is an open-end management investment
company organized as a business trust under the laws of the State of Ohio by
a Declaration of Trust dated August 3, 1999. 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
three series of shares for the StoneRidge Equity Fund, the StoneRidge Small
Cap Equity Fund, and the StoneRidge Bond Fund (the "Funds"). The investment
objective of the StoneRidge Equity Fund is capital appreciation over the
long term. The investment objective of the StoneRidge Small Cap Equity Fund
is capital growth over the long term. The investment objective of the
StoneRidge Bond Fund is income consistent with preservation of capital.
The Funds use an independent custodian and transfer agent. No transactions
other than those relating to organizational matters and the sale of 5,000
Shares of the StoneRidge Equity Fund and 5,000 Shares of the StoneRidge
Small Cap Equity Fund have taken place to date.
2. MANAGEMENT AGREEMENT
StoneRidge Investment Partners, LLC, the Fund's investment adviser, is
registered as an investment adviser under the Investment Advisers Act of
1940.
The adviser receives from each Fund as compensation for its services to the
Funds, an annual fee of 0.60% of the StoneRidge Equity Fund's net assets,
1.00% of the StoneRidge Small Cap Equity Fund's net assets, and 0.40% of the
StoneRidge Bond Fund net assets. The fee is paid monthly and calculated on
the basis of that month's net assets.
The adviser has contractually agreed to waive fees and/or reimburse expenses
through December 31, 2000 to maintain "net expenses" of 0.90% for the Equity
Fund; 1.25% for the Small Cap Fund; and 0.65% for the Bond Fund.
3. ADMINISTRATION AGREEMENT/RELATED PARTY TRANSACTIONS Ameriprime Financial
Services, Inc. (a subsidiary of Unified Fund Services, Inc.) acts as the
fund administrator. Unified Fund Services, Inc. acts as the transfer agent
and fund accountant. Ameriprime Financial Securities, Inc (a subsidiary of
Unified Fund Services, Inc.) acts as distributor for the fund. Certain
officers and trustees of the Trust are also officers of Unified Fund
Services, Inc. The administrator receives a fee of 0.10% of average daily
net assets under $50 million; 0.075% from $50 to $100 million; and 0.05%
above $100 million. There is a minimum monthly administrative fee of $2,500
per Fund. The transfer agent and fund accountant receive fees based on
transaction volume.
As of September 24, 1999, all of the outstanding shares of the Funds were
owned by Highcrest Partners, L.P. A shareholder who beneficially owns,
directly or indirectly, more than 25% of the Funds' voting securities may be
deemed a "control person" (as defined in the 1940 Act) of the Fund.
4. CAPITAL SHARES AND DISTRIBUTION
At September 24, 1999, an unlimited number of shares were authorized and paid
in capital amounted to $50,000 for the StoneRidge Equity Fund; $50,000 for
the StoneRidge Small Cap Equity Fund; and $0 for the StoneRidge Bond Fund.
Transactions in capital shares were as follows:
Shares Sold:
StoneRidge Equity Fund 5,000
StoneRidge Small Cap Equity Fund 5,000
StoneRidge Bond Fund 0
Shares Redeemed:
StoneRidge Equity Fund 0
StoneRidge Small Cap Equity Fund 0
StoneRidge Bond Fund 0
Net Increase:
StoneRidge Equity Fund 5,000
StoneRidge Small Cap Equity Fund 5,000
StoneRidge Bond Fund 0
Shares Outstanding:
StoneRidge Equity Fund 5,000
StoneRidge Small Cap Equity Fund 5,000
StoneRidge Bond Fund 0
5. ORGANIZATION COSTS
StoneRidge Investment Paetners, LLC, the Fund's investment adviser, will
pay all organization costs incurred in establishing the Trust. The Funds
are under no obligation to reimburse the adviser for these organization
costs.
To The Shareholders and Trustees
Ameriprime Advisors Trust:
We have audited the accompanying statement of assets and liabilities of the
Ameriprime Advisors Trust (comprised of the StoneRidge Equity Fund, the
StoneRidge Small Cap Equity Fund, and the StoneRidge Bond Fund) as of September
24, 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 September 24, 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
StoneRidge Equity Fund, the StoneRidge Small Cap Equity Fund, and the StoneRidge
Bond Fund as of September 24, 1999, in conformity with generally accepted
accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
September 24, 1999
