<PAGE>
SEC Filing Fees Account #0000803020
AS FILED WITH THE SECURITIES AND EXCHANGE 1933 ACT FILE NO. 33-9093
COMMISSION ON DECEMBER 21, 1995 1940 ACT FILE NO. 811-4854
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 11 [X]
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13 [X]
OBERWEIS EMERGING GROWTH FUND
(to be renamed The Oberweis Funds)
(Exact Name of Registrant as Specified in Charter)
c/o Oberweis Asset Management, Inc.
One Constitution Drive
Aurora, Illinois 60506
(Address of Principal Executive Offices, Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (800) 323-6166
Patrick B. Joyce
Oberweis Asset Management, Inc.
One Constitution Drive
Aurora, Illinois 60506
(Name and Address of Agent for Service)
Copies to:
CATHY G. O'KELLY
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 NORTH LASALLE STREET, SUITE 2600
CHICAGO, ILLINOIS 60601
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has declared that an indefinite number or amount of Shares of beneficial
interest in the Fund has been registered under the Securities Act of 1933. The
Rule 24f-2 Notice for the year ended December 31, 1994 was filed with the
Securities and Exchange Commission on or about February 27, 1995. It is proposed
that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[X] on January 1, 1996 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment
<PAGE>
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM NUMBER LOCATION IN PROSPECTUS
- --------------------- ----------------------
<S> <C>
Part A--
Item 1. Cover page Cover Page
Item 2. Synopsis Synopsis of Fees
Item 3. Condensed Financial Information Financial Highlights; Performance Comparison
Item 4. General Description of Registrant Investment Objective, Policies and Risks; General Information
Item 5. Management of the Fund Management of the Portfolios; Expenses of the Fund; The
Advisory and Management Agreements
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities Distribution of Shares; Dividends, Distributions and Tax
Status; General Information
Item 7. Purchase of Securities Being Offered How to Purchase Shares; Shareholder Services
Item 8. Redemption or Repurchase How to Redeem Shares; Shareholder Services
Item 9. Pending Legal Proceedings Not Applicable
LOCATION IN
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
Item B--
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Policies Investment Objective, Policies and Restrictions
Item 14. Management of the Fund Management of the Fund
Item 15. Control Persons and Principal Holders of Securities Management of the Fund
Item 16. Investment Advisory and Other Services Oberweis Asset Management, Inc.; The Chicago Corporation;
Distribution Plan and Agreement; Additional Information
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Securities Shareholder Voting Rights [See also Item 6]
Item 19. Purchase, Redemption and Pricing of Securities Redemption of Shares, Determination of Net Asset Value
Being Offered
Item 20. Tax Status Taxes
Item 21. Underwriters See Prospectus - How to Purchase Shares
Item 22. Calculations of Performance Data Calculation of Average Annual Total Return
Item 23. Financial Statements Financial Statements
Part C--
Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C of this
Registration Statement.
</TABLE>
ii
<PAGE>
This post-effective amendment to the Registration Statement of the Oberweis
Emerging Growth Fund (Post-Effective Amendment No. 11 under the Securities Act
of 1933 (the "1933 Act") and Amendment No. 13 under the Investment Company Act
of 1940 (the "1940 Act")) is being filed to amend Parts B and C of Post-
Effective Amendment No. 10 under the 1933 Act filed on October 18, 1995.
iii
<PAGE>
SUBJECT TO COMPLETION
Preliminary Statement Of Additional Information
Dated December 21, 1995
STATEMENT OF ADDITIONAL INFORMATION
THE OBERWEIS FUNDS
ONE CONSTITUTION DRIVE
AURORA, ILLINOIS 60506
(800) 323-6166
___________________________________
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Fund's Prospectus dated _________________. A copy of
the Fund's Prospectus may be obtained by writing or calling the above address or
phone number.
- -------------------------------------
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to time the registration statement becomes
effective. This Statement of Additional Information does not constitute a
prospectus.
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS............................. 2
MANAGEMENT OF THE FUND...................................................... 5
OBERWEIS ASSET MANAGEMENT, INC.............................................. 7
DISTRIBUTION PLAN AND AGREEMENT............................................. 8
EXPENSES BORNE BY THE PORTFOLIOS............................................ 9
PORTFOLIO TRANSACTIONS...................................................... 10
SHAREHOLDER VOTING RIGHTS................................................... 12
REDEMPTION OF SHARES........................................................ 12
SHAREHOLDER SERVICES........................................................ 13
DETERMINATION OF NET ASSET VALUE............................................ 13
TAXES....................................................................... 13
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN.................................. 14
ADDITIONAL INFORMATION...................................................... 14
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS
</TABLE>
1
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The following information supplements the discussion of each Portfolio's
investment objective and policies in the Fund's Prospectus under the heading
"Investment Objective, Policies and Risks."
Investment Objective
- --------------------
The investment objective of each Portfolio is to maximize capital appreciation.
Each Portfolio intends to achieve its objective through investing primarily in
common stocks of companies, which in the opinion of its investment adviser have
a potential for above-average long-term growth in market value. The investment
objective of each Portfolio is fundamental and, like all fundamental policies of
a Portfolio, cannot be changed without the affirmative vote of a majority of the
outstanding voting securities of that Portfolio. As used in this Statement of
Additional Information and in the Fund's Prospectus, "a majority of the
outstanding voting securities" of the Portfolio means the lesser of (1) the
holders of more than 50% of the outstanding shares of the Portfolio, or (2) the
holders of more than 67% of the shares of the Portfolio present if more than 50%
of the outstanding shares of the Portfolio are present at a meeting in person or
by proxy.
Investment Restrictions
- -----------------------
The policies set forth below are fundamental policies of each Portfolio and may
not be changed without approval of a majority of that Portfolio's outstanding
shares. A Portfolio individually may not:
1. purchase more than 10% of any class of securities of any one issuer
other than the United States government and its instrumentalities;
2. invest more than 5% of its total assets, at the time of the investment
in question, in the securities of any one issuer (other than the United States
government and its instrumentalities);
3. invest more than 5% of its total assets in securities that are not
readily marketable and securities of unseasoned issuers that have been in
continuous operation for less than three years, including operating periods of
their predecessors;
4. invest more than 5% of its total assets in securities of issuers which
the Fund is restricted from selling to the public without registration under the
Securities Act of 1933;
5. invest more than 5% of its total assets in warrants, and of this
amount, no more than 2% of total assets may be invested in warrants that are
listed on neither the New York Stock Exchange nor the American Stock Exchange;
6. purchase or retain the securities of any issuer if (i) one or more
officers or directors of the Fund or the investment adviser individually own or
would own, directly or beneficially, more than 1/2 of 1% of the securities of
such issuer, and (ii) in the aggregate, such persons own or would own, directly
or beneficially, more than 5% of such securities;
7. purchase, sell or invest in the securities of other investment
companies;
8. purchase, sell or invest in interests in oil, gas or other mineral
exploration or development programs;
9. purchase, sell or invest in commodities or commodity contracts;
10. purchase, sell or invest in real estate or interests in real estate,
except that the Portfolio may purchase, sell or invest in marketable securities
of companies holding real estate or interests in real estate, including real
estate investment trusts; provided such investments do not exceed 10% of the
Portfolio's total assets;
11. issue senior securities;
12. invest in companies for the purpose of exercising control or
management;
13. concentrate its investments in any one industry, except that the
Portfolio may invest up to 25% of its total assets in any one industry;
14. purchase securities on margin, except that the Portfolio may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities;
2
<PAGE>
15. make short sales of securities unless, at the time of each such sale
and thereafter while a short position exists, the Portfolio owns an equal amount
of securities of the same issue or owns securities which, without payment by the
Portfolio of any consideration, are convertible into, or are exchangeable for,
an equal amount of securities of the same issue;
16. participate on a joint or joint and several basis in any trading
account in any securities;
17. lend its funds to other persons, except through the purchase of a
portion of an issue of debt securities publicly distributed;
18. lend its portfolio securities, unless the borrower is a broker, dealer
or financial institution that pledges and maintains collateral with the
Portfolio consisting of cash or securities issued or guaranteed by the United
States government having a value at all times not less than 100% of the value of
the loaned securities, provided that the aggregate amount of such loans shall
not exceed 30% of the Fund's total assets;
19. borrow money except from banks as a temporary measure for
extraordinary or emergency purposes or as necessary for the clearance of
purchases and sales of securities, provided that the aggregate amount of such
borrowing shall not exceed 5% of the value of its total assets at the time of
any such borrowing, or mortgage, pledge or hypothecate its assets, except in an
amount not exceeding 5% of its total assets taken at cost to secure such
borrowing;
20. engage in the business of underwriting the securities of other
issuers; or
21. invest in puts, calls, straddles or any combination thereof, except
that the Portfolio may write covered call options on its Portfolio securities,
the aggregate market value of which is limited to 50% of the Portfolio's net
assets, and the Portfolio may invest up to 5% of its assets in the purchase of
put and call options including options on stock indices.
The policies set forth below may be changed by the Fund's Board of Trustees, all
such changes being subject to applicable law. A Portfolio individually may not:
1. purchase, sell or invest in interests in oil, gas or other mineral
leases; or
2. purchase, sell or invest in limited partnership interests in real
estate, except that the Portfolio may purchase, sell or invest in
marketable securities of companies holding real estate or interests
in real estate, including real estate investment trusts; provided
such investments do not exceed 10% of the Portfolio's total assets.
If a percentage restriction is adhered to at the time of investment, a later
change in percentage resulting from changes in values or assets will not be
considered a violation of such restriction.
Other Restrictions
- ------------------
Other investment restrictions are set forth in the Fund's Prospectus and
elsewhere in this Statement of Additional Information. In addition, each
Portfolio will not invest more than 10% of its total assets in "restricted
securities" (meaning securities the resale of which is legally or contractually
restricted, including repurchase agreements with maturities of seven days or
more and securities that are not readily marketable).
Repurchase Agreements
- ---------------------
Each Portfolio may enter into so-called "repurchase agreements," whereby it
purchases a security and the seller (a qualified bank or securities dealer)
simultaneously commits to repurchase that security at a certain date at an
agreed upon price, plus an agreed upon market rate of interest that is unrelated
to the coupon rate or date of maturity of the security. In these transactions,
the securities purchased by the Portfolio have, at all times, a total value in
excess of the value of the repurchase agreement and are held by the Fund's
custodian bank until repurchased. Certain costs may be incurred by a Portfolio
in connection with the sale of the securities purchased by it if the seller does
not repurchase them in accordance with the repurchase agreement. The Portfolio
will consider on an ongoing basis the creditworthiness of the institutions with
which it enters into repurchase agreements and will monitor the value of the
underlying securities to ensure that additional securities are deposited by the
seller if the value of the securities purchased decreases below the resale price
at any time. Under the Investment Company Act of 1940, repurchase agreements
may be considered loans by the Portfolio. Each Portfolio is subject to
restrictions on entering into repurchase agreements in excess of 25% of the
total assets and on investing more than 10% of its total assets in restricted
securities, which includes repurchase agreements with maturities of seven days
or more.
3
<PAGE>
Purchasing Put and Call Options
- -------------------------------
Each Portfolio will commit no more than 5% of its assets to premiums when
purchasing put and call options. The Portfolios may enter into closing
transactions, exercise their options or permit them to expire.
The Portfolios may purchase put options on an underlying security owned by them.
As the holder of a put option, a Portfolio would have the right to sell the
underlying security at the exercise price at any time during the term of the
option. While a Portfolio will not purchase options for leverage purposes, it
may purchase put options for defensive purposes in order to protect against an
anticipated decline (usually short-term) in the value of its securities. Such
hedge protection is provided only during the life of the put option and only
when the Portfolio, as the holder of the put option, is able to sell the
underlying security at the put exercise price regardless of any additional
decline in the security's market price. For example, a put option may be
purchased in order to protect unrealized appreciation of a security where the
Portfolio deems it desirable to continue to hold the security. The premium paid
for the put option and any transaction costs would reduce any capital gain
otherwise available for distribution when the security is eventually sold.
Except as discussed below with respect to options on stock indices, each
Portfolio has no current intention of purchasing put options at a time when the
Portfolio does not own the underlying security; however, it reserves the right
to do so. By purchasing put options on a security it does not own, the
Portfolio would seek to benefit from a decline in the market price of the
underlying security. If such a put option is not sold when it has remaining
value, and if the market of the underlying security remains equal to or greater
than the exercise price during the life of the put option, the Portfolio would
lose its entire investment in the put option (i.e., the entire premium paid by
the Portfolio). In order for the purchase of a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs, unless the put option
is sold in a closing sale transaction.
The Portfolios may also repurchase call options previously written on underlying
securities they already own in order to preserve unrealized gains.
The Portfolios may also purchase call and put options on stock indices ("stock
index options") for the purpose, in part, of partially hedging against the risk
of unfavorable price movements adversely affecting a Portfolio's securities or
securities the Portfolio intends to buy and may sell stock index options in
related closing transactions.
The principal uses of stock index options would be to provide a partial hedge
for a portion of the Portfolios' investment securities, and to offer a cash
management tool. Purchasing stock index options could provide an efficient way
to implement a partial decrease in portfolio market exposure in response to
changing market conditions. Although techniques other than the purchase of
options could be used to hedge the Portfolios' investments, the Portfolios may
be able to hedge their exposure more effectively, and perhaps at a lower cost,
through the use of stock index options.
The Portfolios propose to invest only in stock index options for which the
underlying index is a broad market index such as the Standard & Poor's Index,
the Major Market Index, or the Russell 2000 Index. The Portfolios would propose
to purchase broad stock index options only if they are listed on a national
securities exchange and traded, in the opinion of the Fund's investment adviser,
with some significant volume.
The Portfolios will not enter into a stock index option if, as a result thereof,
more than five percent (5%) of the Fund's total assets (taken at market value at
the time of entering into the contract) would be committed to options, whether
options on individual securities or options on stock indices.
There are several risks in connection with the Portfolios' use of stock index
options as a hedging device. One risk arises because of the imperfect
correlation between movements in the prices of the stock index options and
movements in the prices of securities held by the Portfolios. Successful use of
stock index options by the Portfolios for hedging purposes is also subject to
the Fund's adviser's ability to correctly predict movements in the direction of
the market. In addition, due to market distortions, the price movements of the
stock index options might not correlate perfectly with price movements in the
underlying stock index. Increased participation by speculators in the options
market might also cause temporary price distortions.
The ability to establish and close out positions on options will be subject to
the liquidity of the index options market. Absence of a liquid market on an
exchange may be due to: (i) insufficient trading interest in certain options;
(ii) restrictions imposed by an exchange on opening transactions or closing
transactions, or both; (iii) trading halts, suspensions or other restrictions
imposed with respect to particular classes or series of options, or underlying
securities; (iv) unusual or unforeseen circumstances, such as severe stock
market fluctuations, interrupting normal exchange operations; (v) inadequacy of
an exchange's or a clearing corporation's facilities to handle increased trading
volume; or (vi) discontinuance of the trading of options (or a particular class
or series of options) by an exchange, for economic or other reasons. Higher
than anticipated trading activity or other unforeseen events also could cause an
exchange or clearing corporation to institute special procedures which may
interfere with the timely execution of customers' orders.
4
<PAGE>
Stock index options may be closed out only on an exchange which provides a
market for such options. For example, OEX stock index options currently can be
purchased or sold only on the CBOE. Although the Portfolios intend to purchase
or sell stock index options only on exchanges where there appear to be active
markets, there is no assurance that a liquid market will exist for any
particular options contract at any particular time. In such event, it might not
be possible to close a stock index option position.
Lending of Securities
- ---------------------
The Portfolios may lend their investment securities in an amount up to 30% of
its total assets to qualified institutional investors who need to borrow
securities in order to complete certain transactions. By lending its
investments securities, a Portfolio attempts to increase its income through the
receipt of interest on the loan. Any gain or loss in the market price of the
securities loaned that might occur during the term of the loan would be for the
account of the Portfolio. A Portfolio may lend its portfolio securities to
qualified brokers, dealers, domestic and foreign banks or other financial
institutions, so long as the terms and the structure of such loans are not
inconsistent with the Investment Company Act of 1940, or the Rules and
Regulations or interpretations of the Securities and Exchange Commission (the
"Commission") thereunder, which currently require that (a) the borrower pledge
and maintain with the Portfolio collateral consisting of cash, an irrevocable
letter of credit issued by a domestic U.S. bank, or securities issued or
guaranteed by the U.S. government having a value at all times of not less than
100% of the value of the securities loaned, (b) the borrower add to such
collateral whenever the price of the securities loaned rises (i.e., the borrower
"marks to the market" on a daily basis), (c) the loan be made subject to
termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan or its collateral (which may include the
Portfolio investing any cash collateral in interest-bearing short-term
investments), any dividends and distributions paid on the loaned securities and
any increase in their market value.
Arbitrage
- ---------
The Portfolios have no current intention to engage in arbitrage (meaning the
simultaneous purchase and sale of the same security in different markets but not
on the purchase of call and put options on stock indices).
MANAGEMENT OF THE FUND
All of the Fund officers and two of its Trustees are employees and/or officers
of Oberweis Asset Management, Inc. ("OAM"), the Fund's investment adviser,
manager and shareholder service agent, and/or The Chicago Corporation ("TCC"),
the Fund's distributor.
James D. Oberweis, a Trustee and President of the Fund, is the President and a
Director of OAM, and with his wife, Elaine M. Oberweis, and his children, is the
controlling shareholder of OAM. Mr. Oberweis is also a Senior Vice President of
TCC. Peter H. Wendell, a Trustee of the Fund, is an Executive Vice President
and a Director of TCC.
The Trustees and officers of the Fund, their ages and their principal
occupations during the past five (5) years are:
THOMAS J. BURKE, Trustee (64) **
143 South Lincoln Avenue, Aurora, Illinois 60505; President - Burke Medical
Associates, 1968 to present; retired medical physician, practicing medical
physician until November 1, 1995.
DOUGLAS P. HOFFMEYER, Trustee (48) **
620 Stetson, St. Charles, Illinois 60174; Vice President-Finance - Teltrend,
Inc. (manufacturer of telecommunications equipment), October, 1986 to present.
JAMES D. OBERWEIS, Trustee and President (49) *
One Constitution Drive, Aurora, Illinois 60506; President and Director -
Oberweis Asset Management, Inc., September, 1994 to present; Senior Vice
President - The Chicago Corporation, October, 1994 to present; Senior Vice
President - Alpha Source Asset Management, Inc., February, 1990 to October,
1994; Director of Fund Investments - Hamilton Investments, Inc., December, 1988
to October, 1994; President of the Fund, 1986 to present; Chairman of the Board
of Oberweis Dairy, Inc.
EDWARD F. STREIT, Trustee (60) **
2000 West Galena, Aurora, Illinois 60506; licensed attorney in private practice,
1962 - present.
5
<PAGE>
PETER H. WENDELL, Trustee (54) *
208 South LaSalle Street, Chicago, Illinois 60604; Executive Vice President and
Director - The Chicago Corporation, January 1988 to present.
PATRICK B. JOYCE, Executive Vice President and Treasurer (36)
One Constitution Drive, Aurora, Illinois 60506; Executive Vice President,
Secretary and Director - Oberweis Asset Management, Inc., September, 1994 to
present; Administrator - The Chicago Corporation, October, 1994 to present; Vice
President - Carr Asset Management, Inc./Indosuez Carr Futures, Inc., August,
1993 to September, 1994; Vice President of Operations and Assistant Treasurer -
Selected Financial Services, Inc., September, 1989 to August, 1993.
MARTIN L. YOKOSAWA, Vice President (35)
One Constitution Drive, Aurora, Illinois 60506; Vice President - The Chicago
Corporation - October, 1994 to present; Vice President - Oberweis Asset
Management, Inc., September, 1994 to present; Registered Representative -
Hamilton Investments, Inc., November, 1988 to October, 1994.
JAMES M. ROBERTS, Vice President (35)
One Constitution Drive, Aurora, Illinois 60506; Vice President - The Chicago
Corporation, October, 1994 to present; Vice President - Oberweis Asset
Management, Inc., September, 1995 to present; Registered Representative -
Hamilton Investments, Inc., January, 1990 to October, 1994.
ANITA I. MRAZ, Secretary (29)
One Constitution Drive, Aurora, Illinois 60506; Administrative Assistant - The
Chicago Corporation, October, 1994 to present; Administrative Assistant - Alpha
Source Asset Management, Inc., April, 1991 to October, 1994; Manager - Glenn's
Steak House, January, 1990 to April, 1991.
MARY JANE MURPHY, Assistant Secretary (36)
One Constitution Drive, Aurora, Illinois 60506; Fund Administrator - Oberweis
Asset Management, Inc., October 1994 to Present; Fund Administrator - Alpha
Source Asset Management, Inc., November, 1990 to October, 1994.
__________________
* "Interested person" of the Fund as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended.
** Member of audit committee and nominating committee.
NOTE: In some cases a trustee or officer may have held different positions
during the last five years with the employer or employers listed.
The Fund pays each Trustee of the Fund who is not also affiliated with OAM
and/or TCC for such services an annual fee of $1,000, plus $500 for each day or
part of a day in attendance at a meeting of the Board of Trustees or one of its
Committees.
The Fund reimburses travel and other expenses incurred by its non-interested
Trustees for each such meeting attended. Trustees and officers of the Fund who
are affiliated with OAM and/or TCC and officers of the Fund will receive no
compensation or reimbursement from the Fund for acting in those capacities.
However, Trustees and officers of the Fund who are affiliated with OAM and/or
TCC may directly or indirectly benefit from fees or other remuneration received
from the Fund by OAM and/or TCC. Regular meetings of the Board of Trustees are
held quarterly and the audit committee usually holds two regular meetings during
each year.
The following table sets forth the compensation received by all trustees of the
Fund for the fiscal year ended December 31, 1994.
6
<PAGE>
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED
BENEFITS ANNUAL
AGGREGATE ACCRUED AS BENEFITS
COMPENSATION PART OF UPON TOTAL
TRUSTEE FROM THE FUND FUND EXPENSES RETIREMENT COMPENSATION
------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Robert A. Ebersole(1)....... $ 0 0 0 $ 0
Thomas J. Burke............. 3,500 0 0 3,500
Douglas P. Hoffmeyer........ 3,000 0 0 3,000
James D. Oberweis........... 0 0 0 0
Edward F. Streit............ 3,500 0 0 3,500
Laurence B. Siegel(1)....... 1,750 0 0 1,750
Peter H. Wendell(2)......... 0 0 0 0
</TABLE>
- ---------------------
(1) Served on the Board through September 1994.
(2) Elected to serve on the Board in January 1995.
As of November 30, 1995, the officers and Trustees of the Fund as a group owned
of record or beneficially 1.3% of the outstanding shares of the Emerging Growth
Portfolio.
OBERWEIS ASSET MANAGEMENT, INC.
The Fund's investment adviser, since October 1, 1994, is Oberweis Asset
Management, Inc. ("OAM"), an investment adviser based in Aurora, Illinois. For
additional details concerning OAM, see the Fund's Prospectus under the heading
"Management of the Portfolios." Pursuant to a written contract between the Fund
and OAM (the "Investment Advisory Agreement"), OAM is responsible for managing
the investment and reinvestment of each Portfolio's assets, determining in its
discretion the securities to be purchased or sold and the portion of the
Portfolio's assets to be held uninvested, providing the Fund with records
concerning OAM's activities which the Fund is required to maintain under
applicable law, and rendering regular reports to the Fund's Trustees and
officers concerning Portfolio responsibilities. OAM's investment advisory
services to the Fund are all subject to the control of the Trustees, and must be
in compliance with the investment objective, policies and restrictions set forth
in the Fund's Prospectus and this Statement of Additional Information and with
applicable laws and regulations. In addition, OAM is authorized to select
broker-dealers, including TCC, that may execute purchases and sales of the
securities for the Portfolios. (See "Portfolio Transactions.")
The investment adviser is obligated to pay the salaries and fees of any officers
of the Fund as well as the Trustees of the Fund who are interested persons (as
defined in the Investment Company Act of 1940) of the Fund, who are employed
full time by the investment adviser to perform services for the Portfolio under
the Investment Advisory Agreement.
As compensation for its investment advisory services, the investment adviser
receives from the Emerging Growth Portfolio at the end of each month a fee at an
annual rate equal to .45% of the first $50 million of the average daily net
assets of the Portfolio and .40% of the average daily net assets of the
Portfolio in excess of $50 million, and from the Micro-Cap Portfolio at the end
of each month a fee at the annual rate of .60% of the average daily net assets
of the Portfolio.
For the year ended December 31, 1994, the advisory fees incurred by the Emerging
Growth Portfolio and payable to Alpha Source were $297,924 for the period
January 1, 1994 through September 30, 1994, and advisory fees incurred and
payable to OAM were $96,759 for the period October 1, 1994 through December 31,
1994. For the year ended December 31, 1993, the advisory fees incurred by the
Emerging Growth Portfolio and paid to Alpha Source were $381,178. However,
pursuant to the expense limitation provisions of the Investment Advisory
Agreement, Alpha Source was required to rebate $10,228 to the Portfolio. (See
also "Expenses Borne by the Fund.") For the year ended December 31, 1992, the
advisory fees incurred by the Emerging Growth Portfolio and payable to Hamilton
Investments (the Fund's investment adviser through April 30, 1992) were $44,113
and those payable to Alpha Source were $115,208. Pursuant to the expense
limitations of the Investment Advisory Agreement, Hamilton Investments and Alpha
Source were required to rebate $96,497 and $50,661, respectively, to the
Emerging Growth Portfolio.
OAM also provides the Fund with non-investment advisory, management and
administrative services pursuant to a written contract (the "Management
Agreement"). OAM is responsible under the Management Agreement for providing
the Fund with those management and administrative services which are reasonably
necessary for conducting the business affairs of the Fund, with the exception of
investment advisory services, and distribution of each Portfolio's shares and
shareholder services, which are subject to
7
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the Fund's Rule 12b-1 Plan. (See "Rule 12b-1 Plan and Related Distribution and
Shareholder Service Agreements.") In addition, OAM provides the Fund with
office space and basic facilities for management of the Fund's affairs, and
bookkeeping, accounting, record keeping and data processing facilities and
services. OAM is responsible for preparing and updating the Fund's SEC and
state registration statement and filings, tax reports to shareholders and
similar documents. OAM pays the compensation of all officers and personnel of
the Fund for their services to the Fund as well as the Trustees of the Fund who
are interested persons of the Fund. OAM also provides information and certain
administrative services to shareholders of each Portfolio. These services
include, among other things, transmitting redemption requests to the Fund's
Transfer Agent and transmitting the proceeds of redemption of shares of the Fund
pursuant to a shareholder's instructions when such redemption is effected
through OAM; providing telephone and written communications with respect to its
shareholders' account inquiries; assisting its shareholders in altering
privileges and ownership of their accounts; and serving as a source of
information for its existing shareholders in answering questions concerning the
Fund and their transactions with the Fund.
For its services under the Management Agreement, OAM is paid by the Portfolios
on a monthly basis an annual management fee equal to .40% of the average daily
net assets of each Portfolio. OAM will bear all expenses in connection with the
performance of its services to the Fund and each of the Portfolios under the
Management Agreement. The Fund is responsible for all other expenses. See the
Fund's Prospectus under the heading "Expenses of the Fund." However, the
Management Agreement provides that OAM is obligated to reimburse the Portfolios
for 100% of the amount by which the Portfolio's ordinary operating expenses
during any fiscal year, including the management and advisory fees, exceed
either (i) the most restrictive expense limitation applicable to the Portfolio
imposed by the securities laws or regulations thereunder of any state in which
the Portfolio's shares are qualified for sale, as such limitations may be raised
or lowered from time to time, or (ii) the following amounts expressed as a
percentage of the Portfolio's average daily net assets:
2.0% of the first $25,000,000; plus
1.8% of the next $25,000,000; plus
1.6% of average daily net assets in excess of $50,000,000.
Excluded from the calculation of ordinary operating expenses are expenses such
as interest, taxes and brokerage commissions and extraordinary items such as
litigation costs. There is no state expense limitation applicable to the
Portfolios which is currently more restrictive than that set forth above. Any
such reimbursement is computed and accrued on a daily and settled on a monthly
basis based upon the expenses and average net assets computed through the last
business day of the month. As of the end of the Fund's fiscal year, the
aggregate amounts of reimbursement, if any, by the Manager to a Portfolio in
excess of the amount necessary to limit the operating expenses on an annual
basis to said expense limitation shall be refunded to the Manager. In no event
will the Manager be required to reimburse a Portfolio in an amount exceeding its
management and investment advisory fees, except to the extent required by
applicable law. For the period January 1, 1994 through September 30, 1994, the
management fees incurred by the Emerging Growth Portfolio and paid to Hamilton
Investments were $279,225. For the periods October 1, 1994 through December 31,
1994, the management fees incurred by the Emerging Growth Portfolio and paid to
OAM were $90,458. Neither Hamilton Investments nor OAM was required to
reimburse the Emerging Growth Portfolio pursuant to the expense limitation for
the year ended December 31, 1994. (See also "Expenses Borne by the Fund.") For
the years ended December 31, 1993 and 1992, management fees incurred by the
Emerging Growth Portfolio and paid to Hamilton Investments were $356,178 and
$141,760, respectively, and pursuant to the expense limitation provisions of the
then existing management agreement, Hamilton Investments was required to rebate
to the Portfolio $10,228 and $73,579, respectively, of such amounts.
DISTRIBUTION PLAN AND AGREEMENT
As discussed in the Fund's Prospectus under the heading "Distribution of
Shares," the Fund has adopted a Plan of Distribution (the "Distribution Plan")
and a Distribution and Shareholder Service Agreement (the "Distribution
Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940
(collectively the "Plan and Agreement") under which the Fund compensates TCC in
connection with the distribution of each Portfolio's shares. Reference should
be made to the Prospectus for details not provided below. TCC will act as the
primary distributor of each Portfolio's shares and as the primary shareholder
servicing agent for each Portfolio. The Fund pays TCC a monthly distribution
and shareholder servicing fee at an annual rate of .25% of each Portfolio's
average daily net assets and may also reimburse certain out of pocket costs
incurred by TCC for the Fund.
Pursuant to the Plan and Agreement, TCC has agreed, directly or through other
firms, to advertise and promote the Fund and provide information and services to
existing and potential shareholders. These services include, among other
things, processing new shareholder account applications; converting funds into
or advancing federal funds for the purchase of shares of the Fund as well as
transmitting purchase orders to the Fund's Transfer Agent; transmitting
redemption requests to the Fund's Transfer Agent and transmitting the proceeds
of redemption of shares of the Fund pursuant to a shareholder's instructions;
providing telephone and written communications with respect to shareholder
account inquiries and serving as the primary source of information for existing
and potential shareholders in answering questions concerning the Fund and their
transactions with the Fund; and providing literature distribution, advertising
and promotion as is necessary or appropriate for providing information and
services to existing and potential shareholders.
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TCC will be reimbursed by the Fund for certain out-of-pocket costs, if any, of
providing certain services contemplated by the Distribution Agreement, which
include the costs of postage, data entry, modification and printout, stationery,
tax forms, and all other external forms or printed material that may be required
for performance by TCC of the services contemplated in the Distribution
Agreement. TCC proposes to compensate its account executives annually for
servicing and administering a shareholder's account.
The Plan and Agreement provides that TCC may appoint various broker-dealer firms
to assist in providing distribution services for the Fund, including literature
distribution, advertising and promotion, and may appoint broker-dealers and
other firms (including depository institutions such as commercial banks and
savings and loan associations) to provide administrative services for their
clients as shareholders of the Fund under related service agreements. To
provide these services, these firms will furnish, among other things, office
space and equipment, telephone facilities, and personnel as is necessary or
beneficial for providing information and services related to the distribution of
the Portfolios' shares to TCC in servicing accounts of such firms' clients who
own shares of the Fund.
The Glass-Steagall Act generally prohibits federally chartered or supervised
banks from engaging in the business of underwriting, selling, or distributing
securities. Although the scope of this prohibition under the Glass-Steagall Act
has not been fully defined, in TCC's opinion it should not prohibit banks from
being paid for shareholder servicing and record-keeping. If, because of changes
in law or regulation, or because of new interpretations of existing law, a bank
or a fund were prevented from continuing these arrangements, it is expected that
other arrangements would be made for these services and that shareholders would
not suffer adverse financial consequences. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to register
as dealers pursuant to state law.
The Plan provides that the Fund's asset-based sales charges (as defined in the
NASD's Rules of Fair Practice) shall not exceed those permitted by Article III,
Section 26 of the NASD's Rules of Fair Practice. Further, as permitted by the
NASD's Rules, the Emerging Growth Portfolio has elected to calculate its
permissible amount of asset-based sales charges on new gross sales of the
Portfolio since the Portfolio's inception.
The Board of Trustees has determined that, in its judgment, there is a
reasonable likelihood that the Plan and Agreement will benefit the Portfolios
and their shareholders. If the sizes of the Portfolios are increased rapidly,
fixed expenses will be reduced as a percentage of each shareholder's investment.
The 12b-1 expenses will also provide TCC and others an incentive to promote the
Portfolios and to offer individual shareholders prompt and efficient services.
As required by Rule 12b-1, the Plan, as amended, and Agreement was approved by
the Board of Trustees, including a majority of Trustees who are not interested
persons, as defined in the Investment Company Act of 1940, of the Fund, who are
not parties to the Distribution Agreement or Shareholder Service Agreement and
who have no direct or indirect financial interest in the operation of the Plan.
Unless terminated earlier as described below, the Plan and Agreement will
continue in effect from year to year if approved annually by the Board of
Trustees of the Fund, including a majority of the Trustees who are not parties
to the Plan and Agreement (or have a direct or indirect financial interest in
the operation thereof) and who are not interested persons of the Fund. The Plan
may be terminated with respect to the Fund or a Portfolio at any time by (1) a
vote of a majority of the Trustees who are not interested persons of the Fund,
who are not parties to the Distribution Agreement and who have no direct or
indirect financial interest therein, or (2) by the vote of a majority of
shareholders of that Portfolio. The Distribution Agreement may be terminated
similarly without penalty upon 60 days written notice by either party and will
automatically terminate if assigned, as defined in the 1940 Act.
For the period January 1, 1994 through September 30, 1994 (the day the Fund
ceased 12b-1 payments to Hamilton Investments), total 12b-1 fees paid by the
Emerging Growth Portfolio to Hamilton Investments were $349,031. For the period
October 1, 1994 through December 31, 1994, total 12b-1 fees paid by the
Portfolio to TCC and OAM were $78,609 and $34,464, respectively. During that
time period, TCC was appointed by the Fund to act as the principal distributor
of the Emerging Growth Portfolio's shares pursuant to a Distribution Agreement
dated October 1, 1994 between the Fund and TCC and OAM was appointed by the Fund
to act as the Emerging Growth Portfolio's primary shareholder service agent
pursuant to a Shareholder Service Agreement dated October 1, 1994 between the
Fund and OAM. During that period, the Fund was authorized to pay an annual fee
not to exceed .50% the Emerging Growth Portfolio's average daily net assets for
distribution and shareholder services provided to the Portfolio and from the
total 12b-1 fees, TCC was paid fees for distribution services at an annual rate
of .35% of the Portfolio's average daily net assets and OAM was paid fees for
shareholder services at an annual rate of .15% of the Portfolio's average daily
net assets.
For the 12 month period ended December 31, 1994, the Emerging Growth Portfolio
paid the following amounts under the Rule 12b-1 Plan in the approximate amounts
noted: $27,120 in sales promotion and literature expenses, $247,389 in service
fees paid to brokers, $90,476 in salary expenses and employment services,
$12,132 in telephone expenses, $41,280 in professional fees, and $529 in
miscellaneous operating expenses. There was no reimbursement of out-of-pocket
expenses for such period.
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EXPENSES BORNE BY THE PORTFOLIOS
Other than those expenses payable by OAM and/or TCC, the Portfolios will pay all
of their expenses, including the following:
(a) Federal, state and local or other governmental agency taxes or
fees levied against the Fund.
(b) Costs, including the interest expense, of borrowing money.
(c) Brokerage fees and commissions and other transaction costs in
connection with the purchase or sale of portfolio securities for the Portfolios.
(d) Fees and expenses of the Trustees other than those who are
"interested persons" (as defined in the Investment Company Act of 1940) of the
Fund.
(e) Expenses incident to holding meetings of the Fund's Shareholders,
including proxy solicitations of the Fund or its Board of Trustees therefor, and
meetings of the Board of Trustees and committees of the Board of Trustees.
(f) Fees and expenses in connection with legal services rendered to
the Fund, the Board of Trustees of the Fund and duly appointed committees of the
Board of Trustees of the Fund, including fees and expenses of special counsel to
those Trustees who are not interested persons of the Fund, and litigation.
(g) Audit and accounting expenses of the
independent auditors.
(h) Custodian and transfer and dividend paying agent fees and expenses
and shareholder service expenses.
(i) Fees and expenses related to registering, qualifying and
maintaining registration and qualification of the Fund and its Shares for
distribution under federal, state and other laws.
(j) Fees and expenses incident to the preparation and filing of
reports with regulatory agencies.
(k) Expenses of preparing, printing (including typesetting) and
mailing prospectuses, shareholder reports, proxy materials and notices to
shareholders of the Fund.
(l) Premiums for trustee's and officer's liability insurance and
insurance carried by the Fund pursuant to the requirements of Section 17(g) of
the Investment Company Act of 1940, or otherwise required by law or deemed
desirable by the Board of Trustees.
(m) Fees and expenses incurred in connection with any investment
company organization or trade association of which the Fund may be a member.
(n) Costs and expenses incurred for promotion or advertising of the
Fund's Shares, but only pursuant to a Plan duly adopted in accordance with Rule
12b-1 under the Investment Company Act of 1940 and to the extent that such Plan
may from time to time provide.
(o) Expenses related to issuance or redemption of the Portfolios'
shares.
For the fiscal year ended December 31, 1994, total expenses incurred by the
Emerging Growth Portfolio were $1,647,254 and the ratio of such total expenses
to the Portfolio's average net asset value was 1.78%.
PORTFOLIO TRANSACTIONS
Effective October 1, 1994, decisions with respect to the purchase and sale of
portfolio securities on behalf of the Fund's Portfolios are made by OAM. Prior
to October 1, 1994, decisions with respect to the purchase and sale of portfolio
securities on behalf of the Emerging Growth Portfolio were made by Alpha Source.
Actual portfolio turnover may vary considerably from year to year. However, in
order to qualify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code, less than 30% of the Fund's gross income may be derived
from the sale or other disposition of stock or securities held for less than
three months.
OAM is authorized to place orders for securities with various broker-dealers,
including TCC, subject to the requirements of applicable laws and regulations.
OAM may place a significant portion of the Portfolios' agency orders with TCC,
as it believes by so doing a Portfolio is able to achieve more control over and
better execution of its orders. Orders for securities transactions are placed
by OAM with a view to obtaining the best combination of price and execution
available. In seeking to achieve the best combination of
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price and execution, OAM attempts to evaluate the overall quality and
reliability of the broker-dealers and the services provided, including research
services, general execution capability, reliability and integrity, willingness
to take positions in securities, general operational capabilities and financial
condition. However, the responsibility of OAM to attempt to obtain the best
combination of price and execution does not obligate it to solicit a competitive
bid for each transaction. Furthermore, under the Advisory Agreement, OAM is not
obligated to seek the lowest available cost to the Portfolio, so long as it
determines in good faith that the broker-dealer's commission, spread or discount
is reasonable in relation to the value of the execution and research services
provided by such a broker-dealer to the Portfolio, or OAM when viewed in terms
of that particular transaction or its overall responsibilities with respect to
all of its clients, including the Portfolio, as to which it offers advice or
exercises investment discretion.
OAM, with the prior consent of the Fund's Trustees, may place orders with
affiliated persons of OAM, TCC or the Fund subject to (i) the provisions of
Sections 10(f) and 17(e)(2) of the Investment Company Act of 1940 and Rules 10f-
3 and 17e-1 thereunder, Rule 206(3)-2 under the Investment Advisers Act of 1940,
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)(a)(2)
thereunder and any other applicable laws or regulations, and (ii) procedures
properly adopted by the Fund with respect thereto. The Fund has been advised by
OAM that it may place a significant portion of the Portfolios' orders for
securities with TCC, but only when it believes that the combination of price and
execution are comparable to that of other broker-dealers. OAM, with the prior
consent of the Fund's Trustees, may engage in agency cross transactions subject
to (i) the provisions of Section 17(a) of the Investment Company Act of 1940 and
Rule 17a-7 thereunder and other applicable laws or regulations, (ii) the
provisions of Section 206 of the Investment Advisers Act of 1940 and Rule
206(3)-2 thereunder, and (iii) procedures properly adopted by the Fund with
respect thereto.
OAM has agreed to furnish certain information quarterly to the Fund's Trustees
to enable them to evaluate the quality of execution and cost of all orders
executed by TCC. The Fund requires that OAM, as investment adviser, record and
furnish to the Fund quarterly the following information:
(A) Exchange Transactions
A listing showing for each transaction executed by TCC for the
Portfolios during the month, in time sequence, the date of the transaction, the
price, the commission, the exchange where executed, the security and the number
of shares.
(B) Over-the-Counter Transactions
A listing showing for each transaction executed by TCC for the
Portfolios during the month, in time sequence, the date of execution, the price,
the best bid and ask at the time, the commission for the transaction, the
security and the number of shares.
(C) Transactions Through Other Brokers
A list of all transactions during each quarter through other brokers,
showing the price and commission for the transaction, and a summary of
commission charges by all other brokers executing transactions for the
Portfolios.
A greater discount, spread or commission may be paid to non-affiliated broker-
dealers that provide research services, which research may be used by OAM in
managing assets of its clients, including the Portfolios. Research services may
include data or recommendations concerning particular securities as well as a
wide variety of information concerning companies, industries, investment
strategy and general economic, financial and political analysis and forecasting.
In some instances, OAM may receive research, statistical and/or pricing services
it might otherwise have had to perform itself. However, OAM cannot readily
determine the extent to which net prices or commission rates charged by most
broker-dealers reflect the value of its research, statistical and/or pricing
services. As OAM is the principal source of information and advice to the Fund
and is responsible for managing the investment and reinvestment of the
Portfolios' assets and determining the securities to be purchased and sold, it
is believed by the Fund's management to be in the interests of the Fund for OAM,
in fulfilling its responsibilities to the Fund, to be authorized to receive and
evaluate the research and information provided by other securities brokers or
dealers, and to compensate such brokers or dealers for their research and
information services. Any such information received may be utilized by OAM for
the benefit of its other accounts as well, in the same manner that the Fund
might also benefit from information obtained by OAM in performing services for
its other accounts. Although it is believed that research services received
directly or indirectly benefit all of OAM's accounts, the degree of benefit
varies by account and is not directly related to the commissions or other
remuneration paid by such account.
Transactions of the Portfolios in the over-the-counter market and the third
market may be executed for the Portfolios by TCC as agent with primary market
makers acting as principal, except where OAM believes that better prices or
execution may be obtained otherwise. Transactions with primary market makers
reflect the spread between the bid and the ask prices. Occasionally, the
Portfolios may make purchases of underwritten issues at prices which include
underwriting discount fees.
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OAM may place orders with broker-dealers other than TCC that sell shares of the
Fund, provided the price and execution are reasonably believed to be comparable
with other nonaffiliated broker dealers.
OAM and the Fund's Board of Trustees review quarterly the Portfolios' brokerage
transactions for execution and services furnished. Such quarterly review may
from time to time result in changes of brokers being utilized to execute
transactions because of services furnished or to be furnished to OAM or the
Fund.
For the period January 1, 1994 through September 30, 1994, the total brokerage
commissions paid by the Emerging Growth Portfolio was $79,554, of which 35%, or
$27,659, was paid to Hamilton Investments. The total amount of securities
transactions on which the Portfolio paid brokerage commission during such period
was $27,827,404. Thirty-six percent (36%), or $10,032,294, of the securities
transactions on which the Portfolio paid brokerage commissions were effected
through Hamilton Investments. For the period October 1, 1994 through December
31, 1994, the total brokerage commissions paid by the Emerging Growth Portfolio
was $17,248, of which 49%, or $8,463, was paid to TCC. The total amount of
securities transactions on which the Portfolio paid brokerage commissions during
such period was $10,765,934. Forty-four percent (44%), or $4,718,944, of the
securities transactions on which the Portfolio paid brokerage commissions were
effected through TCC. The total amount of principal transactions of the
Portfolio for the year ended December 31, 1994, for which no commission was
incurred, was $95,896,610.
For the years ended December 31, 1993 and 1992, the total brokerage commissions
paid by the Emerging Growth Portfolio were $153,239 and $127,450, respectively,
of which $130,033 and $120,370, respectively, was paid to Hamilton Investments.
The total amount of securities transactions on which the Portfolio paid
brokerage commissions during such periods was $65,833,808 and $34,900,116,
respectively. The total amount of principal transactions of the Portfolio for
such period, for which no commission was incurred, was $99,743,039 and
36,146,491, respectively.
SHAREHOLDER VOTING RIGHTS
Reference should be made to the Prospectus under the heading "General
Information" for a description of certain shareholder rights and information
concerning the shares of the Portfolios. As a general rule, the Fund is not
required to and will not hold annual or other meetings of the shareholders.
Special meetings of shareholders for actions requiring a shareholder vote may be
requested in writing by holders of at least twenty-five percent (25%) (or ten
percent (10%) if the purpose of the meeting is to determine if a Trustee is to
be removed from office) of the outstanding shares of the Fund or as may be
required by applicable law. Under the Declaration of Trust, shareholders are
entitled to vote in connection with following matters: (1) for the election or
removal of Trustees if a meeting is called for such purpose; (2) with respect to
the adoption of any contract for which approval is required by the Investment
Company Act of 1940; (3) with respect to any termination or reorganization of
the Portfolios to the extent and as provided in the Declaration of the Trust;
(4) with respect to any amendment of the Declaration of Trust (other than
amendments changing the name of the Fund or the Portfolios, supplying any
omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision thereof); (5) as to whether or not a court
action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Fund or the shareholders, to
the same extent as the stockholders of a Massachusetts business corporation; and
(6) with respect to such additional matters relating to the Fund as may be
required by law, the Declaration of Trust, the By-Laws of the Fund, or any
registration of the Fund with the Securities and Exchange Commission or any
state, or as the Trustees may consider necessary or desirable. The Declaration
of Trust specifically authorizes the Board of Trustees to terminate the Fund (or
any portfolio of the Fund) without shareholder approval by notice to the
shareholders. Each Trustee serves until the next meeting of shareholders, if
any, called for the purpose of electing Trustees and until the election and
qualification of his successor or until such Trustee sooner dies, resigns,
retires or is removed by the majority vote of the shareholders or by the
Trustees.
REDEMPTION OF SHARES
Reference should be made to the Fund's Prospectus under the heading "How to
Redeem Shares" for other information concerning redemption of the shares of a
Portfolio. The Fund may suspend the right to redeem shares or postpone the date
of payment for more than seven (7) days for any period during which: (a) the New
York Stock Exchange is closed, other than weekend and holiday closings, or the
Securities and Exchange Commission determines that trading on the New York Stock
Exchange is restricted; (b) the Securities and Exchange Commission determines
there is an emergency as a result of which it is not reasonably practical for a
Portfolio to sell the investment securities or to calculate their Net Asset
Value; or (c) the Securities and Exchange Commission permits such suspension for
the protection of Portfolio's shareholders. In the case of a suspension of the
right of redemption, a shareholder may either withdraw his request for
redemption or receive payment at the Net Asset Value of his shares existing
after termination of the suspension.
Although it is the Fund's present policy to make payment of redemption proceeds
in cash, if the Fund's Trustees determine it to be appropriate, redemption
proceeds may be paid in whole or in part by a distribution in kind of securities
held by the Portfolios, subject to the limitation that, pursuant to an election
under Rule 18f-1 under the Investment Company Act of 1940, each Portfolio is
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of
the net asset value of a Portfolio during any 90-day period for
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<PAGE>
any one account. The value of such securities shall be determined as of the
close of trading of the New York Stock Exchange on the business day on which the
redemption is effective. In such circumstances, a shareholder might be required
to bear transaction costs to dispose of such securities.
SHAREHOLDER SERVICES
The Fund's Prospectus under the headings "How to Purchase Shares," "How to
Redeem Shares" and "Shareholder Services" describes information in addition to
that set forth below. When a shareholder makes an initial investment in a
Portfolio, a shareholder account is opened in accordance with the Fund's Account
Application instructions. After each transaction for the account of a
shareholder, confirmation of all deposits, purchases, reinvestments,
redemptions, withdrawal payments, and other transactions in the shareholder's
account will be forwarded to the shareholder.
A Portfolio will generally not issue certificates for its shares, except that
certificates for full amounts will be issued upon a shareholder's written
request to the Transfer Agent. The investor will be the record owner of all
shares in his account with full shareholder rights, irrespective of whether
share certificates are issued. Certain of the functions performed by the Fund
in connection with the operation of the accounts described above have been
delegated by the Fund to its Transfer Agent.
In addition to the purchase and redemption services described above, the Fund
offers its shareholders the special accounts and services described in the
Fund's Prospectus. Applications and information about any shareholder services
may be obtained from OAM.
DETERMINATION OF NET ASSET VALUE
See the Fund's Prospectus under the headings "How to Purchase Shares" and "Net
Asset Value," for descriptions of certain details concerning the determination
of Net Asset Value. The Net Asset Value of the shares of the Portfolios are
computed once daily, as of the later of the close of the New York Stock Exchange
or the Chicago Board Options Exchange, on each day the New York Stock Exchange
is open for trading (except the Net Asset Value for the Micro-Cap Portfolio was
computed on January 1, 1996, the New Year's Day Holiday, which was the first day
shares of the Portfolio were offered to the public). All securities in the
Portfolios other than options are priced as of the close of trading on the New
York Stock Exchange. The options in the Portfolios are priced as of the close
of trading on the Chicago Board Options Exchange. The Net Asset Value per share
is computed by dividing the value of the Portfolio's securities plus all other
assets minus all liabilities by the total number of Portfolio shares
outstanding. In valuing the Portfolio's securities, each listed and unlisted
security for which last sale information is regularly reported is valued at the
last reported sale price prior to the close of the New York Stock Exchange,
except for options which are based on the close of the Chicago Board Options
Exchange. If there has been no sale on such day, the last reported bid price is
used. Any unlisted security for which last sale information is not regularly
reported and any listed debt security which has an inactive listed market for
which over-the-counter market quotations are readily available is valued at the
highest bid price as of the close of the New York Stock Exchange determined on
the basis of reasonable inquiry. Restricted securities and any other securities
or other assets for which market quotations are not readily available are valued
by appraisal at their fair values as determined in good faith under procedures
established by and under the general supervision and responsibility of the Board
of Trustees. Short-term debt obligations, commercial paper and repurchase
agreements are valued on the basis of quoted yields for securities of comparable
maturity, quality and type or on the basis of amortized cost.
TAXES
As stated in the Fund's Prospectus under the heading "Dividends, Distributions
and Tax Status" each of the Portfolios has elected to qualify under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"), so that the
Portfolio will not be liable for Federal income taxes to the extent that its net
investment income and net realized capital gains are currently distributed to
its shareholders. Each of the Portfolios will qualify for this status as long
as it: (a) derives at least 90% of its gross income from dividends, interest,
gains from the sale or other distribution of securities or foreign currencies,
and certain other investment income including gain from options, futures or
forward contracts; (b) derives less than 30% of its gross income from the sale
or other disposition of securities it has held for less than three months; (c)
invests in securities that satisfy certain diversification requirements; and (d)
distributes at least 90% of its net investment income and net short-term capital
gains to its shareholders each year. A Portfolio may be limited in its options
transactions in order to comply with these rules.
Except for those shareholders exempt from Federal income taxes, dividends and
capital gains distributions are taxable to shareholders for purposes of the
Federal income tax, whether paid in cash or reinvested in additional shares of
the Portfolio. Dividends from net investment income are taxable to non-exempt
shareholders as ordinary income for Federal income tax purposes. For corporate
shareholders, such income dividends may be eligible for the deduction for
dividends received from domestic corporations. Distribution of long-term
capital gains are taxable to non-exempt shareholders as long-term capital gains
regardless of the length of time that such shareholders have owned shares in a
Portfolio. Short-term capital gain distributions are taxable to non-exempt
shareholders as ordinary income. Losses incurred by such shareholders on the
redemption of shares of a Portfolio held six months or less will be treated as
long-term capital losses to the extent of any capital gains distributions made
by the Portfolio with respect
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to such shares. Shareholders will be notified annually as to the Federal income
tax status of dividends and capital gains distributions. Such dividends and
distributions may also be subject to state and local taxes.
Income dividends are taxed as ordinary income at rates up to a maximum of 39.6%
for individuals. Long-term capital gain distributions are taxable at a maximum
rate of 28% for individual shareholders and at the same rate as ordinary income
for corporate shareholders.
In order to avoid an excise tax on undistributed amounts, each Portfolio must
declare, by the end of the calendar year, a dividend to shareholders of record
that represents 98% of its net investment income for the calendar year plus 98%
of its capital gain net income for the period from November 1 of the previous
year through October 31 of the current year plus any undistributed net
investment income from the prior calendar year, plus any undistributed capital
gain net income for the one-year period ended October 31 of the prior calendar
year, less any overdistribution in the prior calendar year. Each Portfolio
intends to declare or distribute dividends during the appropriate periods in an
amount sufficient to avoid the 4% excise tax.
Federal law requires the Fund to withhold 31% from dividends and/or redemption
proceeds (including from exchanges) that occur in certain shareholder accounts
if the shareholder has not properly furnished a certified correct Taxpayer
Identification Number (in the case of individuals, a social security number) or
has not certified that withholding does not apply. Amounts withheld are applied
to the shareholder's Federal income tax liability and a refund may be obtained
from the Internal Revenue Service if withholding results in overpayment of
taxes. Federal law also requires the Fund to withhold the applicable tax treaty
rate from dividends that are paid to certain nonresident alien, foreign
partnership and foreign corporation shareholder accounts.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury Regulations in effect on the date of the Fund's
Prospectus and this Statement of Additional Information, which provisions are
subject to change by legislative or administrative action. Investors are
advised to consult their own tax advisers regarding the tax consequences of an
investment in the Portfolios. Shareholders are likewise advised to consult
their own tax advisers regarding specific questions as to state or local taxes.
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
Average annual total return measures both the net investment income generated
by, and the effect of any realized and unrealized appreciation or depreciation
of, the underlying investments of a Portfolio. A Portfolio's average annual
total return quotation is computed in accordance with a standardized method
prescribed by the rules of the Securities and Exchange Commission. The Emerging
Growth Portfolio's average annual total return figures for the one-year and
five-year periods ended June 30, 1995 were 48.0% and 17.8 %, respectively, and
for the period from the commencement of operations on January 7, 1987 through
June 30, 1995 was 15.6%, as calculated in accordance with the following formula
pursuant to applicable regulations of the Securities and Exchange Commission:
P(1+T)/n/ = ERV
Where P = a hypothetical initial payment of $1,000
T = average annual total return
n = time period the Fund's registration statement has been
in effect expressed in years or portion thereof
ERV = the ending redeemable value of a hypothetical $1,000
payment made at January 7, 1987 (the date the Fund
commenced operations)
A sales load of 4% was charged until December 31, 1991 which is not reflected in
these total return numbers.
ADDITIONAL INFORMATION
Custodian and Transfer Agent
- ----------------------------
The Custodian for the Fund is Investors Fiduciary Trust Company, P.O. Box
419042, Kansas City, Missouri 64141, a national bank organized under the laws of
the United States. The Fund has authorized the Custodian to deposit certain
securities of the Portfolios in central depository systems as permitted by
federal law. The Portfolios may invest in obligations of the Custodian and may
purchase or sell securities from or to the Custodian. The Custodian is also the
Fund's Transfer Agent and acts as dividend disbursing agent.
14
<PAGE>
Independent Auditors and Reports to Shareholders
- ------------------------------------------------
The Fund's Independent Auditors audit and report on the Fund's annual financial
statements, review certain regulatory reports and prepare the Fund's federal
income tax return, and perform other professional accounting, auditing and
advisory services when engaged to do so by the Fund. Beginning with the 1994
fiscal year, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
serves as the Fund's independent auditors. For the 1993 fiscal year and prior
years, Checkers, Simon & Rosner LLP, One South Wacker Drive, Chicago, Illinois
60606, served as the Fund's independent auditors.
Shareholders will receive annual audited financial statements and semi-annual
unaudited financial statements.
Counsel
- -------
Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street, Chicago, Illinois
60601, is legal counsel to the Fund.
Other Information
- -----------------
The Fund's Prospectus and this Statement of Additional Information omit certain
information contained in the Registration Statement, which the Fund has filed
with the Securities and Exchange Commission under the Securities Act of 1933,
and reference is hereby made to the Registration Statement for further
information with respect to the Fund and the securities offered hereby. This
Registration Statement is available for inspection by the public at the
Securities and Exchange Commission in Washington, D.C.
15
<PAGE>
OBERWEIS MICRO-CAP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 2, 1995
ASSETS: Cash $100,000
Deferred organizational costs 55,000
--------
$155,000
LIABILITIES: Organizational costs accrued 55,000
--------
NET ASSETS $100,000
========
Shares outstanding (unlimited number of
shares authorized, no par value) 10,000
========
Net asset value, offering price and
redemption price per share $ 10.00
========
NOTES:
===========
1. Organization. The Oberweis Funds (the "Fund") offers two portfolios,
currently consisting of the Oberweis Emerging Growth and Oberweis Micro-Cap
Portfolios. The Fund is registered under the Investment Company Act of 1940 as a
diversified open-end management investment company. The Fund is authorized to
operate numerous portfolios under various trading strategies. The Fund commenced
operations of the Oberweis Emerging Growth Portfolio on January 7, 1987. The
Oberweis Micro-Cap Portfolio has had no operations, other than those relating to
organizational matters, including the sale and issuance of 10,000 shares to
Oberweis Asset Management, Inc. ("OAM") on October 2, 1995 for $100,000.
2. Organization Costs. Costs incurred by the Oberweis Micro-Cap Portfolio
in connection with their organization, registration and the initial public
offering of shares have been deferred and will be amortized on a straight-line
basis over a period of five years from the date upon which the Portfolio
commences their investment activities. If any of the original shares of the
Portfolio are redeemed by any holder prior to the end of the amortization
period, the redemption proceeds will be reduced by the pro rata share of the
unamortized organization costs as of the date of redemption.
OAM has advanced all of the organizational costs of the Oberweis Micro-Cap
Portfolio. The Portfolio will reimburse OAM for those costs upon the
commencement of operations.
<PAGE>
3. The Advisory, Management, and Distribution Agreements. The Fund has
agreements with OAM to provide investment advisory and management services for
each Portfolio. Under the terms of these agreements, the Micro-Cap Portfolio
will pay OAM .60% and .40% of the average daily net assets for investment
advisory and management services, respectively. The Fund also has a rule 12b-1
Plan and a Distribution and Shareholder Service Agreement (collectively, the
"Plan and Agreement") with The Chicago Corporation ("TCC"). Under the Plan and
Agreement, the Fund is to pay TCC a monthly fee at an annual rate of .25% of
each Portfolio's average daily net assets for distribution and shareholder
services and will reimburse TCC for certain out-of-pocket expenses.
4. Federal Income Taxes. The Micro-Cap Portfolio intends to comply with the
requirements of the Internal Revenue Code necessary to qualify as a regulated
investment company and to make the requisite distributions of the income to its
shareholders which will be sufficient to relieve it from all or substantially
all Federal income taxes.
<PAGE>
PRESIDENT'S LETTER FEBRUARY 9, 1995
Dear Emerging Growth Fund Shareholder:
For the first time in the history of your fund I must report to you that we
experienced a loss for a full calendar year. Even in 1990, a year during which
the NASDAQ Composite and Russell 2000 indices were each down by double digit
amounts, we were able to achieve a small positive return. Unfortunately, in
1994 fund shares declined by 3.5%, similar to the 3.2% decline in the NASDAQ
Composite and the 1.7% decline in the Russell 2000 index. At the beginning of
last year, price/earnings ratios were quite high by historical standards. The
entire year seemed to be a battle to lower those P.E. ratios through higher
earnings before they would be reduced by a significant stock market decline.
The battle ended in a draw. Higher earnings did reduce P.E. ratios, but not
fast enough to allow stocks to gain ground.
The outlook for this year appears more favorable since P.E.s are significantly
lower than a year ago and earnings continue to expand. However, since interest
rates are considerably higher than last year, fixed income investments offer
more attractive alternatives than they did a year ago. Thus investors have much
more attractive alternatives than they did a year ago. Unless interest rates
rise another 200 basis points this year, I believe that the opportunities for
stock market investors are significantly better than a year ago. While no
investment strategy works perfectly every year, we believe our method of
identifying some of the fastest growing companies in the world, selling at
reasonable prices in relation to their growth rates and prospects, will produce
above average investment results over longer periods of time. As you can see
from the graph on the next page, this has generally been true over the eight-
year life of the fund. A $10,000 investment in the fund at its January 7, 1987
inception would have grown to $27,157 at the end of last year, assuming
reinvestment of capital gains distributions and no tax liability, for a 13.3%
average annual return. Our latest five-year average annual return is an even
higher 17.7%.
We believe that the long term growth prospects for the type of stocks owned by
the fund are excellent. We expect average gains in the S&P 500 this year, and
we hope that emerging growth stocks will do even better. In my opinion, small
company stocks, especially emerging growth companies, represent better value
today than large company shares. Any significant reduction in capital gains
taxes should benefit growth stocks more than larger, dividend paying company
shares.
Finally, I would like to thank all of you for investing in our fund. Share
prices can be quite volatile on a day-to-day basis but over the long run,
accepting that volatility should produce reasonable rewards. I would like to
remind you that that very volatility makes this fund a good candidate for
periodic additional investments (dollar-cost averaging), which is a recommended
strategy for long term investors. I realize it's hard to invest more in a fund
after it had a loss for the year, but that may in fact be an excellent time to
do so. Fund shareholders with 2000 shares or more held at our custodian bank
should be receiving complimentary copies of The Oberweis Report, our monthly
investment advisory letter.
If you have any questions about your account, please call shareholder services
at 1-800-245-7311 during normal business hours. If you have any questions about
the fund's portfolio or investment policy, please feel free to call me or
either of our assistant portfolio managers, Martin Yokosawa and Chip Roberts,
at 1-800-323-6166. We're usually in the office from 7:30 A.M. until 6:00 P.M.
central time during the week, and from 9:00 until noon on Saturday. We would
like to hear from you!
Sincerely,
Jim Oberweis
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
The Oberweis Emerging Growth Fund is positioned to take advantage of the long-
term price appreciation that occurs when the market places an appropriately
high value on the fastest-growing companies. The market for such companies (and
most other investments) was not particularly strong in 1994, causing the fund
to have a return similar to the NASDAQ Composite and the Russell 2000 indices.
(The before-cost return of the Fund was -1.7%, the same as the Russell 2000,
and somewhat better than the 3.2% decline in the NASDAQ Composite; after
deducting costs, the Fund lost 3.5%.) The steep rise in interest rates in 1994
tended to cause investors to lower the price they were willing to pay for each
$1 of corporate earnings. At the same time, total corporate earnings were
rising rapidly, helping to hold stock prices up. The relatively weak
performance of the stocks of fast-growing companies in 1994 enabled the Fund to
accumulate such stocks at reasonable prices, laying the groundwork for higher
returns in the future. The Fund's performance was helped by a continuing
reduction in expenses. In 1994, the Fund's expense ratio declined to 1.78% from
1.80% in 1993, and from almost 2% in 1992.
The fund is not specifically committed either to investing in small companies
or to a "growth" style of investing, where stocks are purchased (regardless of
their price) based on the manager's expectation of growing earnings. Nor is the
fund subject to a "momentum" style of investing where stocks are purchased
solely because they are moving up in price. Rather, the Fund identifies and
purchases the stocks of fast-growing companies that are attractively priced.
Typically, the Fund seeks to buy companies whose revenues and earnings are
growing at a rate in excess of 30% per annum, and whose shares sell at a P.E.
not greater than one-half of the company's rate of growth. This strategy
combines the best features of growth and value investing. Historically, most of
the companies identified by this strategy are smaller than the median New York
Stock Exchange-listed company, although there are notable exceptions. A
majority of portfolio companies have generally been traded over-the-counter.
Portfolio turnover in 1994 was a moderate 66%, down slightly from 1993's 70%.
2
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
AVERAGE ANNUAL RETURNS (1)
PERIODS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
5 LIFE OF FUND
1 YEAR YEAR (1/7/87)
- --------------------------------------------------------
<S> <C> <C> <C>
Oberweis Emerging Growth Fund (3.5)% 17.7% 13.3%
S&P 500 1.3 % 8.7% 11.1%
Russell 2000 (1.7)% 10.2% 9.2%
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 1/7/87 TO 12/31/94
<TABLE>
[GRAPH APPEARS HERE]
<CAPTION>
Measurement Period
(Fiscal Year Covered) OBERWEIS S&P 500 RUSSELL 2000
- ------------------- -------- ------- ------------
<S> <C> <C> <C>
Measurement Pt- $10,000 $10,000 $10,000
1987 $ 9,094 $ 9,948 $ 8,537
1988 $ 9,612 $11,598 $10,664
1989 $12,012 $15,267 $12,395
1990 $12,062 $14,822 $ 9,977
1991 $22,573 $19,345 $14,571
1992 $25,653 $20,822 $17,254
1993 $28,147 $22,909 $20,515
1994 $27,157 $23,206 $20,166
</TABLE>
(1) Performance is historical and does not represent future results. Investment
returns and principal value vary, and you may have a gain or loss when you sell
shares. Results include the reinvestment of all dividends and capital gains
distributions. The Standard & Poor's Stock Index is an unmanaged index
generally representative of the U.S. stock market. The Russell 2000 Index is an
unmanaged index consisting of 2000 small cap securities with an average market
capitalization of approximately $255 million. A sales load of 4% was charged
until December 31, 1991 and is not reflected in the total return figures or
graph above.
3
<PAGE>
OBERWEIS EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994 (Market Value in thousands)
Equity Securities - 92.5%
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
AIRLINES--2.1%
90,000 ValuJet Airlines, [email protected] $ 1,913
APPAREL--0.5%
20,000 Kenneth Cole [email protected] 420
AUDIO/VIDEO HOME PRODUCTS--0.9%
90,000 HTP International, [email protected] 414
65,000 Curtis Mathes Holding [email protected] 142
15,000 Recoton [email protected] 281
SUBTOTAL 837
AUTO/TRUCK EQUIPMENT--1.0%
11,500 *ABS Industries, [email protected] 135
**12,000 *Breed Technologies, [email protected] 341
120,000 Williams Controls, [email protected] 420
SUBTOTAL 896
BUILDING AND BUILDING PRODUCTS--0.3%
20,000 *Slocan Forest Products, [email protected] 228
BUILDING--MOBILE HOMES & RV--2.5%
52,400 *Cavalier Homes, [email protected] 570
69,200 *Decorator Industries, [email protected] 502
105,000 *Shelter Components [email protected] 1,194
SUBTOTAL 2,266
CHEMICALS--0.4%
30,000 Methanex [email protected] 390
COMPUTER GRAPHICS--0.3%
15,000 Pinnacle Systems, [email protected] 225
COMPUTER--LOCAL NETWORKS--8.3%
10,000 Alantec [email protected] 323
105,000 Apertus Technologies, [email protected] 1,050
20,500 Ascend Communications, [email protected] 835
15,000 Chipcom [email protected] 750
175,000 Madge [email protected] 2,067
30,000 Network Peripherals, [email protected] 818
20,000 Standard Microsystems [email protected] 600
57,500 Xircom, [email protected] 1,021
SUBTOTAL 7,464
COMPUTER--MEMORY DEVICES--0.9%
26,000 Alliance Semiconductor [email protected] 813
COMPUTER--MINI/MICRO--1.2%
10,000 Compaq Computer [email protected] 395
22,000 Pyxis [email protected] 418
26,000 *Scientific Technologies, [email protected] 221
SUBTOTAL 1,034
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
COMPUTER PERIPHERALS--14.3%
40,000 Cornerstone Imaging, [email protected] $ 610
60,000 Eltron International, [email protected] 1,185
100,000 Encad, [email protected] 1,237
60,000 Microtouch Systems, [email protected] 2,700
112,000 Mylex [email protected] 1,253
75,000 PC Service Source, [email protected] 675
40,000 Proxima [email protected] 1,155
12,000 Sonic Solutions, [email protected] 189
90,000 U.S. Robotics, [email protected] 3,892
SUBTOTAL 12,896
COMPUTER SERVICES--4.4%
50,000 AmeriData Technologies, [email protected] 500
119,000(a) AmeriData Technologies, Inc.
Common Stock and [email protected] 1,190
100,000 CIBER, [email protected] 1,000
10,000 *Keane, [email protected] 238
25,000 Network Six, [email protected] 262
100,000 Quality Systems, [email protected] 325
10,000 Quick Response Services, [email protected] 126
50,000 Wave Technologies [email protected] 319
SUBTOTAL 3,960
COMPUTER SOFTWARE--5.7%
40,000 BTG, [email protected] 330
5,000 Cambridge Technology [email protected] 111
25,500 Hummingbird Communications [email protected] 520
10,000 Infosoft International, [email protected] 351
10,000 MapInfo [email protected] 257
4,000 Mercury Interactive [email protected] 53
27,000 Natural MicroSystems [email protected] 358
20,000 NetManage, [email protected] 810
21,000 Platinum Technology, [email protected] 475
15,000 Softdesk, [email protected] 291
55,000 Systemsoft [email protected] 495
60,000 VMark Software, [email protected] 1,065
SUBTOTAL 5,116
CONSUMER PRODUCTS--1.1%
39,060 Celex Group, [email protected] 713
57,000 Creative Technology [email protected] 278
SUBTOTAL 991
DRUGS--4.8%
35,000 Barr Laboratories, [email protected] 884
100,000 Future HealthCare, [email protected] 2,063
**10,000 Roberts Pharmaceuticals, [email protected] 318
41,000 Watson Pharmaceuticals, [email protected] 1,076
SUBTOTAL 4,341
</TABLE>
4
See accompanying notes to financial statements.
<PAGE>
Equity Securities - continued
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
ELECTRICAL & ELECTRONIC EQUIPMENT--0.7%
15,000 Datamarine International, [email protected] $ 176
37,500 Symetrics Industries, [email protected] 478
SUBTOTAL 654
ELECTRONICS--COMPONENTS/
SEMICONDUCTORS--5.8%
34,400 Atmel [email protected] 1,152
27,500 *Cerprobe [email protected] 151
45,000 Flextronics International [email protected] 686
10,000 Fusion Systems [email protected] 255
30,000 Integrated Device Technology, [email protected] 885
30,000 Level One Communications, [email protected] 465
20,000 Mattson Technology, [email protected] 385
15,000 Micrel Semiconductor, [email protected] 217
60,000 Micrion [email protected] 705
10,000 Quality Semiconductor, [email protected] 125
40,000 Submicron System [email protected] 198
SUBTOTAL 5,224
ELECTRONICS--PARTS DISTRIBUTOR--0.9%
150,000 All American Semiconductor, [email protected] 281
50,000 Bell Microproducts, [email protected] 537
SUBTOTAL 818
FARM MACHINERY--1.4%
22,500 *AGCO [email protected] 684
10,000 *AGCO Corp. Convertible [email protected] 595
SUBTOTAL 1,279
FINANCIAL/BUSINESS SERVICES--2.2%
20,000 Express Scripts, Inc. Class [email protected] 735
100,000 Leasing Solutions, [email protected] 688
15,000 *The Money Store, [email protected] 278
58,000 Sherwood Group, [email protected] 312
SUBTOTAL 2,013
HEALTH MAINTENANCE ORGANIZATION--4.0%
30,600 Coventry [email protected] 750
**28,000 PacifiCare Health Systems, [email protected] 1,848
40,000 Wellcare Management Group, [email protected] 980
SUBTOTAL 3,578
HOUSEHOLD APPLIANCES--0.4%
10,000 Duracraft [email protected] 319
LEISURE & RECREATION PRODUCTS--1.5%
45,000 Regal Cinemas, [email protected] 1,148
20,000 Ride Snowboard [email protected] 208
SUBTOTAL 1,356
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
MACHINERY--0.3%
8,000 *JLG Industries, [email protected] $ 292
MEDIA--RADIO/TV--2.3%
85,000 United Video Satellite Group, [email protected] 2,040
MEDICAL EQUIPMENT & SUPPLIES--2.7%
21,000 Chad Therapeutics, [email protected] 165
105,000 FluoroScan Imaging Systems, [email protected] 643
32,000 Medplus, [email protected] 248
7,000 *Omnicare, [email protected] 306
65,000 Safeskin [email protected] 926
5,000 Ventritex, [email protected] 135
SUBTOTAL 2,423
MEDICAL--HOSPITALS--0.7%
35,000 Quorum Health Group, [email protected] 665
MEDICAL--NURSING HOMES,
OUTPATIENT HOMECARE--1.3%
20,000 Lincare Holdings, [email protected] 580
40,000 *Retirement Care Associates, [email protected] 293
12,800 Sun Healthcare Group, [email protected] 323
SUBTOTAL 1,196
METAL ORES--GOLD--0.3%
20,000 *Santa Fe Pacific Gold [email protected] 260
OIL & GAS--1.1%
40,000 *International Colin Energy [email protected] 275
40,000 *Smith International, [email protected] 494
10,000 *Snyder Oil Corp. Convertible
Preferred @20.125 201
SUBTOTAL 970
PERSONNEL PLACEMENT--0.9%
5,000 Alternative Resources [email protected] 157
22,000 On Assignment, [email protected] 352
15,000 Right Management Consultants, [email protected] 304
SUBTOTAL 813
POLLUTION CONTROL--1.5%
20,000 *Peerless Manufacturing [email protected] 220
43,000 United Waste Systems, [email protected] 1,075
SUBTOTAL 1,295
RESTAURANTS--5.0%
135,000 Checkers Drive-In [email protected] 308
20,000 Landry's Seafood Restaurants, [email protected] 570
100,000 Lone Star Steakhouse & [email protected] 2,000
</TABLE>
5
See accompanying notes to financial statements.
<PAGE>
Equity Securities - continued
Convertible Debt Obligations-6.5%
<TABLE>
<CAPTION>
Face
Amount Value
<S> <C> <C>
COMPUTER MEMORY DEVICES--0.5%
$ 600,000 *Seagate Technology
6.75% due 5-01-12 @83.00 $ 498
COMPUTER PERIPHERALS--2.6%
600,000 *SCI Systems, Inc.
5.625% due 3-01-12 @96.50 579
1,500,000 *Western Digital Corp.
9.00% due 6-01-14 @120.25 1,804
SUBTOTAL 2,383
EYECARE SERVICES--0.6%
500,000 *Benson Eyecare Corp.
8.00% due 5-15-01 @101.25 506
FERTILIZERS--0.3%
300,000 *Freeport-McMoran
6.55% due 1-15-01 @90.75 272
MEDICAL EQUIPMENT & SUPPLIES--0.2%
100,000 *Omnicare, Inc.
5.75% due 10-01-03 @143.00 143
MEDICAL-NURSING HOMES--1.4%
1,500,000 *GranCare, Inc.
6.50% due 1-15-03 @84.00 1,260
POLLUTION CONTROL--0.7%
580,000(a) *Growth Environmental, Inc.
9.00% due 4-30-97 @102.767 596
RETAIL--0.2%
200,000 *Proffitts, Inc.
4.75% due 11-01-03 @75.25 151
600,000(a) *Zam's, Inc.
7.50% due 10-31-00 @6.875 41
SUBTOTAL 192
TOTAL CONVERTIBLE DEBT OBLIGATIONS
(COST: $6,141,000) 5,850
Short-Term Investments-0.9%
812,294 United Missouri Bank
4.7182% due [email protected] $ 812
TOTAL INVESTMENT--99.9%
(COST: $74,948,000) 89,911
-------
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
30,000 Outback Steakhouse, [email protected] $ 705
20,000 Papa John's International, [email protected] 575
35,000 Pollo Tropical, [email protected] 337
SUBTOTAL 4,495
RETAIL--CONSUMER ELECTRONICS--0.1%
10,000 Campo Electronics, Appliances and Computers [email protected] 108
RETAIL/WHOLESALE COMPUTERS--1.0%
7,000 Micro Warehouse, [email protected] 245
40,000 Tech Data [email protected] 680
SUBTOTAL 925
RUBBER--0.2%
40,000 American United Global, [email protected] 138
SCHOOLS--0.5%
80,000 Youth Services International, [email protected] 480
SECURITY/SAFETY EQUIPMENT--0.5%
20,000 First Alert, [email protected] 292
5,000 Safety 1st, [email protected] 146
SUBTOTAL 438
TELECOMMUNICATIONS--7.4%
20,000 Applied Digital Access, [email protected] 507
22,000 Cidco, [email protected] 638
25,000 Gilat Satellite Networks [email protected] 300
8,000 Glenayre Technologies, [email protected] 462
80,000 Incomnet, [email protected] 1,065
2,000 IPC Information Systems, [email protected] 22
20,000 Qualcomm, [email protected] 480
40,000 Spectrian [email protected] 1,125
55,000 Transaction Network Services, [email protected] 798
80,000 Wholesale Cellular USA, [email protected] 1,240
SUBTOTAL 6,637
TEXTILE PRODUCTS--0.6%
20,000 *St. John Knits, [email protected] 573
TOYS & SPORTING GOODS--0.1%
10,000 Lewis Galoob Toys, Inc. Convertible Preferred @11.375 114
TRUCKING--0.4%
25,000 Knight Transportation, [email protected] 356
TOTAL EQUITY SECURITIES
(COST: $67,995,000) 83,249
</TABLE>
6
See accompanying notes to financial statements.
<PAGE>
Covered Call Options-(0.0%)
<TABLE>
<CAPTION>
Contracts Value
<C> <S> <C>
120 Breed Technologies, Inc., January $40 $ (1)
25 PacifiCare Health Systems, Inc. February $75 (2)
100 Roberts Pharmaceutical, January $35 (7)
-------
Total Covered Call Options
(Premiums received: $53,000) (10)
OTHER ASSETS LESS LIABILITIES--0.1% 113
-------
NET ASSETS--100.0% $90,014
=======
</TABLE>
Notes to Portfolio of Investments
* Income producing security during the year ended December 31, 1994.
**The aggregate market value of stocks held in escrow at December 31, 1994
covering open covered call options written was $2,507,000.
Based on the cost of investments of $74,948,000 for federal income tax purposes
at December 31, 1994, the aggregate gross unrealized appreciation was
$23,123,000, the aggregate gross unrealized depreciation was $8,160,000, and
the net unrealized appreciation of investments was $14,963,000.
(a) The following securities are subject to legal or contractual restrictions
on sale. They were valued at cost on the dates of acquisition and at fair value
as determined by the board of trustees of the Fund as of December 31, 1994. The
aggregate value of restricted securities was $1,827,000, or 2.0% of net assets,
at year end.
AmeriData Technologies, Inc. 119,000 common stock and warrants purchased in
March, 1994 at a cost of $1,309,000.
Growth Environmental, Inc. $580,000 face amount convertible debt purchased
in May, 1994 at a cost of $580,000.
Zam's, Inc. $600,000 face amount convertible debt purchased in November,
1993 at a cost of $600,000.
7
See accompanying notes to financial statements.
<PAGE>
OBERWEIS EMERGING GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
(in thousands)
<TABLE>
<S> <C> <C>
ASSETS:
Investment securities at market value (Cost: $74,948,000) $89,911
Cash 9
Receivables:
Fund shares sold 59
Securities sold 239
Dividends and interest 114
----
Total receivables 412
Prepaid expenses 26
-------
Total Assets 90,358
LIABILITIES:
Options written, at value (Premiums received: $53,000) 10
Payables:
Fund shares repurchased $142
Securities purchased 88
Payable to adviser 72
Payable to distributor 26
----
Total Payables 328
Accrued expenses 6
-------
Total Liabilities 344
NET ASSETS $90,014
=======
ANALYSIS OF NET ASSETS:
Aggregate paid in capital $75,025
Accumulated net realized loss from investment transactions (17)
Net unrealized appreciation of investments 15,006
-------
Net assets $90,014
=======
THE PRICING OF SHARES:
Net asset value, offering and redemption price per share
($90,014,406 divided by 4,203,507 shares outstanding) $ 21.41
=======
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
OBERWEIS EMERGING GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1994
(in thousands)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $142
Interest 526
----
Total Investment Income $ 668
EXPENSES:
Distribution fees 428
Advisory fees 395
Management fees 370
Custodian fees 149
Transfer agent fees 130
Professional fees 81
Shareholder servicing fees 34
Shareholder reports 19
Insurance 14
Trustee fees 13
Registration fees 12
Other 2
----
Total Expenses 1,647
-------
NET INVESTMENT LOSS (979)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from investment transactions (783)
Net realized gain from covered call options written 766
-------
Total net realized loss (17)
Decrease in unrealized appreciation of investments (3,046)
-------
Net realized and unrealized loss on investments (3,063)
-------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(4,042)
-------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
OBERWEIS EMERGING GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------
1994 1993
-------- --------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss $ (979) $ (931)
Net realized gain (loss) from investment transactions (17) 5,623
Increase (decrease) in unrealized appreciation of
investments (3,046) 5,625
-------- --------
Net increase (decrease) in net assets resulting from
operations (4,042) 10,317
-------- --------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains on investments -- (3,381)
-------- --------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 26,882 83,936
Redemption of shares (37,150) (43,816)
Shares issued in reinvestment of distribution -- 3,205
-------- --------
Net increase (decrease) from capital share transactions (10,268) 43,325
-------- --------
Total increase (decrease) in net assets (14,310) 50,261
NET ASSETS:
Beginning of year 104,324 54,063
-------- --------
End of year $ 90,014 $104,324
======== ========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
1. SIGNIFICANT ACCOUNTING POLICIES
Description of Business. Oberweis Emerging Growth Fund (the "Fund") is
registered under the Investment Company Act of 1940 as a diversified open-end
management investment company. The Fund is authorized to operate numerous
portfolios under various trading strategies. The Fund commenced operations of
one portfolio on January 7, 1987.
Investment valuation. Investments are stated at value. Each listed and unlisted
security for which last sale information is regularly reported is valued at the
last reported sales price on that day. If there has been no sale on such day,
then such security is valued at the current day's bid price. Any unlisted
security for which last sale information is not regularly reported and any
listed debt security which has an inactive listed market for which over-the-
counter market quotations are readily available is valued at the highest
closing bid price determined on the basis of reasonable inquiry. Restricted
securities and any other securities or other assets for which market quotations
are not readily available are valued by appraisal at their fair value as
determined in good faith under procedures established by and under the general
supervision and responsibility of the Board of Trustees. Short-term debt
obligations, commercial paper and repurchase agreements are valued on the basis
of quoted yields for securities of comparable maturity, quality and type or on
the basis of amortized costs.
Fund share valuation. Fund shares are sold and redeemed on a continuous basis
at net asset value. On each day the New York Stock Exchange is open for
trading, the net asset value per share is determined as of the later of the
close of the New York Stock Exchange or the Chicago Board Options Exchange by
dividing the total value of the Fund's investments and other assets, less
liabilities, by the number of Fund shares outstanding.
Investment transactions and investment income. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date, and interest income is
recorded on the accrual basis and includes amortization of money market
instrument premium and discount. Realized gains and losses from investment
transactions are reported on an identified cost basis. Gains and losses on
premiums from expired options are recognized on date of expiration.
Change in Accounting for Distributions to Shareholders. During the year ended
December 31, 1994, the Fund adopted AICPA Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. The
statement requires that the classification of distributions to shareholders be
changed in the financial statements to better disclose the differences between
financial statement amounts and distributions determined in accordance with
income tax regulations. Accordingly, the Fund reclassified $3,408,000 of net
operating losses incurred by the Fund since 1987 and which cannot be utilized
to paid in capital.
Federal income taxes and dividends to shareholders. The Fund has complied with
the special provisions of the Internal Revenue Code available to investment
companies and therefore no federal income tax provision is required. Dividends
payable to its shareholders are recorded by the Fund on the ex-dividend date.
The accumulated net realized loss from investment transactions for federal
income tax purposes at December 31, 1994, amounting to approximately $17,000,
is available to offset future taxable gains. If not applied, the loss
carryforward expires during the year in 2002.
11
<PAGE>
2. TRANSACTIONS WITH AFFILIATES
Effective October 1, 1994 Oberweis Asset Management, Inc. ("OAM") became the
Fund's investment adviser, manager and primary shareholder service agent; and
The Chicago Corporation ("TCC") became the Fund's principal distributor. Prior
to October 1, 1994, Hamilton Investments, Inc. acted as the fund's manager,
distributor and shareholder service agent; and Alpha Source Asset Management, a
subsidiary of Hamilton Investments, Inc., served as the Fund's investment
adviser.
Advisory agreement. During 1994, pursuant to written agreements, the Fund paid
monthly investment advisory fees at an annual rate equal to .45% of the first
$50,000,000 of average daily net assets and .40% of average daily net assets in
excess of $50,000,000.
Management agreement. During 1994, for management services and facilities
furnished, the Fund paid a monthly fee at an annual rate equal to .40% of
average daily net assets.
Expense Reimbursement. The manager and investment adviser are obligated to
reduce their investment advisory and management fees or reimburse the Fund to
the extent that total ordinary operating expense, as defined, exceed in any one
year the following amounts expressed as a percentage of the Fund's average
daily net assets: 2% of the first $25,000,000; plus 1.8% of the next
$25,000,000; plus 1.6% of average daily net assets in excess of $50,000,000; or
such lower percentage as may be required by any state where the Fund's shares
are registered. For the year ended December 31, 1994, Hamilton Investments,
Inc., Alpha Source Asset Management, Inc. and OAM were not required to rebate
any of the investment adviser or management fees to the Fund.
Officers and trustees. Certain officers or trustees of the Fund are also
officers or directors of OAM. During the year ended December 31, 1994, the fund
made no direct payments to its officers and paid $12,560 to its unaffiliated
trustees. James D. Oberweis, the Fund's portfolio manager, is employed by OAM
and TCC.
Distribution and shareholder service expense. Effective October 1, 1994, the
Fund pays The Chicago Corporation a monthly distribution fee at the annual rate
of .35% of the average daily net assets and reimbursement for certain out-of-
pocket expenses. The Fund also pays OAM a monthly shareholder service expense
equal to .15% of average daily net assets and reimbursement for out-of-pocket
expenses. Prior to this agreement, the Fund paid Hamilton Investments, Inc. a
monthly fee at an annual rate equal to .50% of average daily net assets for its
distribution service.
Commissions. During 1994, the Fund paid Hamilton Investments, Inc. and TCC for
executing some of the Fund's agency security transactions at competitive rates,
typically $.03 to $.05 per share.
12
<PAGE>
The following summarizes fees incurred by the Fund for the services provided by
Hamilton Investments, Inc. and Alpha Source Asset Management, Inc. for the nine
months ended September 30, 1994, and OAM and TCC for the three months ended
December 31, 1994:
<TABLE>
<CAPTION>
ALPHA
HAMILTON SOURCE OAM TCC
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Advisory fees -- $298,000 $97,000 --
Management fees $279,000 -- $91,000 --
Distribution
fees $349,000 -- -- $79,000
Shareholder
service fees -- -- $34,000 --
Commissions $ 28,000 -- -- $ 9,000
</TABLE>
3. INVESTMENT TRANSACTIONS
The cost of securities purchased and proceeds from securities sold during 1994,
other than options written and money market investments, aggregated $61,146,000
and $71,457,000, respectively.
Transactions in options written for the year ended December 31, 1994 were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Options outstanding at
beginning of year 700 $ 104,000
Options written 12,938 1,681,000
Options expired (9,356) (1,034,000)
Options closed (1,543) (206,000)
Options assigned (2,494) (492,000)
------ -----------
Options outstanding at end of
year 245 $ 53,000
</TABLE>
The premiums received provide a partial hedge (protection) against declining
prices and enables the Fund to generate a higher return during periods when OAM
does not expect the underlying security to make any major price moves in the
near future but still deems the underlying security to be, over the long term,
an attractive investment for the Fund.
4. CAPITAL SHARE TRANSACTIONS
The following table summarizes the activity in capital shares of the Fund:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1994 1993
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 1,272,000 $ 26,882,000 4,069,000 $83,936,000
Shares issued in
reinvestment of dividends -- -- 144,000 3,205,000
Less shares redeemed (1,771,000) (37,150,000) (2,098,000) (43,816,000)
---------- ------------ ---------- -----------
Net increase (decrease)
from capital share
transactions (499,000) $(10,268,000) 2,115,000 $43,325,000
</TABLE>
13
<PAGE>
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the
year is as follows (c):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1994 1993 1992 1991 1990
------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning
of year $ 22.19 $ 20.90 $ 18.39 $ 12.11 $ 12.06
Income from investment
operations:
Net investment loss (.22) (.22) (.21) (.09) (.24)
Net realized and unrealized
gain (loss) on investments (.56) 2.25 2.72 10.64 .29
------- ---------- ---------- -------- ----------
Total from investment
operations (.78) 2.03 2.51 10.55 .05
Less Distributions:
Distribution from net
realized gains on
investments -- (.74) -- (4.27) --
------- ---------- ---------- -------- ----------
Net asset value at end of
year $ 21.41 $ 22.19 $ 20.90 $ 18.39 $ 12.11
======= ========== ========== ======== ==========
Total Return(b) (3.5%) 9.7% 13.7% 87.1% 0.4%
Ratio/Supplemental Data
Net Assets at end of year
(in thousands) $90,014 $104,324 $54,063 $19,730 $11,604
Ratio of expenses to average
daily net assets 1.78% 1.80%(a) 1.99%(a) 2.13%(a) 2.15%(a)
Ratio of net investment loss
to average net assets (1.06%) (1.04%)(a) (1.14%)(a) (1.27%) (1.24%)(a)
Portfolio turnover rate 66% 70% 63% 114% 62%
</TABLE>
- --------
Notes:
(a) Net of expense reimbursement from related parties. Expense ratios would
have been 1.82%, 2.41%, 3.01%, and 3.48% for 1993, 1992, 1991 and 1990,
respectively before expense reimbursement.
(b) A sales load of 4% was charged until December 31, 1991 and is not reflected
in the total return figures above.
(c) The per share data was determined using average shares outstanding during
the year.
14
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders Oberweis Emerging Growth Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Oberweis Emerging Growth Fund as of December
31, 1994, the related statements of operations and changes in net assets and
the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statement of changes in net
assets for the year ended December 31, 1993 and the financial highlights for
each of the years prior to 1994 were audited by other auditors whose report
dated February 6, 1994 expressed an unqualified opinion.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oberweis Emerging Growth Fund at December 31, 1994, the results of its
operations, the changes in its net assets and the financial highlights for the
year ended December 31, 1994, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Ernst & Young LLP
Chicago, Illinois
January 27, 1995
15
<PAGE>
[LOGO] Oberweis Emerging Growth Fund
- --------------------------------------------------------------------------------
James D. Oberweis Thomas J. Burke
Trustee and President Trustee
Douglas P. Hoffmeyer Edward F. Streit
Trustee Trustee
Patrick B. Joyce Martin L. Yokosawa
Executive Vice President Vice President
Treasurer
Anita I. Mraz
James M. Roberts Secretary
Vice President
Mary Jane Murphy
Assistant Secretary
MANAGER AND INVESTMENT ADVISOR
Oberweis Asset Management, Inc.
One Constitution Drive, Aurora, Illinois 60506
DISTRIBUTOR
The Chicago Corporation
208 South LaSalle, Chicago, Illinois 60604
CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
P.O. Box 419042, Kansas City, Missouri 64141
COUNSEL
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Chicago, Illinois 60601
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP
233 South Wacker Drive, Chicago, Illinois 60606
ANNUAL REPORT
---------------------------------------
DECEMBER 31, 1994
[LOGO] Oberweis
Emerging Growth
Fund
One Constitution Drive
Aurora, IL 60506
(800) 323-6166
<PAGE>
PRESIDENT'S LETTER JULY 24, 1995
Dear Emerging Growth Fund Shareholder:
What a difference a year makes! I'm pleased to report that your fund had an
exceptionally strong first half with the net asset value rising 25.5%. That
performance is better than almost all broad market averages and significantly
better than the average mutual fund, which underperformed the S&P 500 for the
first half of this year. For the first six months of 1995, the S&P 500 total
return index gained 20.1%, the NASDAQ Composite gained 24.1%, and the smaller
company oriented Russell 2000 gained 14.4%. Our first half performance looks
particularly favorable when compared to the Russell 2000. The Russell 2000 is
an unmanaged index consisting of 2,000 small cap securities with an average
market capitalization of approximately $255 million.
This year has been an excellent reminder of the pitfalls of market timing.
After a very difficult 1994, it was not easy to be bullish. After a strong
first quarter this year, many market timers locked in their profits by selling
stocks and mutual fund shares. It is very difficult emotionally for an investor
who sold shares at the end of the first quarter at $23.52, up 10% in just three
months, to now buy them back at $26.87 at the end of June. Unfortunately, I
have seen some of our shareholders sell shares after a rise, believing they are
catching a temporary top. Sometimes they are lucky enough to buy them back 5%
cheaper, feeling quite proud of their success. But if the market keeps going
up, they refuse to buy them back, so as to not have to admit a mistake. As a
result, they may miss a 100% or greater profit over a period of time.
Shares of this fund can be quite volatile over the short run. However, for
investors with a longer term time horizon, those ups and downs tend to get
averaged out, and we hope the performance will continue to provide investors
with above market returns. For the last five years, the fund has provided an
average annual return of almost 18%, compared to 15% for the NASDAQ Composite
and 13% for the Russell 2000. Since the fund's inception on January 7, 1987 the
average annual return has been almost 16%.
Technology stocks have been particularly strong during the first half of the
year. We attempt to diversify the fund's investments over as many different
industries as possible. We don't try to buy technology stocks when we think
they're attractive or medical stocks when we think they're attractive. Like
market timing, industry timing can also be a very dangerous game. Many
professional and individual investors were selling their technology stocks in
May after nice gains because they "knew" that technology stocks are "always"
weak during the summer months. We follow a much simpler approach of just trying
to identify the companies that are most successful in the real world and invest
in them. If you and I are buying 50% or 100% more each year of whatever a
company produces and the company's profits are rising at a similar rate, and if
we can buy those companies at a P.E. ratio of less than half their growth rate,
I believe we should be able to achieve above average returns over a long period
of time.
Thanks for having the confidence to invest your money with us. If you have any
questions about your account, please call shareholder services at 1-800-245-
7311 during normal business hours. If you have any questions about the fund's
portfolio or investment policy, please feel free to call me or either of our
assistant portfolio managers, Martin Yokosawa and Chip Roberts, at 1-800-323-
6166. We're usually in the office from 7:30 A.M. until 6:00 P.M. central time
during the week, and from 9:30 until noon on Saturday. We would like to hear
from you!
Sincerely,
Jim Oberweis
1
<PAGE>
OBERWEIS EMERGING GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995 (Market Value in thousands)
Equity Securities - 93.9%
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
AIRLINES--5.1%
**180,000 ValuJet Airlines, [email protected] $ 5,917
APPAREL--0.6%
20,000 Kenneth Cole Productions, [email protected] 667
AUTO/TRUCK EQUIPMENT--0.6%
12,000 *Breed Technologies, [email protected] 288
120,000 Williams Controls, [email protected] 390
678
BUILDING AND BUILDING PRODUCTS--0.1%
15,056 *Slocan Forest Products, [email protected] 134
BUILDING--MOBILE HOMES & RV--1.2%
24,900 *Cavalier Homes, [email protected] 293
92,800 *Shelter Components [email protected] 1,090
1,383
CHEMICALS--1.1%
60,000 Applied Extrusion [email protected] 893
10,000 *Borden Chemical & Plastic [email protected] 183
30,000 Methanex [email protected] 251
1,327
COMMERCIAL SERVICES--1.2%
10,000 American Oncology [email protected] 278
14,000 Central Sprinkler [email protected] 343
25,000 Luminart, [email protected] 82
31,000 RTW, [email protected] 566
12,100 Sterling Healthcare [email protected] 182
1,451
COMPUTER GRAPHICS--0.5%
10,000 Diamond Multimedia Systems, [email protected] 205
15,000 Pinnacle Systems, [email protected] 338
543
COMPUTER--INTEGRATED SYSTEMS--0.9%
20,000 Data Research Associates, [email protected] 260
20,000 Kronos, [email protected] 742
1,002
COMPUTER--LOCAL NETWORKS--4.6%
10,000 Alantec [email protected] 342
180,000 Apertus Technologies, [email protected] 1,575
**100,000 Madge [email protected] 2,800
30,000 Network Peripherals, [email protected] 654
5,371
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
COMPUTER--MEMORY DEVICES--3.8%
**39,000 Alliance Semiconductor [email protected] $ 1,911
**25,000 C-Cube Microsystems, [email protected] 681
103,806 Western Digital [email protected] 1,804
4,396
COMPUTER--MINI/MICRO--1.6%
20,000 Compaq Computer [email protected] 908
26,000 *Scientific Technologies, [email protected] 936
1,844
COMPUTER--OPTICAL RECOGNITION--0.4%
30,000 Robotic Vision Systems, [email protected] 435
COMPUTER PERIPHERALS--11.0%
1,000 Discreet Logic, [email protected] 33
120,000 Eltron International, [email protected] 2,430
100,000 Encad, [email protected] 2,700
**40,000 Microtouch Systems, [email protected] 822
132,000 Mylex [email protected] 1,749
30,000 Proxima [email protected] 716
10,000 Scansource, [email protected] 95
**40,000 U.S. Robotics [email protected] 4,360
12,905
COMPUTER SERVICES--3.1%
100,000 AmeriData Technologies, [email protected] 925
11,900 AmeriData Technologies, Inc. [email protected] 0
20,000 AmeriData Technoligies, Inc.
Convertible Preferred @29.25 585
100,000 CIBER, [email protected] 1,775
25,000 Renaissance Solutions, [email protected] 344
3,629
COMPUTER SOFTWARE--10.4%
40,000 BTG, [email protected] 365
30,000 Firefox Communications, [email protected] 772
25,000 Datastream Systems, [email protected] 594
25,000 Electronics For Imaging, [email protected] 1,306
10,000 Epic Design Technology, [email protected] 355
1,000 HNC [email protected] 21
35,000 Hummingbird Communications [email protected] 1,024
10,000 MapInfo [email protected] 355
60,000 Natural MicroSystems [email protected] 1,110
40,000 NetManage, [email protected] 680
100,000 Number Nine Visual [email protected] 2,075
21,000 Platinum Technology, [email protected] 381
15,000 Remedy [email protected] 544
</TABLE>
See notes to Portfolio of Investments.
2
<PAGE>
Equity Securities - continued
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
10,000 Seer Technologies, [email protected] $ 208
500 Software Artistry, [email protected] 11
10,000 Spyglass, [email protected] 286
55,000 Systemsoft [email protected] 797
30,000 Tecnomatix [email protected] 221
60,000 VMark Software, [email protected] 1,065
12,170
COSMETICS/PERSONAL CARE--0.4%
32,000 Parlux Frangrances, [email protected] 468
DIVERSIFIED OPERATIONS--0.1%
4,000 ACX Technologies, [email protected] 167
DRUGS--3.0%
40,000 Barr Laboratories, [email protected] 865
21,800 K V Pharmaceutical Co. Class [email protected] 180
30,000 *Mylan Laboratories, [email protected] 923
**40,000 Watson Pharmaceuticals, [email protected] 1,560
3,528
ELECTRICAL & ELECTRONIC EQUIPMENT--2.3%
30,000 Datamarine International, [email protected] 270
5,000 Itron, [email protected] 156
15,000 *Robbins & Meyers, [email protected] 413
56,250 Symetrics Industries, [email protected] 605
35,000 Zygo [email protected] 1,181
2,625
ELECTRONICS--COMPONENTS/ SEMICONDUCTORS--8.4%
25,000 AG Associates, [email protected] 438
**34,400 Atmel [email protected] 1,905
60,000 Flextronics International [email protected] 1,312
10,000 Fusion Systems [email protected] 343
143,061 Genus, [email protected] 1,940
20,000 Information Storage Devices, [email protected] 500
12,500 Integrated Device Technology, [email protected] 578
**5,000 Integrated Silicon [email protected] 261
25,000 Mattson Technology, [email protected] 1,175
**35,500 Oak Technology, [email protected] 1,305
9,757
ELECTRONICS--LASER SYSTEMS/ COMPONENTS--2.6%
63,000 II-VI, [email protected] 1,748
10,000 Cyberoptics [email protected] 254
**30,000 Electro Scientific Industries, [email protected] 998
3,000
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
FARM MACHINERY--0.7%
22,500 *AGCO [email protected] $ 844
FINANCIAL/BUSINESS SERVICES--1.7%
20,000 Express Scripts, Inc. Class [email protected] 705
15,000 Mercer International, [email protected] 315
**15,000 *The Money Store, [email protected] 537
58,000 Sherwood Group, [email protected] 479
2,036
FOOD--MISCELLANEOUS--0.4%
25,000 Odwalla, [email protected] 506
HEALTH MAINTENANCE ORGANIZATION--1.5%
23,000 Coventry [email protected] 325
**28,000 PacifiCare Health Systems, [email protected] 1,428
1,753
INSURANCE--0.2%
10,000 HCC Insurance Holdings, [email protected] 260
LEISURE & RECREATION PRODUCTS--2.6%
45,000 Regal Cinemas, [email protected] 1,440
40,000 Ride Snowboard [email protected] 1,090
20,000 West Marine, [email protected] 512
3,042
MACHINERY--1.7%
5,000 3D Systems [email protected] 92
10,000 Gleason [email protected] 221
10,000 Indresco, [email protected] 155
58,000 *JLG Industries, [email protected] 1,537
2,005
MEDIA--RADIO/TV--2.1%
85,000 United Video Satellite Group, [email protected] 2,486
MEDICAL EQUIPMENT & SUPPLIES--0.9%
21,000 Chad Therapeutics, [email protected] 312
100,000 FluoroScan Imaging Systems, [email protected] 775
1,087
MEDICAL--NURSING HOMES, OUTPATIENT HOMECARE--2.6%
10,000 American Homepatient, [email protected] 298
10,000 American Medical [email protected] 280
10,000 Medpartners, [email protected] 193
5,000 Physician Reliance Network, [email protected] 97
127,816(a) Retirement Care Associates, [email protected] 1,528
35,000 Transworld Healthcare, [email protected] 586
2,982
</TABLE>
See notes to Portfolio of Investments.
3
<PAGE>
Equity Securities - continued
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
TRUCKING--0.3%
25,000 Knight Transportation, [email protected] $ 338
TOTAL EQUITY SECURITIES
(COST: $70,762,549) 109,824
Convertible Debt Obligations-5.0%
<CAPTION>
Face
Amount Value
<C> <S> <C>
COMPUTER MEMORY DEVICES--0.5%
$600,000 *Seagate Technology
6.75% due 5-01-12 @105.00 $ 630
COMPUTER PERIPHERALS--0.6%
600,000 *SCI Systems, Inc.
5.625% due 3-01-12 @118.50 711
EYECARE SERVICES--0.5%
500,000 *Benson Eyecare Corp.
8.00% due 5-15-01 @125.50 627
FARM MACHINERY--0.6%
250,000 *Agco Corp.
6.50% due [email protected] 740
MEDICAL--NURSING HOMES--1.9%
1,500,000 *GranCare, Inc.
6.50% due 1-15-03 @86.00 1,290
1,000,000 *Theratx, Inc.
8.00% due [email protected] 925
2,215
OIL & GAS--0.4%
500,000 *Snyder Oil Corp.
7.00% due [email protected] 445
POLLUTION CONTROL--0.3%
580,000(a) *Growth Environmental, Inc.
9.00% due 4-30-97 @58.049 337
RETAIL--0.2%
200,000 *Proffitts, Inc.
4.75% due 11-01-03 @89.00 178
600,000(a) *Zam's, Inc.
7.50% due 10-31-00 @1.146 7
185
TOTAL CONVERTIBLE DEBT OBLIGATIONS
(COST: $6,155,260) 5,890
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
OIL & GAS--0.8%
40,000 International Colin Energy [email protected] $ 210
40,000 Smith International, [email protected] 670
880
PERSONNEL PLACEMENT--0.7%
10,000 Alternative Resources [email protected] 265
30,000 On Assignment, [email protected] 570
835
RESTAURANTS--4.6%
100,000 Lone Star Steakhouse & Saloon, [email protected] 3,031
30,000 Outback Steakhouse, [email protected] 866
20,000 Papa John's International, [email protected] 700
100,000 Pollo Tropical, [email protected] 800
5,397
RETAIL/WHOLESALE COMPUTERS--0.6%
40,500 Pomeroy Computer [email protected] 739
SCHOOLS--0.7%
80,000 Youth Services International, [email protected] 850
TELECOMMUNICATIONS--7.8%
20,000 ACT Networks, [email protected] 345
20,000 Applied Innovation, [email protected] 955
**16,300 Cidco, [email protected] 511
60,000 Coherent Communication Systems [email protected] 1,005
25,000 Gilat Satellite Networks [email protected] 569
20,000 Pairgain Technologies, [email protected] 383
**20,000 Qualcomm, [email protected] 691
39,000 Spectrian [email protected] 1,550
5,000 STM Wireless, [email protected] 64
**20,000 Stratacom, [email protected] 975
29,500 Unitech Industries, [email protected] 317
82,000 Wholesale Cellular USA, [email protected] 1,763
9,128
TEXTILE PRODUCTS--0.9%
20,000 *St. John Knits, [email protected] 897
11,000 Supreme International [email protected] 187
1,084
TOYS & SPORTING GOODS--0.1%
10,000 Lewis Galoob Toys, Inc.
Convertible Preferred @17.5 175
</TABLE>
See notes to Portfolio of Investments
4
<PAGE>
Long Put Options-1.3%
<TABLE>
<CAPTION>
Contracts Value
<S> <C> <C>
1,000 S&P 100 Stock Index Sep $520 $ 938
1,000 S&P 100 Stock Index Aug $510 512
1,000 S&P 100 Stock Index Jul $500 100
Total Put Options 1,550
(Cost: $2,318,500)
Repurchase Agreement--1.8%
2,095,716 State Street Bank and Trust Co.
Dated 6/30/95, collateralized by
U.S. Treasury Notes
4.90%, 7/03/95 $ 2,096
TOTAL INVESTMENT - 102.0% 119,360
(COST: $81,332,025)
Covered Call Options-(1.8%)
Contracts Value
390 Alliance Semiconductor Corp. Jul $55 $ (39)
344 Atmel Corp. Aug $55 (133)
100 C-Cube Microsystems, Inc. Aug $22 (58)
150 C-Cube Microsystems, Inc. Nov $30 (47)
60 Cidco, Inc. Jul $35 (2)
90 Electro Scientific Inds. Jul $35 (8)
50 Electro Scientific Inds. Aug $35 (10)
160 Electro Scientific Inds. Sep $35 (45)
50 Integrated Silicon Solution Jul $55 (8)
200 Madge N.V. Aug $25 (85)
750 Madge N.V. Aug $30 (122)
270 Microtouch Systems, Inc. Sep $40 (3)
150 The Money Store, Inc. Jul $35 (30)
150 Oak Technology, Inc. Jul $35 (40)
100 Oak Technology, Inc. Sep $35 (48)
50 PacifiCare Health Systems, Inc. Aug $75 (0)
100 PacifiCare Health Systems, Inc. Aug $80 (0)
100 Qualcomm, Inc. Jul $40 (5)
100 Qualcomm, Inc. Oct $40 (25)
5 Stratacom, Inc. Aug $50 (2)
300 U.S. Robotics Corp. Aug $75 (1,035)
100 U.S. Robotics Corp. Aug $80 (298)
100 ValuJet Airlines, Inc. Jul $35 (10)
100 ValuJet Airlines, Inc. Aug $40 (5)
600 ValuJet Airlines, Inc. Sep $40 (56)
100 Watson Pharmaceuticals, Inc. Jul $40 (6)
</TABLE>
<TABLE>
<CAPTION>
Contracts Value
<S> <C> <C>
90 Watson Pharmaceuticals, Inc. Aug $35 $ (33)
Total Covered Call Options (2,153)
(Premium received: $899,000)
OTHER ASSETS LESS LIABILITIES--(0.2%) (283)
NET ASSETS--100.0% $116,924
</TABLE>
Notes to Portfolio of Investments
* Income producing security during the period ended June 30, 1995.
**The aggregate market value of stocks held in escrow at June 30, 1995
covering open covered call options written was $19,862,869.
Based on the cost of investments of $81,332,025 for federal income tax
purposes at June 30, 1995, the aggregate gross unrealized appreciation was
$41,786,382, the aggregate gross unrealized depreciation was $3,758,120, and
the net unrealized appreciation of investments was $38,028,262.
(a) The following securities are subject to legal or contractual restrictions
on sale. They were valued at cost on the dates of acquisition and at fair
value as determined by the board of trustees of the Fund as of June 30, 1995.
The aggregate value of restricted securities was $926,223 or 0.8% of net
assets, at June 30, 1995.
Growth Environmental, Inc. $580,000 face amount convertible debt purchased
in May, 1994 at a cost of $580,000.
Retirement Care Associates, Inc. 23,625 shares purchased in February, 1995
at a cost of $168,328 and 25,441 shares purchased in June, 1995 at a cost of
$225,789.
Zam's, Inc. $600,000 face amount convertible debt purchased in November,
1993 at a cost of $600,000.
See notes to Portfolio of Investments.
5
<PAGE>
OBERWEIS EMERGING GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
(in thousands)
<TABLE>
<S> <C> <C>
ASSETS:
Investment securities at market value (Cost: $76,917,809) $115,714
Options purchased, at value (Cost: $2,318,500) 1,550
Repurchase agreement 2,096
Cash 395
Receivables:
Fund shares sold $892
Securities sold 258
Dividends and interest 126
----
Total receivables 1,276
Prepaid expenses 20
--------
Total Assets 121,051
LIABILITIES:
Options written, at value (Premiums received: $899,000) 2,153
Payables:
Fund shares repurchased $874
Securities purchased 978
Payable to adviser 80
Payable to distributor 31
----
Total Payables 1,963
Accrued expenses 11
--------
Total Liabilities 4,127
NET ASSETS $116,924
========
ANALYSIS OF NET ASSETS:
Aggregate paid in capital $ 78,213
Accumulated net realized gain from investment transactions 1,937
Net unrealized appreciation of investments 36,774
--------
Net assets $116,924
========
THE PRICING OF SHARES:
Net asset value, offering and redemption price per share
($116,923,548 divided by 4,350,806 shares outstanding) $ 26.87
========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
OBERWEIS EMERGING GROWTH FUND
STATEMENT OF OPERATIONS
Six months ended June 30, 1995
(in thousands)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 61
Interest 257
----
Total Investment Income $ 318
EXPENSES:
Advisory fees 212
Management fees 200
Distribution fees 175
Shareholder servicing fees 75
Custodian fees 80
Transfer agent fees 71
Professional fees 57
Registration fees 16
Shareholder reports 15
Insurance 6
Trustee fees 5
Other 3
----
Total Expenses 915
-------
NET INVESTMENT LOSS BEFORE EXPENSE REIMBURSEMENT (597)
Expense reimbursement 39
-------
NET INVESTMENT LOSS (558)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from investment transactions 2,932
Net realized loss from covered call options written (979)
-------
Total net realized gain 1,953
Increase in unrealized appreciation of investments 21,769
-------
Net realized and unrealized gain on investments 23,722
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $23,164
=======
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Six months ended June 30, 1995 and the year ended December 31, 1994
(in thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
-------- ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss $ (558) $ (979)
Net realized gain (loss) from investment transactions 1,953 (17)
Increase (decrease) in unrealized appreciation of
investments 21,769 (3,046)
-------- --------
Net increase (decrease) in net assets resulting from
operations 23,164 (4,042)
-------- --------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 24,701 26,882
Redemption of shares (20,955) (37,150)
-------- --------
Net increase (decrease) from capital share
transactions 3,746 (10,268)
-------- --------
Total increase (decrease) in net assets 26,910 (14,310)
NET ASSETS:
Beginning of year 90,014 104,324
-------- --------
End of year $116,924 $ 90,014
======== ========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
Description of Business. Oberweis Emerging Growth Fund (the "Fund") is
registered under the Investment Company Act of 1940 as a diversified open-end
management investment company. The Fund is authorized to operate numerous
portfolios under various trading strategies. The Fund commenced operations of
one portfolio on January 7, 1987.
Investment valuation. Investments are stated at value. Each listed and unlisted
security for which last sale information is regularly reported is valued at the
last reported sales price on that day. If there has been no sale on such day,
then such security is valued at the current day's bid price. Any unlisted
security for which last sale information is not regularly reported and any
listed debt security which has an inactive listed market for which over-the-
counter market quotations are readily available is valued at the highest
closing bid price determined on the basis of reasonable inquiry. Restricted
securities and any other securities or other assets for which market quotations
are not readily available are valued by appraisal at their fair value as
determined in good faith under procedures established by and under the general
supervision and responsibility of the Board of Trustees. Short-term debt
obligations, commercial paper and repurchase agreements are valued on the basis
of quoted yields for securities of comparable maturity, quality and type or on
the basis of amortized costs.
Fund share valuation. Fund shares are sold and redeemed on a continuous basis
at net asset value. On each day the New York Stock Exchange is open for
trading, the net asset value per share is determined as of the later of the
close of the New York Stock Exchange or the Chicago Board Options Exchange by
dividing the total value of the Fund's investments and other assets, less
liabilities, by the number of Fund shares outstanding.
Investment transactions and investment income. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date, and interest income is
recorded on the accrual basis and includes amortization of money market
instrument premium and discount. Realized gains and losses from investment
transactions are reported on an identified cost basis. Gains and losses on
premiums from expired options are recognized on date of expiration.
Repurchase agreements. Repurchase agreements are fully collateralized by U.S.
Treasury and Government agency securities. All collateral is held through the
Fund's custodian bank and is monitored daily by the Fund so that its market
value exceeds the carrying value of the repurchase agreement.
Federal income taxes and dividends to shareholders. The Fund has complied with
the special provisions of the Internal Revenue Code available to investment
companies and therefore no federal income tax provision is required. Dividends
payable to its shareholders are recorded by the Fund on the ex-dividend date.
The accumulated net realized loss from investment transactions for federal
income tax purposes at December 31, 1994, amounting to approximately $17,000,
is available to offset future taxable gains. If not applied, the loss
carryforward expires during the year in 2002.
8
<PAGE>
2. TRANSACTIONS WITH AFFILIATES
The Fund has written agreements with Oberweis Asset Management, Inc. ("OAM") as
the Fund's investment adviser, manager and primary shareholder service agent;
and The Chicago Corporation ("TCC") as the Fund's principal distributor.
Advisory agreement. During the six months ended June 30, 1995, the Fund paid
monthly investment advisory fees at an annual rate equal to .45% of the first
$50,000,000 of average daily net assets and .40% of average daily net assets in
excess of $50,000,000. For the six months ended June 30, 1995, the Fund
incurred an advisory fee totalling $212,000.
Management agreement. During the six months ended June 30, 1995, for management
services and facilities furnished, the Fund paid a monthly fee at an annual
rate equal to .40% of average daily net assets. For the six months ended June
30, 1995, the Fund incurred a management fee totalling $200,000.
Expense Reimbursement. The manager and investment adviser are obligated to
reduce their investment advisory and management fees or reimburse the Fund to
the extent that total ordinary operating expense, as defined, exceed in any one
year the following amounts expressed as a percentage of the Fund's average
daily net assets: 2% of the first $25,000,000; plus 1.8% of the next
$25,000,000; plus 1.6% of average daily net assets in excess of $50,000,000; or
such lower percentage as may be required by any state where the Fund's shares
are registered. For the six months ended June 30, 1995, OAM reimbursed the Fund
$38,510.
Officers and trustees. Certain officers or trustees of the Fund are also
officers or directors of OAM. During the six months ended June 30, 1995, the
fund made no direct payments to its officers and paid $4,818 to its
unaffiliated trustees. James D. Oberweis, the Fund's portfolio manager, is
employed by OAM and TCC.
Distribution and shareholder service expense. The Fund has a distribution
agreement with The Chicago Corporation (TCC). For services under the
distribution agreement, the Fund pays TCC a fee at the annual rate of .35% of
the average daily net assets and reimbursement for certain out-of-pocket
expenses. For the six months ended June 30, 1995, the Fund incurred a
distribution fee totalling $175,000. The Fund has a shareholder service
agreement with OAM. For services under the shareholder service agreement, the
Fund pays OAM a fee at the annual fate of .15% of the average daily net assets
and reimbursement for certain out-of-pocket expenses. For the six months ended
June 30, 1995, the Fund incurred a shareholder service fee totalling $75,000.
Commissions. The Fund pays TCC for executing some of the Fund's agency security
transactions at competitive rates, typically $.03 to $.05 per share. For the
six months ended June 30, 1995, the Fund paid commissions of $13,000 to TCC.
9
<PAGE>
3. INVESTMENT TRANSACTIONS
The cost of securities purchased and proceeds from securities sold during the
six months ended June 30, 1995, other than options written and money market
investments, aggregated $37,653,902 and $37,802,561, respectively.
Transactions in options written for the six months ended June 30, 1995, were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Options outstanding at beginning
of period 245 $ 53,000
Options written 12,604 1,752,000
Options expired (4,495) (482,000)
Options closed (2,065) (253,000)
Options assigned (1,530) (171,000)
------ ----------
Options outstanding at end of
period 4,759 $ 899,000
</TABLE>
The premiums received provide a partial hedge (protection) against declining
prices and enables the Fund to generate a higher return during periods when OAM
does not expect the underlying security to make any major price moves in the
near future but still deems the underlying security to be, over the long term,
an attractive investment for the Fund.
4. CAPITAL SHARE TRANSACTIONS
The following table summarizes the activity in capital shares of the Fund:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE YEAR ENDED DECEMBER 31,
30, 1995 1994
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 1,031,000 $24,701,000 1,272,000 $26,882,000
Less shares redeemed (884,000) (20,955,000) (1,771,000) (37,150,000)
--------- ----------- ---------- ------------
Net increase (decrease) from
capital share transactions 147,000 $3,746,000 (499,000) $(10,268,000)
</TABLE>
10
<PAGE>
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the
period is as follows (c):
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED ---------------------------------------
JUNE 30, 1995 1994 1993 1992 1991
------------- -------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 21.41 $ 22.19 $ 20.90 $ 18.39 $ 12.11
Income from investment
operations:
Net investment loss (.13) (.22) (.22) (.21) (.09)
Net realized and
unrealized gain (loss)
on investments 5.59 (.56) 2.25 2.72 10.64
----------- -------- --------- --------- -------
Total from investment
operations 5.46 (.78) 2.03 2.51 10.55
Less Distributions:
Distribution from net
realized gains on
investments -- -- (.74) -- (4.27)
----------- -------- --------- --------- -------
Net asset value at end
of period $ 26.87 $ 21.41 $ 22.19 $ 20.90 $ 18.39
=========== ======== ========= ========= =======
Total Return(%)(b) 25.5 (3.5) 9.7 13.7 87.1
Ratio/Supplemental Data
Net Assets at end of
period (in thousands) $116,924 $ 90,014 $104,324 $54,063 $19,730
Ratio of expenses to
average daily net
assets(%) 1.75(a,d) 1.78 1.80(a) 1.99(a) 2.13(a)
Ratio of net investment
loss to average net
assets(%) (1.26)(a,d) (1.06) (1.04)(a) (1.14)(a) (1.27)
Portfolio turnover
rate(%) 75 66 70 63 114
</TABLE>
- --------
Notes:
(a) Net of expense reimbursement from related parties. Expense ratios would
have been 1.83%, 1.82%, 2.41%, and 3.01% for 1995, 1993, 1992 and 1991,
respectively before expense reimbursement.
(b) A sales load of 4% was charged until December 31, 1991 and is not reflected
in the total return figures above.
(c) The per share data was determined using average shares outstanding during
the year.
(d) Annualized.
11
<PAGE>
[LOGO] Oberweis Emerging Growth Fund
- --------------------------------------------------------------------------------
James D. Oberweis Peter H. Wendell
Trustee and President Trustee
Douglas P. Hoffmeyer Thomas J. Burke
Trustee Trustee
Patrick B. Joyce Edward F. Streit
Executive Vice President Trustee
Treasurer
Martin L. Yokosawa
James M. Roberts Vice President
Vice President
Anita I. Mraz
Mary Jane Murphy Secretary
Assistant Secretary
MANAGER AND INVESTMENT ADVISOR
Oberweis Asset Management, Inc.
One Constitution Drive, Aurora, Illinois 60506
DISTRIBUTOR
The Chicago Corporation
208 South LaSalle, Chicago, Illinois 60604
CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
P.O. Box 419042, Kansas City, Missouri 64141
COUNSEL
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Chicago, Illinois 60601
[LOGO] Oberweis
Emerging Growth
Fund
One Constitution Drive
Aurora, IL 60506
(800) 323-6166
SEMI-ANNUAL REPORT
---------------------------------------
UNAUDITED
JUNE 30, 1995
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS-INCLUDED IN STATEMENT OF ADDITIONAL INFORMATION
(PART B).
Oberweis Emerging Growth Fund Financial Statements and Independent
Auditors' Report thereon
(a) Portfolio of Investments as of December 31, 1994.
(b) Statement of Assets and Liabilities as of December 31, 1994.
(c) Statement of Operations for the Year Ended December 31, 1994.
(d) Statement of Changes in Net Assets for the Years Ended December
31, 1994 and 1993.
Oberweis Emerging Growth Fund Financial Statements
(a) Portfolio of Investments as of June 30, 1995 (Unaudited).
(b) Statement of Assets and Liabilities as of June 30, 1995
(Unaudited).
(c) Statement of Operations for the Six Months Ended June 30, 1995
(Unaudited).
(d) Statement of Changes in Net Assets for the Six Months Ended June
30, 1995 (Unaudited) and the year ended December 31, 1994.
Oberweis Micro-Cap Portfolio
(a) Statements of Assets and Liabilities as of October 2, 1995
(b) Notes to Financial Statements
Schedules II, III, IV, V, VI and VII are omitted and the required
information is not presented.
Schedule I has been omitted and the required information is presented in
the portfolio of investments.
(B) EXHIBITS.
1. Agreement and Declaration of Trust dated July 7, 1986/11/
1.1 First Amendment to Agreement and Declaration of Trust, dated November
17, 1986/11/
2. By-Laws/11/
3. None
4. Form of Specimen Certificates of Shares of Beneficial Interest/11/
4.1 Specimen Certificates of Shares of Beneficial Interest/2/
5.1 Management Agreement/5/
5.1.1 Amendment to Management Agreement as of February 16, 1994/9/
5.1.2 Management Agreement dated October 1, 1994/11/
5.2 Investment Advisory Agreement/5/
5.2.1 Investment Advisory Agreement dated October 1, 1994/11/
5.2.2 Transfer and Guaranty Agreement/7/
*5.2.3 Written Notification required under Investment Advisory Agreement dated
October 1, 1994 regarding the rendering of advisory services to the
Micro-Cap Portfolio.
C-1
<PAGE>
6. None
7. None
8. Custodian Agreement/1/
8.1 Letter Agreements renewing Custodian Agreement dated February
24, 1988,/3/ February 21, 1989,/4/ February 7, 1990,/5/
February 15, 1991,/6/ and February 13, 1992,/7/ respectively
8.2 Letter Agreement dated January 27, 1993, renewing Custodian
Agreement/8/
8.3 Custodian Agreement dated August 3, 1993/11/
9. Transfer Agency Agreement/1/
9.1 Letter Agreements renewing Transfer Agency Agreement dated February
24, 1988,/3/ February 21, 1989,/4/ February 7, 1990,/5/ February 15,
1991,/6/ and February 13, 1992,/7/ respectively
9.2 Letter Agreement dated January 27, 1993, renewing Transfer Agency
Agreement/8/
9.3 Transfer Agent Agreement dated August 3, 1993/11/
10.1 Form of Opinion and Consent of Lawrence, Kamin, Saunders &
Uhlenhop/1A/
*10.1.1 Consent and Opinion of Vedder, Price, Kaufman & Kammholz
10.2 Form of Opinion of Ropes & Gray/1A/
*10.2.1 Opinion and Consent of Ropes & Gray
*11.1 Consent of Ernst & Young LLP
*11.2 Consent of Checkers, Simon & Rosner LLP
12. Not applicable
13. Form of Contribution Agreement with Initial Shareholders/1/
13.1 Contribution Agreement dated December 8, 1986, from James D.
Oberweis with respect to the purchase of an aggregate of 5,500
shares as custodian for two minor children for $10.00 each (a total
of $55,000)/2/
13.2 Contribution Agreement dated December 8, 1986, from Lora J. Oberweis
with respect to the purchase of 2,000 shares for $10.00 each (a total
of $20,000)/2/
13.3 Contribution Agreement dated December 8, 1986, from Helen Cisek with
respect to the purchase of 1,500 shares for $10.00 each (a total of
$15,000)/2/
13.4 Contribution Agreement dated December 8, 1986, from Tedd Determan
with respect to the purchase of an aggregate of 1,000 shares for
$10.00 each (a total of $10,000)/2/
*14.1 Individual Retirement Custodial Account Agreement, Disclosure
Statement, Form of Account Application, and Transfer Request Form/11/
15.1 Plan of Distribution pursuant to Rule 12b-1/4/
15.2 Distribution and Shareholder Service Agreement/5/
15.3 Amendment to Plan of Distribution pursuant to Rule 12b-1 and
Distribution and Shareholder Service Agreement/8/
*15.4 Plan of Distribution pursuant to Rule 12b-1 as amended
October 1, 1994/11/
C-2
<PAGE>
15.4.1 Form of Plan of Distribution pursuant to Rule 12b-1 as amended
January 1, 1996/11/
15.5 Distribution Agreement dated October 1, 1994/11/
15.5.1 Form of Distribution and Shareholder Service Agreement dated
January 1, 1996/11/
15.6 Shareholder Service Agreement dated October 1, 1994/11/
16. Calculation of Performance Data/11/
- -------
/*/ Filed herewith.
/1/ Previously filed with the Registration Statement and incorporated herein by
reference.
/1A/ Previously filed with the Registration Statement.
/2/ Previously filed with Pre-Effective Amendment No. 2 (Amendment No. 2) dated
January 14, 1987 and incorporated herein by reference.
/2A/ Previously filed with Pre-Effective Amendment No. 2.
/3/ Previously filed with Post-Effective Amendment No. 2 (Amendment No. 4)
dated February 28, 1988.
/4/ Previously filed with Post-Effective Amendment No. 3 (Amendment No. 5)
dated March 2, 1989 and incorporated herein by reference.
/5/ Previously filed with Post-Effective Amendment No. 4 (Amendment No. 6)
dated February 28, 1990 and incorporated herein by reference.
/6/ Previously filed with Post-Effective Amendment No. 5 (Amendment No. 7)
dated March 1, 1991 and incorporated herein by reference.
/7/ Previously filed with Post-Effective Amendment No. 6 (Amendment No. 8)
dated March 2, 1992 and incorporated herein by reference.
/8/ Previously filed with Post-Effective Amendment No. 7 (Amendment No. 9)
dated March 1, 1993 and incorporated herein by reference.
/9/ Previously filed with Post-Effective Amendment No. 8 (Amendment No. 10)
dated April 29, 1994 and incorporated herein by reference.
/10/ Previously filed with Post-Effective Amendment No. 9 (Amendment No. 11)
dated February 28, 1995 and incorporated herein by reference.
/11/ Previously filed via EDGAR with Post-Effective Amendment No. 10 (Amendment
No. 12) dated October 18, 1995 and incorporated herein by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Inapplicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Seven thousand six hundred seventy (7,670) as of November 30, 1995.
ITEM 27. INDEMNIFICATION
A response has been previously filed with Pre-Effective Amendment No. 2
(Amendment No. 2) dated January 14, 1987 and is incorporated herein by
reference. The Fund has also purchased a liability policy which indemnifies the
Fund's officers and trustees against loss arising from claims by reason of their
legal liability for acts as officers and trustees, subject to limitations and
conditions as set forth in such policy.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to trustees, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, and the Commission remains of the same opinion, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTION OF INVESTMENT ADVISER.
(a) Oberweis Asset Management, Inc.
Oberweis Asset Management, Inc. ("OAM") was organized in 1989. Its
activities are limited to acting as an investment adviser and shareholder
servicing agent.
C-3
<PAGE>
(b) Set forth below are the names of the directors and officers of OAM (other
than those officers who are also officers of the Registrant) and any other
business, profession, vocation or employment of a substantial nature in
which such directors and officers have been involved an any time during the
past two fiscal years.
<TABLE>
<CAPTION>
NAME AND
POSITIONS WITH OAM NAME OF COMPANY POSITION
- -------------------- ----------------------- ---------
<S> <C> <C>
Elaine M. Oberweis Oberweis Dairy, Inc. President
Director 945 North Lake Street
Aurora, Illinois 60506
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) None.
(b) Set forth below are the names of the directors and officers of The Chicago
Corporation.
<TABLE>
<CAPTION>
John A. Wing, Wilbert A. Thiel,
Chairman of the Board of Directors Director, President, Treasurer and
and Chief Executive Officer Chief Operating Officer
<S> <C>
Robert T. Brehm, Faris F. Chesley,
Director, Executive Vice Vice Chairman of the Board of
President, President-Asset Directors, Executive Vice President
Management Group
Richard W. Durkes, Jon T. Ender,
Director, Executive Vice President Director, Executive Vice President
John C. Harris, Timothy O'Gorman,
Director, Executive Vice President Director, Executive Vice President
Paul W. Oliver, Jr., Perry L. Taylor, Jr.,
Director, Executive Vice President Director, Executive Vice President,
General Counsel, Secretary
Peter H. Wendell, David K. Beecken,
Director, Executive Vice President Director, Senior Vice President
Patrick K. Blackburn, Jack W. Blumenstein,
Director, Senior Vice President Director, Executive Vice President
Jay K. Buck, John T. Coyne,
Director, Senior Vice President Director, Senior Vice President
Victor Elting III, Walter W. Filkin,
Director, Senior Vice President Director, Senior Vice President
Walter D. Fitzgerald, Frederic D. Floberg,
Director, Senior Vice President Director, Senior Vice President
James M. Florsheim Brian F. Foley,
Director, Senior Vice President Director, Senior Vice President
Thomas G. Hallal, Lawrence J. Hanson,
Director, Senior Vice President Director, Senior Vice President
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Jeffrey M. Herr, Jack W. Kindegran
Director, Senior Vice President Director, Senior Vice President
Charles R. Klimkowski, Barbara L. Lamb
Director, Senior Vice President Director, Senior Vice President
Edward J. Laux Thomas J. McCausland,
Director, Senior Vice President Director
James D. McDonald Kenneth H. McLellan, Jr.,
Director, Senior Vice President Director, Senior Vice President
Charles J. Moore, Thomas A. Mueller,
Director, Senior Vice President Director, Senior Vice President
Leonard O'Driscoll Joseph A. Oliva,
Director, Senior Vice President Director, Senior Vice President
Willard J. Peterson, Robert R. Rudolph,
Director, Senior Vice President Director
Richard M. Schaeffer, Ronald M. Schutz,
Director, Senior Vice President Director, Senior Vice President
William C. Steinmetz, Gordon L. Teach
Director, Senior Vice President Director, Senior Adviser to the
Chairman
William A. Trader, Ralph Collins Walter III,
Director, Senior Vice President Director, Senior Vice President,
Chief Administrative Officer
W. Peter Williams, Edward Stuart Winter,
Director, Senior Vice President Director, Senior Vice President
Ben A. Witt, Michael Woodhead
Director, Senior Vice President Director, Senior Vice President
</TABLE>
The principal business address of all such persons is 208 South LaSalle Street,
Chicago, Illinois 60604. Other than Mr. Wendell, a Trustee of the Fund, no
listed person holds a position or office with the Registrant.
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by Registrant
pursuant to Section 31(a) of the Investment Company Act of 1940 and rules
promulgated thereunder are in the possession of Oberweis Asset Management, Inc.
at its offices at One Constitution Drive, Aurora, Illinois 60506, except those
books, records and other documents maintained by the custodian, transfer agent
and registrar, Investors Fiduciary Trust Company, which are located at its
offices at 127 West 10th Street, 16th Floor, Kansas City, Missouri 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
C-5
<PAGE>
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Registrant hereby undertakes to file a Post-Effective Amendment to this
Registration Statement, containing reasonably current financial statements
for the Micro-Cap Portfolio that need not be certified, within four to six
months after the effective date of this registration statement.
(c) The Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the Registrant's latest Annual
Report to Shareholders upon request and without charge.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Aurora, State of Illinois, on the 18th day of
December, 1995.
OBERWEIS EMERGING GROWTH FUND
By:/s/James D. Oberweis
--------------------
James D. Oberweis, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ James D. Oberweis President (Principal Executive December 18, 1995
- -----------------------
Officer) and Trustee
James D. Oberweis
/s/Thomas J. Burke Trustee December 18, 1995
- -----------------------
Thomas J. Burke
Trustee , 1995
- ----------------------- -----------
Douglas P. Hoffmeyer
/s/Edward F. Streit Trustee December 18, 1995
- -----------------------
Edward F. Streit
/s/Peter H. Wendell Trustee December 18, 1995
- -----------------------
Peter H. Wendell
/s/Patrick B. Joyce Executive Vice President and December 18, 1995
- ----------------------- Treasurer (Principal Financial
Patrick B. Joyce and Accounting Officer)
</TABLE>
C-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- ----------------------------------------------------------------------
<S> <C>
1. Agreement and Declaration of Trust dated July 7, 1986/11/
1.1 First Amendment to Agreement and Declaration of Trust, dated
November 17, 1986/11/
2. By-Laws/11/
3. None
4. Form of Specimen Certificates of Shares of Beneficial
Interest/11/
4.1 Specimen Certificates of Shares of Beneficial Interest/2/
5.1 Management Agreement/5/
5.1.1 Amendment to Management Agreement as of February 16, 1994/9/
5.1.2 Management Agreement dated October 1, 1994/11/
5.2 Investment Advisory Agreement/5/
5.2.1 Investment Advisory Agreement dated October 1, 1994/11/
5.2.2 Transfer and Guaranty Agreement/7/
*5.2.3 Written Notification required under Investment Advisory Agreement
dated October 1, 1994 regarding the rendering of advisory services to
the Micro-Cap Portfolio
6. None
7. None
8. Custodian Agreement/1/
8.1 Letter Agreements renewing Custodian Agreement dated February 24,
1988,/3/ February 21, 1989,/4/ February 7, 1990,/5/ February 15,
1991,/6/, and February 13, 1992,/7/ respectively
8.2 Letter Agreement dated January 27, 1993, renewing Custodian
Agreement/8/
8.3 Custodian Agreement dated August 3, 1993/11/
9. Transfer Agency Agreement/1/
9.1 Letter Agreements renewing Transfer Agency Agreement dated
February 24, 1988,/3/ February 21, 1989,/4/ February 7, 1990,/5/
February 15, 1991,/6/ and February 13, 1992,/7/ respectively
9.2 Letter Agreement dated January 27, 1993, renewing Transfer Agency
Agreement/8/
9.3 Transfer Agent Agreement dated August 3, 1993/11/
10.1 Form of Opinion and Consent of Lawrence, Kamin, Saunders &
Uhlenhop/1A/
*10.1.1 Consent and Opinion of Vedder, Price, Kaufman & Kammholz
10.2 Form of Opinion of Ropes & Gray/1A/
*10.2.1 Opinion and Consent of Ropes & Gray
*11.1 Consent of Ernst & Young LLP
*11.2 Consent of Checkers, Simon & Rosner LLP
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
12. Not applicable
13. Form of Contribution Agreement with Initial Shareholders/1/
13.1 Contribution Agreement dated December 8, 1986, from James D. Oberweis
with respect to the purchase of an aggregate of 5,500 shares as
custodian for two minor children for $10.00 each (a total of
$55,000)/2/
13.2 Contribution Agreement dated December 8, 1986, from Lora J. Oberweis
with respect to the purchase of 2,000 shares for $10.00 each (a total
of $20,000)/2/
13.3 Contribution Agreement dated December 8, 1986, from Helen Cisek with
respect to the purchase of 1,500 shares for $10.00 each (a total of
$15,000)/2/
13.4 Contribution Agreement dated December 8, 1986, from Tedd Determan with
respect to the purchase of an aggregate of 1,000 shares for $10.00
each (a total of $10,000)/2/
14.1 Individual Retirement Custodial Account Agreement, Disclosure
Statement, Form of Account Application, and Transfer Request Form/11/
15.1 Plan of Distribution pursuant to Rule 12b-1/4/
15.2 Distribution and Shareholder Service Agreement/5/
15.3 Amendment to Plan of Distribution pursuant to Rule 12b-1 and
Distribution and Shareholder Service Agreement/8/
15.4 Plan of Distribution pursuant to Rule 12b-1 as amended October 1,
1994./11/
15.4.1 Form of Plan of Distribution pursuant to Rule 12b-1 as amended
January 1, 1996./11/
15.5 Distribution Agreement dated October 1, 1994./11/
15.5.1 Form of Distribution and Shareholder Service Agreement dated
January 1, 1996./11/
15.6 Shareholder Service Agreement dated October 1, 1994./11/
16. Calculation of Performance Data/11/
</TABLE>
---------
/*/ Filed herewith.
/1/ Previously filed with the Registration Statement and incorporated herein by
reference.
/1A/ Previously filed with the Registration Statement.
/2/ Previously filed with Pre-Effective Amendment No. 2 (Amendment No. 2) dated
January 14, 1987 and incorporated herein by reference.
/2A/ Previously filed with Pre-Effective Amendment No. 2.
/3/ Previously filed with Post-Effective Amendment No. 2 (Amendment No. 4)
dated February 28, 1988.
/4/ Previously filed with Post-Effective Amendment No. 3 (Amendment No. 5)
dated March 2, 1989 and incorporated herein by reference.
/5/ Previously filed with Post-Effective Amendment No. 4 (Amendment No. 6)
dated February 28, 1990 and incorporated herein by reference.
/6/ Previously filed with Post-Effective Amendment No. 5 (Amendment No. 7)
dated March 1, 1991 and incorporated herein by reference.
/7/ Previously filed with Post-Effective Amendment No. 6 (Amendment No. 8)
dated March 2, 1992 and incorporated herein by reference.
/8/ Previously filed with Post-Effective Amendment No. 7 (Amendment No. 9)
dated March 1, 1993 and incorporated herein by reference.
/9/ Previously filed with Post-Effective Amendment No. 8 (Amendment No. 10)
dated April 29, 1994 and incorporated herein by reference.
/10/ Previously filed with Post-Effective Amendment No. 9 (Amendment No. 11)
dated February 28, 1995 and incorporated herein by reference.
/11/ Previously filed via EDGAR with Post-Effective Amendment No. 10 (Amendment
No. 12) dated October 18, 1995 and incorporated herein by reference.
C-9
<PAGE>
EXHIBIT 5.2.3
November 21, 1995
Oberweis Asset Management, Inc.
One Constitution Drive
Aurora, Illinois 60506
Ladies and Gentlemen:
The Oberweis Emerging Growth Fund (the "Fund") intends to establish an
additional portfolio, the Oberweis Micro-Cap Portfolio (the "Micro-Cap
Portfolio"). This letter serves to notify Oberweis Asset Management, Inc.
("OAM") that the Fund desires to retain OAM to render investment advisory
services for the Micro-Cap Portfolio, effective as of January 1, 1996, pursuant
to the Investment Advisory Agreement dated October 1, 1994 between the Fund and
OAM (the "Agreement"). For the services provided to the Micro-Cap Portfolio
pursuant to the Agreement, the Fund will pay OAM on a monthly basis, an
investment advisory fee at the annual rate of .60% of the average daily net
assets of the Micro-Cap Portfolio.
Oberweis Emerging Growth Fund
/s/Patrick B. Joyce
-------------------------------------------
Patrick B. Joyce, Executive Vice President
Accepted and Agreed this
21st day of November, 1995.
Oberweis Asset Management, Inc.
/s/James D. Oberweis
- ----------------------------------
By: James D. Oberweis
Its President
<PAGE>
EXHIBIT 10.1.1
[LETTERHEAD OF VEDDER, PRICE, KAUFMAN & KAMMHOLZ]
December 12, 1995
Oberweis Emerging Growth Fund
One Constitution Drive
Aurora, Illinois 60506
Ladies and Gentlemen:
Reference is made to Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A under the Securities Act of 1933 being filed by Oberweis
Emerging Growth Fund (the "Fund") in connection with the proposed registration
of units of beneficial interest, no par value ("Shares"), in the Oberweis Micro-
Cap Portfolio (the "Portfolio").
We are counsel to the Fund and in such capacity are familiar with the
Fund's organization and have counseled the Fund regarding various legal matters.
We have examined such Fund records and other documents and certificates as we
have considered necessary or appropriate for the purpose of this opinion. As to
various questions of fact material to our opinion, we have relied upon
statements and certificates of officers and representatives of the Fund. In our
examination of such materials, we have assumed the genuineness of all signatures
and the conformity to original documents of all copies submitted to us.
Based upon the foregoing and upon the opinion dated December 7, 1995 by
Ropes & Gray of Boston, Massachusetts, we advise you and opine that (a) the Fund
is a duly authorized and validly existing voluntary association with
transferrable shares under the laws of the Commonwealth of Massachusetts and is
authorized to issue an unlimited number of Shares in the Portfolio; and (b) upon
the issuance of the Shares in accordance with the Fund's Agreement and
Declaration of Trust and the receipt by the Fund of a purchase price not less
than the net asset value per Share, the Shares will be legally issued and
outstanding, fully paid and non-assessable (although shareholders of the Fund
may be subject to liability under certain circumstances as described in the
opinion from Ropes & Gray).
We hereby consent to the use of this opinion and to the use of our name as
referenced under Additional Information in connection with said Post-Effective
Amendment.
Very truly yours,
/s/VEDDER, PRICE, KAUFMAN & KAMMHOLZ
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
COK:dfd
<PAGE>
EXHIBIT 10.2.1
[LETTERHEAD OF ROPES & GRAY]
December 7, 1995
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, IL 60601
Ladies and Gentlemen:
We are furnishing this opinion in connection with the proposed offer and
sale from time to time by the Oberweis Micro-Cap Portfolio, a series (the
"Series") of The Oberweis Emerging Growth Fund (the "Trust"), of an indefinite
number of shares of beneficial interest, without par value (the "Shares"),
pursuant to the Trust's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended.
We are familiar with the action taken by the Trustees of the Trust to
authorize the issuance of the Shares. We have examined the Trust's records of
Trustee action, its By-Laws and its Agreement and Declaration of Trust, as
amended to date. We have examined such other documents as we deem necessary for
the purposes of this opinion.
We assume that, upon sale of the Shares, the Trust will receive the net
asset value thereof and that appropriate action has been or will be taken to
register or qualify the sale of the Shares under any applicable state and
federal laws regulating sales and offerings of securities.
Based upon the foregoing, we are of the opinion that:
1. The Trust is a legally organized and validly existing unincorporated
voluntary association under the laws of The Commonwealth of Massachusetts which,
unless terminated as provided in its Agreement and Declaration of Trust, shall
continue in existence without limitation of time.
<PAGE>
ROPES & GRAY
Vedder, Price, Kaufman & Kammholz -2- December 7, 1995
2. The Trust is authorized to issue an unlimited number of Shares, and
that, when the Shares are issued and sold after the Registration Statement has
been declared effective and the authorized consideration therefor is received by
the Trust, they will be validly issued, fully paid and nonassessable by the
Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust or any
series of the Trust (a "Series"). However, the Agreement and Declaration of
Trust disclaims shareholder liability for acts or obligations of the Trust or
any Series and requires that notice of such disclaimer be given in every note,
bond, contract, instrument, certificate or other undertaking issued by or on
behalf of the Trust. The Agreement and Declaration of Trust provides for
indemnification out of property of the Trust or a particular Series for all loss
and expense of any shareholder held personally liable for the obligations of the
Trust or that particular Series. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust or the particular Series itself would be unable to meet its
obligations.
We consent to the filing of this opinion as an exhibit to the aforesaid
Registration Statement.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE>
EXHIBIT 11.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our reports dated January 27, 1995 and October 2, 1995
for the Oberweis Emerging Growth Portfolio and the Oberweis Micro-Cap Portfolio,
respectively, in the Registration Statement (Form N-1A) and related Prospectus
of the Oberweis Emerging Growth Fund (to be renamed The Oberweis Funds), filed
with the Securities and Exchange Commission in this Post-Effective Amendment
No. 11 to the Registration Statement under the Securities Act of 1933
(Registration No. 33-9093) and in this Amendment No. 13 to the Registration
Statement under the Investment Company Act of 1940 (Registration No. 811-4854).
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
December 11, 1995
<PAGE>
EXHIBIT 11.2
[LETTERHEAD OF CHECKERS SIMON & ROSNER]
Consent of Checkers, Simon & Rosner
We have issued our report dated February 6, 1994, accompanying the financial
statements of Oberweis Emerging Growth Fund, contained in the Registration
Statement and Prospectus. We consent to the use of the aforementioned report in
the Registration Statement and Prospectus and to the use of our name as
referenced under Additional Information.
/s/ CHECKERS, SIMON & ROSNER LLP
CHECKERS, SIMON & ROSNER LLP
Chicago, Illinois
December 18, 1995
[LETTERHEAD OF CHECKERS SIMON & ROSNER]
