SATUIT CAPITAL MICRO CAP FUND
A SERIES OF
SATUIT CAPITAL MANAGEMENT TRUST
PROSPECTUS DATED DECEMBER 12, 2000
SATUIT CAPITAL MANAGEMENT, LLC
ADVISER
The SATUIT CAPITAL MICRO CAP FUND, a series of SATUIT CAPITAL MANAGEMENT TRUST,
seeks to provide investors with long-term capital appreciation by investing in a
diversified portfolio of U.S. common stocks with market capitalizations under
$500 million that the Adviser believes exhibit reasonable valuations and
favorable growth prospects.
This Prospectus concisely describes the information about the Fund that you
should know before investing. Please read it carefully before investing and
retain it for future reference. A Statement of Additional Information ("SAI")
about the Fund, dated December 12, 2000, is available free of charge and may be
obtained by writing Satuit Capital Management Trust, c/o American Data Services,
Inc., The Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York
11788 or calling (888) 280-5956. The SAI has been filed with the Securities and
Exchange Commission and is incorporated in its entirety by reference in this
Prospectus.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
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TABLE OF CONTENTS
PAGE
RISK RETURN SUMMARY..........................................................1
PERFORMANCE..................................................................3
INVESTMENT STRATEGIES........................................................4
MAIN RISKS...................................................................6
MANAGEMENT...................................................................7
YOUR ACCOUNT.................................................................9
HOW TO OPEN AN ACCOUNT AND PURCHASE SHARES.................................10
HOW TO SELL (REDEEM) SHARES OF THE FUND.....................................13
WHEN AND HOW NAV IS DETERMINED..............................................17
DISTRIBUTIONS...............................................................17
FEDERAL TAX CONSIDERATIONS..................................................18
PERFORMANCE COMPARISONS.....................................................19
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT.....................20
COUNSEL AND INDEPENDENT AUDITORS............................................20
FINANCIAL HIGHLIGHTS........................................................20
ORGANIZATION................................................................20
FOR MORE INFORMATION........................................................21
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RISK RETURN SUMMARY
The following discussion describes the investment objective and principal
investment strategies and risks of the Fund. The investment objective of the
Fund is a fundamental policy and cannot be changed without the approval of a
majority of the Fund's outstanding shares. As with any mutual fund, there can be
no guarantee that the investment objective of the Fund will be achieved.
INVESTMENT OBJECTIVES
The Fund's investment objective is to provide investors with long-term capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to achieve its investment objective by investing at least 65% of
its net assets in a diversified portfolio of U.S. common stocks with market
capitalizations under $500 million ("micro cap companies"). The Adviser will
select portfolio securities which the Adviser believes exhibit reasonable
valuations and favorable growth prospects.
The Adviser utilizes proprietary quantitative analysis of both
value and growth characteristics to rank U.S. micro cap companies. Valuation and
growth characteristics are equally weighted for purposes of ranking potential
investments securities. Valuation analysis is used to determine the inherent
value of the company and requires the analysis of financial information such as
a company's price to book, price to sales, return on equity, and return on
assets ratios. Growth analysis is used to determine a company's potential for
long-term dividends and earnings growth as determined by market-oriented factors
such as market share, the launch of new products or services, the strength of
its management and market demand. From these analyses, the Adviser ranks the
companies that exhibit stable and growing valuation ratios and the most
favorable dividends and earnings prospects and lists them on what it refers to
as the Focus List.
The Adviser selects portfolio securities for investment by the
Fund by subjecting the common stocks on the Focus List to a qualitative analysis
of each company's valuation and growth characteristics in order to determine
whether these characteristics are sustainable over the long term. Such analysis
includes a more detailed review of each company's competitive position in its
particular market sector, its business prospects and financial statements. The
Adviser also regularly conducts personal interviews with company management,
customers, suppliers and Wall Street analysts who provide research about the
company's common stock in the stock market.
Portfolio securities may be sold as a result of adverse
changes in the stock markets generally, or to a specific issuer, that results in
poor relative performance. Portfolio securities may also be sold if the Adviser
determines that the valuation and growth
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characteristics that formed the basis for purchasing a stock no longer meet the
criteria for portfolio securities of the Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND.
Investing in common stocks has inherent risks that could cause you to
lose money. The principal risks of investing in the Fund are listed below and
could adversely affect the NAV, total return and value of the Fund and your
investment.
-- STOCK MARKET RISKS: Stock mutual funds are subject to stock market
risks and significant fluctuations in value. If the stock market
declines in value, the Fund is likely to decline in value and you could
lose money on your investment.
-- STOCK SELECTION RISKS: The portfolio securities selected by the Adviser
may decline in value or not increase in value when the stock market in
general is rising and may fail to meet the Fund's investment objective.
-- INVESTMENT IN MICRO CAP COMPANIES. The Fund invests principally in
companies with a market capitalization of $500 million or less (micro
cap companies). Accordingly, the Fund may be subject to the additional
risks associated with investment in companies with micro capital
structures. These companies may (i) have relatively small revenues,
(ii) have limited product lines or services, (iii) lack depth of
management, (iv) lack the ability to obtain funds necessary for growth,
and (v) feature products or services for which a market does not yet
exist and/or may never be established. The increased risk involved with
investing in micro cap companies may cause the market prices of their
securities to be more volatile than those of larger, more established
companies. Further, these securities tend to trade at a lower volume
than do those of larger, more established companies. If the Fund is
heavily invested in these securities, the net asset value ("NAV") of
the Fund will be more susceptible to sudden and significant losses if
the value of these securities decline.
You could lose money on your investment in the Fund, or the Fund may not perform
as well as other possible investments. The Fund does not constitute a balanced
or complete investment program and the NAV of its shares will fluctuate based on
the value of the securities held by the Fund.
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WHO MAY WANT TO INVEST IN THE FUND
We designed the Fund for investors desiring an investment alternative and who
seek one or more of the following:
-- a long-term investment horizon;
-- long-term capital appreciation;
-- a stock fund to complement a portfolio of more conservative
investments;
-- a stock fund that uses a balanced approach of value and growth
investing; or
-- a stock fund that invests in U.S. micro-cap companies.
The Fund may NOT be suitable for you if:
-- You need regular income or stability of principal;
-- You are pursuing a short-term goal or investing emergency reserves; or
-- You are pursuing an investment strategy that is highly speculative.
PERFORMANCE
No prior performance information for the Fund is being presented because, to
date, the Fund has not had annual returns for a full calendar year.
FEE TABLE
As an investor, you pay certain fees and expenses if you buy and hold shares of
the Fund. The maximum transaction costs and total annual expenses associated
with investing in shares of the Fund are described in the table below and are
further explained in the example that follows:
Shareholder Fees (fees paid directly from your investment) none
Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
Management Fees 1.50%
Distribution and/or Service (rule 12b-1) Fees none
Other Expenses(1)(2) 1.30%
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Total Annual Fund Operating Expenses(2) 2.80%
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(1) Other Expenses includes, among other expenses, administrative, custody,
transfer agency and shareholder servicing fees.
(2) Other Expenses and Total Annual Fund Operating Expenses are based on
estimated amounts for the current fiscal year assuming $10 million in
average annual net assets.
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Example
This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of these
periods. The Example also assumes that your investment has a 5% rate of 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:
1 YEAR 3 YEARS
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$283 $868
INVESTMENT STRATEGIES
PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to achieve its investment objective by investing at least 65% of
its net assets in a diversified portfolio of common stocks of U.S. micro cap
companies. The Adviser believes that micro cap securities which exhibit a
combination of reasonable valuations and above average growth rates will, over
the long term, outperform the broader stock market and provide superior
investment returns to investors. To that end, the Adviser generally seeks to
identify common stocks of companies which are currently priced below the
Adviser's estimation of their potential, have earnings that may be expected to
grow faster than the U.S. economy in general, and/or offer the potential for
accelerated earnings growth due to rapid growth of sales, new products,
management changes, or structural changes in the economy.
The process to select portfolio securities of the Fund occurs in two stages.
First, the Adviser utilizes proprietary quantitative analysis of both value and
growth characteristics to rank U.S. companies with market capitalizations under
$500 million. The Adviser uses valuation analysis to determine the inherent
value of a company. Such analysis includes a review of a company's financial
information such as price to book ratios, price to sales ratios, return on
equity ratios, and return on assets ratios. The Adviser uses growth analysis to
determine a company's potential for long-term growth. Such analysis involves
evaluating a company's dividends and earnings prospects based on its potential
for revenue growth due to growing market share, the launch of new products or
services,
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the strength of its management and its financial condition. Companies that
exhibit stable and growing valuation ratios and the most favorable dividends and
earnings prospects are listed on what the Adviser refers to as the Focus List.
The second stage of the selection process requires subjecting the ranked common
stocks on the Focus List to a detailed qualitative analysis in order to
determine the sustainability of each company's valuation and growth
characteristics over the long term. Such analysis includes a review of each
company's market sector, competitive position within that market sector, and
business prospects in addition to regularly conducting personal interviews with
company management, major customers and suppliers, and Wall Street analysts who
cover the stocks being evaluated.
The Adviser will constantly monitor the Fund's investment portfolio's positions
for adverse changes in the Fund's investment portfolio's. Portfolio securities
may be sold as a result of adverse changes in the stock markets generally, or to
a specific issuer, that results in poor relative performance. Portfolio
securities may also be sold if the Adviser determines that the valuation and
growth characteristics that formed the basis for purchasing a stock no longer
meet the criteria for portfolio securities of the Fund.
TEMPORARY DEFENSIVE STRATEGY
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in order to respond
to adverse market, economic, political, or other unfavorable conditions. Under
these circumstances, the Fund may invest a substantial portion of its assets in
high quality, short-term debt securities and money market instruments. These
short-term debt securities and money market instruments include commercial
paper, certificates of deposit, bankers' acceptances, and U.S. Government
securities. When the Fund is making such defensive investments, the Fund may not
achieve its investment objective.
PORTFOLIO TURNOVER
As stated above, the Adviser recognizes that investment management is a dynamic
process and thus will constantly monitor and reevaluate the Fund's investments
in order to maximize, to the extent possible, the capital appreciation of the
investment portfolio. This process allows the Adviser to determine whether any
of the Fund's investments have lost value or whether securities not held by the
Fund seem poised for growth under developing market conditions and to adjust the
Fund's holdings accordingly. The Adviser does not anticipate this process to
result in high portfolio turnover and does not intend to aggressively trade the
Fund's assets. The Fund expects that its annual portfolio turnover rate will be,
under normal conditions, between 75% and 100%.
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MAIN RISKS
All mutual funds carry a certain amount of risk, which may cause you to lose
money on your investment. The following describes the primary risks of investing
in the Fund based on the Fund's specific investment objective and strategies. As
all investment securities are subject to inherent market risks and fluctuations
in value due to earnings, economic and political conditions and other factors,
the Fund cannot give any assurance that its investment objective will be
achieved. In addition, you should be aware that as of the date of this
Prospectus the Fund had no operating history.
STOCK MARKET RISKS
The net asset value of the Fund will fluctuate based on changes in the value of
the securities held in the investment portfolio. The stock market is generally
susceptible to volatile fluctuations in market price. Market prices of
securities in which the Fund invests may be adversely affected by an issuer's
having experienced losses or by the lack of earnings or by the issuer's failure
to meet the market's expectations with respect to new products or services, or
even by factors wholly unrelated to the value or condition of the issuer. The
value of the securities held by the Fund is also subject to the risk that a
specific segment of the stock market does not perform as well as the overall
market. Under any of these circumstances, the value of the Fund's shares and
total return will fluctuate, and your investment may be worth more or less than
your original cost when you redeem your shares.
STOCK SELECTION RISKS
Like all managed funds, there is a risk that the Adviser's strategy for managing
the Fund may not achieve the desired results. The portfolio securities selected
by the Adviser may decline in value or not increase in value when the stock
market in general is rising and may fail to meet the Fund's investment
objective. In addition, the price of common stock moves up and down in response
to corporate earnings and developments, economic and market conditions and
anticipated events. As a result, the price of the Fund's investments may go down
and you could lose money on your investment.
INVESTMENT IN MICRO CAP COMPANIES
The Fund invests in micro-capitalization companies (generally a market
capitalization of $500 million or less). Accordingly, the Fund may be subject to
the additional risks associated with investment in companies with smaller
capital structures. Historically, stocks of micro cap companies have been more
volatile than stocks of larger companies and are, therefore, more speculative
than investments in larger companies. Among the reasons for the greater price
volatility are the following: (1) the less certain growth prospects of micro cap
companies; (2) the lower degree of liquidity in the markets for such stocks; and
(3) the greater sensitivity of micro cap companies to changing economic
conditions. Besides exhibiting greater volatility, micro cap company stocks may,
to a
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degree, fluctuate independently of larger company stocks. Micro cap company
stocks may decline in price as large company stocks rise, or rise in price as
large company stocks decline. You should therefore expect that the value of Fund
shares to be more volatile than the shares of mutual funds investing primarily
in larger company stocks. Further, stocks of micro cap companies tend to trade
at a lower volume than do those of larger companies. If the Fund is heavily
invested in these securities and the value of these securities suddenly decline,
the net asset value of the Fund will be more susceptible to sudden and
significant losses.
MANAGEMENT
BOARD OF TRUSTEES
The business of the Fund is managed under the direction of the Board of Trustees
(the "Board") of Satuit Capital Management Trust (the "Trust"). The Board
formulates the general policies of the Fund and meets periodically to review the
Fund's performance, monitor investment activities and practices, and discuss
other matters affecting the Fund.
THE ADVISER
Satuit Capital Management, LLC (the "Adviser"), 146 Front Street, Suite 204,
Mill Wharf Plaza, Scituate, Massachusetts 02066, serves as investment adviser to
the Fund. Subject to the general supervision and control of the Board, the
Adviser makes investment decisions for the Fund. The Adviser is a recently
organized, privately held corporation that has been continuously registered with
the U.S. Securities & Exchange Commission since August 16, 2000. The Adviser has
no previous experience serving as an investment adviser to a registered mutual
fund.
Under the terms of its investment advisory agreement with the Fund, the Adviser
is responsible for formulating the Fund's investment programs, making day-to-day
investment decisions and engaging in portfolio transactions. The Adviser also
furnishes corporate officers, provides office space, services and equipment and
supervises all matters relating to the Fund's operations. For its services, the
Adviser receives an advisory fee at an annual rate of 1.50% of the average daily
net assets of the Fund.
PORTFOLIO MANAGER
ROBERT J. SULLIVAN, the Portfolio Manager of the Fund, has over 15 years of
investment experience. He is responsible for implementing the day-to-day
management of the Fund's investment operations.
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Prior to joining the Adviser, Mr. Sullivan was employed from 1993 to 2000 by
Cadence Capital Management where he served as Portfolio Manager/Senior Equity
Analyst. Cadence is an institutional asset management firm with over $6 billion
in equity assets under management. Mr. Sullivan's position included direct
research, analysis and investment responsibility.
From 1992 to 1993 Mr. Sullivan was employed by Fidelity Capital Markets, the
institutional block-trading desk of Fidelity Management & Research Company, as
an institutional equity sales trader. Prior to joining Fidelity, Mr. Sullivan
was employed by Bridge Information Systems, a leading provider of financial
information to market participants around the globe. Mr. Sullivan began his
employment with Bridge in 1987 where he had account responsibilities for buy and
sell side firms in both Boston and New York.
Mr. Sullivan holds a Bachelors of Science in Economics from the University of
Maryland and holds Series 7, 22, and 63 licenses from the National Association
of Securities Dealers, Inc. He is also a member of the Boston Security Analysts
Society, the Boston Securities Traders Association and the Association for
Investment Management and Research.
OTHER EXPENSES
The Fund pays certain operating expenses directly, including, but not limited to
custodian, audit and legal fees, costs of printing and mailing prospectuses,
statements of additional information, proxy statements, notices, and reports to
shareholders, insurance expenses, and costs of registering its shares for sale
under federal and state securities laws.
ADMINISTRATOR
The Administrator of the Fund is American Data Services, Inc. ("ADS" or the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788. ADS is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York and Denver, and as of the date of this Prospectus had assets under
administration in excess of $4 billion.
ADS provides administrative, fund accounting, stock transfer services, executive
and regulatory services to the Fund. It supervises the preparation of the Fund's
tax returns and coordinates the preparation of reports to and filings with the
Securities and Exchange Commission and various state securities authorities,
subject to the supervision of the Trust's Board of Trustees.
DISTRIBUTOR
AmeriMutual Funds Distributor, Inc. (the "Distributor"), an affiliate of the
Administrator, has entered into a distribution agreement with the Trust to serve
as the principal underwriter for the Fund and the distributor for the Fund's
shares. The Distributor receives no compensation for distributing the Fund's
shares.
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SHAREHOLDER SERVICING
The Distributor is responsible for paying various shareholder servicing agents
for performing shareholder servicing functions and maintaining shareholder
accounts. These agents have written shareholder servicing agreements with the
Distributor and perform these functions on behalf of their clients who own
shares of the Fund. In consideration of these services, the Distributor is paid
a monthly fee equal to one-quarter (0.25%) percent of the Fund's average daily
net assets on an annualized basis.
YOUR ACCOUNT
TYPES OF ACCOUNTS
If you are making an initial investment in the Fund, you will need to open an
account. You may establish the following types of accounts:
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS. Individual and sole
proprietorship accounts are owned by one person; joint accounts can have two or
more owners. All owners of the joint account must sign written instructions to
purchase or redeem shares or to change account information exactly as their
names appear on the account. If you elect telephone privileges, however,
redemption requests by telephone may be made by any one of the joint account
owners.
UNIFORM GIFT OR TRANSFER TO MINOR ACCOUNTS (UGMA OR UTMA). Depending on the laws
of your state, you may set up a custodial account under the Uniform Gift (or
Transfers) to Minors Act. These custodial accounts provide a way to give a child
up to $10,000 per year without paying Federal gift tax under the Uniform Gift
(or Transfers) to Minors Act. To open a UGMA or UTMA account, you must include
the minor's social security number on the application, and the custodian, or
trustee, of the UGMA or UTMA must sign instructions in a manner indicating
trustee capacity.
CORPORATE AND PARTNERSHIP ACCOUNTS. To open a corporate or partnership account,
or to send instructions to the Fund, the following
documents are required:
-- For corporations, a corporate resolution signed by an authorized
person with a signature guarantee.
-- For partnerships, a certification for a partnership agreement, or
the pages from the partnership agreement that identify the
general partners.
-- An authorized officer of the corporation or other legal entity
must sign the application.
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TRUST ACCOUNTS. The trust must be established before you can open a trust
account. To open the account you must include the name of each trustee, the name
of the trust and provide a certification for trust, or the pages from the trust
document that identify the trustees.
RETIREMENT ACCOUNTS. The Fund currently does not offer NEW IRA accounts,
including traditional IRA, Roth IRA, Rollover IRA, SEP-IRA, SIMPLE IRA and Keogh
accounts. However, Fund shares may be purchased by EXISTING retirement accounts.
Before investing in any IRA or other retirement plan, you should consult your
tax advisor. Whenever making an investment in a retirement account be sure to
indicate the year in which the contribution is made.
HOW TO OPEN AN ACCOUNT AND PURCHASE SHARES
Once you have chosen the type of account that you want toopen, you are ready to
establish an account.
GENERAL INFORMATION
The Fund does not issue share certificates.
You will receive quarterly account statements and a confirmation of each
transaction. You should verify the accuracy of all transactions in your account
as soon as you receive your account statement.
During unusual market conditions, the Fund may temporarily suspend or
discontinue any service or privilege.
MINIMUM INITIAL PURCHASES
The Fund accepts investments in the following minimum amounts:
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MINIMUM INITIAL MINIMUM SUBSEQUENT
TYPE OF ACCOUNT INVESTMENT INVESTMENT
---------------------------------- ---------------------- --------------------
Individual, Sole proprietorship
or Joint accounts $1,000 $250
---------------------------------- ---------------------- --------------------
Corporate, partnership or
trust accounts $1,000 $250
---------------------------------- ---------------------- --------------------
Uniform Gift or Transfer
to a Minor Accounts (UGMA, UTMA) $1,000 $250
---------------------------------- ---------------------- --------------------
Individual Retirement
Accounts (IRA) $1,000 $100
---------------------------------- ---------------------- --------------------
YOU MUST COMPLETE AND SIGN AN APPLICATION FOR EACH ACCOUNT YOU OPEN WITH THE
FUND.
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The price for the Fund's shares is the Fund's net asset value per share or NAV.
We determine the NAV as of the close of trading on the New York Stock Exchange
("NYSE") (normally 4:00 p.m. Eastern time) every day that the NYSE is open. We
will price your order at the next NAV calculated after the Fund receives your
order. For more information on how we price shares, see "WHEN AND HOW NAV IS
DETERMINED" on page 17.
METHOD OF PURCHASE
------------------
BY TELEPHONE
To open an account by telephone, call (888) 280-5956 to obtain an account number
and instructions. We will take information necessary to open your account,
including your social security or tax identification number, over the phone.
After you have obtained an account number, you may purchase shares of the Fund
by wiring federal funds. Your bank may charge a fee for doing this. You should
instruct your bank to wire funds to:
Custodial Trust Company
ABA #031207526
CTC NJ
BNF = TRUST
OBI = Satuit Micro Cap Fund a/c 114-80040
For Further Credit-Shareholder Account No. ___________________
You will then need to mail a signed account application to:
Satuit Capital Micro Cap Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
BY MAIL
You may also open an account by mailing a completed and signed account
application, together with a check made payable to the Satuit Capital Micro Cap
Fund, to:
Satuit Capital Micro Cap Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
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AUTOMATIC INVESTMENT PLANS
You may invest a specified amount of money in the Fund once or twice a month on
specified dates pursuant to an Automatic Investment Plan ("AIP"). These payments
are taken from your bank account by automated clearinghouse ("ACH") payment. The
minimum investment for an AIP is $100.
To open an AIP account, call or write to us to request an "Automatic Investment"
form. Complete and sign the form, and return it to us along with a voided check
for the bank account from which payments will be made.
TRANSACTIONS THROUGH THIRD PARTIES
You may buy and sell shares of the Fund through certain brokers (and their
authorized agents) that have made arrangements with the Fund's distributor to
sell Fund shares. When you place your order with such a broker or its authorized
agent, your order is treated by the broker as if you had placed it directly with
the Fund, and you will pay or receive the next price calculated by the Fund. The
broker (or authorized agent) is responsible for processing your order correctly
and promptly, keeping you advised regarding the status of your individual
account, confirming your transactions and ensuring that you receive copies of
the Fund's current prospectus. The broker (or its authorized agent) may charge
you a fee for handling your order.
HOW TO PAY FOR YOUR PURCHASE OF SHARES
You may purchase shares of the Fund by check, ACH payment, or wire. All payments
must be in U.S. dollars.
CHECKS. All checks must be drawn on U.S. banks and made payable to "Satuit
Capital Micro Cap Fund." No other method of check payment is acceptable (for
instance, you may not pay by travelers check).
ACH PAYMENTS. Instruct your financial institution to make an ACH payment to us.
These payments typically take two days. Your financial institution may charge
you a fee for this service.
WIRES. Instruct your financial institution to make a Federal funds wire payment
to us. Your financial institution may charge you a fee for this service. See
page 11 for wiring instructions.
LIMITATIONS ON PURCHASES
The Fund reserves the right to refuse any purchase request, particularly
requests that could adversely affect the Fund or its operations. This includes
those from any individual
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or group who, in the Fund's view, is likely to engage in excessive trading
(usually defined as more than four exchanges out of the Fund within a calendar
year).
CANCELED OR FAILED PAYMENTS
The Fund accepts checks and ACH transfers at full value subject to collection.
If your payment for shares is not received or you pay with a check or ACH
transfer that does not clear, your purchase will be canceled. You will be
responsible for any losses or expenses incurred by the Fund or the Transfer
Agent, and the Fund may redeem other shares you own in the account as
reimbursement. The Fund and its agents have the right to reject or cancel any
purchase, exchange, or redemption due to nonpayment. IF WE CANCEL YOUR PURCHASE
DUE TO NON-PAYMENT, YOU WILL BE RESPONSIBLE FOR ANY LOSS THE FUND INCURS. WE
WILL NOT ACCEPT CASH OR THIRD-PARTY CHECKS FOR THE PURCHASE OF SHARES.
HOW TO SELL (REDEEM) SHARES OF THE FUND
You have the right to sell ("redeem") all or any part of your shares subject to
certain restrictions. Selling your shares in the Fund is referred to as a
"redemption" because the Fund buys back its shares. We will redeem your shares
at the NAV next computed following receipt of your redemption request in proper
form. See "Redemption Procedures" below.
We will mail your redemption proceeds to your current address or transmit them
electronically to your designated bank account. Except under certain emergency
conditions, we will send your redemption to you within 7 calendar days after we
receive your redemption request. During unusual market conditions, the Fund may
suspend redemptions or postpone the payment of redemption proceeds, to the
extent permitted under the Federal securities laws. Delays may occur in cases of
very large redemptions, excessive trading or during unusual market conditions.
If you purchase your shares by check, the Fund may delay sending the proceeds
from your redemption request until your check has cleared. This could take up to
15 calendar days.
The Fund cannot accept requests that specify a certain date for redemption or
which specify any other special conditions. Please call (888) 280-5956 for
further information regarding redemptions. WE WILL NOT PROCESS YOUR REDEMPTION
REQUEST IF IT IS NOT IN PROPER FORM (SEE "REDEMPTION PROCEDURES"). HOWEVER, WE
WILL NOTIFY YOU IF YOUR REDEMPTION REQUEST IS NOT IN PROPER FORM.
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REDEMPTION PROCEDURES
BY MAIL
To redeem shares of the Fund, your redemption request must be in proper form. To
redeem by mail, prepare a written request including:
o Your name(s) and signature(s);
o The name of the Fund, and your account number;
o The dollar amount or number of shares you want to redeem;
o How and where to send your proceeds;
o A signature guarantee, if required (see "Signature Guarantee Requirements"
below); and
o Any other legal documents required for redemption requests by
corporations, partnerships or trusts.
Mail your request and documentation to:
Satuit Capital Micro Cap Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
BY WIRE
You may only request payment of your redemption proceeds by wire if you have
previously elected wire redemption privileges on your account application or a
separate form.
Wire requests are only available if your redemption is for $10,000 or more.
To request a wire redemption, mail or call us with your request. If you wish to
make your wire request by telephone, however, you must have previously elected
telephone redemption privileges.
BY TELEPHONE
We accept redemption requests by telephone only if you have elected telephone
redemption privileges on your account application or on a separate form.
To redeem shares by telephone, call us with your request. You will need to
provide your account number and the exact name(s) in which the account is
registered. We may also require a password or additional forms of
identification.
-14-
<PAGE>
Your proceeds will be mailed to you or wired to you (if you have elected wire
redemption privileges - See "By Wire" above)
Telephone redemptions are easy and convenient, but this account option involves
a risk of loss from unauthorized or fraudulent transactions. We will take
reasonable precautions to protect your account from fraud. You should do the
same by keeping your account information private and by reviewing immediately
any account statement and transaction confirmations that you receive. Neither
the Fund nor the Transfer Agent will be responsible for any losses due to
telephone fraud, so long as we have taken reasonable steps to verify the
caller's identity.
AUTOMATIC REDEMPTION
If you own shares of the Fund with an aggregated value of at least $10,000, you
may request a specified amount of money from your account once a month or once a
quarter on a specified date. These payments are sent from your account to a
designated bank account by ACH payment. Automatic requests must be for at least
$100.
To set up periodic redemptions automatically, call or write the Fund for an
"Automatic Redemption" form. You should complete the form and mail it to the
Fund with a voided check for the account into which you would like the
redemption proceeds deposited.
SIGNATURE GUARANTEE REQUIREMENTS
To protect you and the Fund against fraud, signatures on certain requests must
have a "signature guarantee." For requests made in writing a signature guarantee
is required for any of the following:
-- Redemption of over $5,000 worth of shares;
-- Changes to a record name or address of an account;
-- Redemption from an account for which the address or account
registration has changed within the last 30 days;
-- Sending proceeds to any person, address, brokerage firm or bank
account not on record;
-- Sending proceeds to an account with a different registration
(name or ownership) from yours; or
-- Changes to automatic investment or redemption programs,
distribution options, telephone or wire redemption privileges,
any other election in connection with your account. A signature
guarantee verifies the authenticity of your signature. You can
obtain one from most banking institutions or securities brokers,
but NOT from a notary public.
-15-
<PAGE>
SMALL ACCOUNTS
If the value of your account falls below $1,000, the Fund may ask you to
increase your balance. If the account value is still below $1,000 after 30 days,
the Fund will provide you with 60 days written notice in order to allow you a
reasonable opportunity to increase the size of your account. If after the 60
days notice period, your account remains below $1,000, the Fund may close your
account and send you the proceeds. THE FUND WILL NOT CLOSE YOUR ACCOUNT,
HOWEVER, IF IT FALLS BELOW $1,000 SOLELY AS A RESULT OF A REDUCTION IN YOUR
ACCOUNT'S MARKET VALUE.
TRANSFERRING REGISTRATION
You can transfer the registration of your shares in the Satuit Capital Micro Cap
Fund to another owner by completing a transfer form and sending it to Satuit
Capital Micro Cap Fund c/o American Data Services, Inc., P.O. Box 5536,
Hauppauge, New York 11788-0132.
LOST ACCOUNTS
The Transfer Agent will consider your account "lost" if correspondence to your
address of record is returned as undeliverable, unless the Transfer Agent
determines your new address. When an account is "lost," all distributions on the
account will be reinvested in additional shares of the Fund. In addition, the
amount of any outstanding (unpaid for six months or more) checks for
distributions that have been returned to the Transfer Agent will be reinvested
and the checks will be canceled.
HOW TO CONTACT THE FUND
For more information about the Fund or your account, you may write to the Fund
at:
Satuit Capital Micro Cap Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Or you may call toll free at (888) 280-5956
-16-
<PAGE>
WHEN AND HOW NAV IS DETERMINED
The value of a single share of the Fund is known as its NAV per share. The
Fund's NAV per share is normally calculated by the administrator of the Fund as
of the close of the regular session of trading on the NYSE (normally 4:00 p.m.,
eastern standard time) on each weekday except days when the NYSE is closed. The
Fund's NAV may be calculated earlier, however, if trading on the NYSE is
restricted or as permitted by the Securities and Exchange Commission.
If a security or securities that the Fund owns are traded when the NYSE is
closed (for example in an after-hours market) the value of the Fund's assets may
be affected on days when the Fund is not open for business. In addition, trading
in some of the Fund's assets may not occur on days when the Fund is open for
business. The Fund's NAV is determined by taking the market value of all
securities owned by the Fund (plus all other assets such as cash), subtracting
all liabilities and then dividing the result (net assets) by the number of
shares outstanding.
The Fund's securities are valued primarily on the basis of market quotations.
Certain short-term securities are valued on the basis of amortized cost. If
market quotations are not readily available for a security or if a security's
value has been materially affected by events occurring after the close of the
exchange or market on which the security is principally traded, then that
security may be valued by another method that the Board of Trustees believes
accurately reflects fair value. A security's valuation may differ depending on
the method used for determining value.
DISTRIBUTIONS
As a shareholder, you are entitled to your share of the Fund's net income and
capital gains on its investments. The Fund passes substantially all of its
earnings along to its investors as distributions. When the Fund earns dividends
from stocks and interest from bonds and other debt securities and distributes
these earnings to shareholders, it is called a dividend distribution. The Fund
realizes capital gains when it sells securities for a higher price than it paid.
When net long-term capital gains are distributed to shareholders, it is called a
capital gain distribution. Net short-term capital gains are considered ordinary
income and are included in dividend distributions.
The Fund distributes dividends and capital gains, if any, annually. All
distributions are reinvested in additional shares, unless you elect to receive
distributions in cash. For Federal income tax purposes, distributions are
treated the same whether they are received
-17-
<PAGE>
in cash or reinvested. Shares become entitled to receive distributions on the
day after the shares are issued.
If you have elected to receive distributions in cash, and the postal or other
delivery service returns your check to the Fund as undeliverable, you will not
receive interest on amounts represented by the uncashed checks.
LONG-TERM VS. SHORT-TERM CAPITAL GAINS:
---------------------------------------
-- Long-term capital gains are realized on securities held by the
Fund for more than one year and are part of your capital gain
distribution.
-- Short-term capital gains are realized on securities held by the
Fund for less then one year and are part of your dividend
distributions
FEDERAL TAX CONSIDERATIONS
Your investment will have tax consequences that you should consider. Some of the
more common federal tax consequences are described here but you should consult
your tax consultant about your particular situation. Although it is not an
investment objective, the Fund's Adviser will attempt to take into account the
tax consequences of its investment decisions. However, there may be occasions
when the Adviser's investment decisions will result in a negative tax
consequence for the Fund's shareholders.
TAXES ON DISTRIBUTIONS. The Fund operates in a manner such that it will not be
liable for Federal income or excise tax. Distributions, whether received in cash
or reinvested in additional shares of the Fund, may be subject to local, state
and federal taxes. Distributions of net investment income or short-term capital
gain are taxable to you as ordinary income. Distributions of long-term capital
gain are taxable to you as long-term capital gain, regardless of how long you
have held your shares.
The Fund will mail reports containing information about the Fund's distributions
during the year to you after December 31 of each year (by January 31st). Consult
your tax advisor about the Federal, state and local tax consequences in your
particular circumstances.
TAXES ON REDEMPTIONS OF SHARES. The sale of Fund shares is a taxable transaction
for Federal income tax purposes. Your taxable gain or loss is computed by
subtracting your tax basis in the shares from the redemption proceeds. Because
your tax basis
-18-
<PAGE>
depends on the original purchase price and on the price at which any dividends
may have been reinvested, you should keep your account statements so that you or
your tax preparer will be able to determine whether a sale will result in a
taxable gain or loss.
"BUYING A DIVIDEND." All distributions reduce the NAV of the Fund's shares by
the amount of the distribution. Unless your investment is in a tax-deferred
account, you may wish to avoid buying shares of the Fund shortly before a
distribution. If you do purchase shares prior to a distribution, you will pay
the full pre-distribution price for your shares and then receive part of your
investment back as a taxable distribution.
TAX WITHHOLDING. The Fund may be required to withhold U.S. federal income tax at
the rate of 31% from all taxable distributions and form proceeds from certain
sales payable to shareholders who fail to provide the Fund with their correct
social security or taxpayers identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Any such withheld amounts may be credited against the
shareholder's U.S. federal income tax liability.
PERFORMANCE COMPARISONS
Advertisements and other sales literature may refer to the Fund's total return.
The total return for the one, five and ten-year periods (or for the life of the
Fund until the Fund is in existence for such longer periods) through the most
recent calendar quarter represents the average annual compounded rate of return
on an investment of $1,000 in the Fund invested at the public offering price.
Total return may also be presented for other periods. All data are based on past
investment results and do not predict future performance. Investment
performance, which will vary, is based on many factors, including market
conditions, portfolio composition and Fund operating expenses. Investment
performance also often reflects the risks associated with the Fund's investment
objective and strategies. These factors should be considered when comparing the
Fund's investment results with those of other mutual funds and other investment
vehicles.
Quotations of investment performance for any period when an expense limitation
is in effect will be greater than if the limitation had not been in effect. Fund
performance may be compared to that of various indexes.
-19-
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Custodial Trust Company, 101 Carnegie Center, Princeton, New Jersey 08540-6231,
serves as custodian for the Fund's cash and securities. The Custodian does not
assist in, and is not responsible for, investment decisions involving assets of
the Fund. ADS, the Fund's Administrator, located at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, also serves as the Fund's
transfer and dividend disbursing agent.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of shares of beneficial interest
of the Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New
York, New York 10022. McCurdy & Associates, CPAs, Inc., 27955 Clemens Road,
Westlake, Ohio 44145, have been selected as independent auditors for the Fund.
FINANCIAL HIGHLIGHTS
Because the Fund has been in operation for less than a year, no financial
highlights are being reported for the Fund at this time
ORGANIZATION
The Satuit Capital Micro Cap Fund is a series of Satuit Capital Management
Trust, a Delaware business trust that is registered with the SEC as an open-end,
management investment company. The shares of Satuit Capital Management Trust may
be offered in series in addition to the Satuit Capital Micro Cap Fund with
distinct and separate investment objectives, strategies and policies.
It is not intended that meetings of the Fund's shareholders be held except when
required by Federal or Delaware state law. All shareholders of the Fund are
entitled to vote at shareholders' meetings. From time to time, large
shareholders may control the Fund.
-20-
<PAGE>
FOR MORE INFORMATION
ADVISER SATUIT CAPITAL MANAGEMENT, LLC
146 FRONT STREET, SUITE 204
MILL WHARF PLAZA
SCITUATE, MASSACHUSETTS 02066
LEGAL COUNSEL SPITZER & FELDMAN P.C.
405 PARK AVENUE
NEW YORK, NEW YORK 10022
INDEPENDENT AUDITORS MCCURDY & ASSOCIATES CPA'S, INC.
27955 CLEMENS ROAD
WESTLAKE, OHIO 44145
ADMINISTRATOR, TRANSFER AMERICAN DATA SERVICES, INC.
AGENT AND FUND ACCOUNTANT THE HAUPPAUGE CORPORATE CENTER
150 MOTOR PARKWAY
HAUPPAUGE, NEW YORK 11788
CUSTODIAN CUSTODIAL TRUST COMPANY
101 CARNEGIE CENTER
PRINCETON, NEW JERSEY 08540-6231
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<PAGE>
The following documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS. Additional information about the Fund's
investments is available in the Fund's annual and semi-annual reports
to shareholders. In the Fund's annual report, you will find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its most recent
fiscal year.
STATEMENT OF ADDITIONAL INFORMATION. The SAI provides more detailed
information about the Fund and is incorporated by reference into this
Prospectus.
You may obtain free copies of both reports and the SAI, request other
information and discuss your questions about the Fund by sending your request
to:
SATUIT CAPITAL MICRO CAP FUND
C/O AMERICAN DATA SERVICES, INC.
P.O. BOX 5536
HAUPPAUGE, NEW YORK 11788-0132
OR BY CALLING : (888) 280-5956
SEC: You may review and obtain copies of the Fund's information (including the
SAI) at the SEC Public Reference Room located at 450 Fifth Street, NW,
Washington, D.C. 20549. Please call (202) 942-8090 for information relating to
the operation of the Public Reference Room. Reports and other information about
the Fund are available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of the information may be obtained, after paying a
duplicating fee, by electronic request at the following e-mail address:
[email protected], or by writing the Public Reference Section, Securities and
Exchange Commission, Washington, D.C. 20549-0102.
Investment Company Act File Number: 811-10103
<PAGE>
SATUIT CAPITAL MICRO CAP FUND
A SERIES OF
SATUIT CAPITAL MANAGEMENT TRUST
146 Front Street, Suite 204
Mill Wharf Plaza
Scituate, Massachusetts 02066
(888) 280-5956
STATEMENT OF ADDITIONAL INFORMATION
December 12, 2000
Table of Contents
Page
----
Investment Objective, Policies and Restrictions........................... 3
Trustees and Executive Officers............................................9
Investment Advisory and Other Services....................................12
Portfolio Transactions and Allocation of Brokerage........................14
Taxation..................................................................16
Voting and Ownership of Shares............................................17
Purchase of Shares........................................................17
Redemption of Shares......................................................17
Dividends and Distributions...............................................18
Net Asset Value ..........................................................18
Performance Comparisons...................................................18
Counsel and Independent Auditors..........................................20
Other Information.........................................................20
Financial Statements......................................................20
This Statement of Additional Information ("SAI") provides general information
about the Satuit Capital Micro Cap Fund (the "Fund"). This SAI is not a
prospectus, but should be read in conjunction with the Fund's Prospectus dated
December 12, 2000. Copies of the Prospectus may be obtained from the Fund by
writing the Fund's Administrator at American Data Services, Inc., The Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 or by calling
(888) 280-5956 or (631) 951-0500.
1
<PAGE>
GLOSSARY
As used in this SAI, the following terms have the meanings listed.
"ADS" means American Data Services, Inc., the administrator, fund accountant,
and transfer and dividend disbursing agent of the Fund.
"Adviser" means Satuit Capital Management, LLC.
"Board" means the Board of Trustees of the Trust.
"Code" means the Internal Revenue Code of 1986, as amended.
"Custodian" means the Custodial Trust Company, the custodian of the Fund's
assets.
"Fund" means the Satuit Capital Micro Cap Fund, a separate series of the Trust.
"Moody's" means Moody's Investors Service.
"NRSRO" means a nationally recognized statistical rating organization.
"NAV" means net asset value.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's.
"Trust" means Satuit Capital Management Trust, a Delaware business trust that is
registered with the SEC as an open-end, management investment company, commonly
referred to as a "mutual fund".
"U.S. Government Securities" means obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
"1933 Act" means the Securities Act of 1933, as amended.
"1940 Act" means the Investment Company Act of 1940, as amended.
2
<PAGE>
THE FUND
--------
The Satuit Capital Micro Cap Fund (the "Fund") is a series of Satuit Capital
Management Trust, a Delaware business trust organized on August 29th, 2000. The
Fund's principal office is located at c/o American Data Services, Inc., The
Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788. The
Fund is a diversified, open-end management investment company.
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND PRINCIPAL RISKS
--------------------------------------------------------------------
The Fund's investment objective is to provide investors with long-term capital
appreciation. The Fund seeks to achieve its investment objective by investing at
least 85% of its net assets in a diversified portfolio of U.S. common stocks
with market capitalizations under $500 million. The Adviser will select
portfolio securities which the Adviser believes exhibit reasonable valuations
and favorable growth prospects.
The Adviser utilizes proprietary quantitative analysis of both value and growth
characteristics to rank U.S. companies with market capitalizations under $500
million (micro-cap companies). Valuation and growth characteristics are equally
weighted for purposes of ranking potential investments securities. Valuation
analysis is used to determine the inherent value of the company and requires the
analysis of financial information such as a company's price to book, price to
sales, return on equity, and return on assets ratios. Growth analysis is used to
determine a company's potential for long-term dividends and earnings growth as
determined by market-oriented factors such as market share, the launch of new
products or services, the strength of its management and market demand. From
these analyses, the Adviser ranks the companies that exhibit stable and growing
valuation ratios and the most favorable dividends and earnings prospects and
lists them on what it refers to as the Focus List.
The Adviser selects portfolio securities for investment by the Fund by
subjecting the top 20% of the common stocks on the Focus List to a qualitative
analysis of each company's valuation and growth characteristics in order to
determine whether these characteristics are sustainable over the long term. Such
analysis includes a more detailed review of each company's competitive position
in its particular market sector, its business prospects and financial
statements. The Adviser also regularly conducts personal interviews with company
management, customers, suppliers and Wall Street analysts who provide research
about the company's common stock in the stock market.
The Adviser may elect to sell a portfolio security when the reasons for its
purchase no longer apply, when return on assets, price to book value or other
valuation ratios decline, when the Adviser believes that the market price per
share of a security exceeds the inherent value of the company, or when a
company's earnings and dividends prospects weaken.
INVESTING IN MUTUAL FUNDS.
--------------------------
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. As all investment securities are subject to inherent
market risks and fluctuations in value due to earnings, economic and political
conditions and other factors, the Fund can give no assurance that its investment
objective will be achieved.
STOCK MARKET RISKS
------------------
The net asset value of the Fund will fluctuate based on changes in the value of
the securities held in the investment portfolio. The stock market is generally
susceptible to volatile fluctuations in market price. Market prices of
securities in which the Fund invests may be adversely affected by an issuer's
having experienced losses or by the lack of earnings or by the issuer's failure
to meet the market's expectations with respect to new products or services, or
even by factors wholly unrelated to the value or condition of the issuer. The
value of the securities held by the Fund is also subject to the risk that a
specific segment of the stock market does not perform as well as the overall
market. Under any of these circumstances, the value of the Fund's shares and
total return will fluctuate, and your investment may be worth more or less than
your original cost when you redeem your shares.
STOCK SELECTION RISKS
---------------------
Like all managed funds, there is a risk that the Adviser's strategy for managing
the Fund may not achieve the desired results. The portfolio securities selected
by the Adviser may decline in value or not increase in value when the stock
market in general is rising and may fail to meet the Fund's investment
3
<PAGE>
objective. In addition, the price of common stock moves up and down in response
to corporate earnings and developments, economic and market conditions and
anticipated events. As a result, the price of the Fund's investments may go down
and you could lose money on your investment.
INVESTMENT IN MICRO CAP COMPANIES.
----------------------------------
The Fund invests primarily in companies with market capitalizations under $500
million(collectively, "micro cap companies"). These companies may have
relatively small revenues, limited product lines, and a small share of the
market for their products or services. Micro cap companies may also: (1) lack
depth of management; (2) be unable to internally generate funds necessary for
growth or potential development or to generate such funds through external
financing on favorable terms; and (3) be developing or marketing new products or
services for which markets are not yet established and may never become
established. Due to these and other factors, micro cap companies may suffer
significant losses, as well as realize substantial growth. Thus, securities of
micro cap companies present greater risks than do securities of larger, more
established companies.
Historically, stocks of micro cap companies have been more volatile than stocks
of larger companies and are, therefore, more speculative than investments in
larger companies. Among the reasons for the greater price volatility are the
following: (1) the less certain growth prospects of micro cap companies; (2) the
lower degree of liquidity in the markets for such stocks; and (3) the greater
sensitivity of micro cap companies to changing economic conditions. Besides
exhibiting greater volatility, micro cap company stocks may, to a degree,
fluctuate independently of larger company stocks. Micro cap company stocks may
decline in price as large company stocks rise, or rise in price as large company
stocks decline. You should therefore expect that the value of Fund shares to be
more volatile than the shares of mutual fund investing primarily in larger
company stocks.
OTHER INVESTMENT POLICIES AND RESTRICTIONS
------------------------------------------
The following paragraphs provide a description of other investment policies and
restrictions of the Fund. Unless otherwise noted, the policies described in this
SAI are not fundamental and may be changed by the Board of Trustees of the
Trust.
INITIAL PUBLIC OFFERINGS.
-------------------------
To the extent that IPOs are offered to the Fund, the Fund may participate in
IPOs if the security being offered satisfies the Fund's investment criteria as
determined by the Adviser. An IPO, initial public offering, is a company's first
sale of stock to the public and are primarily used to raise substantial amounts
of new capital to support current operations, expansion or new business
opportunities and otherwise to implement a company's growth plans. Securities
offered in an IPO are often, but not always, those of young, small companies
seeking outside equity capital and a public market for their stock. There is no
guarantee that the company offering its shares in a public offering will sell a
sufficient amount of shares to raise the captal that is needed or that a public
market for their shares will ever develop. Investors purchasing stock in IPOs
generally must be prepared to accept considerable risks for the possibility of
large gains. IPOs by investment companies (closed-end funds) usually include
underwriting fees that represent a load to buyers. IPOs are considered
speculative investments and can be extremely volatile. As a result, IPOs may
have a significant impact on the Fund's performance. There is no guarantee that
the IPOs in which the Fund participates will be successful, or that the Fund
will have access to successful IPOs. In addition, as Fund assets grow, the
positive impact of successful IPOs on Fund performance will decrease.
CASH POSITIONS AND TEMPORARY DEFENSIVE STRATEGIES.
--------------------------------------------------
At times, the Fund may employ temporary defensive strategies in response to
unfavorable economic, market, political or other conditions. At such times, the
Fund may increase its cash reserves without limit by holding high quality,
short-term debt securities and money market instruments and by entering into
repurchase agreements. These investments are inconsistent with the Fund's
primary investment strategies. As a result, during these periods, the Fund may
not achieve its objective.
4
<PAGE>
SHORT-TERM INVESTMENTS.
-----------------------
The Fund may invest in any of the following securities and instruments:
BANK CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES AND TIME DEPOSITS.
---------------------------------------------------------------------
The Fund may acquire certificates of deposit, bankers' acceptances and time
deposits. Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by the Fund will be
dollar-denominated obligations of domestic banks or financial institutions which
at the time of purchase have capital, surplus and undivided profits in excess of
$100 million (including assets of both domestic and foreign branches), based on
latest published reports, or less than $100 million if the principal amount of
such bank obligations are fully insured by the U.S. Government.
Banks may be subject to different governmental regulations with respect to the
amount and types of loans which may be made and interest rates which may be
charged. In addition, the profitability of the banking industry depends largely
upon the availability and cost of funds for the purpose of financing lending
operations under prevailing money market conditions. General economic
conditions, as well as exposure to credit losses arising from possible financial
difficulties of borrowers, play an important part in the operations of the
banking industry.
As a result of federal and state laws and regulations, banks are, among other
things, required to maintain specified levels of reserves, limited in the amount
which they can loan to a single borrower, and subject to other regulations
designed to promote financial soundness.
In addition to purchasing certificates of deposit and bankers' acceptances, to
the extent permitted under its investment objective, strategies and policies
stated above and in its Prospectus, the Fund may make interest-bearing time or
other interest-bearing deposits in commercial or savings banks. Time deposits
are non-negotiable deposits maintained at a banking institution for a specified
period of time at a specified interest rate.
SAVINGS ASSOCIATION OBLIGATIONS.
--------------------------------
The Fund may invest in certificates of deposit (interest-bearing time deposits)
issued by savings banks or savings and loan associations that have capital,
surplus and undivided profits in excess of $100 million, based on latest
published reports, or less than $100 million if the principal amount of such
obligations is fully insured by the U.S. Government.
COMMERCIAL PAPER, SHORT-TERM NOTES AND OTHER CORPORATE OBLIGATIONS.
-------------------------------------------------------------------
The Fund may invest a portion of its assets in commercial paper and short-term
notes. Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper and short-term notes will normally have
maturities of less than nine months and fixed rates of return, although such
instruments may have maturities of up to one year.
Commercial paper and short-term notes will consist of issues rated at the time
of purchase "A-2" or higher by S&P, "Prime-1" or "Prime-2" by Moody's, or
similarly rated by another nationally recognized statistical rating organization
or, if unrated, will be determined by Satuit Capital Management, LLC (the
"Advisor") to be of comparable quality.
Corporate obligations include bonds and notes issued by corporations to finance
longer-term credit needs that could not be supported by commercial paper. While
such obligations generally have maturities of ten years or more, the Fund may
purchase corporate obligations which have remaining maturities of one year or
less from the date of purchase and which are rated "AA" or higher by S&P or "Aa"
or higher by Moody's.
GOVERNMENT OBLIGATIONS.
-----------------------
The Fund may make short-term investments in U.S. Government obligations. Such
obligations include Treasury bills, certificates of indebtedness, notes and
bonds, and issues of such entities as the Government National Mortgage
Association ("GNMA"), Export-Import Bank of the United States, Tennessee Valley
Authority, Resolution Funding Corporation, Farmers Home Administration, Federal
Home Loan Banks, Federal Interm ediate Credit Banks, Federal Farm Credit Banks,
Federal Land Banks, Federal Housing Administration, Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation, and the Student
Loan Marketing Association.
5
<PAGE>
Each of these obligations, such as those of the GNMA, are supported by the full
faith and credit of the U.S. Treasury; others, such as those of the
Export-Import Bank of United States, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the FNMA, are supported by
the discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law.
ILLIQUID SECURITIES.
--------------------
The Fund may not invest more than 15% of the value of its net assets in
securities that at the time of purchase are illiquid. The Adviser will monitor
the amount of illiquid securities in the Fund's portfolio, under the supervision
of the Trust's Board of Trustees, to ensure compliance with the Fund's
investment restrictions.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 (the "Securities Act"), securities
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of the Fund's portfolio securities and the Fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemption requests within seven days. The Fund might also have to register such
restricted securities in order to dispose of them, resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
In recent years, however, a large institutional market has developed for certain
securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, municipal securities and corporate
bonds and notes. Institutional investors depend on an efficient institutional
market in which the unregistered security can be readily resold or on an
issuer's ability to honor a demand for repayment. The fact that there are
contractual or legal restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such investments. If such
securities are subject to purchase by institutional buyers in accordance with
Rule 144A promulgated by the Commission under the Securities Act, the Trust's
Board of Trustees may determine that such securities are not illiquid securities
notwithstanding their legal or contractual restrictions on resale. In all other
cases, however, securities subject to restrictions on resale will be deemed
illiquid.
RESTRICTED SECURITIES.
----------------------
The SEC Staff currently takes the view that any delegation by the Board of
Trustees of the authority to determine that a restricted security is readily
marketable (as described in the investment restrictions of the Fund) must be
pursuant to written procedures established by the Board of Trustees. It is the
present intention of the Board of Trustees that, if the Board of Trustees decide
to delegate such determinations to the Adviser or another person, they would do
so pursuant to written procedures, consistent with the Staff's position. Should
the Staff modify its position in the future, the Board of Trustees would
consider what action would be appropriate in light of the Staff's position at
that time.
SHORT SALES
-----------
The Fund is authorized commit up to 5% of the Fund's net assets to engage in
short sales of securities which it does not own or have the right to acquire. In
a short sale, the Fund sells a security which it does not own, in anticipation
of a decline in the market value of the security. To complete the sale, the Fund
must borrow the security (generally from the broker through which the short sale
is made) in order to make delivery to the buyer. The Fund is then obligated to
replace the security borrowed by purchasing it at the market price at the time
of replacement. The Fund is said to have a "short position" in the securities
sold until it delivers them to the broker. The period during which the Fund has
6
<PAGE>
a short position can range from one day to more than a year. Until the security
is replaced, the proceeds of the short sale are retained by the broker, and the
Fund is required to pay to the broker a negotiated portion of any dividends or
interest which accrue during the period of the loan. To meet current margin
requirements, the Fund is also required to deposit in a segregated account with
the Fund's custodian additional cash or securities so that the total collateral
held for the broker is maintained daily at 150% of the current market value of
the securities sold short (100% of the current market value if a security is
held in the account that is convertible or exchangeable into the security sold
short within 90 days without restriction other than the payment of money).
If the Fund makes a short sale, the Fund would not immediately deliver the
securities sold and would not receive the proceeds from the sale. The seller is
said to have a short position in the securities sold until it delivers the
securities sold, at which time it receives the proceeds of the sale. The Fund
can close out its short position by purchasing and delivering an equal amount of
the securities sold short, rather than by delivering securities already held by
the Fund, because the Fund might want to continue to receive interest and
dividend payments on securities in its portfolio that are convertible into the
securities sold short.
As stated above, when engaging in short sales, the Trust is required to
segregate with its custodian at all times an amount of cash, U.S. Government
securities, and other high-grade liquid debt securities equal to the excess of
the current market value, as calculated on a daily basis, of the securities sold
short over the amount of collateral deposited with the broker in respect of the
short sale (not including the proceeds of the short sale). The Fund values the
securities sold short daily in accordance with procedures established by the
Board of Trustees for valuing the Fund's "long" investments, and the segregated
account is marked to market daily to reflect changes in the value of the
security. The Fund's segregation requirement is reduced to an amount below the
opening value of the security in question, if the value of the security falls
below the opening value. Conversely, The Fund's segregation requirement is
increased above the opening value, if the value of the security rises above that
level. If the segregation requirement increases, that is, if the sum of the
market value of the segregated account plus the market value of the amount
deposited with the broker as collateral falls below the amounts required to be
maintained (i.e., the greater of the current market value of the security sold
short or the market value of that security at the time the transaction was
entered into), then the Fund deposits additional assets in the segregated
account to satisfy the requirement.
The Fund's decision to make a short sale may be a technique to hedge against
market risks when the Advisor believes that the price of a security may decline,
causing a decline in the value of a security owned by the Fund or a security
convertible into or exchangeable for such security. In such case, any future
losses in the Fund's long position would be reduced by a gain in the short
position. The extent to which such gains or losses in the long position are
reduced will depend upon the amount of securities sold short relative to the
amount of the securities the Fund owns, either directly or indirectly, and, in
the case where the Fund owns convertible securities, changes in the investment
values or conversion premiums of such securities.
Short sales create opportunities to increase the Fund's return but, at the same
time, involve specific risk considerations and may be considered a speculative
technique. Since the Fund in effect profits from a decline in the price of the
securities sold short without the need to invest the full purchase price of the
securities on the date of the short sale, the Fund's net asset value per share
will tend to increase more when the securities it has sold short decrease in
value, and to decrease more when the securities it has sold short increase in
value, than would otherwise be the case if it had not engaged in such short
sales. The amount of any gain will be decreased, and the amount of any loss
increased, by the amount of any premium, dividends or interest the Fund may be
required to pay in connection with the short sale. Furthermore, under adverse
market conditions, the Fund might have difficulty purchasing securities to meet
its short sale delivery obligations, and might have to sell portfolio securities
to raise the capital necessary to meet its short sale obligations at a time when
fundamental investment considerations would not favor such sales.
REPURCHASE AGREEMENTS.
----------------------
The Fund may invest in repurchase agreements. A repurchase agreement involves
the purchase by the Fund of the securities with the condition that after a
stated period of time the original seller will buy back the same securities at a
predetermined price or yield. The Fund's custodian will hold the securities
underlying any repurchase agreement or such securities will be part of the
Federal Reserve Book Entry System. The market value of the collateral underlying
the repurchase agreement will be determined on each business day. If at any time
7
<PAGE>
the market value of the Fund's collateral falls below the repurchase price of
the repurchase agreement (including any accrued interest), the Fund will
promptly receive additional collateral (so the total collateral is an amount at
least equal to the repurchase price plus accrued interest).
BORROWING MONEY.
----------------
The Fund may borrow money from banks as a temporary measure for emergency
purposes or to facilitate redemption requests. The Fund may borrow up to
one-third of its total assets. Borrowing money involves special risk
considerations that may not be associated with other funds having similar
objectives and policies. Because substantially all of the Fund's assets
fluctuate in value, whereas the interest obligation resulting from a borrowing
is generally fixed, the net asset value per share of the Fund tends to decrease
more when its portfolio assets decrease in value than would otherwise occur if
the Fund did not borrow funds. Interest costs on borrowings, however, may
fluctuate with changing market rates of interest and may partially offset or
exceed the return earned on borrowed funds. Under adverse market conditions, the
Fund might have to sell portfolio securities to meet interest or principal
payments at a time when fundamental investment considerations would not favor
such sales.
SECURITIES LOANS.
-----------------
The Fund may make secured loans of its portfolio securities, on either a
short-term or long-term basis, amounting to not more than 33 1/3% of its total
assets, thereby realizing additional income. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible delay in
recovery of the securities or possible loss rights in the collateral should the
borrower fail financially. As a matter of policy, securities loans are made to
broker-dealers pursuant to agreements requiring that the loans be continuously
secured by collateral consisting of cash or short-term debt obligations at least
equal at all times to the value of the securities on loan, "marked-to-market"
daily. The borrower pays to a lender-Fund an amount equal to any dividends or
interest received on securities lent. The Fund retains all or a portion of the
interest received on the collateral or receives a fee from the borrower.
Although voting rights, or rights to consent, with respect to the loaned
securities may pass to the borrower, the Fund retains the right to call the
loans at any time on reasonable notice, and it will do so to enable the Fund to
exercise voting rights on any matters materially affecting the investment. The
Fund may also call such loans in order to sell the securities.
INVESTMENT RESTRICTIONS
-----------------------
In addition to the principal investment objectives, policies and risks set forth
in the Prospectus and in this SAI, the Fund is subject to certain fundamental
and non-fundamental investment restrictions, as set forth below. Fundamental
investment restrictions may not be changed without the vote of a majority of the
Fund's outstanding securities, as defined in the 1940 Act. Non-fundamental
investment restrictions of the Fund may be changed by the Board of Trustees.
FUNDAMENTAL INVESTMENT RESTRICTIONS
-----------------------------------
As fundamental investment restrictions, the Fund will not:
1. Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities), if, as a
result, as to 75% of the Fund's total assets, more than 5% of its net assets
would be invested in the securities of one issuer or the Fund would hold more
than 10% of the outstanding voting securities of any one issuer;
2. Issue any senior securities, as defined in the 1940 Act, except as set
forth in restriction number 3 below;
3. Borrow amounts in excess of 33 1/3% of the market value of its total
assets, and then only from a bank and as a temporary measure for extraordinary
or emergency purposes. To secure any such borrowing, the Fund may pledge or
hypothecate all or any portion of the value of its total assets;
4. Act as an underwriter of securities of other issuers, except insofar
as the Trust may be technically deemed an underwriter under the federal
securities laws in connection with the disposition of the Fund's portfolio
securities;
8
<PAGE>
5. Purchase or sell real estate or commodities, including oil, gas or
other mineral exploration or developmental programs or commodity futures
contracts;
6. Make loans, in the aggregate, exceeding 33 1/3% of the Fund's total
assets or lend the Fund's portfolio securities to broker-dealers if the loans
are not fully collateralized;
7. Invest in other registered investment companies, except as permitted
by the 1940 Act;
8. Purchase from or sell to any officer or trustee of the Trust or its
Adviser any securities other than the shares of beneficial interest of the Fund;
or
9. Concentrate investments, or invest 25% or more of its net assets, in
any one industry. This limitation shall not apply to securities issued or
guaranteed by the U.S. Government.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
---------------------------------------
The Fund is subject to the following restrictions that are not fundamental and
may therefore be changed by the Board of Trustees without shareholder approval.
The Fund will not:
1. Acquire securities for the purpose of exercising control over
management;
2. Invest more than 15% of its net assets in illiquid securities. In the
event that such illiquid securities comprise more than 15% of the Fund's assets
due to appreciation or other like cause not related to direct investment, the
Fund shall not purchase additional portfolio securities until such time as the
Fund holds 15% or less in such illiquid securities; or
3. Purchase additional portfolio securities if borrowings exceed 5% of
the Fund's net assets.
Unless otherwise indicated, percentage limitations included in the restrictions
apply at the time the Fund enters into a transaction. Accordingly, any later
increase or decrease beyond the specified limitation resulting from a change in
the Fund's net assets will not be considered in determining whether its has
complied with its investment restrictions.
TRUSTEES AND OFFICERS
---------------------
The business of the Fund is managed under the direction of the Board. The Board
formulates the general policies of the Fund and meets periodically to review the
Fund's performance, monitor investment activities and practices, and discuss
other matters affecting the Fund. The Trustees are fiduciaries for the Fund's
shareholders and are governed by the laws of the State of Delaware in this
regard. The names and addresses of the Trustees and officers of the Trust are
listed below along with a description of their principal occupations over at
least the last five years. Trustees who are "interested persons", as defined by
the 1940 Act, are indicated by asterisk. Unless otherwise noted, the address of
each officer is The Hauppauge Corporate Center, Suite 109, Hauppauge, New York
11788.
9
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------ --------------------------------------------- ---------------------------
NAME (AGE) AND PRINCIPAL OCCUPATION AND OTHER
ADDRESS BUSINESS EXPERIENCE DURING THE POSITIONS HELD WITH
PAST FIVE (5) YEARS THE TRUST
------------------------------------------ --------------------------------------------- ---------------------------
<S> <C> <C>
Robert J. Sullivan* (39) Managing Director and Chief Investment Chairman of the Board,
5 Driftwood Lane Officer of Satuit Capital Management, LLC President and Treasurer
Scituate, Massachusetts 02066 from June, 2000 to Present, Portfolio
Manager and Senior Equity Analyst at
Cadence Capital Management from 1997 to
2000, an institutional asset management firm;
Institutional Equity Sales Trader at Fidelity
Capital Markets from 1992 to 1993; and Customer
Service Representative at Bridge Information
Systems from 1987 to 1992.
------------------------------------------ --------------------------------------------- ---------------------------
Michael D. Muffoletto (43) Director of Trade Training at Electronic Trustee
194 Ocean Drive West Trading Group, LLC from 1998 to Present;
Stamford, Connecticut 06902 Portfolio Manager (private hedge fund) at
Fairfield Limited Partners from 1993 to
1998; and Portfolio Manager (NYSE listed
company) at Investment Advisor, Inc. from
1988 to 1992.
------------------------------------------ --------------------------------------------- ---------------------------
Kevin M. Haggerty (41) Manager, Andover Brokerage (equity trading) Trustee
200 Highland Road from 1998 to Present; Private Investor from
Rye, NY 10580 1997 to 1998; and Head of Trading at
Fidelity Capital Markets from 1990 to 1997.
------------------------------------------ --------------------------------------------- ---------------------------
Keith D. Kemp (40) Vice President and Chief Operations Treasurer
Officer, Orbitex Management, Inc. and
Assistant (February 1999 - present)
(Investment Adviser); Treasurer
Vice-President, Fund Accounting and
Administration, Bank of New York (February
1998 - February 1999) (Bank); Senior
Manager, Forum Financial Group (November
1996 - February 1998) (Mutual Fund
Administrator); Business Unit Controller,
First Data Investor Services Group (March
1995 - November 1996) (Mutual Fund
Administrator).
------------------------------------------ --------------------------------------------- ---------------------------
Giovanni A. Urena (32) Senior Paralegal, American Data Services, Secretary
Inc. August, 2000 to Present (Mutual Fund
Administrator); Senior Documentation
Specialist - Compliance/Risk Management,
UBS AG, October 1999 to August, 2000
(Bank); Assistant Vice President -
Paralegal, Citigroup Inc., August, 1995 to
October, 1999 (Bank).
------------------------------------------ --------------------------------------------- ---------------------------
10
<PAGE>
------------------------------------------ --------------------------------------------- ---------------------------
Ismael Lopez (52) Director of Administration, American Data Assistant Treasurer
Services, Inc., January, 2000 to Present
(Mutual Fund Administrator); Assistant
Controller, The Reserve Funds, September,
1997 to October, 1999; Director of
Operations, Christian Brothers Investment
Services, January, 1996 to June 1997,
Consultant, The Reserve Funds, June 1995 to
December 1995.
------------------------------------------ --------------------------------------------- ---------------------------
Stephanie Diem (26) Paralegal, American Data Services, Inc., Assistant Secretary
May, 2000 to Present (Mutual Fund
Administrator); Account/Administrative
Assistant, Fiduciary Trust International
July 1997 to May 2000 (Custodian); Custody
Administrator, United States Trust Company
of New York August 1996 to July 1997.
------------------------------------------ --------------------------------------------- ---------------------------
</TABLE>
AUDIT COMMITTEE
---------------
The members of the Audit Committee of the Board of Trustees are Messrs.
Muffoletto and Haggerty. Mr. Haggerty acts as the chairperson of such committee.
The Audit Committee oversees the Fund's financial reporting process, reviews
audit results and recommends annually to the Trust a firm of independent
auditors.
COMPENSATION
------------
No Trustee receives any compensation for their service as Trustees of the Trust.
However, each Trustee who is not affiliated with the Trust or the Adviser, will
be reimbursed for expenses incurred in connection with attending Board and
committee meetings. None of the executive officers receives any compensation or
expense reimbursement from the Fund. As of the date of this SAI, the Trust has
not commenced operation and no expense reimbursements have been paid. The
following table provides estimated information on all expense reimbursements to
be made to the Trustees by the Fund for fiscal year 2001.
<TABLE>
<CAPTION>
---------------------------- -------------------- -------------------- ---------------------- ------------------------
Name and Position Aggregate Pension or Estimated Total Compensation
Compensation Retirement Annual Benefits from Fund and Fund
From Fund Benefits Accrued Upon Complex Paid to
as Part of Fund Retirement Trustees**
Expenses
---------------------------- -------------------- -------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
Robert J. Sullivan* None None None None
Michael D. Muffoletto $600 None None $600
Kevin M. Haggerty $600 None None $600
<FN>
------------------
*"Interested person" as defined under the 1940 Act.
**The Registrant is the only registered mutual fund in the fund complex.
</FN>
</TABLE>
PORTFOLIO TURNOVER
------------------
In order to qualify for the beneficial tax treatment afforded regulated
investment companies, and to be relieved of Federal tax liabilities, the Fund
must distribute substantially all of its net income to shareholders generally on
an annual basis. Thus, the Fund may have to dispose of portfolio securities
11
<PAGE>
under disadvantageous circumstances to generate cash or borrow cash in order to
satisfy the distribution requirement. The Fund does not trade in securities for
short-term profits but, when circumstances warrant, securities may be sold
without regard to the length of time they have been held.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
---------------------------------------------------
A control person is one who owns beneficially or through controlled companies
more than 25% of the voting securities of a company or acknowledges the
existence of control. As of the date of this SAI, the Fund could be deemed to be
under the control of the Adviser, which had voting authority with respect to
approximately 100% of the value of the outstanding interests in the Trust on
such date. However, it is expected that once the Fund commences investment
operations, and its shares are sold to the public, that the Adviser's control
will be diluted until such time as the Fund is controlled by its shareholders.
MANAGEMENT OWNERSHIP As a group, the officers and Trustees of the Fund own less
-------------------------------------------------------------------------------
than 1% of the outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
--------------------------------------
THE ADVISER
-----------
Satuit Capital Management LLC (the "Adviser"), 146 Front Street, Suite 204, Mill
Wharf Plaza, Scituate, Massachusetts 02066, serves as investment adviser to the
Fund. Subject to the general supervision and control of the Board, the Adviser
makes investment decisions for the Fund. The Adviser is a privately held
corporation that is registered as an investment adviser with the U.S. Securities
& Exchange Commission.
Under the terms of its investment advisory agreement with the Fund, the Adviser
is responsible for formulating the Fund's investment programs and for making
day-to-day investment decisions and engaging in portfolio transactions. The
Adviser also furnishes corporate officers, provides office space, services and
equipment and supervises all matters relating to the Fund's operations. For its
services, the Adviser receives an advisory fee at an annual rate of 1.50% of the
average daily net assets of the Fund.
CONTROL OF THE ADVISER
----------------------
The Adviser is wholly-owned and controlled by Mr. Robert J. Sullivan, who is
also the Managing Director and Chief Investment Officer of the Adviser.
INVESTMENT ADVISORY AGREEMENT
-----------------------------
The Adviser acts as the investment adviser to the Fund pursuant to an Investment
Advisory Agreement which has been approved by the Board of Trustees (including a
majority of the Trustees who are not parties to the agreement, or interested
persons of any such party). Under the terms of the investment advisory
agreements between the Trust and the Adviser, the Adviser conducts investment
research and management for the Fund and is responsible for the purchase and
sale of securities for the Fund's investment portfolio. The Adviser provides the
Fund with investment advice, supervises the management and investment programs
and provides investment advisory facilities and executive and supervisory
personnel for managing the investments and effectuating portfolio transactions.
The Adviser also furnishes, at its own expense, all necessary administrative
services, office space, equipment and clerical personnel for servicing the
investments of the Fund. In addition, the Adviser pays the salaries and fees of
all officers of the Trust who are affiliated with the Adviser.
The Investment Advisory Agreement remains in effect initially for a two year
term and continues in effect thereafter only if such continuance is specifically
approved at least annually by the Trustees or by vote of a majority of the
outstanding voting securities of the Fund (as defined in the1940 Act) and, in
either case, by a majority of the Trustees who are not interested persons of the
Trust or the Adviser. The Adviser's investment decisions are made subject to the
direction and supervision of the Board of Trustees. The Investment Advisory
Agreement provides that the Adviser shall not be liable to the Fund for any
error of judgment by the Adviser or for any loss sustained by the Fund except in
the case of the Advisor's willful misfeasance, bad faith, gross negligence or
reckless disregard of duty. The Investment Advisory Agreement also provides that
it shall terminate automatically if assigned and that it may be terminated
without penalty by vote of a majority of the outstanding voting securities of
the Fund or by either party upon 60 days' written notice. No person other than
the Adviser regularly furnishes advice to the Fund with respect to the
desirability of the Fund's investing in, purchasing or selling securities.
12
<PAGE>
CODE OF ETHICS
--------------
The Trust, Adviser and Distributor have each adopted a Code of Ethics ("Code"),
pursuant to Rule 17j-1 of the 1940 Act, which makes it unlawful for any
affiliated person of the Fund, Adviser, or Distributor, in connection with the
purchase or sale, directly or indirectly, by the person, of a security held or
to be acquired by the Fund to (i) employ any device, scheme or artifice to
defraud the Fund; (ii) make any untrue statement of a material fact to the Fund
or omit to state a material fact necessary in order to make the statements made
to the Fund, in light of the circumstances under which they are made, not
misleading; (iii) engage in any act, practice or course of business that
operates or would operate as a fraud or deceit on the Fund; or (iv) engage in
any manipulative practice with respect to the Fund.. The Board of Trustees has
determined that personnel of the Trust may engage in personal trading of
securities, including with respect to securities purchased and sold by the Fund,
subject to general fiduciary principles and compliance with the express
provisions of the Code.
It is noted that under the Code: (1) the disinterested Trustees of the Trust are
not required to pre-clear personal securities transactions, and (2) the
disinterested Trustees need not report transactions where they were not provided
with information about the portfolio transactions contemplated for the Fund or
executed for the Fund for a period of 15 days before and after such
transactions.
ADMINISTRATOR
-------------
The Administrator of the Fund is American Data Services, Inc. ("ADS" or the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788. ADS is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York and Denver and as of the date of this Prospectus had assets under
administration in excess of $4 billion.
Pursuant to an Administrative Service Agreement with the Trust on behalf of the
Fund, the Administrator provides all administrative services necessary for the
Fund, subject to the supervision of the Trust's Board of Trustees. The
Administrator will provide persons to serve as officers of the Trust. Such
officers may be directors, officers or employees of the Administrator or its
affiliates.
The Administrative Service Agreement is terminable by the Board of Trustees of
the Trust or the Administrator on sixty days' written notice and may be assigned
provided the non-assigning party provides prior written consent. The Agreement
shall remain in effect for two years from the date of its initial approval, and
is subject to annual approval of the Board of Trustees for one-year periods
thereafter. The Agreement provides that in the absence of willful misfeasance,
bad faith or negligence on the part of the Administrator or reckless disregard
of its obligations thereunder, the Administrator shall not be liable for any
action or failure to act in accordance with its duties thereunder.
Under the Administrative Service Agreement, the Administrator provides all
administrative services, including, without limitation: (i) provides services of
persons competent to perform such administrative and clerical functions as are
necessary to provide effective administration of the Fund; (ii) overseeing the
performance of administrative and professional services to the Fund by others,
including the Fund's Custodian; (iii) preparing, but not paying for, the
periodic updating of the Registration Statement and the Fund's Prospectus and
Statement of Additional Information in conjunction with Fund counsel, including
the printing of such documents for the purpose of filings with the Securities
and Exchange Commission and state securities administrators, preparing the
Fund's tax returns, and preparing reports to the Fund's shareholders and the
Securities and Exchange Commission; (iv) preparing, but not paying for, all
filings under the securities or "Blue Sky" laws of such states or countries as
are designated by the Distributor, which may be required to register or qualify,
or continue the registration or qualification, of the Fund and/or its shares
under such laws; (v) preparing notices and agendas for meetings of the Board of
Trustees and minutes of such meetings in all matters required by the 1940 Act to
be acted upon by the Board; and (vi) monitoring daily and periodic compliance
with respect to all requirements and restrictions of the 1940 Act, the Internal
Revenue Code and the Prospectus.
The Administrator, pursuant to a Fund Accounting Service Agreement in place with
the Trust, on behalf of the Fund, provides the Fund with all accounting
services, including, without limitation: (i) daily computation of net asset
value; (ii) maintenance of security ledgers and books and records as required by
13
<PAGE>
the 1940 Act; (iii) production of the Fund's listing of portfolio securities and
general ledger reports; (iv) reconciliation of accounting records; (v)
calculation of yield and total return for the Fund; (vi) maintaining certain
books and records described in Rule 31a-1 under the 1940 Act, and reconciling
account information and balances among the Fund's Custodian and Adviser; and
(vii) monitoring and evaluating daily income and expense accruals, and sales and
redemptions of shares of the Fund.
ADMINISTRATOR'S FEES
--------------------
For the services rendered to the Fund by the Administrator, the Fund pays the
Administrator, on a monthly basis, an annual fee equal to 0.15% of the first $75
million, 0.10% of the next $75 million, and 0.07% of the remaining balance of
the Fund's average daily net assets. The fee is subject to a monthly minimum of
$3,000. The Fund also reimburses the Administrator for any out-of-pocket
expenses incurred by the Administrator on behalf of the Fund. In addition, in
consideration for providing the Fund with all fund accounting related services,
the Fund pays the Administrator a monthly fee based on the Fund's average net
assets, plus any out-of-pocket expenses for such services.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
-------------------------------------------------------
Custodial Trust Company (the "Custodian"), located at 101 Carnegie Center,
Princeton, New Jersey 08540-6231, serves as custodian for the Fund's cash and
securities. The Custodian does not assist in, and is not responsible for,
investment decisions involving assets of the Fund.
ADS, the Fund's Administrator, also acts as the Fund's transfer and dividend
disbursing agent. The Fund pays ADS the greater of $900 per month or $9.00 per
year per account, plus out-of-pocket expenses, for rendering such transfer and
dividend disbursement agency services.
DISTRIBUTOR
-----------
AmeriMutual Funds Distributor, Inc. (the "Distributor"), an affiliate of the
Administrator, and the Trust are parties to a distribution agreement (the
"Distribution Agreement") with respect to the continuous offering of the shares
of the Fund pursuant to which the Distributor will serve as distributor and
principal underwriter of such shares. The Distributor receives no compensation
for distributing the Fund's shares.
The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor, by a majority vote
of the Trustees who are not interested persons and have no financial interest in
the Distribution Agreement or by a majority vote of the outstanding securities
of the Company upon not more than 60 days' written notice by either party or
upon assignment by the Distributor.
The Distributor receives a shareholder servicing fee from the Fund pursuant to a
Shareholder Servicing Agreement in an amount equal to 0.25% of the Fund's
average daily net assets. The Distributor is responsible for paying a portion of
these shareholder servicing fees to various shareholder servicing agents which
have a written shareholder servicing agreement with the Distributor and which
perform shareholder servicing functions and maintenance of shareholder accounts
on behalf of their clients who own shares of the Fund.
OTHER EXPENSES
--------------
The Fund pays certain operating expenses that are not assumed by the Adviser,
the Trust or any of their respective affiliates. These expenses, together with
fees paid to the Adviser, the Administrator, the Custodian, the Distributor and
the Transfer Agent, are deducted from the income of the Fund, respectively,
before dividends are paid. These expenses include, but are not limited to,
expenses of officers and Trustees who are not affiliated with the Adviser, the
Trust or any of their respective affiliates, taxes, interest, legal fees,
custodian fees, audit fees, brokerage fees and commissions, the expenses of
reports to shareholders, shareholders' meetings and proxy solicitations.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
--------------------------------------------------
The Fund's assets are invested by the Adviser in a manner consistent with its
investment objective, strategies and policies, and restrictions and with any
instructions the Board of Trustees may issue from time to time. Within this
framework, the Adviser is responsible for making all determinations as to the
purchase and sale of portfolio securities and for taking all steps necessary to
implement securities transactions on behalf of the Fund.
14
<PAGE>
U.S. Government securities generally are traded in the over-the-counter market
through broker-dealers. A broker-dealer is a securities firm or bank that makes
a market for securities by offering to buy at one price and sell at a slightly
higher price. The difference between the prices is known as a spread.
In placing orders for the purchase and sale of portfolio securities for the
Fund, the Adviser will use its best efforts to obtain the best possible price
and execution and will otherwise place orders with broker-dealers subject to and
in accordance with any instructions the Board of Trustees may issue from time to
time. The Adviser will select broker-dealers to execute portfolio transactions
on behalf of the Fund primarily on the basis of best price and execution.
When consistent with the objectives of prompt execution and favorable net price,
business may be placed with broker-dealers who furnish investment research or
services to the Adviser. Such research or services include advice, both directly
and in writing, as to the value of securities; the advisability of investing in,
purchasing or selling securities; and the availability of securities, or
purchasers or sellers of securities; as well as analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts. To the extent portfolio transactions are
effected with broker-dealers who furnish research services to the Adviser, the
Adviser receives a benefit, not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to the Fund from these transactions. The
Adviser believes that most research services obtained by it generally benefit
several or all of the investment companies and private accounts that it manages,
as opposed to solely benefiting one specific managed fund or account.
Transactions on U.S. stock exchanges, commodities markets and futures markets
and other agency transactions involve the payment by the Fund of negotiated
brokerage commissions. Such commissions vary among different brokers. A
particular broker may charge different commissions according to such factors as
the difficulty and size of the transaction. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid by the Fund usually includes an undisclosed dealer commission or
mark-up. In underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the underwriter or dealer.
It has for many years been a common practice in the investment advisory business
for advisers of investment companies and other institutional investors to
receive brokerage and research services (as defined in the Securities Exchange
Act of 1934, as amended (the "1934 Act")) from broker-dealers that execute
portfolio transactions for the clients of such advisers and from third parties
with which such broker-dealers have arrangements. Consistent with this practice,
the Adviser may receive brokerage and research services and other similar
services from many broker-dealers with which the Adviser may place the Fund's
portfolio transactions and from third parties with which these broker-dealers
have arrangements. These services include such matters as general economic and
market reviews, industry and company reviews, evaluations of investments,
recommendations as to the purchase and sale of investments, newspapers,
magazines, pricing services, quotation services, news services and personal
computers utilized by the Adviser. Where the services referred to above are not
used exclusively by the Adviser for research purposes, the Adviser, based upon
its own allocations of expected use, bears that portion of the cost of these
services which directly relates to their non-research use. Some of these
services are of value to the Adviser and its affiliates in advising a variety of
their clients (including the Fund), although not all of these services are
necessarily useful and of value in managing the Fund. The management fee paid by
the Fund is not reduced because the Adviser and its affiliates receive these
services even though the Adviser might otherwise be required to purchase some of
these services for cash.
As permitted by Section 28(e) of the 1934 Act, the Adviser may cause the Fund to
pay a broker-dealer which provides "brokerage and research services" (as defined
in the 1934 Act) to the Adviser an amount of disclosed commission for effecting
securities transactions on stock exchanges and other transactions for the Fund
on an agency basis in excess of the commission which another broker-dealer would
have charged for effecting that transaction. The Adviser's authority to cause
the Fund to pay any such greater commissions is also subject to such policies as
the Trustees may adopt from time to time. The Adviser does not currently intend
to cause the Fund to make such payments. It is the position of the staff of the
Securities and Exchange Commission that Section 28(e) does not apply to the
payment of such greater commissions in "principal" transactions. Accordingly,
the Adviser will use its best effort to obtain the most favorable price and
execution available with respect to such transactions, as described above.
15
<PAGE>
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Trustees may determine, the Adviser may
consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
TAXATION
--------
The Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
so qualifying, the Fund will not incur federal income or state taxes on its net
investment company taxable income and on net realized capital gains (net
long-term capital gains in excess of the sum of net short-term capital losses
and capital losses carryovers from the prior 8 years) to the extent distributed
as dividends to shareholders.
To qualify as a regulated investment company, the Fund must, among other things
(a) derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock, securities or other income derived with respect to
its business of investing in such stock, securities or currencies; (b) diversify
its holdings so that, at the end of each quarter of the taxable year, (i) at
least 50% of the market value of the Fund's assets is represented by cash, U.S.
Government securities, the securities of other regulated investment companies
and other securities, with such other securities of any one issuer limited for
the purposes of this calculation to an amount not greater than 5% of the value
of the Fund's total assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its total assets is invested
in the securities of any one issuer (other than U.S. Government securities or
the securities of other regulated investment companies); and (c) distribute to
its shareholders at least 90% of its investment company taxable income (which
includes dividends, interest and net short-term capital gains in excess of any
net long-term capital losses) and 90% of its net exempt interest income each
taxable year.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax at the
Fund level. To avoid the tax, the Fund must distribute during each calendar year
an amount equal to the sum of (a) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (b) at
least 98% of its capital gains in excess of capital losses (adjusted for certain
ordinary losses) for a one-year period generally ending on October 31st of the
calendar year, and (c) all ordinary income and capital gains for previous years
that were not distributed during such years.
Under the Code, dividends derived from interest, and any short-term capital
gains, are taxable to shareholders as ordinary income for federal and state tax
purposes, regardless of whether such dividends are taken in cash or reinvested
in additional shares. Distributions made from the Fund's net realized long-term
capital gains (if any) and designated as capital gain dividends are taxable to
shareholders as long-term capital gains, regardless of the length of time Fund
shares are held. Corporate investors are not eligible for the dividends-received
deduction with respect to distributions derived from interest on short-or
long-term capital gains from the Fund but may be entitled to such a deduction in
respect to distributions attributable to dividends received by the Fund. A
distribution will be treated as paid on December 31st of a calendar year if it
is declared by the Fund in October, November or December of the year with a
record date in such a month and paid by the Fund during January of the following
year. Such distributions will be taxable to shareholders in the calendar year
the distributions are declared, rather than the calendar year in which the
distributions are received.
Distributions paid by the Fund from net long-term capital gains (excess of
long-term capital gains over long-term capital losses), if any, whether received
in cash or reinvested in additional shares, are taxable as long-term capital
gains, regardless of the length of time you have owned shares in the Fund.
Distributions paid by the Fund from net short-term capital gains (excess of
short-term capital gains over short-term capital losses), if any, whether
received in cash or reinvested in additional shares are taxable as ordinary
income. Capital gains distributions are made when the Fund realizes net capital
gains on sales of portfolio securities during the year.
16
<PAGE>
Any redemption or exchange of the Fund's shares is a taxable event and may
result in a capital gain or loss. A gain or loss, if the shares are capital
assets in the shareholder's hands, and will be long-term, mid-term or short-term
generally depending upon the shareholder's holding period for the shares. Any
loss realized on a disposition will be disallowed by "wash sale" rules to the
extent the shares disposed of are replaced within a period of 61 days beginning
30 days before and ending 30 days after the disposition. In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a shareholder on a disposition of shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of capital gain dividends received by the
shareholder with respect to such shares.
Dividend distributions, capital gains distributions, and capital gains or losses
from redemptions and exchanges may also be subject to state and local taxes.
Ordinarily, distributions and redemption proceeds paid to Fund shareholders are
not subject to withholding of federal income tax. However, 31% of the Fund's
distributions and redemption proceeds must be withheld if a Fund shareholder
fails to supply the Fund or its agent with such shareholder's taxpayer
identification number or if the Fund shareholder who is otherwise exempt from
withholding fails to properly document such shareholder's status as an exempt
recipient.
The information above is only a summary of some of the tax considerations
generally affecting the Fund and its shareholders. No attempt has been made to
discuss individual tax consequences. To determine whether the Fund is a suitable
investment based on his or her tax situation, a prospective investor may wish to
consult a tax advisor.
VOTING AND OWNERSHIP OF SHARES
------------------------------
Each share of the Fund has one vote in the election of Trustees. Cumulative
voting is not authorized for the Fund. This means that the holders of more than
50% of the shares voting for the election of Trustees can elect 100% of the
Trustees if they choose to do so, and, in that event, the holders of the
remaining shares will be unable to elect any Trustees.
Shareholders of the Fund and any other future series of the Trust will vote in
the aggregate and not by series except as otherwise required by law or when the
Board of Trustees determines that the matter to be voted upon affects only the
interest of the shareholders of a particular series. Matters such as
ratification of the independent public accountants and election of Trustees are
not subject to separate voting requirements and may be acted upon by
shareholders of the Trust voting without regard to series.
On November 21, 2000, the Adviser invested $100,000 in shares of the Fund at
$10.00 per share, as seed capital. The Adviser will control the Fund until
public shareholders begin investing in the Fund thereby diluting the ownership
of Fund shares by the Adviser.
The authorized capitalization of the Trust consists of 1 billion shares of
beneficial interest of $0.001 par value per share. Each share has equal
dividend, distribution and liquidation rights. There are no conversion or
preemptive rights applicable to any shares of the Fund. All shares issued are
fully paid and non-assessable.
PURCHASE OF SHARES
------------------
Shares of the Fund may be purchased at the net asset value per share next
determined after receipt of an order by the Fund's Transfer Agent in proper form
with accompanying check or other bank wire payment arrangements satisfactory to
the Fund. The minimum initial investment in the Fund is $1,000 and the minimum
subsequent investment is $250 (except for individual retirement accounts for
which the minimum subsequent investment is $100).
REDEMPTION OF SHARES
--------------------
Redemption of shares, or payment for redemptions, may be suspended at times (a)
when the NYSE is closed for other than customary weekend or holiday closings,
(b) when trading on said exchange is restricted, (c) when an emergency exists,
as a result of which disposal by the Fund of securities owned by it is not
reasonably practicable, or it is not reasonably practicable for the Fund fairly
17
<PAGE>
to determine the value of its net assets, or (d) during any other period when
the Securities and Exchange Commission, by order, so permits, provided that
applicable rules and regulations of the Securities and Exchange Commission shall
govern as to whether the conditions prescribed in (b) or (c) exist.
Shareholders who purchased shares through a broker-dealer may also redeem such
shares by written request to the Transfer Agent which shares are held by the
Transfer Agent at the address set forth in the Prospectus. To be considered in
"good order", written requests for redemption should indicate the dollar amount
or number of shares to be redeemed, refer to the shareholder's Fund account
number, including either the social security or tax identification number. The
request should be signed in exactly the same way the account is registered. If
there is more than one owner of the shares, all owners must sign. If shares to
be redeemed have a value of $5,000 or more or redemption proceeds are to be paid
by someone other than the shareholder at the shareholder's address of record,
the signature(s) must be guaranteed by an "eligible guarantor institution,"
which includes a commercial bank that is a member of the Federal Deposit
Insurance Corporation, a trust company, a member firm of a domestic stock
exchange, a savings association or a credit union that is authorized by its
charter to provide a signature guarantee. The Transfer Agent may reject
redemption instructions if the guarantor is neither a member of nor a
participant in a signature guarantee program. Signature guarantees by notaries
public are not acceptable. The purpose of a signature guarantee is to protect
shareholders against the possibility of fraud. Further documentation will be
requested from corporations, administrators, executors, personal
representatives, trustees and custodians. Redemption requests given by facsimile
will not be accepted. Unless other instructions are given in proper form, a
check for the proceeds of the redemption will be sent to the shareholder's
address of record. Share purchases and redemptions are governed by Delaware
state law.
DIVIDENDS AND DISTRIBUTIONS
---------------------------
Net investment income, if any, is declared as dividends and paid annually.
Substantially all the realized net capital gains for the Fund, if any, are also
declared and paid on an annual basis. Dividends and distributions are payable to
shareholders of record at the time of declaration.
Distributions from the Fund are automatically reinvested in additional Fund
shares unless the shareholder has elected to have them paid in cash.
NET ASSET VALUE
---------------
The price per share of the Fund is referred to as the Fund's "net asset value."
The method for determining the Fund's net asset value is summarized in the
Prospectus in the text following the heading "When And How NAV Is Determined".
The net asset value of the Fund's shares is determined on each day on which the
New York Stock Exchange ("NYSE") is open, provided that the net asset value need
not be determined on days when no Fund shares are tendered for redemption and no
order for Fund shares is received. The NYSE is not open for business on the
following holidays (or on the nearest Monday or Friday if the holiday falls on a
weekend): New Year's Day, President's Day, Good Friday, Dr. Martin Luther King,
Jr. Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
PERFORMANCE COMPARISONS
-----------------------
Total return quoted in advertising and sales literature reflects all aspects of
the Fund's return, including the effect of reinvesting dividends and capital
gain distributions and any change in the Fund's net asset value during the
period.
The Fund's total return must be displayed in any advertisement containing the
Fund's yield. Total return is the average annual total return for the 1-, 5- and
10-year period ended on the date of the most recent balance sheet included in
the Statement of Additional Information, computed by finding the average annual
compounded rates of return over 1-, 5- and 10-year periods that would equate the
initial amount invested to the ending redeemable value according to the
following formula:
18
<PAGE>
P(1 + T)n = ERV
Where:
P = a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1-, 5- or 10-year periods at the end of the
1-, 5-or 10-year periods (or fractions
thereof).
Because the Fund has not had a registration in effect for 1, 5 or 10 years, the
period during which the registration has been effective shall be substituted.
Average annual total return is calculated by determining the growth or decline
in value of a hypothetical historical investment in the Fund over a stated
period and then calculating the annual compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant throughout the period. For example, a cumulative total return of 100%
over 10 years would produce an average annual total return of 7.18%, which is
the steady annual rate that would result in 100% growth on a compounded basis in
10 years. While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that the Fund's performance is
not constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to actual year-to-year
performance.
In addition to average annual total returns, the Fund may quote unit asset value
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total returns may
be quoted as a percentage or as a dollar amount and may be calculated for a
single investment, a series of investments, or a series of redemptions over any
time period. Performance information may be quoted numerically or in a table,
graph, or similar illustration.
The Fund's performance may be compared with the performance of other funds with
comparable investment objectives, tracked by fund rating services or with other
indexes of market performance. Sources of economic data that may be considered
in making such comparisons may include, but are not limited to, rankings of any
mutual fund or mutual fund category tracked by Lipper Analytical Services, Inc.
or Morningstar, Inc.; data provided by the Investment Company Institute; major
indexes of stock market performance; and indexes and historical data supplied by
major securities brokerage or investment advisory firms. The Fund may also
utilize reprints from newspapers and magazines furnished by third parties to
illustrate historical performance.
The agencies listed below measure performance based on their own criteria rather
than on the standardized performance measures described in the preceding
section.
Lipper Analytical Services, Inc. distributes mutual fund rankings
monthly. The rankings are based on total return performance calculated
by Lipper, generally reflecting changes in net asset value adjusted for
reinvestment of capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a variety of
performance periods, including year-to-date, 1-year, 5-year, and
10-year performance. Lipper classifies mutual funds by investment
objective and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a month. The
ratings are divided into five groups: highest, above average, neutral,
below average and lowest. They represent the fund's historical
risk/reward ratio relative to other funds in its broad investment class
as determined by Morningstar, Inc. Morningstar ratings cover a variety
of performance periods, including 1-year, 3-year, 5-year, 10-year and
overall performance. The performance factor for the overall rating is a
weighted-average assessment of the fund's 1-year, 3-year, 5-year, and
10-year total return performance (if available) reflecting deduction of
expenses and sales charges. Performance is adjusted using quantitative
techniques to reflect the risk profile of the fund. The ratings are
derived from a purely quantitative system that does not utilize the
subjective criteria customarily employed by rating agencies such as
Standard & Poor's and Moody's Investor Service, Inc.
19
<PAGE>
CDA/Weisenberger's Management Results publishes mutual fund rankings
and is distributed monthly. The rankings are based entirely on total
return calculated by Weisenberger for periods such as year-to-date,
1-year, 3-year, 5-year and 10-year. Mutual funds are ranked in general
categories (e.g., international bond, international equity, municipal
bond, and maximum capital gain). Weisenberger rankings do not reflect
deduction of sales charges or fees.
Independent publications may also evaluate the Fund's performance. The Fund may,
from time to time, refer to results published in various periodicals, including
Barrons, Financial World, Forbes, Fortune, Investor's Business Daily,
Kiplinger's Personal Finance Magazine, Money, U.S. News and World Report and The
Wall Street Journal.
COUNSEL AND INDEPENDENT AUDITORS
--------------------------------
Legal matters in connection with the Trust, including the issuance of shares of
beneficial interest of the Fund, are passed upon by Spitzer & Feldman P.C., 405
Park Avenue, New York, New York 10022. McCurdy & Associates CPAs, Inc., 27955
Clemens Road, Westlake, Ohio 44145 have been selected as independent auditors
for the Fund.
OTHER INFORMATION
-----------------
The investment adviser for the Fund is Satuit Capital Management, LLC, a
recently formed Delaware limited liability company which was registered as an
investment adviser with the SEC on August 16, 2000. The Trust has filed a
registration statement under the Securities Act of 1933 and the 1940 Act with
respect to the shares offered. Such registrations do not imply approval or
supervision of the Fund or the Adviser by the SEC.
For further information, please refer to the registration statement and exhibits
on file with the SEC in Washington, D.C. These documents are available upon
payment of a reproduction fee. Statements in the Prospectus and in this SAI
concerning the contents of contracts or other documents, copies of which are
filed as exhibits to the registration statement, are qualified by reference to
such contracts or documents.
FINANCIAL STATEMENTS
--------------------
The Trust's balance sheet as of November 22, 2000 is set forth below. It has
been audited by the Trust's independent auditors, McCurdy & Associates CPAs,
Inc., whose Report thereon is set forth below. The balance sheet is included
herein in reliance upon their authority as experts in accounting and auditing.
20
<PAGE>
To The Shareholders and Trustees
Satuit Capital Management Trust:
We have audited the accompanying statement of assets and liabilities of Satuit
Capital Management Trust (comprised of Satuit Capital Micro Cap Fund) as of
November 22, 2000. 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 November 22, 2000, 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 Satuit
Capital Micro Cap Fund as of November 22, 2000, in conformity with generally
accepted accounting principles.
McCurdy & Associates CPA's, Inc.
/s/ McCurdy & Associates CPA's, Inc.
Westlake, Ohio
November 22, 2000
<PAGE>
SATUIT CAPITAL MICRO CAP FUND
Statement of Assets and Liabilities
November 22, 2000
Assets
Cash..........................................................$100,000
Net Assets ...................................................$100,000
========
Shares of common stock outstanding
(Unlimited shares authorized,
No par value)...................................................10,000
======
Net asset value, offering price and
redemption price per share ....................................$ 10.00
=======
The accompanying notes are an integral part of this statement
<PAGE>
SATUIT CAPITAL MICRO CAP FUND
NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
November 22, 2000
================================================================================
1. ORGANIZATION - The Satuit Capital Micro Cap Fund (the "Fund") is a series
of Satuit Capital Management Trust. The Fund is a no-load, diversified,
open-end management investment company. The Fund's principal investment
objective is to provide investors with long-term capital appreciation. On
November 22, 2000, 10,000 shares of the Fund were issued for cash at a
purchase price of $10.00 per share. The Fund has had no operations except
for the initial issuance of shares.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Equity securities are valued
at the last sale price on the exchange or the over-the-counter market in
which such securities are primarily traded, or lacking any sales, the last
available bid price. Foreign securities are valued on the basis of market
quotations from the primarily market in which they are traded, and are
translated from the local currency into U.S. dollars using current exchange
rates. Certain short-term securities are valued on the basis of amortized
cost. Securities for which current market quotations are not readily
available are valued at fair value as determined in good faith by and under
the direction of the Fund's Board of Trustees.
Security transactions are recorded on trade date. Dividend income is
recognized on the ex-dividend date and interest income is recognized on the
accrual basis.
The Fund intents to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all
of its net investment income and net realized capital gains in order to relieve
the Fund from all federal income taxes.
Expenses incurred in connection with the organization of the Fund and the
initial offering of shares of will be permanently absorbed by Satuit Capital
Management LLC (the "Adviser").
3. ADVISORY FEE AND OTHER TRANSACTIONS - The Fund has entered into an
Investment Advisory Agreement with the Adviser. The Adviser is responsible
for formulating the Fund's investment program, making day-to-day investment
decisions and engaging in portfolio transactions. The Adviser also
furnishes corporate offices, provides office space, services and equipment
and supervises all matters relating to the Fund's operations. For its
services, the Adviser will receive an advisory fee at an annual rate of
1.50% of the average daily value of the net assets of the Fund.
The Fund has entered into an Administration and Shareholder Servicing
Agreement with American Data Services, Inc. ("ADS"). ADS will provide
administrative, accounting, executive and regulatory services. For it
services, ADS will receive a fee based on a sliding scale ranging from .35%
of the first $50 million of average net assets, down to .20% of assets
greater than $150 million.
23
