Crescent Fund
Supplement to Prospectus dated August 1, 1995
The disclosure under the caption "Management of the Fund" is revised as follows:
Effective March 1, 1996, investment advisory services to the Fund will be
provided by First Pacific Advisors, Inc. ("FPA") and Mr. Steven Romick, who has
been principally responsible for the management of the Fund's portfolio since
inception, will become Senior Vice President of FPA and continue to act as
Portfolio Manager for the Fund. FPA, together with its predecessors, has been in
the investment advisory business since 1954. Presently, FPA manages assets of
approximately $3.4 billion for five investment companies, including one
closed-end investment company, and more than 45 institutional accounts. FPA is
an indirect, wholly-owned subsidiary of United Asset Management Corporation
("UAM"), One International Place, Boston, MA 02110, a New York Stock Exchange
listed holding company principally engaged, through affiliated firms, in
providing institutional investment management and acquiring institutional
investment management firms. Under the new investment advisory agreement with
FPA approved by shareholders on February 29, 1996, the advisory fee payable by
the fund will remain unchanged at 1.00% of average net assets annually.
The disclosure under the caption "How to Invest in the Fund" and "How to Redeem
an Investment in the Fund" in the Fund's prospectus dated August 1, 1995 is
supplemented by the following information. Shareholders should review those
portions of the prospectus for a complete discussion regarding purchases and
redemptions of fund shares.
Effective March 8, 1996, Star Bank, N.A., 425 Walnut Street, Cincinnati, OH
45202 will serve as Custodian of the Fund's assets and American Data Services,
Inc., 24 West Carver St., Huntington, NY 11743 will serve as the Fund's Transfer
and Shareholder Service Agent.
Shareholders should direct correspondence and inquiries as follows:
INVESTMENTS
BY MAIL: Initial and subsequent investments should be sent to Crescent Fund,
P.O. Box 856, Cincinnati, OH 45264-0856.
BY WIRE: It is necessary to notify the Fund prior to each wire purchase. Wires
sent without notifying the Fund will result in a delay of the effective date of
your purchase.
Shareholders should instruct their bank to wire funds as follows:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Crescent Fund
DDA # 483897922
Account name (shareholder name)
Shareholder account number
BY COURIER: All investments sent by overnight or other courier services should
be sent to Crescent Fund, c/o Star Bank, N.A., 425 Walnut Street, Mutual Fund
Custody Dept. M.L. 6118, Cincinnati, OH 45202.
REDEMPTIONS:
DIRECT REDEMPTION: Requests for redemption of fund shares should be mailed to
Crescent Fund, 24 West Carver St., Huntington, NY 11743.
TELEPHONE REDEMPTION: If you have completed the Redemption by Telephone portion
of the Fund's account application you may redeem shares on any business day the
New York Stock Exchange is open by calling the Transfer Agent at 1-800-385-7003
before 4:00 p.m. Eastern time.
All other shareholder account questions should be directed to 1-800-385-7003.
The disclosure under the caption "Management of the Fund" in the Prospectus is
revised as follows:
Effective March 8, 1996, Investment Company Administration Corporation ("ICAC")
will act as the Fund's Administrative Manager under substantially the same terms
and conditions as in the previous management agreement with Southampton
Investment Management Company. ICAC and Southampton have the same officers,
directors and employees. Under the current arrangement with Southampton, a
monthly fee is paid at the annual rate of 0.25% of average net assets or
$30,000, whichever is greater. Under the 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
March 1, 1996
<PAGE>
THE CRESCENT FUND
1800 Avenue of the Stars, Suite 1420
Los Angeles, California 90067
(310) 789-5099
The CRESCENT FUND (the "Fund") is a mutual fund with the investment
objective of providing, through a combination of income and capital
appreciation, a total return consistent with reasonable investment risk. The
Fund seeks to achieve its objective by investing primarily in equity securities
(common and preferred stocks) and fixed income obligations. Crescent Management
(the "Advisor") serves as investment advisor to the Fund.
This Prospectus sets forth basic information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. The Fund is a series of Professionally Managed
Portfolios. A Statement of Additional Information dated August 1, 1995, as may
be amended from time to time, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. This 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
Objective and Investment Approach of the Fund............. 4
Management of the Fund.................................... 8
How To Invest in the Fund................................. 8
How To Redeem an Investment in the Fund................... 10
Services Available to the Fund's Shareholders............. 11
How the Fund's Per Share Value Is Determined.............. 11
Distribution and Taxes.................................... 12
General Information....................................... 12
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated August 1, 1995
<PAGE>
The CRESCENT FUND (the "Fund") is a diversified series of Professionally
Managed Portfolios (the "Trust"), an open-end management investment company
offering redeemable shares of beneficial interest. Shares are purchased and
redeemed at their net asset value per share, without a sales charge. The minimum
initial investment is $5,000, with subsequent minimum investments of $500 or
more ($2,000 and $200, respectively, for retirement plans).
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 Fees........................................................... None
Exchange Fee.............................................................. None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management Fees........................................................... 1.00%
12b-1 Fees................................................................ None
Other Expenses............................................................ 0.65%
------
Total Fund Operating Expenses............................................. 1.65%
======
Example 1 Year 3 Years 5 Years 10 Years
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:........................... $17 $52 $90 $195
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."
<PAGE>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period.
The following information has been audited by Tait, Weller & Baker,
independent accountants, whose unqualified report covering the periods indicated
below is incorporated by reference herein and appears in the annual report to
shareholders. This information should be read in conjunction with the financial
statements and accompanying notes which appear in the Statement of Additional
Information. Further information about the Fund's performance is contained in
its annual report to shareholders, which may be obtained without charge by
writing or calling the address or telephone number on the Prospectus cover page.
<TABLE>
<CAPTION>
Year Ended June 2, 1993*
March 31, through
1995 March 31, 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period ..................... $10.96 $10.00
- - ------- ------
Income from investment operations:
Net investment income .............................. .21 .13
Net realized and unrealized gain on investments .... .77 .99
------- -------
Total from investment operations.......................... .98 1.12
------- -------
Less distributions:
Dividends from net investment income................ (.18) (.10)
Distributions from net capital gains ............... (.53) (.06)
------- -------
Total distributions....................................... (.71) (.16)
------- -------
Net asset value, end of period ........................... $11.23 $10.96
======= =======
Total return ............................................. 9.35% 13.73%+
Ratios/supplemental data:
Net assets, end of period (millions)...................... $16.0 $10.2
Ratio of expenses to average net assets:
Before expense reimbursement ....................... 1.65% 1.86%+
After expense reimbursement......................... 1.65% 1.85%+
Ratio of net investment income to average net assets:
Before expense reimbursement ....................... 2.16% 1.60%+
After expense reimbursement ........................ 2.16% 1.61%+
Portfolio turnover rate .................................. 101.41% 88.88%
</TABLE>
*Commencement of operations.
+Annualized.
<PAGE>
OBJECTIVE AND INVESTMENT APPROACH OF THE FUND
The investment objective of the Fund is to provide, through a combination
of income and capital appreciation, a total return consistent with reasonable
investment risk. The Fund seeks to achieve its objective by investing in a
combination of equity securities and fixed income obligations. There is, of
course, no assurance that the Fund's objective will be achieved. Because prices
of common stocks and fixed-income securities fluctuate, the value of an
investment in the Fund will vary, as the market value of its investment
portfolio changes.
Investment Approach-Equity Securities. The Advisor selects equity
securities for the Fund which it believes offer superior investment value. The
Advisor looks for securities of quality companies with characteristics such as:
o Projected corporate earnings growth rate exceeding that of the stock
market average
o High return on capital
o Solid balance sheet
o Meaningful cash flow
o High relative profit margin
o Increasing dividend
o Active share repurchase program
o Superior management, seeking to maximize shareholder value
In the Advisor's view, the stock market prices securities efficiently in
the long term, rewarding companies who successfully grow their earnings and
penalizing those who do not. The Advisor's investment philosophy is based on the
conviction that the market valuation of securities is often inefficient in the
short term. When reacting to current economic or company information, investors
frequently make purchase or sale decisions hastily. These decisions could cause
a particular security, industry group or the entire market to become underpriced
or overpriced in the short term thereby creating an excellent opportunity to
either buy or sell.
Fundamental analysis is the foundation of the Advisor's investment
approach. The Advisor makes use of computer screens, company reports, research
and personal contacts to determine the prospects for a particular industry or
company. Specific considerations affecting an industry or company are reviewed,
as well as macroeconomic factors affecting financial markets.
In addition to common stocks, equity securities purchased for the Fund may
include preferred stocks, convertible preferred stocks and warrants.
Investment Approach-Fixed Income Obligations. Through fixed-income
investments, the Advisor seeks a reliable and recurring stream of income for the
Fund, while preserving its capital. The Advisor attempts to identify the current
interest rate and invest funds accordingly. Usually, a defensive strategy is
employed, with investments made at different points along the yield curve in an
attempt to keep the average maturity of fixed-income investments less than or
equal to ten years.
The Advisor's approach is to invest in U.S. Treasury obligations, U.S.
Government Agency and mortgage-backed securities, corporate and convertible
bonds. The Advisor considers yield spread relationships and their underlying
factors such as credit quality, investor perception and liquidity on a
continuous basis to determine which sector offers the best investment value.
The Fund may purchase investment grade corporate debt securities.
Securities rated BBB by Standard & Poor's Corporation ("S&P") or Moody's
Investors Service ("Moody's") are investment grade, but Moody's
<PAGE>
considers securities rated Baa to have speculative characteristics. Changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity for such securities to make principal and interest payments than is the
case for higher-rated debt securities.
Lower Rated Securities. The Fund may invest in debt securities that are
rated below investment grade, but will limit that investment to no more than 20%
of its assets. Such securities, sometimes referred to as "junk bonds," typically
carry higher coupon rates than investment grade securities but also involve
higher risks and are described as speculative by both Moody's and S&P. They may
by subject to greater market price fluctuations, less liquidity, and greater
risk of income or principal, including a greater possibility of default or
bankruptcy of the issuer of such securities, than are more highly rated debt
securities. Lower rated fixed income securities also are likely to be more
sensitive to adverse economic or company developments and more subject to price
fluctuations in response to changes in interest rates. The market for
lower-rated debt issues generally is thinner and less active than that for
higher quality securities, which may limit the Fund's ability to sell such
securities at fair value in response to changes in the economy or financial
markets.
The Advisor seeks to reduce the risk associated with investing in such
securities by limiting the Fund's holdings in such securities and by the depth
of its own credit analysis. In selecting below investment grade securities, the
Advisor seeks securities in companies with improving cash flows and balance
sheet prospects, whose credit ratings the Advisor views as likely to be
upgraded. The Advisor believes that such securities can produce returns similar
to equities, but with less risk. See the Statement of Additional Information.
Repurchase Agreements. The Fund may enter into repurchase agreements in
order to earn additional income on available cash, or as a defensive investment
in periods when the Fund is primarily in short-term maturities. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Fund)
acquires ownership of a U.S. Government security (which may be of any maturity)
and the seller agrees to repurchase the obligation at a future time at a set
price, thereby determining the yield during the purchaser's holding period
(usually not more than seven days from the date of purchase). Any repurchase
transaction in which the Fund engages will require full collateralization of the
seller's obligation during the entire term of the repurchase agreement. In the
event of a bankruptcy or other default of the seller, the Fund could experience
both delays in liquidating the underlying security and losses in value. However,
the Fund intends to enter into repurchase agreements only with banks with assets
of $500 million or more that are insured by the Federal Deposit Insurance
Corporation and the most creditworthy registered securities dealers pursuant to
procedures adopted and regularly reviewed by the Trust's Board of Trustees. The
Advisor monitors the creditworthiness of the banks and securities dealers with
whom the Fund engages in repurchase transactions.
Illiquid and Restricted Securities. The Fund may not invest more than 15%
of its net assets in illiquid securities, including (i) securities for which
there is no readily available market; (ii) securities the disposition of which
would be subject to legal restrictions (so-called "restricted securities"); and
(iii) repurchase agreements having more than seven days to maturity. A
considerable period of time may elapse between the Fund's decision to dispose of
such securities and the time when the Fund is able to dispose of them, during
which time the value of the securities could decline. Restricted securities do
not include those which meet the requirements of Securities Act Rule 144A and
which the Trustees have determined to be liquid based on the applicable trading
markets.
Foreign Securities. The Fund may invest up to 20% of its assets in
securities of foreign issuers. The Advisor usually buys securities of larger
foreign companies that have well recognized franchises and are selling at a
discount to the securities of similar domestic businesses.
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
<PAGE>
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. The Fund may also invest without limit in securities of foreign
issuers which are listed and traded on a domestic national securities exchange.
Short Sales. The Fund may engage in short sales of securities. In a short
sale, the Fund sells stock which it does not own, making delivery with
securities "borrowed" from a broker. The Fund is then obligated to replace the
security borrowed by purchasing it at the market price at the time of
replacement. This price may or may not be less than the price at which the
security was sold by the Fund. Until the security is replaced, the Fund is
required to pay to the lender any dividends or interest which accrue during the
period of the loan. In order to borrow the security, the Fund may also have to
pay a premium which would increase the cost of the security sold. The proceeds
of the short sale will be retained by the broker, to the extent necessary to
meet margin requirements, until the short position is closed out.
The Fund also must deposit in a segregated account an amount of cash or
U.S. Government Securities equal to the difference between (a) the market value
of the securities short at the time they were sold short and (b) the value of
the collateral deposited with the broker in connection with the short sale (not
including the proceeds from the short sale). While the short position is open,
the Fund must maintain daily the segregated account at such a level that (1) the
amount deposited in it plus the amount deposited with the broker as collateral
equals the current market value of the securities sold short and (2) the amount
deposited in it plus the amount deposited with the broker as collateral is not
less than the market value of the securities at the time they were sold short.
The Fund will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and date on which the
Fund replaces the borrowed security. The Fund will realize a gain if the
security declines in price between those dates. The amount of any gain will be
decreased and the amount of any loss will be increased by any interest the Fund
may be required to pay in connection with the short sale.
The dollar amount of short sales at any one time (not including short
sales against the box) may not exceed 25% of the net equity of the Fund, and the
value of securities of any one issuer in which the Fund is short may not exceed
the lesser of 2% of the value of the Fund's net assets or 2% of the securities
of any issuer.
A short sale is "against-the-box" if at all times when the short position
is open the Fund owns an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for, securities
of the same issue as the securities sold short. Such a transaction serve to
defer a gain or loss for Federal income tax purposes.
Options and Futures. The Fund may purchase and write call and put options
on securities, securities indexes and on foreign currencies, and enter into
futures contracts and use options on futures contracts. The Fund may use these
techniques to hedge against changes in interest rates, foreign currency exchange
rates or securities prices or as part of its overall investment strategies. The
Fund is subject to regulatory limitations on the use of such techniques and is
required to maintain segregated accounts consisting of cash, U.S. Government
securities, or other high grade debt obligations (or, as permitted by applicable
regulation, enter into certain offsetting positions) to cover its obligations
under options and futures contracts to avoid leveraging of the Fund.
The Fund may buy or sell interest rate futures contracts, options on
interest rate futures contracts and options on debt securities for the purpose
of hedging against changes in the value of securities which the Fund owns or
anticipates purchasing due to anticipated changes in interest rates. The Funds
also may engage in currency exchange transactions by means of buying or selling
foreign currency on a spot basis, entering into
<PAGE>
foreign currency forward contracts, any buying and selling foreign currency
options, futures and options on futures. Foreign currency exchange transactions
may be entered into for the purpose of hedging against foreign currency exchange
risk arising from the Fund's investment or anticipated investment in securities
denominated in foreign currencies.
See the Statement of Additional Information for further information
regarding characteristics of and risks involved in the use of these instruments.
U.S. Government Securities. The Fund may invest in U.S. Government
securities. U.S. Government securities include direct obligations issued by the
U.S. Treasury, such as Treasury bills, certificates of indebtedness, notes and
bonds. U.S. Government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal National Mortgage
Association, Government National Mortgage Association, Federal Home Loan Banks,
Federal Financing Bank, and Student Loan Marketing Association.
All Treasury securities are backed by the full faith and credit of the
United States. Obligations of U.S. Government agencies and instrumentalities may
or may not be supported by the full faith and credit of the United States. Some,
such as the Federal Home Loan Banks, are backed by the right of the agency or
instrumentality to borrow from the Treasury. Others, such as securities issued
by the Federal National Mortgage Association, are supported only by the credit
of the instrumentality and not by the Treasury. If the securities are not backed
by the full faith and credit of the United States, the owner of the securities
must look principally to the agency issuing the obligation for repayment and may
not be able to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment.
Mortgage-Related Securities. Mortgage pass-through securities are
securities representing interests in pools of mortgages in which payments of
both interest and principal on the securities are generally made monthly, in
effect "passing through" monthly payments made by the individual borrowers on
the residential mortgage loans which underlie the securities (net of fees paid
to the issuer or guarantor of the securities). Early repayment of principal on
mortgage pass-through securities (arising from prepayments of principal due to
the sale of underlying property, refinancing, or foreclosure, net of fees and
costs which may be incurred) may expose a Fund to a lower rate of return upon
reinvestment of principal. Also, if a security subject to repayment has been
purchased at a premium, in the event of prepayment the value of the premium
would be lost.
As noted above, payment of principal and interest on some mortgage related
securities (but not the market value of the securities themselves) may be
guaranteed by the full faith and credit of the U. S. Government (in the case of
securities guaranteed by GNMA), by agencies or instrumentalities of the U.S.
Government (in the case of securities guaranteed by FNMA or the Federal Home
Loan Mortgage Corporation ("FHLMC"), which are supported only by the
discretionary authority of the U.S. Government to purchase the agency's
obligations). Mortgage pass-through securities created by non-governmental
issuers (such as commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market
issuers) may be supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance, and letters of credit, which
may be issued by governmental entities, private insurers or the mortgage
poolers.
Collateralized mortgage obligations ("CMO's") are hybrid instruments with
characteristics of both mortgage-backed bonds and mortgage pass-through
securities. Similar to a bond, interest and prepaid principal on a CMO are paid,
in most cases, semi-annually. CMO's may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by GNMA, FHLMC, or
<PAGE>
FNMA. CMO's are structured into multiple classes, with each class bearing
a different stated maturity. Monthly payments of principal, including
prepayments, are first returned to investors holding the shortest maturity
class. Investors holding the longer maturity classes receive principal only
after the first class has been retired. Other mortgage related securities
include those that directly or indirectly represent a participation in or are
secured by and payable from mortgage loans on real property, such as CMO
residuals or stripped mortgage-backed securities, and may be structured in
classes with rights to receive varying proportions of principal and interest.
Portfolio Turnover. The annual rate of portfolio turnover is not expected
to exceed 100%. In general, the Advisor will not consider the rate of portfolio
turnover to be a normally limiting factor in determining when or whether to
purchase or sell securities in order to achieve the Fund's objective.
The Fund has adopted certain investment restrictions, which are described
fully in the Statement of Additional Information. Like the Fund's investment
objective, these restrictions are fundamental 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. Crescent Management, located
at 1800 Avenue of the Stars, Suite 1420, Los Angeles, CA 90067, acts as the
Fund's Advisor, and has been in the investment advisory business since 1990. The
Advisor provides investment advisory services to individual and institutional
accounts with a value in excess of $90,000,000.
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. 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 1.00% annually.
Southampton Investment Management Company (the "Manager") acts as the
Fund's Manager under a Management Agreement; 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
$30,000. 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. 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 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 $5,000. Subsequent investments must be at
least $500. Investments in retirement plans may be for minimums of $2,000 and
$200, respectively. First Fund Distributors, Inc. (the
<PAGE>
"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.
Investors may purchase shares of the Fund by check or wire:
By Check:
Initial Investment. Complete the Fund's Account Application (included with
this Prospectus). Make your check payable to "The Crescent Fund" Mail or deliver
the completed Account Application and your check to the Fund's Transfer Agent:
The Provident Bank
Mutual Fund Services
P.O. Box 14967
Cincinnati, OH 45250-0967
Subsequent Investments. Detach and complete the stub attached to your
account statement. Make your check payable to "The Crescent Fund." Write your
shareholder account number on the check. Mail or deliver the check and
reinvestment form to the Provident Bank in the envelope provided or send to the
Bank at the address indicated above.
By Wire:
Initial Investment. Before wiring funds, call the Transfer Agent at (800)
424-2295 to advise the Transfer Agent that you intend to make an initial
investment by wire and to receive an account number. Provide the Transfer Agent
with your name, and the dollar amount to be invested.
Complete the Fund's Account Application (included with this Prospectus).
Be sure to include the date and the order confirmation number. Mail or deliver
the completed Application to the appropriate address shown at the top of the
Account Application.
Request your bank to transmit immediately available funds by wire for
purchase of shares in your name to the Fund's Custodian, as follows:
The Provident Bank
Attn: Mutual Fund Services
ABA Routing Number: 042-000-424
for further credit to The Crescent Fund
Account Number [Name of Shareholder]
Subsequent Investments. Instruct your bank to wire funds as indicated
above. It is not necessary to contact the Transfer Agent prior to making
subsequent investments by wire. It is essential that complete information
regarding your account be included in all wire instructions in order to
facilitate prompt and accurate handling of investments. Investors may obtain
further information about remitting funds in this manner from the Transfer
Agent, and any fees that may be imposed from their own banks.
General. Investors will not be permitted to redeem any shares purchased
with an initial investment made by wire 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.
<PAGE>
If an order, together with payment in proper form, is received by the
Transfer Agent by the close of public 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 public trading on that day.
Otherwise, Fund shares will be purchased at the offering price determined as of
the close of public 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
Fund's Account Application for further information concerning this requirement.
The Fund does not issue share certificates. All shares are 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.
The Transfer Agent requires that the signature(s) on the written request be
guaranteed by a commercial bank or a member firm of a domestic stock exchange or
the National Association of Securities Dealers, Inc.
Telephone Redemption. Shareholders who complete the Telephone Privileges
Authorization 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) 424-2295 before 4:00 p.m. Eastern time. Redemption proceeds will
be mailed 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 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. Neither the Fund nor the Transfer Agent will be liable for
any loss, expense, or cost arising out of any telephone redemption request,
including any fraudulent or unauthorized requests that are reasonably believed
to be genuine, provided that such procedures are followed. The Fund may change,
modify, or terminate these privileges at any time upon at least 60 days' notice
to shareholders.
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 may
suspend the right of redemption under certain extraordinary circumstances in
accordance with the Rules of the Securities and
<PAGE>
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 $1,500. 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
$1,500 and will be allowed 30 days to make an additional investment to bring the
value of his account to at least $1,500 before the Fund takes any action.
SERVICES AVAILABLE TO THE FUND'S SHAREHOLDERS
Retirement Plans. The minimum initial investment for such plans is $2,000,
with minimum subsequent investments of $200. 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.
Check-A-Matic 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), as if the shareholder had written it directly. 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 exceed 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 the supervision of the
Trust's officers in accordance with methods which are specifically authorized by
the Board of Trustees. Short-term obligations with remaining maturities of sixty
days or less are valued at amortized cost as reflecting fair value.
<PAGE>
DISTRIBUTIONS AND TAXES
Dividends and Distributions. Dividends from net investment income are
expected to be paid in June and December. Any undistributed net capital gains
realized during the Fund's fiscal year will also be distributed to shareholders
in June, with a supplemental distribution in December of any 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 Trust 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 Trust intends to qualify and elect to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (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 or excise taxes. 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 of the Fund ends on March 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 (e.g., 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 (e.g., election or
removal of Trustees). Voting rights are not cumulative, so 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.
<PAGE>
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 and after giving effect to
the maximum applicable sales charge. 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 Transfer Agent at (800)
424-2295.
<PAGE>
Advisor
Crescent Management
1800 Avenue of the Stars
Suite 1420
Los Angeles, CA 90067
(310) 789-5099
o
Distributor
First Fund Distributors, Inc.
4455 E. Camelback Road
Suite 261-E
Phoenix, AZ 85018
o
Custodian and Transfer Agent
The Provident Bank
One East Fourth Street
Cincinnati, OH 45202
o
Auditors
Tait, Weller & Baker
2 Penn Center Plaza
Philadelphia, PA 19102
o
Legal Counsel
Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, CA 94104
Prospectus
August 1, 1995
