T-1 TREASURY TRUST
P. O. Box 2529
2303 Yorktown Avenue
Lynchburg, Virginia 24501
(804) 846-1361
(800) 544-6060
API Trust ("Trust") is an open-end, management investment company that
currently consists of seven separate series ("Series"). This Prospectus relates
only to shares of the T-1 Treasury Trust ("Fund"), a diversified series of the
Trust. The Fund's investment objective is to seek current income while limiting
credit risk. It pursues this objective by investing in U.S. Treasury securities
with remaining maturities of one year or less. Although the Fund limits its
investments to securities with remaining maturities of one year or less, it is
not operated as a money market fund and accordingly does not seek to and will
not maintain a stable net asset value. No assurance can be given that the Fund
will achieve its investment objective.
Shares of the Fund are offered through Yorktown Distributors, Inc.
("Distributors"). The Fund's minimum initial investment is $500; subsequent
investments must be at least $100. The Fund pays expenses related to the
distribution of its shares.
This Prospectus sets forth concisely the information about the Trust and
the Fund that a prospective investor should know before investing. It should be
read and retained for future reference. A Statement of Additional Information,
dated October 1, 1997 has been filed with the Securities and Exchange Commission
and, as amended from time to time, is incorporated by reference herein. It is
available, at no charge, by contacting the Trust at the address or telephone
numbers provided above.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is dated October 1, 1997.
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TABLE OF CONTENTS
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TOPIC PAGE
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TABLE OF FUND EXPENSES................................................................................ 3
FINANCIAL HIGHLIGHTS.................................................................................. 4
INVESTMENT OBJECTIVE AND POLICIES..................................................................... 5
OTHER INFORMATION..................................................................................... 5
Temporary Investments............................................................................... 5
Borrowing and Other Policies........................................................................ 6
Portfolio Turnover.................................................................................. 6
MANAGEMENT OF THE FUND................................................................................ 6
PURCHASE OF FUND SHARES............................................................................... 6
Distribution Arrangements........................................................................... 6
How Shares May Be Purchased......................................................................... 7
Systematic Investment Plan.......................................................................... 8
Exchange Privileges................................................................................. 8
Determining Net Asset Value......................................................................... 9
REDEMPTION OF FUND SHARES............................................................................. 9
How Shares May Be Redeemed.......................................................................... 9
Systematic Withdrawal Plan.......................................................................... 10
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES.............................................................. 10
Dividends and Other Distributions................................................................... 10
Taxes............................................................................................... 10
Qualified Retirement Plans.......................................................................... 11
PERFORMANCE INFORMATION............................................................................... 11
FUND SHARES........................................................................................... 12
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT..................................................... 13
GENERAL INFORMATION................................................................................... 13
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TABLE OF FUND EXPENSES
The following tables are intended to assist investors in understanding the
expenses associated with investing in the Fund.
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SHAREHOLDER TRANSACTION EXPENSES
Sales load imposed on purchases............................................................... None
Redemption fees............................................................................... None
Sales load imposed on reinvested dividends.................................................... None
Exchange fees................................................................................. None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets) (1)(2)
Management Fees (after wavers)................................................................ 0.10%
12b-1 Fees (after waivers).................................................................... 0.25%
Other Expenses (3)............................................................................ 1.14%
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Total Fund Operating Expenses (after waivers)................................................. 1.49%
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(1) "Annual Fund Operating Expenses"are based on operating expenses
incurred by the Fund for the fiscal year ended May 31, 1997. Long-term
shareholders may pay more in 12b-1 fees over time as a percentage of their
initial investment than the amount of the maximum front-end sales charge
permitted under the rules of the National Association of Securities Dealers,
Inc. ("NASD").
(2) The Fund's distributor, Yorktown Distributors, Inc. ("Distributors")
has agreed to limit the Fund's Rule 12b-1 fees to an annual rate of 0.25% of the
Fund's average daily net assets. In addition, the Fund's investment adviser,
Yorktown Management & Research Company, Inc. (the "Adviser") waived a portion of
its advisory fees during the fiscal year ended May 31, 1997. Without such
waivers, Management Fees, 12b-1 Fees and Total Fund Operating Expenses would
have been 0.60%, 0.50%, and 2.24%, respectively.
(3) Other Expenses may vary significantly depending upon the size of the
Fund.
EXAMPLE - A shareholder would pay the following expenses on a $1,000 investment
assuming (1) a 5% annual return and (2) redemption at the end of each period.
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After 1 year................................................................. $ 15
After 3 years................................................................ 47
After 5 years................................................................ 82
After 10 years............................................................... 179
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The Example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The 5% annual return assumed in the
Example is required by regulations of the Securities and Exchange Commission
("SEC") and is not a predication of, and does not represent, the projected or
actual performance of Fund shares. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES OF THE FUND MAY BE
GREATER OR LESS THAN THOSE SHOWN.
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FINANCIAL HIGHLIGHTS
The table below provides financial highlights for one share of the Fund for
the periods shown. This information is supplemented by the financial statements
and accompanying notes appearing in the Statement of Additional Information. The
financial statements and notes have been audited by Coopers & Lybrand L.L.P.,
independent certified public accountants, whose report thereon is also included
in the Statement of Additional Information. The financial highlights appearing
below were derived from financial statements audited by Coopers & Lybrand L.L.P.
Prior to November 23, 1994, the Fund followed a strategy of using multiple
investment styles by investing primarily in the shares of other registered
investment companies. Prior to February 22, 1991, the Fund invested directly in
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
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FOR THE YEAR/PERIOD ENDED MAY 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
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FOR A SHARE OUTSTANDING THROUGHOUT EACH
YEAR/PERIOD:
Net asset value, beginning of year/period...... $ 4.69 $ 4.73 $ 4.75 $ 5.15 $ 5.16 $ 5.03 $ 5.05
------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income........................ 0.21 0.17 0.23 0.19 0.18 0.17 0.28
Net realized and unrealized gain (loss) on
investments................................ 0.02 (0.35) 0.03 0.17 0.04
------ ------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations............................... 0.19 0.17 0.23 (0.16) 0.21 0.34 0.32
------ ------ ------ ------ ------ ------ ------
Distributions:
From net investment income................... (0.17) (0.21) (0.25) (0.14) (0.22) (0.13) (0.30)
From net realized gain on security
transactions............................... (0.10) (0.08) (0.04)
------ ------ ------ ------ ------ ------ ------
Total distributions........................ (0.17) (0.21) (0.25) (0.24) (0.22) (0.21) (0.34)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of year/period...... $ 4.71 $ 4.69 $ 4.73 $ 4.75 $ 5.15 $ 5.16 $ 5.03
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Total return................................... 4.13% 3.67% 4.99% (3.48)% 4.18% 6.78% 6.36%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year/period (000's
omitted).................................... $2,528 $6,652 $4,049 $4,234 $7,295 $5,614 $1,981
Ratio of expenses to average net assets(3)... 1.49% 1.49% 1.76% 1.57% 1.44% 2.08% 3.21%
Ratio of net investment income to average net
assets..................................... 3.66% 3.77% 4.19% 3.71% 4.72% 5.01% 4.97%
Portfolio turnover rate...................... 108% 278% 292% 127% 308% 391% 169%
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1990 1989 1988(1)
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FOR A SHARE OUTSTANDING THROUGHOUT EACH
YEAR/PERIOD:
Net asset value, beginning of year/period...... $ 5.00 $ 4.91 $ 4.99
------ ------ ---------
Income from investment operations:
Net investment income........................ 0.31 0.19 0.01
Net realized and unrealized gain (loss) on
investments................................ 0.02 0.04 (0.09)
------ ------ ---------
Total income (loss) from investment
operations............................... 0.33 0.23 (0.08)
------ ------ ---------
Distributions:
From net investment income................... (0.28) (0.14)
From net realized gain on security
transactions...............................
------ ------
Total distributions........................ (0.28 (0.14)
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Net asset value, end of year/period...... $ 5.05 $ 5.00 $ 4.91
------ ------ ---------
------ ------ ---------
Total return................................... 6.67% 4.71% (11.68)%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year/period (000's
omitted).................................... $2,976 $2,406 $ 375
Ratio of expenses to average net assets(3)... 2.37% 3.40% 7.19%(2)
Ratio of net investment income to average net
assets..................................... 6.27% 4.83% 1.39%(2)
Portfolio turnover rate...................... 54% 12% --
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(1) Commencement of operations was April 12, 1988.
(2) Annualized.
(3) Without fees waived/reimbursed by the investment adviser and distributor,
the ratio of expenses to average net assets would have been 2.24%, 2.46%,
2.56%, 2.16%, 2.04%, 2.70%, 3.81%, 2.88%, 4.03% and 7.86%, respectively.
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INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek current income while limiting
credit risk. The Fund seeks to achieve its objective by investing under normal
conditions in U.S. Treasury securities (bills, notes and bonds) and other direct
obligations of the U.S. Treasury that are guaranteed as to payment of principal
and interest by the full faith and credit of the U.S. government. Dividends paid
by the Fund that are attributable to interest on such obligations are generally
exempt from state and local income tax (see "Dividends, Other Distributions and
Taxes"). The Fund limits it investments to securities with remaining maturities
of one year or less. All investments involve risks, and there is no assurance
that the investment objective of the Fund will be achieved. Although the Fund
limits its investments to securities with remaining maturities of one year or
less, it is not operated as a money market fund and accordingly does not seek to
and will not maintain a stable net asset value.
U.S. Treasury securities historically have involved little risk of loss of
principal if held to maturity. Such securities, however, are subject to
variations in market value due to interest rate fluctuations. If interest rates
fall, the market value of fixed-income securities tend to rise; if interest
rates rise, the market value of fixed-income securities tends to fall. In
general, securities with remaining maturities of one year or less are less
vulnerable to price changes than securities with longer remaining maturities.
The Fund may invest in certain zero coupon securities that are U.S.
Treasury notes and bonds that have been stripped of their unmatured interest
coupon receipts or interest in such U.S. Treasury securities or coupons. The
Fund may purchase U.S. Treasury STRIPS ("Separate Trading of Registered Interest
and Principal of Securities") that are created when coupon payments and the
principal payment are stripped from an outstanding Treasury bond by a Federal
Reserve bank. These securities may be more sensitive to market interest rate
fluctuations than interest paying government securities of the same maturity.
The investment objective of the Fund may not be changed without the
affirmative vote of a majority of the Fund's outstanding voting securities as
defined in the Investment Company Act of 1940 ("1940 Act"). Certain other
investment limitations that apply to the Fund also may not be changed without
shareholder approval, as described in the Statement of Additional Information.
All other investment policies, unless otherwise indicated, may be changed by the
Trust's Board of Trustees without shareholder approval.
OTHER INFORMATION
TEMPORARY INVESTMENTS
Pending investment, for liquidity or when Yorktown Management & Research
Company, Inc. (the "Adviser"), the Fund's investment adviser, believes market
conditions warrant a defensive position, the Fund may temporarily hold cash or
invest all or any portion of its assets in money market mutual funds or directly
in money market instruments such as (1) securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities; (2) instruments (such as
certificates of deposit, demand and time deposits and bankers' acceptances) of
banks and savings associations that are insured by the Federal Deposit Insurance
Corporation; (3) repurchase agreements secured by U.S. Government securities;
and (4) commercial paper, including master demand notes, rated A-1 by Standard &
Poor's Ratings Services or P-1 by Moody's Investors Service, Inc. To the extent
the Fund invests more than $100,000 in a single bank or savings association, the
investment is not protected by federal insurance. The Adviser will waive its
advisory fee to the extent Fund assets are invested in money market funds.
5
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BORROWING AND OTHER POLICIES
The Fund may temporarily borrow money from banks for extraordinary or
emergency purposes, but not in excess of the lesser of 10% of its total assets
(valued at cost) or 5% of its total assets (valued at market). The Fund also may
invest up to 10% of its net assets in securities for which no readily available
market exists and may lend securities constituting up to 5% of its net assets.
PORTFOLIO TURNOVER
The Fund's portfolio turnover rate may vary greatly from year to year and
will not be a limiting factor when the Adviser deems portfolio changes
appropriate. For the fiscal years ended May 31, 1997 and 1996, the Fund's
portfolio turnover rates were 108% and 278%, respectively. A high portfolio
turnover rate (100% or more) involves correspondingly greater transaction costs,
which will be borne directly by the Fund, and increases the potential for
short-term capital gains and taxes.
MANAGEMENT OF THE FUND
The Trust's Board of Trustees has overall responsibility for the operation
of the Trust. Pursuant to that responsibility, the Board has selected the
Adviser to act as investment adviser and administrator for the Fund. Services
provided by the Adviser include the provision of a continuous investment program
for the Fund and supervision of all matters relating to the operation of the
Fund. Among other things, the Adviser is responsible for making investment
decisions and placing orders to buy, sell or hold particular securities,
furnishing corporate officers and clerical staff and providing office space,
office equipment and office services. For its services, the Adviser receives a
monthly fee, calculated daily, payable at an annual rate of 0.60% of the average
daily net assets of the Fund.
The Adviser has acted as the investment adviser to the Fund since it
commenced operations on April 12, 1988. The Adviser, whose address is 2303
Yorktown Avenue, Lynchburg, Virginia 24501, was incorporated under the laws of
the State of Maryland in 1984 and is controlled by David D. Basten. In addition,
Mr. Basten currently serves as the Fund's portfolio manager and has served in
that capacity since commencement of the Fund's operations. He is also the
portfolio manager of the Trust's other Series.
The Adviser places orders for the purchase and sale of portfolio
investments for the Fund's account with brokers or dealers, selected by it in
its discretion. A factor in the selection of a broker-dealer includes the sale
of Fund shares by such broker-dealer.
PURCHASE OF FUND SHARES
DISTRIBUTION ARRANGEMENTS
Yorktown Distributors, Inc., whose address is 2303 Yorktown Avenue,
Lynchburg, Virginia 24501, is the distributor of shares of the Fund.
Distributors is an affiliate of the Adviser and is controlled by David D.
Basten.
The Trust's Board of Trustees has adopted and the Fund's shareholders have
approved a plan of distribution pursuant to Rule 12b-1 under the 1940 Act
("Plan"). The Plan provides that the Fund will pay Distributors, as compensation
for Distributors' distribution activities with respect to the Fund, a monthly
fee at the annual rate of 0.25% of the average daily net assets of the Fund and
will pay Distributors, as compensation for Distributors' service activities with
respect to the Fund and its shareholders, a monthly
6
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fee at the annual rate of 0.25% of the average daily net assets of the Fund. The
Fund and Distributors have agreed, however, to limit payments pursuant to the
Plan for distribution and service activities to an annual rate of 0.25% of the
Fund's average daily net assets.
As distributor of Fund shares, Distributors may spend such amounts as it
deems appropriate on any activities or expenses primarily intended to result in
the sale of the Fund's shares or the servicing and maintenance of shareholder
accounts, including compensation to employees of Distributors; compensation to
and expenses, including overhead and telephone and other communication expenses,
of Distributors and selected dealers who engage in or support the distribution
of shares or who service shareholder accounts; the costs of printing and
distributing prospectuses, statements of additional information, and reports for
other than existing shareholders; the costs of preparing, printing and
distributing sales literature and advertising materials; and internal costs
incurred by Distributors and allocated by Distributors to its efforts to
distribute shares of the Fund such as office rent, employee salaries, employee
bonuses and other overhead expenses.
During the period it is in effect, the Plan obligates the Fund to pay fees
to Distributors as compensation for its distribution and service activities, not
as reimbursement for specific expenses incurred. Thus, even if Distributors'
expenses exceed its fees, the Fund will not be obligated to pay more than those
fees and, if Distributors' expenses are less than such fees, it will retain the
full fee and realize a profit.
Distributors may also pay certain banks, fiduciaries, custodians for public
funds, investment advisers and broker-dealers a fee for administrative services
in connection with the distribution of Fund shares. Such fees would be based on
the average net asset value represented by shares of the administrators'
customers invested in the Fund. This fee is in addition to any commissions these
entities may receive from Distributors out of the fees it receives pursuant to
the Plan, and, if paid, will be reimbursed by the Adviser and not the Fund.
Distributors also may provide additional incentives to brokers that sell shares
of the Fund. In some instances, these incentives may be offered only to certain
brokers that have sold or may sell significant amounts of shares.
Applicable banking laws prohibit certain deposit-taking institutions from
underwriting or distributing securities. There is currently no precedent
prohibiting banks from performing administrative services in connection with the
distribution of Fund shares. If a bank were prohibited from performing such
administrative services, its shareholder clients would be permitted to remain
shareholders of the Fund and alternate means of servicing such shareholder would
be sought. It is not expected that shareholders would suffer any adverse
financial consequences as a result of any of these occurrences.
HOW SHARES MAY BE PURCHASED
Application forms for the purchase of Fund shares can be obtained from
Distributors or from a broker-dealer that has entered into an agreement with
Distributors. The Fund's minimum initial investment is $500, and the minimum for
additional investments is $100. An exception to these minimums is granted for
investments made pursuant to special plans or if approved by Distributors. All
orders are executed at the net asset value per share next computed after receipt
and acceptance of the order by Fund Services, Inc., the Fund's transfer agent.
The Fund does not impose a front-end sales load when Fund shares are purchased;
however, a broker-dealer may charge its client a fee for selling Fund shares.
The Trust and Distributors reserve the right to reject any purchase order.
When shares of the Fund are initially purchased, an account is
automatically established for the shareholder. Any shares of the Fund
subsequently purchased or received as a distribution are credited
7
<PAGE>
directly to the shareholder account. No share certificates are issued unless
specifically requested in writing to the Trust. Certificates are issued in full
shares only. In addition, no certificates are issued for shares purchased by
check until 15 business days have elapsed, unless the Trust is reasonably
assured that payment for the shares has been collected. There is no charge for
certificate issuance.
SYSTEMATIC INVESTMENT PLAN
Shareholders may purchase Fund shares through a Systematic Investment Plan.
Under the Plan, Fund Services, Inc., at regular intervals, will automatically
debit a shareholder's bank checking account monthly or quarterly in an amount of
$100 or more (subject to the $500 minimum initial investment), as specified by
the shareholder. The purchase of Fund shares will be effected at their offering
price at the close of normal trading on the New York Stock Exchange, Inc.
("NYSE") on or about the 15th day of the month. To obtain an application for the
Systematic Investment Plan, write to Distributors at the address shown on the
back cover of this Prospectus.
EXCHANGE PRIVILEGES
Shares of the Fund may be exchanged for shares of the Trust's Series listed
below without an exchange fee. Each of these Series seeks to achieve its
investment objective by investing in shares of open-end and closed-end
investment companies ("underlying funds"). The Trust's Series with which
exchanges may be made are:
Growth Fund, which seeks growth of capital.
Capital Income Fund, which seeks primarily high current income and
secondarily growth of capital and income.
Shareholders must place exchange orders in writing with the transfer agent,
Fund Services, Inc., at P.O. Box 26305, Richmond, Virginia 23260. Telephone
exchanges are not available. All permitted exchanges will be effected based on
the net asset value per share of each Fund that is next computed after receipt
by the transfer agent of the exchange request in "good order".
An exchange request is considered in "good order" only if:
1. The dollar amount or number of shares to be purchased is indicated.
2. The written request is signed by the registered owner and by any
co-owner of the account in exactly the same name or names used in
establishing the account.
3. Where share certificates have been issued, the written request is
accompanied by the certificates for shares to be redeemed, properly
endorsed in form for transfer, and either the share certificates or
separate instructions of assignment (stock powers) signed by each
registered owner and co-owner exactly as the shares are registered.
4. The signatures on any share certificates (or on accompanying stock
powers) are guaranteed by a member of the Securities Transfer Agents
Medallion Program ("STAMP"), the Stock Exchanges Medallion Program
("SEMP") or the New York Stock Exchange, Inc.'s Medallion Signature
Program ("MSP"). Signature guarantees from a notary public are not
acceptable.
8
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Other supporting legal documents may be required from corporations or other
organizations, fiduciaries or persons other than the stockholder of record
making the exchange request. In addition, exchanges are only available in states
where they may legally be made.
The exchange privilege may be modified or terminated at any time upon 60
days' written notice to shareholders. Before making any exchange, shareholders
should contact Distributors or their broker to obtain more information about
exchanges and prospectuses of the Trust's series to be acquired through the
exchange. For tax purposes, an exchange is treated as a redemption and a
subsequent purchase. Any capital gains or losses on the shares exchanged should
be reported for tax purposes. The price of the acquired shares is the new cost
basis for income tax purposes.
DETERMINING NET ASSET VALUE
The net asset value of the Fund's shares is determined as of the close of
normal trading (currently 4:00 p.m. eastern time) on the NYSE each day that the
NYSE is open for business. The net asset value per share is computed by dividing
the value of the Fund's securities plus any cash and other assets (including
dividends accrued but not yet collected) minus all liabilities (including
accrued expenses) by the total number of Fund shares outstanding.
The Fund values its assets based on their current market value when market
quotations are readily available. If such value cannot be established, assets
are valued at fair value as determined in good faith by or under the direction
of the Board of Trustees. Securities having 60 days or less remaining to
maturity are valued at their amortized cost.
REDEMPTION OF FUND SHARES
HOW SHARES MAY BE REDEEMED
Fund shares may be redeemed by mailing redemption requests to the Fund's
transfer agent, Fund Services, Inc., at P.O. Box 26305, Richmond, Virginia
23260. Upon receipt at the offices of Fund Services, Inc. of a redemption
request in "good order", as described in "Exchange Privileges" above, the shares
will be redeemed at the net asset value per share computed at the close of
normal trading on the NYSE on that day. Redemption requests received after the
close of normal trading will be executed at the net asset value per share next
computed. The signature(s) on all redemption requests of $10,000 or more must be
guaranteed as described above.
Redemption proceeds will be forwarded by check within five days of the
receipt of a redemption request. If the shares to be redeemed were paid for by
check, then to allow clearance the redemption proceeds may be delayed for up to
15 days after the purchase date. The redemption proceeds may be more or less
than the original cost.
Other supporting legal documents may be required from corporations or other
organizations, fiduciaries or persons other than the stockholder of record
making the redemption request. If there is a question concerning the redemption
of Fund shares, contact Distributors, your broker or Fund Services, Inc.
Because of the high cost of maintaining small accounts, the Trust reserves
the right to redeem shareholder accounts of less than $100 net asset value
resulting from redemptions or exchanges. If the Trust elects to redeem such
shares, it will notify the shareholder of its intention to do so and provide the
shareholder with the opportunity to increase the amount invested to $100 or more
within 30 days of notice.
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SYSTEMATIC WITHDRAWAL PLAN
An investor who has made an initial investment of at least $10,000 in the
Fund or otherwise has accumulated shares valued at no less than $10,000 is
eligible for a Systematic Withdrawal Plan. If so eligible, the investor may
arrange for fixed withdrawal payments (minimum payment -- $100; maximum
payment -- 1% per month or 3% per quarter of the total net asset value of the
Fund shares in the shareholder account at inception of the Systematic Withdrawal
Plan) at regular monthly or quarterly intervals.
Withdrawal payments are made to the investor or to the beneficiaries
designated by him. An investor is not eligible for a Systematic Withdrawal Plan
if he is making regular purchase payments pursuant to the Systematic Investment
Plan described above.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends from the Fund's net investment income, if any, are distributed at
least quarterly. Any net capital gain (the excess of net long-term capital gain
over net short-term capital loss) realized from the sale of portfolio securities
is distributed at least annually. Unless the Trust receives instructions to the
contrary from a shareholder before the record date, it will be assumed that the
shareholder wishes to receive both dividends and capital gain distributions in
additional Fund shares. Instructions continue in effect until the Trust is
notified in writing that a change is desired. All reinvested dividends and
capital gain distributions are reinvested in additional Fund shares on the
payment date at those shares' net asset value on that day. Account statements
are mailed to shareholders evidencing each reinvestment. If the Trust has
received instructions that a shareholder wishes to receive dividends and capital
gain distributions from the Fund in cash, and the U.S. Postal Service cannot
deliver a check representing the payment thereof, or if any such check remains
uncashed for six months, the check(s) will be reinvested in Fund shares at the
then current net asset value per share of the Fund and the shareholder's
election will be changed so that future distributions will be received in
additional Fund shares.
TAXATION OF THE FUND
The Fund is treated as a separate corporation for federal income tax
purposes and intends to continue to qualify for treatment as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
("Code"), so that it will be relieved of federal income tax on that part of its
investment company taxable income (consisting generally of net investment income
and net short-term capital gain) and net capital gain that is distributed to its
shareholders. To the extent, however, that the Fund does not distribute to its
shareholders by the end of any calendar year substantially all of its ordinary
income for that year and substantially all of its capital gain net income for
the one-year period ending on October 31 of that year, plus certain other
amounts, a 4% excise tax will be imposed on the Fund.
TAXATION OF SHAREHOLDERS
Dividends from the Fund's investment company taxable income are taxable to
its shareholders, other than tax-exempt entities (including individual
retirement accounts and qualified retirement plans), as ordinary income, whether
received in cash or reinvested in additional Fund shares, to the extent of the
Fund's earnings and profits. Distributions of the Fund's net capital gain, when
designated as such, are
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taxable to those shareholders as long-term capital gains, whether received in
cash or reinvested in additional Fund shares and regardless of the length of
time the shares have been held. Under the Taxpayer Relief Act of 1997 ("Act"),
different maximum tax rates apply to net capital gain depending on the
taxpayer's holding period and marginal rate of federal income tax -- generally,
28% for gain on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) on capital
assets held for more than 18 months. The Act, however, does not address the
application of these rules to distributions by RICs, including whether a RIC's
holding period can be "passed through" to its shareholders. Instead, the Act
authorizes the issuance of regulations to do so. Accordingly, shareholders
should consult their tax advisers as to the effect of the Act on distributions
by the Fund to them of net capital gain.
To the extent the Fund's dividends are attributable to interest on U.S.
Treasury securities or other "direct" obligations of the United States, they
will be exempt from state and local tax. The Fund advises its shareholders of
the amount and federal tax status of distributions paid (or deemed paid) during
each calendar year following the end of that year. The Fund is required to
withhold 31% of all dividends, capital gain distributions, and redemption
proceeds payable to any individuals and certain other noncorporate shareholders
who do not provide the Fund with a correct taxpayer identification number.
Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding.
A redemption of Fund shares will result in taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are more or
less than the shareholder's adjusted basis for the redeemed shares. An exchange
of Fund shares for shares of any other Series of the Trust generally will have
similar tax consequences. Capital gain on the redemption or exchange of Fund
shares held for more than one year will be long-term capital gain, in which
event it will be subject to federal income tax at the rates indicated above. If
a shareholder purchases Fund shares within thirty days after redeeming other
Fund shares at a loss, all or a part of that loss will not be deductible and
instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important tax considerations
generally affecting the Fund and its shareholders; see the Statement of
Additional Information for a further discussion. There may be other federal,
state or local tax considerations applicable to a particular investor. Investors
therefore are urged to consult their own tax advisers.
QUALIFIED RETIREMENT PLANS
An investment in shares of the Fund may be appropriate for individual
retirement accounts (including "education individual retirement accounts" and
"Roth IRAs," both available to certain taxpayers beginning in 1998), tax
deferred annuity plans under section 403(b) of the Code, self-employed
individual retirement plans (commonly referred to as "Keogh plans"), simplified
employee pension plans and other qualified retirement plans (including section
401(k) plans). Capital gain distributions and dividends received on Fund shares
held by any of these accounts or plans are automatically reinvested in
additional Fund shares, and taxation thereof is deferred until distributed by
the account or plan. Investors who are considering establishing such an account
or plan may wish to consult their attorneys or other tax advisers with respect
to individual tax questions. The option of investing in these accounts or plans
through regular payroll deductions may be arranged with Distributors and the
employer.
11
<PAGE>
PERFORMANCE INFORMATION
From time to time, quotations of the Fund's average annual total return
("Standardized Return") may be included in advertisements, sales literature or
shareholder reports. Standardized Return shows percentage rates reflecting the
average annual change in the value of an assumed initial investment of $1,000,
assuming the investment has been held for periods of one year, five years and
ten years as of a stated ending date. If a five and/or ten-year period has not
yet elapsed, data will be provided as of the end of a period corresponding to
the life of the Fund. Standardized Return assumes that all dividends and capital
gain distributions were reinvested in shares of the Fund.
In addition, other total return performance data ("Non-Standardized
Return") regarding the Fund may be included in advertisements, sales literature
or shareholder reports. Non-Standardized Return shows a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); and it assumes reinvestment of all dividends and
capital gain distributions. Non-Standardized Return may be quoted for the same
or different periods as those for which Standardized Return is quoted.
Non-Standardized Return may consist of cumulative total returns, average annual
total returns, year-by-year rates or any combination thereof. Cumulative total
return represents the cumulative change in value of an investment in the Fund
for various periods. Average annual total return refers to the annual compound
rate of return of an investment in the Fund.
The Fund may also advertise its yield. Yield reflects investment income net
of expenses over a 30-day period on a Fund share, expressed as an annualized
percentage of the net asset value per share at the end of the period. Yield
computations differ from other accounting methods and therefore may differ from
dividends actually paid or reported net income.
The Fund's performance is increased to the extent that the Adviser or
Distributor has waived all or a portion of its fee or reimbursed all or a
portion of the Fund's expenses. Total return and yield figures are based on
historical performance of the Fund and are not intended to indicate future
performance. Additional information about the Fund's performance is contained in
the Statement of Additional Information and the Fund's annual report to
shareholders, each of which may be obtained without charge by contacting the
Trust at the address or telephone numbers on the cover of this Prospectus.
FUND SHARES
The Trust was organized as a Massachusetts business trust in January 1985
under the name American Pension Investors Trust and is registered with the SEC
under the 1940 Act as an open-end management investment company. The Trust
currently consists of seven separate Series: the T-1 Treasury Trust, the Growth
Fund, the Capital Income Fund, the Yorktown Classic Value Trust, the Yorktown
Value Income Trust, the Treasuries Trust and Multiple Index Trust. The Board of
Trustees may elect to add additional Series in the future, although it has no
present plan to do so. This Prospectus relates only to shares of the T-1
Treasury Trust. Prior to November 23, 1994, the Fund operated under the name
Global Income Fund.
The Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value of separates Series. Shares of beneficial
interest of the Fund, when issued, are fully paid, nonassessable, fully
transferable, redeemable at the option of the shareholder and have equal
dividend and liquidation rights and noncumulative voting rights. The shares of
each Series of the Trust will be voted separately except when an aggregate vote
of all Series is required by the 1940 Act.
12
<PAGE>
The Trust does not hold annual meetings of shareholders. There will
normally be no meetings of shareholders for the purpose of electing trustees
unless and until such time as less than a majority of the trustees holding
office have been elected by shareholders, at which time the trustees then in
office will call a shareholders' meeting for the election of trustees. Under the
1940 Act, shareholders of record of no less than two-thirds of the outstanding
shares of the Trust may remove a trustee by vote cast in person or by proxy at a
meeting called for that purpose. The trustees are required to call a meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee when requested in writing to do so by the shareholders of record of not
less than 10% of the Trust's outstanding shares.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
MainStreet Trust Company, 1 Ellsworth Street, Martinsville, Virginia 24112,
serves as the Fund's custodian. Fund Services, Inc., 1500 Forest Avenue, Suite
111, Richmond, Virginia 23229, is the Fund's transfer and dividend disbursing
agent.
GENERAL INFORMATION
Fund shareholders are kept informed through semi-annual and annual reports.
Any inquiries should be directed in writing to the Trust at P.O. Box 2529, 2303
Yorktown Avenue, Lynchburg, Virginia 24501. Shareholders may direct general
telephone inquiries to the Trust at the numbers listed on the back cover of this
Prospectus. Telephone inquiries regarding shareholder account information should
be directed to the Fund's transfer agent at the number listed on the back cover
of this Prospectus.
13
<PAGE>
API TRUST T-1 TREASURY TRUST ACCOUNT APPLICATION
Please Make Checks Payable to and Addressed to: API TRUST
P.O. Box 26305, Richmond, Virginia 23260
For Questions Please Call: (800) 544-6060
Amount: $ Confirm #:
------------------------- -------------------------------
Minimum Initial Investment $500, Subsequent $100
ACCOUNT REGISTRATION
<TABLE>
<S> <C>
TYPE OF ACCOUNT CHECK ONE: [ ] [ ] JOINT [ ] GIFTS/TRANSFERS TO A [ ] TRUST [ ] BUSINESS
INDIVIDUAL TENANTS MINOR COMPLETE D COMPLETE E
COMPLETE A ONLY ONLY ONLY
COMPLETE A & B COMPLETE C ONLY
</TABLE>
A
<TABLE>
<S> <C>
- --------------------------------------------------- --- --- --- - --- --- - --- --- --- ---------------
First Name, Middle Initial, Last Name Social Security Number (Required) Date of Birth
B
- --------------------------------------------------- --- --- --- - --- --- - --- --- --- ---------------
First Name, Middle Initial, Last Name Social Security Number (Required) Date of Birth
</TABLE>
Joint account holders will be considered "joint tenants with rights of
survivorship" unless otherwise specified. Joint account holders may elect to
register their account as an "either/or" account. Such an election permits
shares to be redeemed and certain instructions to be honored upon the request of
any one of the account holders. By electing "either/or" status, checks or some
written requests with only one signature, from one tenant will be honored. If
"either/or" is elected, the joint account holders agree that the Fund, its
transfer agent and principal underwriter shall not be held liable for any loss
sustained as a result of complying with these instructions.
[ ] "Either/or" election [ ] All signatures required
C
<TABLE>
<S> <C>
- --------------------------------------------------- -------------------------
Custodian's Name (only one permitted) As Custodian For Minor's Name (only one permitted)
under the Uniform Gifts/Transfers to Minors Act.
----- ------------------------------------------ -----------------------
State Minor's Social Security Number (Required) Minor's Date of Birth
D
- --------------------------------------------------- ---------------------------------------------------
Name of Trustee Name of Trust
- --------------------------------------------------- ------------------------- -----------------------------
Name of Second Trustee (if any) Date of Trust (Required) Taxpayer Identification Number
(Required)
E
[ ] Corporation [ ] Partnership [ ] Other
- --------------------------------------------------- ---------------
Name of Business Specify
- --------------------------------------------------- ---------------------------------------------------
Taxpayer Identification Number Person to Contact Concerning Account
- --------------------------------------------------------------------------------
MAILING ADDRESS
- --------------------------------------------- --------------- --------------- ---------------
Street Address and Apartment Number or Box Number City State Zip Code
I am a: [ ] U.S. Citizen [ ] Resident Alien
------------------------------ ---------------------------
(Area Code) Day Phone (Area Code) Evening Phone
[ ] Non-Resident Alien
----------------------------
Please Specify Country
(ADDITIONAL INFORMATION REQUIRED ON REVERSE)
</TABLE>
<PAGE>
CORPORATE AND TRUST CERTIFICATION
I hereby certify: (i) that I am the duly qualified Secretary of , a
corporation duly organized and existing under the laws of , or (ii) that
is/are the currently acting trustee(s) of , and that all actions by
shareholders, directors, trustees and other bodies necessary to execute this
Application and establish an account with API Trust have been taken; and
further, that any one of the following officers or trustees, unless a greater
number is specified, is, and until further notice to API Trust, will be duly
authorized and empowered to purchase, sell, assign, transfer, and withdraw
securities and funds from the account established hereby.
Dated this day of , 19
----- ------------ -----
<TABLE>
<S> <C>
- ---------------------------------------------------- ----------------------------------------------------
Name Title Signature of Secretary or Trust Officer
If more than one signature is required on the account, please specify the number
of signatures required and identify the individuals below:
- ---------------------------------------------------- ----------------------------------------------------
Name Title Signature
- ---------------------------------------------------- ----------------------------------------------------
Name Title Signature
</TABLE>
LIMITED AUTHORIZATION
I hereby authorize API Trust, its transfer agent and its principal underwriter
to transmit information (such as statements) and to honor redemption
instructions from the party designated below concerning my account:
Broker/Dealer [ ] Investment Adviser [ ]
<TABLE>
<S> <C>
- ---------------------------------------------------- ----------------------------------------------------
Firm Name Firm Address
( )
- ---------------------------------------------------- ----------------------------------------------------
Main Office Phone Number Client Securities Firm Account No.
- ---------------------------------------------------- ----------------------------------------------------
Registered Representative Name
</TABLE>
DISTRIBUTION OPTIONS
If no box below is checked, all distributions (dividends and capital gains) will
be reinvested in additional shares.
[ ] I would like all dividends and capital gains (if any) reinvested in my
account.
[ ] I would like all dividends and capital gains (if any) paid to me in cash.
[ ] I would like all dividends (if any) paid to me in cash and all capital gains
(if any) reinvested in my account.
AUTOMATIC INVESTMENT PLAN
Purchases through the Automatic Investment Plan are effected on the 15th day of
the month (or the following business day). Check one:
[ ] Monthly Investment [ ] Quarterly Investment
(March, June, September, December)
Amount of Systematic Investment $___________________ ($100 Minimum)
PLEASE ATTACH A VOIDED CHECK TO THIS APPLICATION.
SYSTEMATIC WITHDRAWAL PLAN
(The minimum initial investment or public offering price of any existing
account must be $10,000 or more.)
[ ] Check here if you would like additional information and the Application
for Systematic Withdrawal Plan sent to you.
SIGNATURES
I acknowledge receipt of a current prospectus of Yorktown Classic Value Trust
and agree to be bound by its terms and the terms set forth herein. As required
by law and under penalties of perjury, I certify that (1) the Social Security or
other taxpayer identification number (TIN) provided on this application is my
correct TIN, and (2) currently I am not under IRS notification that I am subject
to backup withholding. (Please strike out clause (2) if you are currently under
notification.)
<TABLE>
<S> <C>
- ---------------------------------------------------- ----------------------------------------------------
Applicant Date Joint Applicant Date
- ---------------------------------------------------- ----------------------------------------------------
Other Authorized Signature Date Other Authorized Signature Date
</TABLE>
<PAGE>
EXECUTIVE OFFICES
American Pension Investors Trust
P.O. Box 2529
2303 Yorktown Avenue
Lynchburg, Virginia 24501
(800) 544-6060
INVESTMENT ADVISER
Yorktown Management & Research
Company, Inc.
P.O. Box 2529
2303 Yorktown Avenue
Lynchburg, Virginia 24501
(800) 544-6060
DISTRIBUTOR
Yorktown Distributors, Inc.
P.O. Box 2529
2303 Yorktown Avenue
Lynchburg, Virginia 24501
(800) 544-6060
TRANSFER AND DIVIDEND
DISBURSING AGENT
Fund Services, Inc.
P.O. Box 26305
Richmond, Virginia 23260
(800) 628-4077
CUSTODIAN
MainStreet Trust Company
P.O. Box 5228
Martinsville, Virginia 24115
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
250 West Pratt Street
Baltimore, Maryland 21201
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offering
made by this Prospectus and, if given or made, such information and
representations must not be relied upon as having been authorized by the Trust
or its distributor. This Prospectus does not constitute an offering by the Trust
or its distributor in any jurisdiction to any person to whom such offering may
not lawfully be made.
<PAGE>
T-1 TREASURY TRUST
PROSPECTUS
[T-1 TREASURY TRUST LOGO]
THIS PROSPECTUS IS DATED OCTOBER 1, 1997
