<PAGE>
ADDISON CAPITAL SHARES, INC.
Supplement dated January 31, 1996
To
Prospectus Dated November 1, 1995
The following information replaces the "Financial Highlights" section on
page 5 of the Prospectus:
Financial Highlights (for a Fund Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended 9/15/86* to
6/30/95 6/30/94 6/30/93 6/30/92 6/30/91 6/30/90 6/30/89 6/30/88 6/30/87
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period ................... $20.45 $22.69 $19.64 $18.90 $18.17 $16.45 $14.62 $16.21 $12.75
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment
- ----------------------
Operations
- ----------
Net investment income ....... .22 .21 .24 .26 .22 .22 .42 .21 .13
Net realized and unrealized
gains (losses) on investments 3.77 (.76) 3.72 1.57 .74 1.71 1.79 (1.62) 3.35
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations ............... 3.99 (.55) 3.96 1.83 .96 1.93 2.21 (1.41) 3.48
------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions
- ------------------
Dividends from net
investment income ........... (.20) (.23) (.24) (.27) (.23) (.21) (.38) (.17) (.02)
Distributions from capital
gains ....................... (1.32) (1.46) (.67) (.82) -- -- -- (.01) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions ......... (1.52) (1.69) (.91) (1.09) (.23) (.21) (.38) (.18) (.02)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value at end of
period ...................... $22.92 $20.45 $22.69 $19.64 $18.90 $18.17 $16.45 $14.62 $16.21
====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (1) ............ 21.11% (2.73)% 20.98% 9.93% 5.40% 11.70% 15.37% (8.64)% 34.25%(3)
Ratios/Supplemental Data
- ------------------------
Net assets at end of period
(in 000's) .................. $38,506 $36,171 $37,621 $31,243 $28,744 $29,037 $26,953 $25,843 $26,318
Ratio of expenses to average
net assets .................. 2.06% 2.06% 2.13% 2.12% 2.34% 2.21% 2.30%(2) 2.24%(2) 1.50%(2)(3)
Ratio of net income to
average net assets .......... 1.03% 1.00% 1.14% 1.32% 1.24% 1.20% 2.26%(2) 1.47%(2) 1.82%(2)(3)
Portfolio turnover rate ..... 42.82% 43.26% 30.01% 57.34% 57.52% 68.97% 52.39% 63.12% 25.20%
</TABLE>
_____________________
* Initial public offering date
(1) Assumes an initial investment made at the net asset value last calculated
on the business day before the first day of each fiscal year and does not
reflect sales loads or account fees.
(2) Prior to reimbursement of expenses by Janney and the Adviser, the ratio of
expenses to average net assets on an annualized basis was 2.45%, 2.49% and
3.16% for 1989, 1988 and 1987, respectively, and the ratio of net
investment income to average net assets on an annualized basis was 2.11%,
1.22% and 0.16% for 1989, 1988 and 1987, respectively.
(3) Annualized.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
ADDISON LOGO
IMAGE OMITTED
Addison Capital Shares, Inc. (the "Fund") is a mutual fund seeking
long-term capital appreciation. The Fund invests principally in those equity
securities which the Fund's investment adviser, Addison Capital Management
Company, believes are undervalued and therefore offer above-average
potential for capital appreciation. See "The Fund's Investment Objective and
Policies" at page 6.
The Fund's shares are distributed by Janney Montgomery Scott Inc.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. It should be retained
for future reference. A Statement of Additional Information about the Fund
dated the same date as this Prospectus, and which is incorporated herein by
reference, has been filed with the Securities and Exchange Commission and is
available without charge upon request from Janney Montgomery Scott Inc.
(address and telephone numbers listed below).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY 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.
DISTRIBUTOR
JANNEY MONTGOMERY SCOTT LOGO
IMAGE OMITTED
1801 Market Street
Philadelphia, PA 19103
In Philadelphia, PA (215) 665-6000
Outside Philadelphia, PA (800) 526-6397
The date of this Prospectus is November 1, 1995.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
--------
<S> <C>
The Fund ................................................... 3
Advantages to Investors .................................. 3
Summary of Fund Expenses ................................... 3
Financial Highlights ....................................... 5
The Fund's Investment Objective and Policies ............... 6
The Fund's Investment Limitations .......................... 7
How You Can Invest in the Fund ............................. 7
What Shares will Cost. ..................................... 8
How Your Shareholder Account will be Maintained ............ 9
How You Can Sell Your Fund Shares .......................... 9
Redemption in Kind .................................... 10
Exchange Privilege .................................... 10
How Net Asset Value is Determined .......................... 11
Dividends and Capital Gains Distributions .................. 11
Tax Status of Dividends and Capital Gains Distributions. ... 11
Shareholder Services ....................................... 12
Confirmations and Reports ............................. 12
Systematic Withdrawal Plan ............................ 12
Qualified Retirement Plans ................................. 12
Management of the Fund ..................................... 13
The Fund's Distributor ..................................... 16
Description of Fund Shares ................................. 17
Transfer Agent ............................................. 18
Shareholder Inquiries ...................................... 18
Application for Pre-Authorized Check Plan .................. 19
Account Application. ....................................... 21
</TABLE>
===========================================================================
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE
PRINCIPAL UNDERWRITER IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
2
<PAGE>
THE FUND
Addison Capital Shares, Inc. (the "Fund") is a corporation formed under
the laws of the state of Maryland on June 4, 1986. The Fund is an open-end
diversified mutual fund and commenced operations on September 15, 1986. The
Fund currently offers one class of common stock designed for investment by
individuals, institutions and fiduciaries whose investment objective is
long-term capital appreciation. See "The Fund's Investment Objective and
Policies" at page 6. The Fund may later offer additional series of shares
designed for investment by persons or entities with different investment
objectives. A minimum initial investment of $1,000. See "How You Can Invest
in the Fund" at page 7.
The Fund currently pays an annual distribution fee to its distributor,
Janney Montgomery Scott Inc. ("Janney"), equal to .40% of the Fund's average
daily net assets, pays an annual service fee to Janney equal to .25% of the
Fund's average daily net assets and pays other fees for management and
investment advisory services. Addison Capital Management Company acts as the
Fund's investment adviser. The total amount of the Fund's investment advisory
services, financial accounting, management and distribution fees should equal
approximately 1.60% of the Fund's average daily net assets, which amount is
higher than that paid by many other equity investment companies. See
"Management of the Fund" at page 13 and "The Fund's Distributor" at page 16.
ADVANTAGES TO INVESTORS
--Investors will obtain the benefit of professional management for
securities investments and avoid the cost and burden of selecting,
supervising, and handling an individual securities portfolio.
--Investors will obtain an interest in a diversified portfolio of many
different securities, with the brokerage costs incurred by the Fund
being significantly less than those which would be borne by investors
individually making a small series of purchases.
--By investing in the Fund through an Individual Retirement Account
("IRA"), Self-Employed Individual Retirement Plan ("Keogh Plan"), or
corporate retirement plan, investors can obtain tax-shelter for a
portion of their current income and tax deferral of the earnings on
their investment. See "Qualified Retirement Plans" at page 12.
--Investors will be free to redeem their shares at any time at the next
determined net asset value. See "How You Can Sell Your Fund Shares" at
page 9 and "Qualified Retirement Plans" at page 12.
SUMMARY OF FUND EXPENSES
The following information concerning shareholder transaction expenses and
annual Fund operating expenses was developed for use by all mutual funds to
aid investors in understanding the various expenses that are borne directly
or indirectly by the Fund. It should be noted that the long term investor in
the Fund may pay more through the distribution fees described below than the
economic equivalent of the maximum front-end sales charges permitted by the
Rules of the National Association of Securities Dealers.
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases(1) (as a percentage of offering price) ............... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price) ...... None
Deferred Sales Load (as a percentage of original purchase price or redemption proceeds, as
applicable) ................................................................................ None
Redemption Fees (as a percentage of amount redeemed, if applicable) ......................... None
Exchange Fees ............................................................................... None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees(2) ........................................................................... 0.75%
Asset Based Sales Charges
(12b-1 Fees)(3) ............................................................................ 0.40%
Shareholder Servicing Fees(4)................................................................. 0.25%
Administration and Accounting Fees .......................................................... 0.20%
Other Expenses .............................................................................. 0.46%
Total Fund Operating Expenses ............................................................... 2.06%
</TABLE>
- ------
(1) Janney has agreed to waive the front-end sales charge of 3% for all new
share purchases.
(2) Addison has agreed to pay Janney an amount equal to .25% of the Fund's
average net assets for Janney's efforts in selling the shares of the Fund.
(3) Janney receives total payments for distribution of Funds shares in an amount
equal to .65% of the Fund's average net assets. Of this amount, .40% is
received from the Fund under the Compensation Plan and .25% is received from
Addison. Janney distributes this fee to brokers for promoting sales of Fund
shares. The NASD imposes a maximum limit on asset based charges for funds
with a 12b-1 fee of 6.25% of new sales, plus interest.
(4) 100% of the Servicing Fees are retained by Janney for continuous personal
service, such as responding to shareholder inquiries, quoting net asset
values, and attending to other shareholder matters, including shareholder
account maintenance.
THE FOLLOWING EXAMPLE ILLUSTRATES THE EXPENSES THAT ARE PAID ON A $1,000
INVESTMENT OVER VARIOUS TIME PERIODS ASSUMING (1) A 5% ANNUAL RATE OF RETURN
AND (2) REDEMPTION AT THE END OF EACH TIME PERIOD. AS NOTED ABOVE, THE FUND
CHARGES NO REDEMPTION FEES OF ANY KIND.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1000
investment assuming (1) 5% annual return and
(2) redemption at the end of each period: ..... $21 $65 $111 $239
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The table below sets forth certain information concerning the investment
results of the Fund. The following information for each of the five years in
the period ended June 30, 1995 has been audited by Tait, Weller & Baker,
independent certified public accountants, whose report thereon appears with
the Fund's financial statements included in the Statement of Additional
Information.
FINANCIAL HIGHLIGHTS (FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended 9/15/86* to
6/30/95 6/30/94 6/30/93 6/30/92 6/30/91 6/30/90 6/30/89 6/30/88 6/30/87
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period ......................... $20.45 $22.69 $19.64 $18.90 $18.17 $16.45 $14.62 $16.21 $12.75
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment Operations
Net investment income ............ .22 .21 .24 .26 .22 .22 .42 .21 .13
Net realized and unrealized gains
(losses) on investments ........ 3.77 (.76) 3.72 1.57 .74 1.71 1.79 (1.62) 3.35
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 3.99 (.55) 3.96 1.83 .96 1.93 2.21 (1.41) 3.48
------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions
Dividends from net investment
income ......................... (.20) (.23) (.24) (.27) (.23) (.21) (.38) (.17) (.02)
Distributions from capital gains . (1.32) (1.46) (.67) (.82) -- -- -- (.01) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions ............. (1.52) (1.69) (.91) (1.09) (.23) (.21) (.38) (.18) (.02)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value at end of period . $22.92 $20.45 $22.69 $19.64 $18.90 $18.17 $16.45 $14.62 $16.21
====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (1) ................ 21.11% (2.73)% 20.98% 9.93% 5.40% 11.70% 15.37% (8.64%) 34.25%(3)
Ratios/Supplemental Data
Net assets at end of period (in
000's) ......................... $38,506 $36,171 $37,621 $31,243 $28,744 $29,037 $26,953 $25,843 $26,318
Ratio of expenses to average net
assets ......................... 2.06% 22.06% 22.13% 22.12% 22.34% 22.21% 2.30%(2) 2.24%(2) 1.50%(2)(3)
Ratio of net income to average net
assets ......................... 1.03% 1.00% 1.14% 1.32% 1.24% 1.20% 2.26%(2) 1.47%(2) 1.82%(2)(3)
Portfolio turnover rate .......... 42.82% 43.26% 30.01% 57.34% 57.52% 68.97% 52.39% 63.12% 25.20%
</TABLE>
- ------
* Initial public offering date
(1) Assumes an initial investment made at the net asset value last calculated
on the business day before the first day of each fiscal year and does not
reflect sales loads or account fees.
(2) Prior to reimbursement of expenses by Janney and the Adviser, the ratio
of expenses to average net assets on an annualized basis was 2.45%, 2.49%
and 3.16% for 1989, 1988 and 1987, respectively, and the ratio of net
investment income to average net assets on an annualized basis was 2.11%,
1.22% and 0.16% for 1989, 1988 and 1987, respectively.
(3) Annualized.
5
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
The Fund's objective will be long-term capital appreciation. The Fund's
adviser, Addison Capital Management Company (the "Adviser"), believes that
this objective can best be met through the purchase of equity securities that
appear to be undervalued. A security may be undervalued because of many
factors, including but not limited to investor apathy, market decline within
an industry group, poor industry conditions, tax-loss selling or other
factors that may provide buying opportunities at attractive prices relative
to the long-term prospects for the securities in question. Such securities
are usually characterized by low price to earnings ratios relative to
standard indices, such as the Standard & Poor's 500 index, or low price to
earnings ratios relative to the relevant industry grouping. There can be no
assurance that the Fund's investment objective will be achieved. Fund shares
will fluctuate in value as a result of changes in value of portfolio
investments.
The Adviser intends to invest in securities which are undervalued due to
investor apathy, earnings declines, or other adverse developments where the
Adviser believes these developments have abated. It believes that such
securities are likely to provide a greater return than securities with prices
that appear to reflected anticipated favorable developments because the
latter are subject to much greater correction should any unfavorable
developments occur. Although the Fund will invest primarily in
dividend-paying companies, the Fund may from time to time invest in
securities that pay no dividends or interest.
The Fund will invest primarily in common stock, but may also invest in
debt instruments, preferred stock and convertible securities. Investments in
stock may include purchases of securities of closed-end investment companies
provided that, immediately after any such purchase, not more than 10% of the
Fund's total assets will be invested in such securities.
Debt instruments held by the Fund may include money market instruments,
such as securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities and repurchase agreements secured thereby, bank
certificates of deposit and bankers' acceptances issued by banks having net
assets of at least $1 billion as of the end of their most recent fiscal year,
commercial paper which at the date of the investment is rated at the highest
grade by Standard & Poor's Corporation (A-1), by Moody's Investors Service,
Inc. (P-1) or by Fitch's Investor's Service (F-1), or, if not rated, is
issued by a company which at the date of investment has an outstanding issue
rated A or better by Standard & Poor's or Moody's, and other long and
short-term debt instruments which are rated A or higher by Standard & Poor's
or Moody's, including corporate bonds, debentures and notes, and bonds and
notes issued by state and local governments and governmental entities. In
periods of market decline, the Fund expects to continue its policy of seeking
investments in equity securities that appear undervalued rather than building
cash reserves.
The Fund may purchase securities traded both on recognized securities
exchanges and in the over-the-counter market. While the Fund may invest in
some foreign securities, investments in foreign securities that are not
traded on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ National Market System will constitute less than 10% of the Fund's
portfolio. The Fund's investments in securities of foreign companies may
involve greater risks than are present in domestic investments. There is
generally less publicly available information about foreign companies and
there may be less governmental regulation and supervision of foreign stock
exchanges, brokers and listed companies. In addition, such companies may use
different accounting and financial standards. The Fund will consider possible
political and financial instability abroad, as well as the liquidity and
volatility of foreign investments.
When cash is temporarily available, the Fund may invest in repurchase
agreements. A repurchase agreement is an agreement under which either U.S.
government obligations or high quality debt securities are acquired from
6
<PAGE>
a securities dealer or bank subject to resale at an agreed upon price and
date. The securities will be held for the Fund by its Custodian as collateral
until retransferred and will be supplemented by additional collateral
(without cost to the Fund) if necessary to maintain a total value equal to or
in excess of the value of the repurchase agreements. The Fund will not enter
into repurchase agreements of more than seven days' duration if more than 10%
of its net assets would be invested in such agreements and other illiquid
investments. The Fund will bear a risk of loss in the event that the other
party to a repurchase agreement defaults on its obligations and the Fund is
delayed or prevented from exercising its rights to dispose of the collateral
securities. The Adviser, with the approval of the Fund's Board of Directors,
will enter into repurchase agreements only with financial institutions deemed
to present minimal risk of bankruptcy or insolvency during the term of the
agreement.
The timing of purchases and sales of the Fund's portfolio securities will
be made primarily on the investment merits of such securities. Only
secondarily will such timing be influenced by whether any gain from such
transactions would be classified as short-term or long-term for tax purposes.
THE FUND'S INVESTMENT LIMITATIONS
Under the Fund's fundamental policies, which cannot be changed except by
vote of a majority of the Fund's outstanding shares, the Fund may not:
1. Borrow money, except for temporary purposes in an aggregate amount
not to exceed 5% of the value of its total assets at the time of
borrowing. Although not a fundamental policy subject to shareholder
approval, the Fund intends to repay any money borrowed before any
additional portfolio securities are purchased.
2. Mortgage, pledge or hypothecate any of its assets, except to secure
permitted borrowings up to 5% of the value of its total assets at the time
of borrowing.
3. Invest more than 5% of its total assets (taken at market value at
the time of the purchase) in securities of any one issuer, other than the
U.S. Government or its agencies and instrumentalities, or buy more than
10% of the voting securities or more than 10% of all the securities of any
issuer.
4. Invest more than 5% of its total assets (taken at market value at
the time of the purchase) in securities of companies that, including their
predecessors, have been in operation for less than three years or in
equity securities that are not readily marketable.
See the Fund's Statement of Additional Information for a listing of other
investment limitations.
HOW YOU CAN INVEST IN THE FUND
You may purchase Fund shares through any Janney broker. See "What Shares
Will Cost" at page 8. Documents available from your Janney broker should be
completed if you invest in Fund shares through an IRA, Keogh Plan or
corporate retirement plan.
The minimum initial investment in the Fund for each account will be $1,000.
However, the initial investment in an IRA account established on behalf of a
non-working spouse of a shareholder who has an IRA invested in the Fund requires
a minimum amount of only $250. The minimum investment of each purchase of
additional shares, including purchases of shares through the Fund's
Pre-authorized Check Plan, and plans involving transfers from other financial
7
<PAGE>
institutions, will be $50. In addition, once an account is established, the
minimum amount for subsequent investment will be waived if an investment in an
IRA or similar plan is the maximum amount permitted under the Internal Revenue
Code. You should always furnish your shareholder account number when making
additional purchases of Fund shares.
There are three ways you can invest in the Fund:
1. Through Your Janney Broker.
Fund shares may be purchased through any Janney broker. Each will be
pleased to explain to you the shareholder services available from the
Fund, and answer any questions you may have. After you have initially
purchased Fund shares, you can order additional Fund shares from your
Janney broker in person, by telephone or by mail. An order placed with
Janney on behalf of an IRA or Keogh Plan that is sponsored by Janney and
that is being opened at the same time that the order is placed, will not
be transmitted to the Fund until Janney receives a check for the amount of
the purchase. Other investors must make payment within three business days
of their order.
2. Through the Pre-authorized Check Plan and Other Transfers of Funds
from Financial Institutions.
Once you are a Fund shareholder, you can make additional investments
through the Fund's Pre-authorized Check Plan for convenient automatic
monthly investments. In addition, certain financial institutions may allow
you to request the automatic transfer of $50 or more on a monthly basis to
Provident National Bank, custodian for the Fund (the "Custodian"), for
investment in shares of the Fund.
3. Open Account Program.
If you do not elect otherwise on your application to purchase Fund
shares, you are automatically enrolled in an Open Account Program. You may
schedule your purchases to suit your personal requirements and you are not
obligated in any way. As each payment is received by the Fund's Transfer
Agent, full and fractional shares will be purchased at the next effective
offering price and proper entry is made on the books of the Fund.
The market value of the Fund's shares is subject to fluctuation. Before
undertaking any plan for systematic investment, the investor should keep
in mind that such a program does not assure a profit or protect against a
loss in declining markets.
WHAT SHARES WILL COST
Fund shares will be sold on each day on which the New York Stock Exchange
(the "Exchange") is open. The shares of the Fund will be sold at their next
determined net asset value. See "How Net Asset Value is Determined" at page
11. Prior to July 3, 1995, the Fund imposed a 3% sales charge payable to
Janney on purchases of shares. This sales charge would decrease depending on
the amount of purchase as set forth by the Fund. However, commencing July 3,
1995, Janney waived the payment of the 3% sales charge on purchases of Fund
shares. The Board of Directors of the Fund determined that such waiver was
appropriate to encourage sales of Fund shares, and has approved Janney's
continuation of such waiver. Janney will not re-introduce this sales charge
without the prior consent of the Board, including a majority of the
"non-interested" directors as defined in the Investment Company Act of 1940.
Except with respect to certain orders for Fund shares to be invested in an
IRA (see "Qualified Retirement Plans" at page 12), orders accepted by Janney
before the close of business of the Exchange on any day that the Exchange is
8
<PAGE>
open for business will be executed at the net asset value determined as of the
close of the Exchange on that day. Orders accepted by Janney after the close of
the Exchange will be executed at the offering price determined as of the close
of the Exchange on its next trading day. Fund shares ordered through the Fund's
Pre-authorized Check Plan will be purchased at the offering price determined on
the close of business of the Exchange on the date in each month the Custodian
draws a check on your account. Fund shares purchased through an automatic
monthly transfer of funds from your account to the Custodian will be purchased
at the net asset value determined at the close of the business of the Exchange
on the respective dates such transfers are made. The Fund reserves the right to
reject any order for Fund shares.
HOW YOUR SHAREHOLDER ACCOUNT WILL BE MAINTAINED
When you initially purchase Fund shares, an account will automatically be
established for you. Any shares that you purchase or receive as a
distribution from time to time will be credited directly to your account at
the time of purchase or receipt. No certificates will be issued unless you
specifically request them in writing, and no charge will be made for the
issuance of certificates. Certificates will be issued in full shares only. No
certificates will be issued for shares prior to 15 business days after
purchase of such shares by check unless the Fund can be reasonably assured
during that period that payment for the purchase of such shares has been
collected.
HOW YOU CAN SELL YOUR FUND SHARES
There are two ways you can sell and receive cash for your Fund shares.
First, you may give your Janney broker an order for repurchase of your
shares. At its discretion, Janney will transmit your order to the Fund for
processing as a redemption request or repurchase your shares itself. Janney
will not impose any charge or fee for transmitting a redemption request to
the Fund or for repurchasing your shares. Second, if you hold your Fund
shares in certificate form, or if you do not hold Fund shares in a Janney
account, you may send a written request for redemption to Addison Capital
Shares, Inc., c/o Provident Financial Processing Corporation, P.O. Box 8950,
Wilmington, DE 19899.
Upon receipt by the Transfer Agent or Janney of a request for redemption
or a repurchase order in "good order" as described below, you will be sent a
check equal to the amount of the net asset value of the redeemed shares next
determined after the redemption request or repurchase order has been
received. If the request for redemption is received by the Transfer Agent or
Janney before the close of business of the Exchange, the Shares will be
redeemed or repurchased at the net asset value per share determined at the
close of the Exchange on that day. Requests for redemption received by the
Transfer Agent or Janney after the close of business of the Exchange or on a
day when the Exchange is not open for business will be executed at the net
asset value determined at the close of the Exchange on its next trading day.
Your check normally will be forwarded promptly after redemption. However
the Fund reserves the right to take up to seven days to make payment if, in
the judgment of the Adviser, the Fund could be adversely affected by
immediate payment. The proceeds of your redemption or repurchase may be more
or less than your original cost. If the shares to be redeemed or repurchased
were paid for by check (including certified or cashier's checks) within 15
business days of the redemption or repurchase request, the proceeds may not
be disbursed unless the Fund can be reasonably assured that the check has
been collected.
A redemption or repurchase request will be considered to be received in
"good order" only if:
1. You have indicated in writing the number of shares to be redeemed
and your shareholder account number.
9
<PAGE>
2. The written request is signed by you and by any co-owner of the
account with exactly the same name or names used in establishing the
account.
3. The written request is accompanied by any certificates representing
the shares that have been issued to you, and you have endorsed the
certificates for transfer or an accompanying stock power exactly as the
name or names appear on the certificates.
4. The signatures on the written redemption request and on any
certificates for your shares (or an accompanying stock power) have been
guaranteed by a national bank, a state bank (not including a savings bank)
or a trust company, or by Janney, or by any other member firm of the New
York, American, Boston, Midwest, Pacific or Philadelphia Stock Exchanges.
Other supporting legal documents may be required from corporations or
other organizations, fiduciaries or persons other than the shareholder of
record making the request for redemption or repurchase. If you have a
question concerning the sale of Fund shares, contact your Janney broker.
The Fund reserves the right to suspend redemption or payment at times when
the Exchange is closed (other than customary weekend or holiday closings) or
during periods of emergency or other periods as permitted by the Securities
and Exchange Commission. In the case of any such suspension, you may either
withdraw your request for redemption or repurchase order or receive payment
based upon the net asset value next determined after the suspension is
lifted.
Because of the high cost of maintaining small accounts, the Fund may elect
to close any account with a current value of less than $500 by redeeming all
of the shares in the account and mailing the proceeds to you. However, if the
Fund so elects, you will be notified that your account is below $500 and will
be allowed 60 days in which to make an additional investment in order to
avoid having your account closed.
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part
by a distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable Securities
and Exchange Commission rules, taking such securities at the same value
employed in determining net asset value and selecting the securities in a
manner the Fund determines to be fair and equitable.
The Fund has also elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940 under which the Fund is obligated to redeem shares for
any one shareholder in cash only up to the lesser of $250,000 or 1% of the
Fund's net asset value during any 90-day period.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders who receive securities and sell them could receive
less than the redemption value of their securities and could incur certain
transaction costs, including brokerage fees incurred in disposing of the
securities received.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of the Janney Montgomery
Scott ("JMS") Money Market Fund portfolios. Shares of the Fund and the JMS
Money Market Fund portfolios are exchanged at their respective net asset
values. The JMS Money Market portfolios do not presently impose any sales
charges. Further information concerning this privilege is contained in the
Fund's Statement of Additional Information.
10
<PAGE>
HOW NET ASSET VALUE IS DETERMINED
Net asset value per Fund share will be determined by dividing the value of
the total assets of the Fund, less liabilities, by the number of shares
outstanding. Net asset value will be determined daily, as of the close of the
Exchange on its customary business days. Securities owned by the Fund for
which market quotations are readily available will be valued at current
market value, or, in their absence, at fair value as determined by the Fund's
Board of Directors.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund intends to declare dividends out of its net investment income to
shareholders twice a year. The Fund also intends to distribute to
shareholders substantially all net long-term and short-term capital gains
realized on portfolio securities after the end of its fiscal year and the
calendar year, in which the gains are realized. Shareholders may elect to:
1. Receive both dividend and capital gains distributions in shares;
2. Receive dividends in cash and capital gains distributions in shares;
or
3. Receive both dividends and capital gains distributions in cash.
Such an election may be made by completing the section entitled
"Subsequent Investments/Dividends and Distributions" in the Share Application
located at the back of this Prospectus. If no election is made, both
dividends and capital gains distributions will be credited to your account in
additional shares at the net asset value of the shares determined at the
close of the day following the record date for payment of the dividends and
distributions. You may elect at any time to change your option by notifying
in writing the Transfer Agent, who is also the dividend disbursing agent for
the Fund.
TAX STATUS OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The following discussion of federal income tax consequences is based on
the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations issued thereunder as in effect on the date of this Statement. New
legislation, administrative changes, and court decisions may significantly
change the conclusions expressed herein and may have a retroactive effect
with respect to the transactions contemplated herein.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Fund or its shareholders.
Accordingly, investors are urged to consult their tax advisors regarding
specific questions as to federal, state, and local income taxes.
The Fund intends to continue to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As long as the Fund qualifies for this tax treatment, the Fund will
be relieved of Federal income tax on amounts distributed to shareholders. The
Code requires, among other things, that the Fund distribute each year at
least 90% of its investment company taxable income. The Fund also intends to
make sufficient distributions prior to the end of each calendar year to avoid
liability for Federal excise tax. For additional information, please see the
Fund's Statement of Additional Information.
Distributions to shareholders of net investment income of the Fund and of
net short-term capital gains of the Fund will be taxable to shareholders as
ordinary income, whether such distributions are received in cash or in
additional shares. Generally, to the extent attributable to dividends
received by the Fund from domestic corporations, a portion of the Fund's
distributions of net investment income will be eligible for the dividends
received deduction for corporate shareholders.
11
<PAGE>
Distributions to shareholders of net capital gain of the Fund are taxable
to shareholders as long-term capital gains, whether received in cash or
additional shares, and regardless of how long a shareholder has held the
shares.
Dividends declared in October, November or December of a year and payable
to shareholders of record on a specified date in such a month are deemed to
be paid by the Fund and received by the shareholder on December 31 of such
year, provided they are paid before February 1 of the following year.
The price paid for a share of the Fund ordinarily includes an amount equal
to any per share undistributed earnings and a proportionate amount of any
undistributed capital gains realized in the Fund's investments. Any
distribution of such earnings or gains after a purchase may in effect be a
return of capital, but would nevertheless be subject to tax.
Any gain or loss recognized on a sale or redemption of shares of the Fund
by a shareholder who is not a dealer in securities will generally be treated
as a long-term capital gain or loss if the shares have been held for more
than twelve months and otherwise will be generally treated as a short-term
capital gain or loss. However, if shares on which a net capital gain
distribution has been received are subsequently sold or redeemed and such
shares have been held for six months or less, any loss recognized will be
treated as a long-term capital loss to the extent of the long-term capital
gain distribution.
Shareholders will be advised annually as to the Federal income tax
consequences of distributions made during the year. Shareholders are
encouraged to consult with their tax advisors concerning the application of
the rules set forth above to their particular circumstances, and also
concerning the application of state and local taxes to an investment in the
Fund. State and local tax consequences of an investment in the Fund may
differ from the Federal income tax consequences described above.
SHAREHOLDER SERVICES
CONFIRMATIONS AND REPORTS
You will receive after each purchase or sale a confirmation showing the
particular transaction and the current status of your account. Reports will
be sent to shareholders at least semiannually showing the Fund's portfolio
and other information. An annual report containing financial statements
audited by independent certified public accountants will also be sent to
shareholders each year.
Shareholder inquiries should be addressed to Janney Montgomery Scott Inc.,
1801 Market Street, Philadelphia, PA 19103 (telephone in Philadelphia: (215)
665-6000; telephone outside Philadelphia: (800) 526-6397).
SYSTEMATIC WITHDRAWAL PLAN
You may elect to make systematic withdrawals from your Fund account of a
minimum of $50 on a monthly basis or $150 on a quarterly basis if you are
purchasing or already own shares with a net asset value of $10,000 or more.
Please contact Janney for further information.
QUALIFIED RETIREMENT PLANS
An investment in Fund shares may be appropriate for IRAs, Keogh Plans, and
corporate retirement plans. Investors who are considering establishing such a
plan may wish to consult their attorneys or tax advisers with respect to
individual tax questions. Janney can make available to you forms of
self-directed IRAs, Keogh Plans, and corporate retirement plans.
12
<PAGE>
The Internal Revenue Code requires the custodian of any IRA to furnish
each individual benefitting from an IRA with a copy of the governing
instrument used to establish the IRA and a disclosure statement satisfying
the requirements of regulations under Section 408 of the Internal Revenue
Code no later than the earlier of the date of establishment or purchase of
the IRA. If, however, the governing instrument and disclosure statement are
not furnished to such individual at least seven days preceding the earlier of
the date of purchase or establishment of the IRA, the individual must be
permitted to revoke his IRA and receive a full refund for a period of seven
days from the earlier of those dates. If the revocation period applies,
Janney, as custodian of a Janney self-directed IRA will hold the individual's
initial payment to his IRA in a suspense account until the expiration of the
seven-day period. Thereupon, if the IRA has not been revoked, such payment
will be applied to the purchase of Fund shares at the net asset value next
calculated following such expiration date plus the appropriate sales charge.
No interest will be paid on funds held in such suspense account. An order
placed with Janney on behalf of a Janney self-directed IRA will not be
transmitted to the Fund until Janney receives a check and completed IRA
application.
The option of investing in the retirement plans described above through
regular payroll deductions may be arranged with Janney and your employer.
Additional information with respect to these plans is available upon request
from any Janney broker.
MANAGEMENT OF THE FUND
The Fund's Board of Directors have overall responsibility for the
operation of the Fund.
The Fund's officers are responsible for the operation of the Fund under
the supervision of the Board of Directors. The directors and officers of the
Fund, their principal occupations during the past five years and other
business affiliations are set forth below. An asterisk (*) indicates
directors who are "interested persons" of the Fund as defined by the
Investment Company Act of 1940. Mr. Meyer, a director of the Fund, is the
uncle of Mr. Cheston, the Fund's President.
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With the Fund During Past Five Years
- -------------- ------------- ----------------------
<S> <C> <C>
Radcliffe Cheston* ....... President, Chief Executive President, Treasurer and Director of Addison
1608 Walnut Street Officer and Director Capital Management Company since May 1990;
Philadelphia, PA Vice President, Treasurer and Secretary of
Addison Capital Management Company and general
partner of its predecessor since January 1984.
Rudolph C. Sander* ....... Chairman of the Board and Chairman of the Board and Chairman of the Executive
1801 Market Street Director Committee of Janney Montgomery Scott Inc.
Philadelphia, PA
Margaret M. Healy ........ Director Interim President, Rosemont College, June 1,
Rosemont College 1995 - Present; Lecturer in Philosophy, Bryn
Rosemont, PA Mawr College, 1978-present; Director,
Independence Capital Group of Funds
(registered investment companies).
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With the Fund During Past Five Years
- -------------- ------------- ----------------------
<S> <C> <C>
Charles A. Meyer ......... Director Retired Senior Vice President of Sears,
135 S. LaSalle St. Roebuck & Co.; Director of Dow Jones Inc. and
Chicago, IL Gillette Co.; Assistant Secretary of State for
Inter-American Affairs from 1969 to 1973.
Charles E. Mather, III ... Director President and Director of Mather & Co.
226 Walnut Street (insurance brokers); Director of American
Philadelphia, PA Shipbuilders and Shipowners Mutual Assurance
Company and Christiana Bank & Trust (a state
chartered bank not a member of the Federal
Reserve Board); Director and President of Finance Company
of Pennsylvania (a registered investment company).
Charles J. Sullivan ...... Vice President Senior Vice President and
1801 Market Street Director of Janney Montgomery Scott
Philadelphia, PA Inc.
James Wolitarsky ......... Treasurer, Chief Financial Senior Vice President, Treasurer and
1801 Market Street Officer and Chief Director of Janney Montgomery Scott Inc.
Philadelphia, PA Accounting Officer
Fred W. Thomas ........... Vice President Senior Vice President of Addison Capital
1608 Walnut Street Management Company since May 1990; Director of
Philadelphia, PA Research of Addison Capital Management Company
from September 1989 through May 1990; Vice
President of Abel/Noser Corp. from March 1984
through August 1989.
James V. Kelly, CFA ...... Vice President Senior Vice President and Director of Addison
1608 Walnut Street Capital Management Company since August 1992;
Philadelphia, PA Vice President of Addison Capital Management
Company since October 1990; President of
Sysdicon Investment Counsel January 1989 to
October 1990; Vice President and Chief Equity
Investment Officer of Wilmington Trust Company
January 1986 to January 1989.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With the Fund During Past Five Years
- -------------- ------------- ----------------------
<S> <C> <C>
James W. Jennings ........ Secretary Partner, Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA
</TABLE>
Pursuant to the Board of Directors' responsibility for Fund management, it
has employed the Adviser to serve as the Fund's investment adviser. Subject
to the overall supervision of the Board of Directors, the Adviser manages the
investment affairs of the Fund and directs the investments of the Fund in
accordance with its investment objective, policies and limitations. The
Adviser manages the investment affairs of the Fund pursuant to an Investment
Advisory Agreement between the Fund and the Adviser dated September 8, 1986
and approved by the Fund's sole shareholder, Janney, on August 13, 1986. The
Investment Advisory Agreement was subsequently approved by the Fund's
shareholders at a meeting on October 29, 1987. The Adviser is a wholly-owned
subsidiary of Janney, which, in turn, is an indirect wholly-owned subsidiary
of Penn Mutual Life Insurance Company. The Adviser's address is 1608 Walnut
Street, Thirteenth Floor, Philadelphia, PA 19103.
The Adviser is entitled to receive for its services a fee, calculated
daily and payable monthly, at an annual rate of 0.75% of the average daily
net assets of the Fund for the first $100 million of average net assets,
0.50% of average daily net assets exceeding $100 million but less than or
equal to $250 million, and 0.25% of average net assets exceeding $250
million. The advisory fee is higher than that paid by most other mutual
funds.
For the fiscal year ended June 30, 1995, the Adviser received $269,708 in
advisory fees from the Fund.
The advisory fee may be reduced because of regulations in various states
where Fund shares may be qualified for sale which impose limitations on the
annual expense ratio of the Fund. For example, the Fund has qualified its
shares for sale in California. Under California law the Fund's aggregate
annual expenses may not exceed 2.5% of the first $30 million of its average
daily net assets, 2% of the next $70 million of average daily net assets, and
1.5% of average daily net assets in excess of $100 million. Interest, taxes,
capital items (including brokerage) and the distribution fee to be paid to
Janney as described below will not be included in calculating aggregate
annual expenses for this purpose. The Fund may also seek to qualify its
shares in other jurisdictions which impose limitations on its expenses.
If the purchase or sale of securities consistent with the investment
policies of the Fund and one or more other clients served by the Adviser is
considered at or about the same time, transactions in such securities will be
allocated among the Fund and such other clients in a manner deemed fair and
reasonable by the Adviser. Although there is no specified formula for
allocating such transactions, the various allocation methods used by the
Adviser, and the results of such allocations, will be subject to periodic
review by the Fund's Board of Directors. Simultaneous transactions in the
same securities by the Fund and other clients served by the Adviser may have
an adverse effect upon the price or volume of securities available to the
Fund.
Under an Administration and Accounting Services Agreement between the Fund
and Provident Financial Processing Corporation ("PFPC"), PFPC provides
certain administrative and accounting services, including bookkeeping, record
maintenance, and preparation of filings required by the Securities and
Exchange Commission and federal and state tax authorities. PFPC's annual
fees, payable monthly, for these services equal 0.10% of the Fund's average
daily assets, with a minimum annual fee of $100,000 (a portion of which has
been voluntarily waived since commencement of the Fund's operations). The
Fund also reimburses PFPC for certain disbursements. These amounts do not
include fees payable to the Transfer Agent and the Fund's Custodian for their
services. PFPC is a wholly-owned subsidiary of the Custodian. For the year
ended June 30, 1995, PFPC received fees of $9,910 for accounting services.
15
<PAGE>
Under a Services Agreement between the Fund and Janney, Janney provides
office space to the Fund, oversees PFPC's performance of its duties under the
Administration and Accounting Services Agreement, oversees the performance by
the Custodian and Transfer Agent of their respective duties to the Fund and
responds to shareholder inquiries, for an annual fee equal to 0.25% of the
Fund's average daily net assets. This fee is in addition to the annual
distribution fee which Janney will also receive from the Fund. See "The
Fund's Distributor" below. Janney has waived payment of this fee since
commencement of the Fund's operations through June 30, 1993. Commencing July
1, 1993, Janney began collecting this fee from the Fund. For the year ended
June 30, 1995, Janney received services fees of $89,902.
The total amount of the advisory services, financial accounting and
management fees described above and distribution fees described below paid by
the Fund during the fiscal year ended June 30, 1995 was 1.60% of the Fund's
average daily net assets. In addition to such fees, the Fund incurs and pays
the following types of expenses: taxes, expenses for legal and auditing
services, the expense of preparing (including typesetting, printing and
mailing) reports, prospectuses and notices to its shareholders, the cost of
printing stock certificates, fees and disbursements of the Custodian,
disbursements of PFPC, the expense of issuing and redeeming Fund shares, the
cost of registering Fund shares under federal and state laws, shareholder
meetings and related proxy solicitation expenses, the fees and out-of-pocket
expenses of Directors who are not affiliated with Janney or the Adviser,
insurance, interest, brokerage costs, legal, including any litigation,
expenses, association membership dues, and other expenses properly payable by
the Fund.
The Fund uses a variety of brokers, including Janney, as broker for agency
transactions in listed and over-the-counter securities at commission rates
and under circumstances consistent with the policy of best execution. Janney
received $6,713 in brokerage commissions from the Fund during the fiscal year
ended June 30, 1995.
THE FUND'S DISTRIBUTOR
Janney is the distributor of the Fund's shares whose principal business
address is shown on the cover of this Prospectus.
The Underwriting Agreement between Janney and the Fund obligates Janney to
pay certain expenses in connection with the offering of Fund shares,
including sales commissions to its brokers. Under the Underwriting Agreement,
as well as a distribution plan adopted by the Fund's Board of Directors (the
"Compensation Plan"), Janney will also pay for the printing and distribution
of prospectuses and periodic reports used in connection with the offering of
Fund shares to prospective investors and for supplementary sales literature
and advertising costs. The Compensation Plan and the Underwriting Agreement
provide that the Fund will compensate Janney for these expenses by paying
Janney an annual distribution fee equivalent to 0.65% of the Fund's average
daily net assets. However, commencing July 1, 1993, Janney waived a portion
of this fee equal to 0.25% of the Fund's average daily net assets. The Board
of Directors of the Fund determined that such a waiver was appropriate in
view of Janney's decision to commence collecting the service fee described
above under "Management of the Fund". The distribution fee is computed daily
and paid monthly, and is in addition to the Adviser's fee and Janney's fee,
if any, for other services described under "Management of the Fund" above.
For the year ended June 30, 1995, Janney received distribution fees of
$143,844. As set forth above under "What Shares Will Cost", Janney commencing
on July 3, 1995, has waived the payment of a 3% sales charge on purchases of
Fund shares. At the same time, the Adviser agreed to pay Janney an amount
equal to .25% of the Fund's average net assets out of said Adviser's own
assets. The Board of Directors of the Fund determined that in order to
encourage sales of Fund shares, it is reasonable to permit the Adviser to use
its own assets to pay Janney for its distribution efforts and to permit
Janney to waive sales charges on purchases of new funds shares, and has
approved Janney's continuation of such waiver.
16
<PAGE>
At any given time, Janney may incur expenses in distributing shares of the
Fund which are in excess of the total payments made by the Fund pursuant to
the Compensation Plan. For example, Janney may conduct sales promotions and,
from its own resources, pay additional consideration or other incentives in
the form of cash or other compensation (such as merchandise or trips) to its
own representatives. Because there is no requirement under the Plan that
Janney be reimbursed for all its expenses or any requirement that the Plan be
continued from year to year, this excess amount does not constitute a
liability of the Fund. Any cumulative expenses incurred by Janney but not yet
recovered through distribution fees may or may not be recovered through
future distribution fees. Thus, Janney's actual distribution expenditures in
a given year may be less than the Plan payments it receives from the Fund for
that year, and no effect will be given to previously accumulated distribution
expenditures in excess of the Plan payments borne by Janney out of its own
resources in other years. The Fund's Compensation Plan is classified as a
"compensation plan" because it will pay the distribution fee regardless of
the actual distribution expenses. To the extent that the fee under the Plan
exceeds the actual distribution expenses of Janney (which has not occurred to
date), any excess should be considered direct compensation to Janney.
To date the fees under the Plan have not fully reimbursed Janney for the
distribution expenses it incurred. In later years, the distribution fee may
exceed Janney's distribution expenses. The Fund is not obligated under the
Compensation Plan and the Underwriting Agreement to reimburse Janney for the
excess of distribution expenses incurred in any one year over the amount of
the distribution fee actually paid, or to reimburse Janney in a later year
for any part of the amount of the distribution fee owed in a prior year but
not paid because the amount of such expenses exceeded expense ceilings
imposed by state regulations. In the event that the Fund later offers shares
in other portfolios and uses Janney to distribute such shares, the
distribution fee herein described may be used by Janney to finance
distribution of such shares.
DESCRIPTION OF FUND SHARES
The Fund has authorized capital of two billion shares of common stock, par
value $0.001. Each share will be entitled to one vote for the election of
directors and on any matter submitted to a shareholder vote. Fractional
shares will have fractional voting rights. Voting rights will not be
cumulative. In the opinion of Morgan, Lewis & Bockius LLP, counsel for the
Fund, the shares are exempt from existing personal property taxes in
Pennsylvania.
Pursuant to the Maryland General Corporation Law, the Fund is not required
to hold annual meetings of shareholders unless the Investment Company Act of
1940 requires action by the shareholders to elect members of the Board of
Directors under certain circumstances.
The Fund's Articles of Incorporation authorize the Board of Directors,
without shareholder approval (unless otherwise required by applicable law), to:
(i) sell and convey the Fund's assets to another management investment company
for consideration which may include securities issued by the purchaser and, in
connection therewith, to cause all outstanding Fund shares to be redeemed at a
price which is equal to their net asset value and which may be paid in cash or
by distribution of the securities or other consideration received from the sale
and conveyance; (ii) sell and convert the Fund's assets into money and, in
connection therewith, to cause all outstanding Fund shares to be redeemed at
their net asset value; or (iii) combine the Fund's assets with the assets
belonging to another portfolio of the Fund hereafter organized if the Board of
Directors reasonably determines that such combination will not have a material
adverse effect on the shareholders of the Fund and such other portfolio and, in
connection therewith, to cause all outstanding Fund shares to be redeemed or
converted into shares of another class of the Fund's capital stock at net asset
value. The exercise of such authority by the Board will be subject, however, to
the provisions of the Investment Company Act of 1940, including Section 13(a)(4)
17
<PAGE>
of that Act which prohibits an investment company from changing the nature of
its business so as to cease being an investment company without the authorizing
vote of a majority of its outstanding voting securities.
TRANSFER AGENT
Provident Financial Processing Corporation, P.O. Box 8950, Wilmington, DE
19899, serves as transfer agent and dividend disbursing agent for the Fund.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by calling Janney at the telephone
number shown on the cover page of this Prospectus.
18
<PAGE>
IF YOU WANT TO START A MONTHLY
INVESTMENT PROGRAM
- -----------------------------------------------------------------------------
o Complete both parts of the bank draft authorization in the panel to the
right
o Complete the Account Application on the next page
o Send
[ ] A check made out for the total amount of your initial investment
and
[ ] a blank check marked "void" to:
PROVIDENT FINANCIAL PROCESSING CORPORATION
C/O ADDISON CAPITAL SHARES, INC.
P.O. BOX 8950
WILMINGTON, DE 19899
(The blank check marked "void" is required because the Transfer Agent must
obtain, and retain in its records, an exact replica of the coding at the
bottom of the voided check so that it can arrange through appropriate bank
channels monthly withdrawals from your check account.)
COMPLETE, DETACH AND MAIL WITH
COMPLETE SHARE APPLICATION
TO BEGIN BANK DRAFT INVESTING
THROUGH YOUR CHECKING ACCOUNT
(PRE-AUTHORIZED CHECK PLAN)
I hereby authorize PNCBank to draw $_______________ from
my checking account monthly, beginning with the 20th day of
_______________ to be used to purchase shares of Addison
(month)
Capital Shares, Inc. for my account through the
- ------------------------------------------------------------
Name of Bank, Branch Name and Number (if any)
- ------------------------------------------------------------
Address of Bank or Branch
- ------------------------------------------ ----------------
(Routing symbol)
This authorization is subject to the provisions on the
reverse side. Name(s) ____________________________________
Street ___________________________________________________
City ____________________________ State ____ Zip _______
NOTE: PLEASE ENCLOSE A BLANK CHECK MARKED "VOID"
- -----------------------------------------------------------------------------
AUTHORIZATION TO HONOR BANK DRAFTS
DRAWN BY
PNCBANK
To: _________________________________________________________________________
(Print Bank Name and Branch, if any)
_____________________________________________________________________________
(Bank Address)
_____________________________________________________________________________
For my convenience, I hereby request and authorize you to pay and charge to
my account checks drawn on my account by, and payable to the order of,
PNCBank. I agree that while this authorization remains in effect (1) your
rights in respect to each such check shall be the same as if it were signed
personally by me, (2) you shall be fully protected in honoring any such check
and (3) if any such check be dishonored, with or without cause, and whether
inadvertently, you shall be under no liability whatsoever.
This authorization shall remain in effect until you receive written
revocation signed by me.
_____________________________________________________________________________
(Print Name of Depositor(s) As Shown On Bank Records)
_____________________________________________________________________________
(Checking Account No.)
_____________________________________________________________________________
(Date) (Signature of Depositor As Shown On Bank Records)
19
<PAGE>
BANK DRAFT AUTHORIZATION
The authorization on the reverse side is subject to the following provisions:
1. PNCBank shall collect the amount specified from the investor's personal
checking account, as authorized on the reverse side, by drawing checks on
such accounts to its own order.
2. Checks will be drawn once each month. The cancelled checks will constitute
receipts for such amounts.
3. The privilege of making deposits under this service may be revoked by
PNCBank without prior notice if any check is not paid upon presentation.
PNCBank shall be under no obligation to notify the investor as to the
non-payment of any check.
4. This service may be discontinued by the investor by written notice to
PNCBank, which is received at least ten business days prior to the
collection date or at any time by PNCBank upon thirty days' written notice
prior to any collection date.
When this card has been completed, please mail to:
PROVIDENT FINANCIAL PROCESSING CORPORATION
C/O ADDISON CAPITAL SHARES, INC.
P.O. BOX 8950
WILMINGTON, DE 19899
Please enclose a voided blank check.
INDEMNIFICATION AGREEMENT
To: BANK NAMED ON THE REVERSE SIDE.
Your depositor executing the authorization on the reverse side is purchasing
shares of Addison Capital Shares, Inc. (the "Fund"), a mutual fund for which
PNCBank is custodian, and has authorized Provident to collect the amounts
indicated for investment from his or her personal checking account by drawing
checks on such account to its order. In consideration of your compliance with
such depositor's request that you pay and charge to his or her account checks
drawn on such account by, and payable to the order of PNCBank, Janney
Montgomery Scott Inc. ("Janney"), distributor for the Fund, hereby agrees:
1. To indemnify and hold you harmless from any loss you may suffer resulting
from or in connection with the execution and issuance of any check, whether
or not genuine, purporting to be drawn by or on behalf of and payable to
PNCBank on the account of your depositor executing the authorization on the
reverse side and received by you in the regular course of business through
normal banking channels for the purpose of payment, including any costs or
expenses reasonably incurred in connection with such loss, but excepting any
loss due to your payment of any check drawn against insufficient funds.
2. In the event that any such check shall be dishonored, whether with or
without cause, and whether intentionally or inadvertently, to indemnify you
and hold you harmless from any loss resulting from such dishonor, including
the costs and reasonable expenses.
Janney Montgomery Scott Inc.
by Norman T. Wilde, Jr., President
Authorized by a resolution adopted by the Board of Directors of Janney
Montgomery Scott Inc.
SEE PRECEDING PAGE
FOR INSTRUCTIONS TO
START A MONTHLY
INVESTMENT PROGRAM.
20
<PAGE>
ADDISON CAPITAL SHARES, INC.
SHARE APPLICATION
<TABLE>
<CAPTION>
Send Completed Application to: ADDISON CAPITAL SHARES, INC., c/o JANNEY MONTGOMERY SCOTT INC.,
2 BALA CYNWYD PLAZA, BALA CYNWYD, PA 19004
___________________________________________________________________________________________________________________________________
ACCOUNT REGISTRATION
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_ _
Owner (print) |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| |_|_|_|_|_|_|_|_|_|_|_|
Owner's Social Security Number
or
_
Co-owner (if any) |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| |_|_|_|_|_|_|_|_|_|_|_|
Tax ID Number
Street Address |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| [ ] Exempt from Backup Withholding (For
Instructions, see Step 3 on last page)
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
City State Zip Code
*If joint registration is indicated, both must sign and the registration will be as joint tenants with right of survivorship and
not as tenants in common, unless otherwise specifically stated.
___________________________________________________________________________________________________________________________________
SUBSEQUENT INVESTMENTS/DIVIDENDS AND DISTRIBUTIONS -- Minimum initial investment is $1,000; thereafter $50. I enclose a check in
the amount of $_______,
[ ] I intend without obligation, to make additional investments in the amount of $_______.
Dividend and other distributions election: (please check applicable box; if no box checked, you will be deemed to have checked
box 1):
[ ] 1. All dividends and distributions of realized securities profits shall be accepted in additional shares at net asset value.
[ ] 2. All dividends shall be paid to me in cash and all distributions of realized securities profits will be accepted in
additional shares at net asset value.
[ ] 3. All dividends and distributions of realized securities profits shall be paid to me in cash.
___________________________________________________________________________________________________________________________________
SYSTEMATIC WITHDRAWAL PLAN: Minimum required investment is $10,000.
[ ] Monthly [ ] Quarterly $______ Starting the of Month Year
___________________________________________________________________________________________________________________________________
APPLICANT(S) SIGNATURE(S) Sign below exactly as printed in Account Registration:
Under penalties of perjury, I certify (1) that the number shown on this form is my correct taxpayer identification number, and
(2) that I am not subject to backup withholding because (a) I have not been notified that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (b) the Internal Revenue Service has notified me that I am no
longer subject to backup withholding. If you have been notified by the IRS that you are currently subject to backup withholding,
strike out phrase (2).
We hereby certify that each of the persons listed below has been duly elected, is now legally holding the office set opposite his
name and has the authority to make this authorization.
Citizenship: [ ] U.S. [ ] Other _____ Telephone No. (____) ___________. Please print titles below if signing for a busines or trust.
(Please provide)
X __________________________________________________________ _________________________________________________________________
(Signature) (President, Trustee, General Partner or Agent)
X __________________________________________________________ _________________________________________________________________
(Signature) (Co-owner, Secretary of Corporation, Co-trustee, etc.)
___________________________________________________________________________________________________________________________________
MUST BE COMPLETED BY DEALER
_________________Dealer's Name and Address:________________
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Invoice Date No. of Shares Trade Date | |
| |
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Representative's Last Name and Number | |
_ _ | |
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(Area Code) Representative's Phone Number | |
| |
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| | |
Dealer Branch Branch Number | |
| |
_____________________________________________ |___________________________________________________________|
Authorized Signature of Dealer
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INFORMATION PERTAINING TO THIS LETTER OF INTENT
Subject to conditions specified below, each purchase during the 13-month
period subsequent to the effective date of this application will be made at
the public offering price applicable to a single transaction of the dollar
amount indicated, as described in the then effective prospectus. The offering
price may be further reduced under Rights of Accumulation if the
shareholder's Janney broker is advised of any shares previously purchased and
still owned. I understand that I may at any time during the period revise
upward my stated intention by submitting a written request to this effect.
Such revision shall provide for the escrowing of additional shares. The
original period of the Letter, however, shall remain unchanged. Each separate
purchase made pursuant to the Letter is subject to the terms and conditions
contained in the prospectus in effect at the time of that particular
purchase. It is understood that I make no commitment to purchase shares, but
that if purchases are so made within thirteen months from this date do not
aggregate the amount specified, I will pay the increased amount of sales
charge prescribed in the terms of escrow. I must make specific reference to
this Letter of Intent in placing each future order for shares while this
Letter is in effect. This cancels and supersedes any previous instructions
which I may have given inconsistent with the above. I have received a copy of
the current prospectus of the Fund.
TERMS OF ESCROW
1. To assure compliance with provisions of the Investment Company Act of
1940, out of the initial purchase (or subsequent purchase if necessary) 5% of
the dollar amount indicated on the reverse side hereof will be held in escrow
in the form of shares (computed to the nearest full share at the applicable
public offering price) registered in the purchaser's name. These shares will
be held by the Fund's Custodian and be subject to the terms of escrow.
2. If total purchases pursuant to this Letter equal the amount specified
at the expected aggregate purchases, escrow shares will be released from
restriction.
3. If the total purchases pursuant to this Letter are less than the amount
specified, the purchaser shall remit to Janney Montgomery Scott Inc.
("Janney") an amount equal to the difference between the dollar amount of
sales charge actually paid and the amount of sales charge which would have
been paid on the total purchases if all such purchases had been made at a
single time. If Janney within 10 business days after request, does not
receive said difference in sales charge, it will instruct the Fund's
Custodian to redeem an appropriate number of escrow shares to realize such
difference. If the proceeds from this redemption are inadequate, the
purchaser will be liable to Janney for the difference. The remaining shares
after the redemption will be deposited to his account unless otherwise
instructed.
4. The purchaser hereby irrevocably constitutes and appoints PNCBank, the
Fund's Custodian, as attorney to surrender for redemption any or all shares
on the books of the Fund, under the conditions previously outlined, with full
power of substitutions in the premises.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
As all dividends and/or capital gains distributions are reinvested at net
asset value without sales commissions, shares acquired through reinvestment
are not applied to this Letter of Intent.
REDUCED SALES CHARGES
(RIGHT OF ACCUMULATION)
Reduced rates on large transactions are limited to purchases made by the
following: An individual; or an individual, his spouse and their children
under 21 purchasing securities for his (their) own account; or a trustee or
other fiduciary purchasing securities for a single trust estate or single
fiduciary account (including a pension, profit-sharing, or other
employee-benefit trust created pursuant to a Plan qualified under Section 401
of the Internal Revenue Code). Such rates are not allowable to a group of
individuals whose funds are combined, directly or indirectly, for the
purchase of securities or to a trustee, agent custodian or their
representative of such a group.
PROVISION FOR PRICE ADJUSTMENT
If total purchases made under this Letter of Intent and the Right of
Accumulation are large enough to qualify for a lower sales charge than that
applicable to the amount initially specified, an adjustment will be made at
the expiration of this Letter to give effect to the lower charge. Such
adjustment in sales charge will be used to purchase additional shares for the
shareowner.
CANCELLATION OR LIQUIDATION
If at any time prior to or after completion of this Letter of Intent the
purchaser wishes to cancel this Letter, he must notify Janney in writing. If
at any time prior to the completion of this Letter of Intent the purchaser
requests the Fund to liquidate his total shares, a cancellation of this
Letter will automatically be effected. Under either of the above conditions
the total purchased pursuant to this Letter may be less than the amount
specified as the expected aggregate purchases. If so, the Fund will redeem an
appropriate number of the escrow shares to remit to Janney, as distributor
for the Fund, an amount equal to the difference between the dollar amount of
sales charge actually paid and the amount of sales charge which would have
been paid on the total purchases if all such purchases would have been at a
single time.
22
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ADDISON CAPITAL SHARES, INC.
c/o Janney Montgomery Scott Inc.
2 Bala Cynwyd Plaza
Bala Cynwyd, PA 19004
Investment Adviser
ADDISON CAPITAL
MANAGEMENT COMPANY
1608 Walnut Street
Philadelphia, PA 19103
Distributor/Shareholder Servicing
JANNEY MONTGOMERY SCOTT INC.
1801 Market Street
Philadelphia, PA 19103
Custodian
PNCBANK
17th & Chestnut Streets
8th Floor
Philadelphia, PA 19103
Transfer Agent
PROVIDENT FINANCIAL
PROCESSING CORPORATION
P.O. Box 8950
Wilmington, DE 19899
Independent Accountants
TAIT, WELLER & BAKER
Two Penn Center Plaza, Suite 700
Philadelphia, PA 19102
Legal Counsel
MORGAN, LEWIS & BOCKIUS LLP
2000 One Logan Square
Philadelphia, PA 19103
GRAPHIC
Distributed by:
LOGO
Prospectus
November 1, 1995
