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SKYLINE Funds
SKYLINE SPECIAL EQUITIES PORTFOLIO
SKYLINE SMALL CAP VALUE PLUS
SKYLINE SMALL CAP CONTRARIAN
Supplement dated November 17, 1999
to
Prospectus of Skyline Funds dated May 1, 1999
The Board of Trustees of Skyline Funds ("Skyline") has approved a Plan of
Reorganization (the "Plan"), which would merge Skyline Small Cap Value Plus
("Value Plus") and Skyline Small Cap Contrarian ("Contrarian" and with Value
Plus, the "Acquired Funds") into Skyline Special Equities Portfolio ("Special
Equities Portfolio"). Pursuant to the Plan, Special Equities Portfolio will
acquire substantially all of the assets and liabilities of the Acquired Funds,
in exchange solely for shares of beneficial interest, no par value ("Shares"),
of Special Equities Portfolio. The Acquired Funds would then distribute the
Shares pro rata to their shareholders. After the distribution, each Acquired
Fund will be liquidated and discontinued as a separate series of Skyline.
The Board believes that the proposed reorganization is in the best interest of
the Acquired Funds' shareholders. The Acquired Funds' shareholders will have an
opportunity to invest in Special Equities Portfolio, the Skyline Funds' flagship
fund, which until October 1999 was closed to new investors. The Board believes
the reorganization will allow Skyline Asset Management, L.P. (the Funds'
investment adviser) to concentrate and devote its stock-picking abilities and
resources to one fund.
The Acquired Funds and Special Equities Portfolio have an identical investment
objective and similar investment strategies. All three funds invest in a
relatively narrow segment of the market - small cap, value-oriented stocks. As
with any mutual fund, however, there is no assurance that Special Equities
Portfolio will meet its investment objective.
The value of the Special Equities Portfolio shares received by each shareholder
of an Acquired Fund in the transaction is expected to be the same as the value
of such shareholder's account in the Acquired Fund immediately prior to the
transaction. The reorganization will not be a taxable event, and shareholders
will recognize no gain or loss through the exchange of shares in the
reorganization.
The reorganization is subject to certain regulatory approvals and the approval
of each Acquired Fund's shareholders. The Board recommends that the Acquired
Funds' shareholders approve the Plan at the special meeting of shareholders.
Details of the transaction and other information about the Plan will be set
forth in a proxy statement/prospectus to be mailed to the Acquired Funds'
shareholders in early January 2000. If approved, the reorganization is expected
to occur on or about February 29, 2000.
Questions may be directed to Skyline Funds at 1.800.828.2759.
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SKYLINE Funds
311 SOUTH WACKER DRIVE, SUITE 4500
CHICAGO, IL 60606
800.828.2759
Distributor: Funds Distributor Inc.
