Trent Equity Fund
Supplement to Prospectus dated January 1, 1996
The disclosure under the caption Custodian in the Fund's prospectus dated
January 1, 1996 is supplemented by the following information.
Effective March 1, 1996, Star Bank, N.A., 425 Walnut Street, Cincinnati, OH
45202 will serve as Custodian of the Fund's assets.
The disclosure under the caption "Management of the Fund" in the Prospectus is
revised as follows:
Investment Company Administration Corporation ("ICAC"),the Fund's Administration
Manager, is paid a monthly fee at the annual rate of 0.25% of average net assets
or $30,000, whichever is greater. Under a revised agreement with ICAC, a monthly
fee will be paid by the Fund to ICAC at the following annual rate:
Average net assets of each Fund Fee or fee rate
- ------------------------------- ---------------
Under $15 million $30,000
$15 to $50 million 0.20% of average net assets
$50 to $100 million 0.15% of average net assets
$100 million to $150 million 0.10% of average net assets
Over $150 million 0.05% of average net assets
ICAC is currently waiving one half of the administrative management fee payable
under this fee rate schedule.
March 1, 1996
<PAGE>
TRENT EQUITY FUND
2002 Pisgah Church Road, Suite 140
Greensboro, North Carolina 27455
(910) 282-9302
The investment objective of the Trent Equity Fund (the "Fund") is to seek
capital appreciation, both realized and unrealized, through investments in
equities, consisting of common and preferred stocks and securities convertible
into common stocks. Current income will be of secondary importance. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
Prospectus. Trent Capital Management, Inc. (the "Advisor") serves as investment
advisor to the Fund.
This Prospectus sets forth the basic information you should know before
investing in the Fund. You should read it and keep it for future reference. The
Fund is a series of Professionally Managed Portfolios. A Statement of Additional
Information dated January 1, 1996, containing additional information about the
Fund has been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus in its entirety. A copy of the
Statement of Additional Information is available without charge upon request to
the Fund at the address or telephone number given above.
TABLE OF CONTENTS
Expense Table.................................................... 2
Financial Highlights............................................. 3
Investment Objectives and Approach............................... 4
Risk Factors..................................................... 5
Management of the Fund........................................... 6
How to Invest in the Fund........................................ 6
How to Redeem an Investment in the Fund.......................... 8
Services Available to the Fund's Shareholders.................... 9
How the Fund's Per Share Value is Determined..................... 9
Dividends, Distributions and Taxes............................... 10
General Information.............................................. 10
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated January 1, 1996
<PAGE>
EXPENSE TABLE
Expenses are one of several factors to consider when investing in the Fund.
The purpose of the following fee table is to provide an understanding of the
various costs and expenses which may be borne directly or indirectly by an
investment in the Fund. Actual expenses may be more or less than those shown.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases................... None
Maximum Sales Load Imposed on Reinvested Dividends........ None
Deferred Sales Load....................................... None
Redemption Fee............................................ None*
* A $7 charge is deducted on redemptions paid by wire transfer. See page 8.
Annual Fund Operating Expenses
(As a % of average net assets)
Investment Advisory Fee Rate.............................. 1.15%
Administrator Fees........................................ 0.25%
Other Expenses............................................ 0.60%
---------
Total Fund Operating Expense (After Expense Reimbursement) 2.00%**
=========
**The Advisor is currently limiting the Fund's annual operating expenses to
2.00% of average net assets. Without the Advisor's voluntary limitation, total
fund operating expenses would have been 3.65% of average daily net assets for
the fiscal year ended August 31, 1995.
EXAMPLE
This table illustrates the net transaction and operating expenses that would be
incurred by an investment in the Fund over different time periods assuming a
$1,000 investment, a 5% annual return, and redemption at the end of:
1 year 3 years 5 years 10 years
$20 $63 $108 $233
The Example shown above should not be considered a representation of past
or future expenses and actual expenses may be greater or less than those shown.
In addition, federal regulations require the Example to assume a 5% annual
return, but the Fund's actual return may be higher or lower. See "Management of
the Fund" on page 6.
<PAGE>
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the fiscal year
The financial information as of and for the period ended September 2, 1992
through August 31, 1993 has been examined by Tait, Weller, & Baker, independent
public accountants. The financial information as of and for the years ended
August 31, 1994 and August 31, 1995 has been examined by Coopers & Lybrand
L.L.P., independent public accountants, whose report is incorporated by
reference in the statement of additional information. This information should be
read in conjunction with the Fund's latest audited annual financial statements
and notes thereto, which are also incorporated by reference in the Statement of
Additional Information, a copy of which may be obtained at no charge by calling
the Fund.
<TABLE>
<CAPTION>
September 2,
1992*
Year Ended Year Ended through
August 31, August 31, August 31,
1995 1994 1993
<S> <C> <C> <C>
Net asset value, beginning of period........................ $11.50 $11.66 $10.00
Income from investment operations:
Net investment loss................................... -0- (0.07) (0.08)
Net realized and unrealized gain on investments....... .67 0.15 1.76
- ----------------------------------------------------------------------------------------------------
Total from investment operations...................... .67 0.08 1.68
- ----------------------------------------------------------------------------------------------------
Less distributions:
Dividends (from net investment income)................ -0- -0- (0.01)
Distributions (from capital gains).................... (1.93) (0.24) (0.01)
- ----------------------------------------------------------------------------------------------------
Total distributions................................... (1.93) (0.24) (0.02)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period.............................. $10.24 $11.50 $11.66
====================================================================================================
Total return................................................ 9.38% 0.64% 16.91%+
Ratios/supplemental data:
Net assets, end of period (millions)........................ $3.8 $ 3.9 $ 4.7
Ratio of expenses to average net assets:
Before expense reimbursement.......................... 3.65% 3.16% 3.33%+++
After expense reimbursements.......................... 1.85% 1.85% 2.54%+++
Ratio of net income to average net assets:
Before expense reimbursement.......................... (2.00)% (1.68)% (1.84)%+++
After expense reimbursements.......................... (0.15)% (0.36)% (1.05)%+++
Portfolio turnover rate..................................... 46.52% 149.25% 315.38%
</TABLE>
* Effective date of the Fund's initial registration under the Securities Act of
1933, as amended. +Annualized.
++Excludes taxes and tax reimbursements of 2.84% of average net assets on an
annualized basis.
Further information about the performance of the Fund is contained in the Annual
Report of the fund, a copy of which may be obtained at no charge by calling the
Fund.
<PAGE>
INVESTMENT OBJECTIVES AND APPROACH
The Fund's investment objective is to seek capital appreciation, both realized
and unrealized. The Fund will seek to attain its objective by investing in
equities and under normal conditions expects to be fully invested. The Fund does
not expect to use market timing techniques or make frequent changes in asset
allocation. In most instances, particularly when the Advisor believes that long
term capital appreciation can be achieved without excessive levels of market
risk, the Fund will be fully invested in equities. In addition to common stocks,
the Fund may hold preferred stock and instruments convertible into common stock.
The Fund's objective may not be altered without the prior approval of a majority
of the Fund's shareholders.
The process of selecting common stocks for the Fund primarily involves analysis
of the fundamentals of individual stocks. Factors considered by the Fund in
selecting stocks include price, earnings expectations, earnings and price
histories, cash flow, balance sheets and management. Macroeconomic
considerations are of secondary importance.
The Fund is diversified, which under applicable federal law means that as to 75%
of its total assets, no more than 5% may be invested in securities of a single
issuer and no more than 10% of the voting securities of such issuer. The Advisor
does, however, expect to limit the holdings in the Fund portfolio to less than
35 holdings under normal circumstances, in the belief that having a small number
of positions leads to the potential for superior capital appreciation.
Under normal market conditions, a portion of the Fund's assets will be held in
money market instruments for funds awaiting investment, to allow for shareholder
redemptions, and to provide for Fund operating expenses. As a temporary
defensive measure, when the Advisor determines that market conditions warrant,
the Fund may invest up to 100% of the Fund's assets in money market instruments.
To the extent the Fund invests its assets in money
market instruments it is not pursuing its stated investment objective.
While portfolio securities are generally acquired for the long term, they may be
sold under some of the following circumstances when the Advisor believes that:
(a) the anticipated price appreciation has been achieved or is no longer
probable; (b) alternate investments offer superior total return prospects; or
(c) the risk of decline in market value is increased.
Equity Selection. The Fund's portfolio will be comprised principally of common
stocks traded on the New York Stock Exchange, American Stock Exchange or on the
over-the-counter market. The Investment Advisor will avoid concentration of the
Fund's portfolio in any one industry or group of industries. The level of
dividends paid by the portfolio companies will be of secondary importance, since
current income is not a primary objective. As a majority of the Fund's portfolio
will be comprised of common stocks traded on the New York Stock Exchange and
American Stock Exchange, the market capitalization of securities selected for
inclusion in the Fund portfolio will typically be medium to large
capitalization.
Money Market Instruments. Money market instruments may be purchased for
temporary defensive purposes, to accumulate cash for anticipated purchases of
portfolio securities and to provide for shareholder redemptions and operational
expenses of the Fund. Money market instruments mature in thirteen months or less
from the date of purchase and may include the U.S. Government Securities and
corporate debt securities described below (including those subject to repurchase
agreements), bankers acceptances and certificates of deposit of domestic
branches of U.S. banks and commercial paper (including variable amount demand
master notes) rated in the highest rating category by S&P or Moody's or, if not
rated, issued by a corporation having an outstanding unsecured debt issue rated
AA or better by Moody's or S&P or, if not so rated, of equivalent quality in the
<PAGE>
Advisor's opinion. The Advisor may, when it believes that unusually volatile or
unstable economic and market conditions exist, depart from the Fund's investment
approach and assume temporarily a defensive portfolio posture, increasing the
Fund's percentage investment in fixed income securities and cash equivalents,
even to the extent that 100% of Fund assets may be so invested. "U.S. Government
Securities" include direct obligations of the U.S. Treasury, securities issued
or guaranteed by agencies or instrumentalities of the U.S. Government, or any of
the foregoing subject to repurchase agreements. (See "Repurchase Agreements").
Repurchase Agreements. The Fund may engage in repurchase agreements. A
repurchase agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
which reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to five days of
the purchase. The Fund will not enter into a repurchase agreement which will
cause more than 10% of its assets to be invested in repurchase agreements which
extend beyond seven days.
Foreign Securities. The Fund may invest up to 10% of its assets in U.S. dollar
denominated securities of foreign issuers, including American Depositary
Receipts with respect to securities of foreign issuers. ADRs are depository
receipts for foreign securities denominated in U.S. dollars and traded on U.S.
securities markets.
There may be less publicly available information about these issuers than is
available about companies in the U.S. and foreign auditing requirements may not
be comparable to those in the U.S. In addition, the value of the foreign
securities may be adversely affected by movements in the exchange rates between
foreign currencies and the U.S. dollar, as well as other political and economic
developments, including the possibility of expropriation, confiscatory taxation,
exchange controls or other foreign governmental restrictions.
RISK FACTORS
The major portion of the Fund's portfolio normally consists of common stocks,
which are subject to market risks that cause their prices to fluctuate over
time. Thus, the Fund's net asset value will be expected to fluctuate and Fund
shares when redeemed may be worth more or less than their original cost.
Borrowing. The Fund may borrow, temporarily, up to 10% of its total assets for
extraordinary purposes or to meet redemption requests which might otherwise
require untimely disposition of portfolio holdings. To the extent the Fund
borrows for these purposes, the effects of market price fluctuations on
portfolio net asset value will be exaggerated. If, while such borrowing is in
effect, the value of the Fund's assets declines, the Fund could be forced to
liquidate portfolio securities when it is disadvantageous to do so. The Fund
would incur interest and other transaction costs in connection with borrowing.
Any such borrowing will be repaid prior to making any additional investments.
The Fund will borrow only from a bank. The Fund will not make any further
investments if the borrowing exceeds 5% or more of its assets until such time as
repayment has been made to bring the total borrowing below 5% of its assets.
Portfolio Turnover. By utilizing the approach to investing described herein,
portfolio turnover will generally not exceed 100% per year. The degree of
portfolio activity affects the brokerage costs of the Fund, and may have an
effect on the tax consequences of capital gain distributions.
The Fund has adopted certain investment restrictions, which are described fully
in the Statement of Additional Information. Like the Fund's investment
objective, certain of these restrictions are fundamental
<PAGE>
and may be changed only by a majority vote of the Fund's outstanding shares.
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund.
The Advisor provides the Fund with advice on buying and selling securities,
manages the investments of the Fund, furnishes the Fund with office space and
certain administrative services, and provides most of the personnel needed by
the Fund. The Advisor was organized as a corporation in 1987 and is registered
as an investment advisor under the Investment Advisers Act of 1940. Mr. Robert
V. May, Mr. David C. Millikan and Mr. James Folds are control persons of the
Advisor. Mr. May is responsible for day to day management of the Fund's
portfolio.
As compensation, the Fund pays the Advisor a monthly management fee (accrued
daily) based upon the average daily net assets of the Fund at the rate of 1.15%
annually.
Investment Company Administration Corporation (the "Manager") acts as the Fund's
Administrative Manager. Under that agreement, the Manager prepares various
federal and state regulatory filings, reports and returns for the Fund, prepares
reports and materials to be supplied to the trustees, monitors the activities of
the Fund's custodian, transfer agent and accountants, and coordinates the
preparation and payment of Fund expenses and reviews the Fund's expense
accruals. For its services, the Manager receives an annual fee equal to the
greater of 0.25 of 1% of the Fund's average daily net assets or $15,000.
The Fund is responsible for its own operating expenses. The Advisor has agreed
to reduce its fees or reimburse the Fund for its annual operating expenses which
exceed the most stringent limits prescribed by any state in which the Fund's
shares are offered for sale. The Advisor also may reimburse additional amounts
to the Fund at any time in order to reduce the Fund's expenses, or to the extent
required by applicable securities laws. The Advisor is currently limiting the
Fund's annual operating expense to 2.00% of average net assets. To the extent
the Advisor performs a service for which the Fund is obligated to pay, the Fund
shall reimburse the Advisor for its costs incurred in rendering such service.
The Advisor may in its discretion and out of its own funds compensate third
parties, such as financial planners, advisors, brokers and financial
institutions, for sales and marketing assistance with respect to the Fund.
The Advisor considers a number of factors in determining which brokers or
dealers to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional Information, the factors include, but
are not limited to, the reasonableness of commissions, quality of services and
execution, and the availability of research which the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive prices, the Advisor may also
consider the sale of Fund shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.
HOW TO INVEST IN THE FUND
The minimum initial investment is $1,000. Subsequent investments must be at
least $500, except that the minimum subsequent investment made through the
Automatic Investment Plan is $250. First Fund Distributors, Inc. (the
"Distributor"), acts as Distributor of the Fund's shares. The Distributor may,
at its discretion, waive the minimum investment requirements for purchases in
conjunction with certain group or periodic plans.
<PAGE>
Investors may purchase shares of the Fund by check or wire:
By Check: For initial investments, an investor should complete the Fund's
Account Application (included with this Prospectus). The completed application,
together with a check payable to "Trent Equity Fund," should be mailed to the
Fund's Transfer Agent: Trent Equity Fund, Rodney Square Management Corp., P.O.
Box 8987, Wilmington, DE 19899-9752. A purchase order sent by overnight mail
should be sent to Trent Equity Fund, c/o Rodney Square Management, 1105 North
Market Street, Wilmington, DE 19890.
For subsequent investments, a stub is attached to the account statement sent to
shareholders after each transaction. The stub should be detached from the
statement and, together with a check payable to "Trent Equity Fund," mailed to
the Transfer Agent in the envelope provided at the address indicated above. The
investor's account number should be written on the check.
By Wire: For initial investments, before wiring funds, an investor should call
the Transfer Agent at (800) 282-2340 between the hours of 9:00 a.m. and 4:00
p.m. Eastern time, on a day when the New York Stock Exchange is open for trading
in order to receive an account number. The Transfer Agent will request the
investor's name, address, tax identification number, amount being wired and
wiring bank. The investor should then instruct the wiring bank to transfer funds
by wire to: RSMC, c/o Wilmington Trust Company, Wilmington, DE, ABA
#0311-0009-2, DDA #2689-8811, for credit to Trent Equity Fund, for further
credit to [investor's name and account number]. The investor should also ensure
that the wiring bank includes the name of the Fund and the account number with
the wire. If the funds are received by the Transfer Agent prior to the time that
the Fund's net asset value is calculated, the funds will be invested on that
day; otherwise they will be invested on the next business day. Finally, the
investor should write the account number provided by the Transfer Agent on the
Application Form and mail the Form promptly to the Transfer Agent.
For subsequent investments, an investor should call the Transfer Agent at (800)
282-2340 before the wire is sent. Failure to do so will cause the purchase to be
credited the next day, when the Transfer Agent receives notice of the wire. The
investor's bank should wire funds as indicated above. It is essential that
complete information regarding the investor's account be included in all wire
instructions in order to facilitate prompt and accurate handling of investments.
Investors may obtain further information from the Transfer Agent about remitting
funds in this manner and from their own banks about any fees that may be
imposed.
Payment of proceeds from redemption of shares purchased with an initial
investment made by wire may be delayed until one business day after the
completed Account Application is received by the Fund. All investments must be
made in U.S. dollars and, to avoid fees and delays, checks should be drawn only
on U.S. banks and should not be made by third party check. A charge may be
imposed if any check used for investment does not clear. The Fund and the
Distributor reserve the right to reject any purchase order in whole or in part.
If an order, together with payment in proper form, is received by the Transfer
Agent by the close of trading on the New York Stock Exchange (currently 4:00
p.m., New York City time), Fund shares will be purchased at the offering price
determined as of the close of trading on that day. Otherwise, Fund shares will
be purchased at the offering price determined as of the close of trading on the
New York Stock Exchange on the next business day.
Federal tax regulations require that investors provide a certified Taxpayer
Identification Number and certain other required certifications upon opening or
reopening an account in order to avoid backup withholding of taxes at the rate
of 31% on taxable distributions and proceeds of redemptions. See the
<PAGE>
Fund's Account Application for further information concerning this requirement.
The Fund is not required to issue share certificates. All shares are normally
held in non-certificated form registered on the books of the Fund and the Fund's
Transfer Agent for the account of the shareholder.
HOW TO REDEEM AN INVESTMENT IN THE FUND
A shareholder has the right to have the Fund redeem all or any portion of his
outstanding shares at their current net asset value on each day the New York
Stock Exchange is open for trading. The redemption price is the net asset value
per share next determined after the shares are validly tendered for redemption.
Direct Redemption. A written request for redemption must be received by the
Fund's Transfer Agent in order to constitute a valid tender for redemption.
Redemption requests should (a) state the number of shares to be redeemed, (b)
identify the shareholder's account number and (c) be signed by each registered
owner exactly as recorded on the account registration. To protect the Fund and
its shareholders, a signature guarantee is required for certain transactions,
including redemptions. Signature(s) on the redemption request must be guaranteed
by an "eligible guarantor institution" as defined in the federal securities
laws. These institutions include banks, broker-dealers, credit unions and
savings institutions. A broker-dealer guaranteeing signatures must be a member
of a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees. Signature guarantees
will be accepted from any eligible guarantor institution which participates in a
signature guarantee program. A notary public is not an acceptable guarantor.
Telephone Redemption. Shareholders who complete the Redemption by Telephone
portion of the Fund's Account Application may redeem shares on any business day
the New York Stock Exchange is open by calling the Fund's Transfer Agent at
(800) 282- 2340 between the hours of 9:00 a.m. and 4:00 p.m. Eastern time.
Redemption proceeds will be mailed to the address of record or wired at the
shareholder's direction the next business day to the predesignated account. The
minimum amount that may be wired is $1,000 (wire charges, if any, will be
deducted from redemption proceeds).
By establishing telephone redemption privileges, a shareholder authorizes the
Fund and its Transfer Agent to act upon the instruction of any person by
telephone to redeem from the account for which such service has been authorized
and send the proceeds to the address of record on the account or transfer the
proceeds to the bank account designated in the Authorization. The Fund and the
Transfer Agent will use procedures to confirm that redemption instructions
received by telephone are genuine, including recording of telephone instructions
and requiring a form of personal identification before acting on such
instructions. If these identification procedures are not followed, the Fund or
its agents could be liable for any loss, liability or cost which results from
acting upon instructions of a person believed to be a shareholder with respect
to the telephone redemption privilege. The Fund may change, modify, or terminate
these privileges at any time upon at least 60 days' notice to shareholders. The
Transfer Agent charges a fee of $7 for wire transmission of redemption proceeds,
which is deducted from the proceeds.
Shareholders may request telephone redemption after an account is opened;
however, the authorization form will require a separate signature guarantee.
Shareholders may experience delays in exercising telephone redemption during
periods of abnormal market activity.
General. Payment of the redemption proceeds will be made promptly, but not later
than seven days after the receipt of all documents in proper form, including a
written redemption order with appropriate signature guarantee in cases where
telephone redemption privileges are not being utilized. The Fund
<PAGE>
may suspend the right of redemption under certain extraordinary circumstances in
accordance with the Rules of the Securities and Exchange Commission. In the case
of shares purchased by check and redeemed shortly after purchase, the Fund will
not mail redemption proceeds until it has been notified that the check used for
the purchase has been collected, which may take up to 15 days from the purchase
date. To minimize or avoid such delay, investors may purchase shares by
certified check or federal funds wire. A redemption may result in recognition of
a gain or loss for Federal income tax purposes.
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to redeem shares in any account, other than retirement plan
or Uniform Gift to Minors Act accounts, if at any time, due to redemptions by
the shareholder, the total value of a shareholder's account does not equal at
least $1,000. If the Fund determines to make such an involuntary redemption, the
shareholder will first be notified that the value of his account is less than
$1,000 and will be allowed 30 days to make an additional investment to bring the
value of his account to at least $1,000 before the Fund takes any action.
SERVICES AVAILABLE TO THE FUND'S SHAREHOLDERS
Retirement Plans. The Fund offers a prototype Individual Retirement Account
("IRA") plan and information is available from the Distributor or from your
securities dealer with respect to Keogh, Section 403(b) and other retirement
plans offered. Investors should consult a tax adviser before establishing any
retirement plan.
Automatic Investment Plan. For the convenience of shareholders, the Fund offers
a preauthorized check service under which a check is automatically drawn on the
shareholder's personal checking account each month for a predetermined amount
(but not less than $250, unless waived), as if the shareholder had written it
himself. Upon receipt of the check, the Fund automatically invests the money in
additional shares of the Fund at the current offering price. Applications for
this service are available from the Distributor. There is no charge by the Fund
for this service. The Distributor may terminate or modify this privilege at any
time, and shareholders may terminate their participation by notifying the
Transfer Agent in writing.
Systematic Withdrawal Program. As another convenience, the Fund offers a
Systematic Withdrawal Program whereby shareholders may request that a check
drawn in a predetermined amount be sent to them each month or calendar quarter.
A shareholder's account must have Fund shares with a value of at least $10,000
in order to start a Systematic Withdrawal Program, and the minimum amount that
may be withdrawn each month or quarter under the Systematic Withdrawal Program
is $100. This Program may be terminated or modified by a shareholder or the Fund
at any time without charge or penalty.
A withdrawal under the Systematic Withdrawal Program involves a redemption of
shares, and may result in a gain or loss for federal income tax purposes. In
addition, if the amount withdrawn exceeds the dividends credited to the
shareholder's account, the account ultimately may be depleted.
HOW THE FUND'S PER SHARE VALUE IS DETERMINED
The net asset value of a Fund share is determined once daily as of the close of
public trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time)
on each day the New York Stock Exchange is open for trading. Net asset value per
share is calculated by dividing the value of the Fund's total assets, less its
liabilities, by the number of Fund shares outstanding.
Portfolio securities are valued using current market values, if available.
Securities for which market quotations are not readily available are valued at
fair values as determined in good faith by or under supervision of the Trust's
officers in accordance with methods which are specifically authorized by the
Board of Trustees. Short-term obligations with
<PAGE>
remaining maturities of sixty days or less are valued at amortized cost as
reflecting fair value.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. Dividends from net investment income are declared
and paid at least annually, typically at the end of the Fund's fiscal year
(August 31). Any undistributed net capital gains realized during the Fund's
fiscal year will also be distributed to shareholders after the end of the year,
with a supplemental distribution on or about December 31 of any undistributed
net investment income as well as any additional undistributed capital gains
earned during the 12-month period ended each October 31.
Dividends and capital gain distributions (net of any required tax withholding)
are automatically reinvested in additional shares of the Fund at the net asset
value per share on the reinvestment date unless the shareholder has previously
requested in writing to the Transfer Agent that payment be made in cash.
Any dividend or distribution paid by the Fund has the effect of reducing the net
asset value per share on the reinvestment date by the amount of the dividend or
distribution. Investors should note that a dividend or distribution paid on
shares purchased shortly before such dividend or distribution was declared will
be subject to income taxes as discussed below even though the dividend or
distribution represents, in substance, a partial return of capital to the
shareholder.
Taxes. The Fund has qualified and elected to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code (the "Code").
As long as the Fund continues to qualify, and as long as the Fund distributes
all of its income each year to the shareholders, the Fund will not be subject to
any federal income tax or excise taxes based on net income. The distributions
made by the Fund will be taxable to shareholders whether received in shares
(through dividend reinvestment) or in cash. Distributions derived from net
investment income, including net short-term capital gains, are taxable to
shareholders as ordinary income. A portion of these distributions may qualify
for the intercorporate dividends-received deduction. Distributions designated as
capital gains dividends are taxable as long-term capital gains regardless of the
length of time shares of the Fund have been held. Although distributions are
generally taxable when received, certain distributions made in January are
taxable as if received the prior December. Shareholders will be informed
annually of the amount and nature of the Fund's distributions.
Additional information about taxes is set forth in the Statement of Additional
Information. Shareholders should consult their own advisers concerning federal,
state and local taxation of distributions from the Fund.
GENERAL INFORMATION
The Trust. The Trust was organized as a Massachusetts business trust on February
17, 1987. The Agreement and Declaration of Trust permits the Board of Trustees
to issue an unlimited number of full and fractional shares of beneficial
interest, without par value, which may be issued in any number of series. The
Board of Trustees may from time to time issue other series, the assets and
liabilities of which will be separate and distinct from any other series. The
fiscal year end of the Fund is August 31.
Shareholder Rights. Shares issued by the Fund have no preemptive, conversion, or
subscription rights. Shareholders have equal and exclusive rights as to
dividends and distributions as declared by the Fund and to the net assets of the
Fund upon liquidation or dissolution. The Fund, as a separate series of the
Trust, votes separately on matters affecting only the Fund (for example,
approval of the Management Agreement); all series of the Trust vote as a single
class on matters affecting all series jointly or the Trust as a whole (for
example, election or removal of Trustees). Voting rights are not cumulative, so
<PAGE>
that the holders of more than 50% of the shares voting in any election of
Trustees can, if they so choose, elect all of the Trustees. While the Trust is
not required and does not intend to hold annual meetings of shareholders, such
meetings may be called by the Trustees in their discretion, or upon demand by
the holders of 10% or more of the outstanding shares of the Trust for the
purpose of electing or removing Trustees.
Performance Information. From time to time, the Fund may publish its total
return in advertisements and communications to investors. Total return
information will include the Fund's average annual compounded rate of return
over the most recent four calendar quarters and over the period from the Fund's
inception of operations. The Fund may also advertise aggregate and average total
return information over different periods of time. The Fund's total return will
be based upon the value of the shares acquired through a hypothetical $1,000
investment (at the maximum public offering price) at the beginning of the
specified period and the net asset value of such shares at the end of the
period, assuming reinvestment of all distributions. Total return figures will
reflect all recurring charges against Fund income. Investors should note that
the investment results of the Fund will fluctuate over time, and any
presentation of the Fund's total return for any prior period should not be
considered as a representation of what an investor's total return may be in any
future period.
Shareholder Inquiries. Shareholder inquiries should be directed to the Fund at
the number shown on the cover of the Prospectus.
<PAGE>
Advisor
Trent Capital Management, Inc.
2002 Pisgah Church Road, Suite 140
Greensboro, North Carolina 27455
(910) 282-9302
--
Distributor
First Fund Distributors, Inc.
4455 E. Camelback Road, Suite 261E
Phoenix, Arizona 85018
--
Custodian
The Provident Bank
P.O. Box 14967
Cincinnati, Ohio 45250-0967
--
Transfer and Dividend Disbursing Agent
Rodney Square Management Corporation
P.O. Box 8987
Wilmington, DE 19899
(800) 282-2340
--
Auditors
Tait, Weller & Baker
2 Penn Center Plaza
Philadelphia, PA 19102
--
Legal Counsel
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
PROSPECTUS
January 1, 1996
