As filed with the Securities and Exchange Commission on May 30, 1997
1933 Act Registration No. 33-18255
1940 Act Registration No. 811-5380
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (x)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. 31 (x)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (x)
Amendment No. 32 (x)
(Check appropriate box or boxes)
PORTICO FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
PORTICO FUNDS CENTER
615 EAST MICHIGAN STREET
MILWAUKEE, WISCONSIN 53201-3011
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (414) 287-3909
W. BRUCE MCCONNEL, III, ESQUIRE
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box).
(x) immediately upon filing pursuant to paragraph (b)
( ) On , 199 pursuant to paragraph (b)
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( ) 60 days after filing pursuant to paragraph (a)(1)
( ) on (date) pursuant to paragraph (a)(1)
(x) 75 days after filing on August 13, 1997 pursuant to paragraph (a)(2)
( ) on , 19 pursuant to paragraph (a)(2) of Rule 485.
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If appropriate, check the following box:
( ) this Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective
Amendment.
Registrant has registered an indefinite number of shares of its securities
under the Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended. The Registrant filed on behalf of
the Money Market Fund, Institutional Money Market Fund, U.S. Treasury Money
Market Fund, U.S. Government Money Market Fund, Tax-Exempt Money Market Fund,
Short-Term Bond Market Fund, Intermediate Bond Market Fund, Tax-Exempt
Intermediate Bond Fund, Bond IMMDEXt Fund, Balanced Fund, Growth & Income Fund,
Special Growth Fund, Equity Index Fund, MidCore Growth Fund, International
Equity Fund and MicroCap Fund its Rule 24f-2 Notice for its fiscal year ended
October 31, 1996 on December 27, 1996.
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PORTICO FUNDS, INC.
(Retail and Institutional Series)
Emerging Growth Fund
Form N-1A
Cross Reference Sheet
Part A
Item No. Prospectus Heading
1. Cover Page. . . . . . . . . . . . . . . . . Cover Page
2. Synopsis. . . . . . . . . . . . . . . . . . Expense Summary
3. Condensed Financial Information . . . . . . Not Applicable
4. General Description of Registrant . . . . . Cover Page;
Investment
Objective and
Policies; Other
Investment
Information;
Description of
Shares; Invest-
ment Limitations
5. Management of the Fund. . . . . . . . . . . Management of the
Fund
5A. Management's Discussion of Fund Performance Inapplicable
6. Capital Stock and Other Securities. . . . . Dividends and
Distributions;
Management of the
Fund; Taxes;
Description of
Shares
7. Purchase of Securities Being Offered. . . . Purchase of Shares;
Shareholder
Services; Net Asset
Value and Days of
Operation
8. Redemption or Repurchase. . . . . . . . . . Redemption of
Shares; Shareholder
Services; Net Asset
Value and Days of
Operation
9. Pending Legal Proceedings . . . . . . . . . Not Applicable
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PRELIMINARY PROSPECTUS
DATED MAY 30, 1997
SUBJECT TO COMPLETION
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 THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PORTICO FUNDS(R)
EMERGING GROWTH FUND
This Prospectus describes the Emerging Growth Fund, one of the seventeen mutual
funds in the Portico family of funds. The Emerging Growth Fund seeks capital
appreciation through investments in securities of small-sized companies
(companies with stock market capitalizations between $250 million and $2 billion
are considered by the Fund's investment advisor to be small sized). Portico
Funds offer a variety of portfolios with different investment objectives to meet
the needs of individual and institutional investors, including money market,
bond, balanced, domestic and international equity funds, which is described in a
separate prospectus.
Firstar Investment Research & Management Company LLC, ("FIRMCO" or the
"Adviser")serves as investment adviser to the Fund, and the Fund is sponsored
by B.C. Ziegler and Company (the "Distributor"). Shareowner organizations may
perform shareowner servicing and assistance in connection with the distribution
of the Fund's Retail Shares and receive fees from the Fund for their services.
(See "Management of the Fund").
This Prospectus sets forth concisely the information about the Emerging Growth
Fund that a prospective investor should consider before investing. You should
read this Prospectus and retain it for future reference. Additional information
about the Fund, contained in a Statement of Additional Information, has been
filed with the Securities and Exchange Commission ("SEC") and is available
upon request without charge by writing Portico Investor Services at 615 East
Michigan Street, P.O. Box 3011, Milwaukee, Wisconsin 53201-3011, or by calling
1-800-982-8909 or 414-287-3710 (Milwaukee area). The SEC maintains a website
(http://www.sec.gov.) that contains the Statement of Additional Information,
material incorporated by reference and other information regarding registrants
that file electronically with the SEC. The Statement of Additional Information
bears the same date as this Prospectus and is incorporated by reference in its
entirety into the Prospectus.
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.
SHARES OF THE FUND ARE NOT BANK DEPOSITS, AND ARE NEITHER ENDORSED BY, INSURED
BY, GUARANTEED BY, OBLIGATIONS OF, NOR OTHERWISE SUPPORTED BY THE FDIC, THE
FEDERAL RESERVE BOARD, FIRSTAR INVESTMENT RESEARCH & MANAGEMENT COMPANY LLC,
FIRSTAR TRUST COMPANY, FIRSTAR CORPORATION, ITS AFFILIATES OR ANY OTHER BANK, OR
OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE PORTICO FUNDS INVOLVES
INVESTMENT RISKS INCLUDING POSSIBLE LOSS OF PRINCIPAL.
AUGUST , 1997
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TABLE OF CONTENTS Page
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Expense Summary........................................... 4
Investment Objective and Policies......................... 6
Other Investment Information.............................. 7
Purchase of Shares........................................ 11
Redemption of Shares...................................... 17
Exchange of Shares........................................ 21
Shareowner Services (Retail Shareowners Only)............. 22
Dividends and Distributions............................... 24
Management of the Fund.................................... 24
Expenses.................................................. 27
Investment Limitations.................................... 27
Taxes..................................................... 28
Description of Shares..................................... 29
Net Asset Value and Days of Operation..................... 31
Performance Calculations.................................. 31
EXPENSE SUMMARY
Below is a summary of the shareowner transaction expenses and the annual
operating expenses expected to be incurred by Retail and Institutional Shares of
the Emerging Growth Fund during its first twelve months of operations. An
example based on the summary is also shown.
Retail Institutional
Shares Shares
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SHAREOWNER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases 4.00% None
Maximum Sales Charge Imposed on Reinvested
Dividends None None
Deferred Sales Charge None None
Redemption Fees None<F1> None<F1>
Exchange Fees None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees <F2> 0.63% 0.63%
12b-1 Fees 0% <F3> 0%
All Other Expenses After Fee Waivers
Shareowner Servicing Fees 0.25% 0%
Other Expenses After Fee Waivers <F4> 0.27% 0.52% 0.27% 0.27%
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Total Fund Operating Expenses
After Fee Waivers <F5> 1.15% 0.90%
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<F1> A fee of $12.00 is charged for each wire redemption on Retail Shares. See
"Redemption of Shares."
<F2> To the extent that the Fund's total ordinary operating expenses exceed
1.15% and 0.90%, respectively, for the Retail and Institutional Shares, the
Adviser will waive voluntarily a portion of its fee for the Fund's first
twelve months of operation. Absent such waivers, the advisory fee would be
0.75%, which is higher than the advisory fee payable by most other
investment companies. See "Management of the Fund" in this Prospectus
for a more complete discussion.
<F3> The total of all 12b-1 fees and Shareowner Servicing Fees paid by Retail
Shares of the Fund may not exceed, in the aggregate, the annual rate of
0.25% of the Fund's average daily net assets. The Fund does not expect to
pay any 12b-1 fees for the current year. If 12b-1 fees are paid in the
future, long-term shareowners may pay more than the economic equivalent of
the maximum front end sales charge permitted by the NASD Regulations, Inc.
<F4> The Administrator anticipates voluntarily waiving 0.07% of its fees to the
Fund during the first twelve months of operations. Without the fee waiver,
"Other Expenses" would be 0.34% for both Retail and Institutional Shares.
<F5> Absent fee waivers, total operating expenses would be 1.34% and 1.09% for
Retail and Institutional Shares, respectively.
Example: You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return; and (2) redemption of your investment at the end of the
following periods:
1 Year 3 Years
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Retail Shares $51 $75
Institutional Shares $9 $29
The foregoing tables are intended to assist investors in understanding the
expenses that shareowners bear either directly or indirectly and reflect
anticipated fees. In addition, Shareowner Organizations or Institutions (as
defined below) may charge fees for providing services in connection with their
clients' investments in the Fund's shares.
The example shown above should not be considered a representation of future
investment return or operating expenses. Actual investment return and operating
expenses may be more or less than those shown. The Emerging Growth Fund is new
and the above figures are based on estimates of expenses expected during its
first twelve months of operations.
Information regarding the Fund's actual performance will appear in its annual
report to shareowners. The annual report for its first fiscal year, which may
be obtained without charge by calling Portico Investor Services at 1-800-982-
8909, will be available within 60 days after the end of the fiscal year. Each
shareowner of record at the close of the fiscal year will be sent the annual
report.
UNDERSTANDING EXPENSES
OPERATING A MUTUAL FUND INVOLVES A VARIETY OF EXPENSES FOR PORTFOLIO
MANAGEMENT, SHAREOWNER STATEMENTS AND REPORTS, AND OTHER SERVICES.
THESE COSTS ARE PAID FROM THE FUND'S ASSETS AND THEIR EFFECT, EXCEPT FOR
FEES CHARGED DIRECTLY BY A SHAREOWNER ORGANIZATION OR INSTITUTION TO ITS
CUSTOMERS, ARE FACTORED INTO ANY QUOTED SHARE PRICE OR RETURN.
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE. The investment objective of the Emerging Growth Fund is
capital appreciation. The Fund seeks to achieve its objective primarily through
investments in securities of small-sized companies. Current income is not a
significant consideration in the selection of securities for this Fund.
Securities are selected for the Fund by the Adviser on the basis of their
potential for price appreciation.
The Fund's policy is to invest at least 50% of the value of its total assets in
equity securities under normal market conditions. Most equity securities held
by the Fund will be publicly traded common stocks of companies incorporated in
the United States, although up to 25% of its total assets may be invested,
either directly or through investments in American Depository Receipts, in the
securities of foreign issuers. From time to time, the Fund may also acquire
preferred stocks and obligations, such as bonds, debentures and notes that, in
the opinion of the Adviser, present opportunities for capital appreciation. In
addition, the Fund may invest in securities convertible into common stock, such
as certain bonds and preferred stocks, and may invest up to 5% of its net assets
in other types of securities having common stock characteristics, such as rights
and warrants to purchase equity securities.
The Fund generally invests in small-sized companies that the Adviser considers
to be well managed and to have attractive fundamental financial characteristics,
which include, among other factors, low debt, return on equity above the market
average and consistent revenue and earnings per share growth over the prior
three to five years. The Adviser believes greater potential for price
appreciation exists among small-sized companies since they tend to be less
widely followed by other securities analysts and thus may be more likely to be
undervalued by the market. Companies with stock market capitalizations between
$250 million and $2 billion are considered by the Adviser to be small-sized.
The Fund generally anticipates its median stock market capitalization will be
between $500 million and $1.5 billion and its weighted average will be between
$750 million and $1.25 billion. The Fund may also invest from time to time a
portion of its assets, not to exceed 20% at the time of purchase, in companies
with larger or smaller market capitalizations.
Securities of unseasoned companies, that is, companies with less than three
years' continuous operation, which present risks considerably greater than do
common stocks of more established companies, may be acquired from time to time
by the Fund when the Adviser believes such investments offer possibilities of
attractive capital appreciation. However, the Fund will not invest more than
10% of the value of its total assets in the securities of unseasoned companies.
Non-convertible debt obligations acquired by the Fund will be "investment
grade' at the time of purchase. That is, these obligations will be rated
within the four highest rating categories by Standard and Poor's Rating Group
("S&P") (AAA, AA, A and BBB), Moody's Investors Service, Inc. (""Moody's")
(Aaa, Aa, A and Baa) or other nationally recognized rating agencies. Unrated
obligations will be determined by the Adviser to be comparable in quality to
instruments that are so rated. Obligations rated in the lowest of the top four
rating categories are considered to have speculative characteristics and are
subject to greater credit and market risk than higher rated securities. As a
result, the market value of these securities may be expected to fluctuate more
than those of securities with higher ratings.
Subsequent to its purchase by the Fund, a rated security may cease to be rated
or its rating my be reduced below the minimum rating required for purchase by
the Fund. The Adviser will consider such an event in determining whether the
Fund should continue to hold the security. The Adviser will sell promptly any
securities that are not rated investment grade by at least one nationally
recognized rating agency and that exceed 5% of the Fund's net assets.
In view of the specialized nature of its investment activities, investment in
the Fund's shares may be suitable only for those investors who are prepared to
invest without concern for current income and are financially able to assume an
above-average level of market risk in search of long-term capital gain.
OTHER INVESTMENT INFORMATION
MONEY MARKET INSTRUMENTS. The Fund may hold short-term U.S. Government
obligations, high quality money market instruments (i.e., rated A-1 or better by
S&P or Prime-1 by Moody's or unrated instruments deemed by the Adviser to be of
comparable quality), repurchase agreements, bank obligations and cash, pending
investment, to meet anticipated redemption requests, or if, in the opinion of
the Adviser, other suitable securities are unavailable. The foregoing
investments may include among other things commercial paper and variable amount
master demand notes and corporate bonds with remaining maturities of thirteen
months or less, and may be in such proportions as, in the opinion of the
Adviser, existing circumstances may warrant. Variable amount master demand
notes are unsecured instruments that permit the indebtedness thereunder to vary
and provide for periodic adjustments in the interest rate. Although the notes
are not normally traded and there may be no secondary market in the notes, the
Fund may demand payment of the principal of the instrument at any time. The
notes are not typically rated by credit rating agencies, but they must satisfy
the criteria set forth above for high quality money market instruments. If an
issuer of a variable amount master demand note defaulted on its payment
obligation, the Fund might be unable to dispose of the note because of the
absence of a secondary market and might, for this or other reasons, suffer a
loss to the extent of the default. The Fund invests in variable amount master
demand notes only when the Adviser deems the investment to involve minimal
credit risk. The Fund may invest in obligations of foreign banks and foreign
branches of U.S. banks. The Fund may also invest in securities issued by other
investment companies which invest in high quality, short-term debt instruments.
Securities of other investment companies will be acquired by the Fund within the
limits prescribed by the Investment Company Act of 1940 (the "1940 Act"). The
Fund will not invest in any other Portico Fund. In addition to the advisory
fees and other expenses the Fund bears directly in connection with its own
operations, as a shareowner of another investment company, the Fund would bear
its pro rata portion of the other investment company's advisory fees and other
expenses, and such fees and other expenses will be borne indirectly by the
Fund's shareowners.
RESTRICTED SECURITIES. The Fund will not knowingly invest more than 10%, and in
all cases will not invest more than 15%, of the value of its net assets in
securities that are illiquid at the time of purchase. Repurchase agreements and
time deposits that do not provide for payment to the Fund within seven days, and
securities that are not registered under the Securities Act of 1933 (the
"Act") but may be purchased by institutional buyers under Rule 144A, are
subject to this 15% limit (unless such securities are variable amount master
demand notes with maturities of nine months or less or unless the Board of
Directors or the Adviser, pursuant to guidelines adopted by the Board of
Directors, determines that a liquid trading market exists).
BORROWINGS. The Fund may borrow money to the extent described below under
"Investment Limitations." The Fund would borrow money to meet redemption
requests prior to the settlement of securities already sold or in the process of
being sold by the Fund. If the securities held by the Fund should decline in
value while borrowings are outstanding, the net asset value of the Fund's
outstanding shares will decline in value by proportionately more than the
decline in value suffered by the Fund's securities. As a result, the Fund's
share price may be subject to greater fluctuation until the borrowing is paid
off.
Reverse repurchase agreements are considered to be borrowings under the 1940
Act. At the time the Fund enters into a reverse repurchase agreement (an
agreement under which the Fund sells portfolio securities and agrees to
repurchase them at an agreed-upon date and price), it will place in a segregated
custodial account U.S. Government securities or other liquid high-grade debt
securities having a value equal to or greater than the repurchase price
(including accrued interest), and will subsequently monitor the account to
insure that such value is maintained. Reverse repurchase agreements involve the
risk that the market value of the securities sold by the Fund may decline below
the price of the securities it is obligated to repurchase.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. The Fund may purchase securities
on a "when-issued" or delayed delivery basis and may purchase or sell securities
on a "forward commitment" basis. These transactions, which involve a commitment
by the Fund to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), permit the Fund
to lock in a price or yield on a security it owns or intends to purchase,
regardless of future changes in interest rates. The Fund does not accrue income
until the securities delivery occurs. When-issued and forward commitment
transactions involve the risk, however, that the price or yield obtained in a
transaction (and therefore the value of the security) may be less favorable than
the price or yield (and therefore the value of the security) available in the
market when the securities delivery takes place. The Fund's forward commitments
and when-issued purchases are not expected to exceed 25% of the value of its
total assets absent unusual market conditions. The Fund does not intend to
engage in when-issued purchases and forward commitments for speculative purposes
but only in furtherance of its investment objective.
FOREIGN SECURITIES. The Fund may invest in foreign securities. The Fund's
investments in the securities of foreign issuers may include both securities of
foreign corporations and banks, as well as securities of foreign governments and
their political subdivisions. Investments in foreign securities, whether made
directly or through American Depository Receipts, involve certain inherent risks
and considerations not typically associated with investing in U.S. companies,
such as political or economic instability of the issuer or the country of issue,
the difficulty of predicting international trade patterns, changes in exchange
rates of foreign currencies and the possibility of adverse changes in investment
or exchange control regulations. There may be less publicly available
information about a foreign company than about a U.S. company. Foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to domestic companies. In
addition, foreign banks and foreign branches of U.S. banks are subject to less
stringent reserve requirements and to different accounting, auditing, reporting
and record keeping standards than those applicable to domestic branches of U.S.
banks. Further, foreign stock markets are generally not as developed or
efficient as those in the U.S., and in most foreign markets volume and liquidity
are less than in the U.S. Fixed commissions on foreign stock exchanges are
generally higher than the negotiated commissions on U.S. exchanges, and there is
generally less government supervision and regulation of foreign stock exchanges,
brokers and companies than in the U.S. With respect to certain foreign
countries, there is a possibility of expropriation or confiscatory taxation,
limitations on the removal of assets or diplomatic developments that could
affect investment within those countries. Additionally, foreign securities and
dividends and interest payable on those securities may be subject to foreign
taxes, including foreign withholding taxes, and other foreign taxes may apply
with respect to securities transactions. See "Taxes." Transactions in
foreign securities may involve greater time from the trade date until the
settlement date than for domestic securities transactions, and may involve the
risk of possible losses through the holding of securities in custodians and
securities depositories in foreign countries. Additional costs associated with
an investment in foreign securities may include higher transaction costs and the
cost of foreign currency conversions. Changes in foreign exchange rates will
also affect the value of securities denominated or quoted in currencies other
than the U.S. dollar. In this regard, the Fund does not intend to hedge against
foreign currency risk, and changes in currency exchange rates will impact the
Fund's net asset value (positively or negatively) irrespective of the
performance of the portfolio securities held by the Fund. The Fund and its
shareowners may encounter substantial difficulties in obtaining and enforcing
judgments against non-U.S. resident individuals and companies. Because of these
and other factors, securities of foreign companies acquired by the Fund may be
subject to greater fluctuation in price than securities of domestic companies.
CONVERTIBLE SECURITIES AND WARRANTS. The Fund may invest in convertible
securities, including bonds, notes and preferred stock, that may be converted
into common stock either at a stated price or within a specified period of time.
In investing in convertibles, the Fund is looking for the opportunity, through
the conversion feature, to participate in the capital appreciation of the common
stock into which the securities are convertible, while earning higher current
income than is available from the common stock.
During normal market conditions, no more than 5% of the Fund's net assets will
be purchased or held in convertible or other securities that (1) are not rated
at the time of purchase investment grade by S&P, Moody's or other nationally
recognized rating agencies; or (2) are unrated and have not been determined by
the Adviser to be of comparable quality to a security rated investment grade.
Securities rated below investment grade are predominantly speculative and are
commonly referred to as junk bonds. To the extent the Fund purchases
convertibles rated below investment grade or convertibles that are not rated, a
greater risk exists as to the timely repayment of the principal of, and the
timely payment of interest or dividends on, such securities. Subsequent to its
purchase by the Fund, a rated security may cease to be rated or its rating may
be reduced below a minimum rating for purchase by the Fund. The Adviser will
consider such an event in determining whether a Fund should continue to hold the
security. The Adviser will sell promptly any securities that are non-
investment grade as a result of these events and that exceed 5% of the Fund's
net assets.
The Fund may purchase warrants and similar rights, which are privileges issued
by corporations enabling the owners to subscribe to and purchase a specified
number of shares of the corporation at a specified price during a specified
period of time. The purchase of warrants involves the risk that the Fund could
lose the purchase value of a warrant if the right to subscribe to additional
shares is not exercised prior to the warrant's expiration. Also, the purchase
of warrants involves the risk that the effective price paid for the warrant
added to the subscription price of the related security may exceed the value of
the subscribed security's market price such as when there is no movement in the
level of the underlying security. During normal market conditions, no more than
5% of the Fund's net assets will be invested in warrants.
SECURITIES LENDING. Although the Fund does not intend to during the current
fiscal year, the Fund may lend portfolio securities.
AMERICAN DEPOSITORY RECEIPTS ("ADRs"). The Fund may invest in sponsored ADRs,
which are receipts issued by an American bank or trust company evidencing
ownership of underlying securities issued by a foreign issuer. ADRs may be
listed on a national securities exchange or may trade in the over-the-counter
market. ADR prices are denominated in U.S. dollars; the underlying security may
be denominated in a foreign currency.
CONCENTRATION. The Adviser anticipates that from time to time certain industry
sectors will not be represented in the Fund's portfolio while other sectors will
represent a significant portion. As a matter of fundamental policy, however,
the Adviser will not purchase any securities which would cause 25% or more of
the Fund's total assets at the time of purchase to be invested in the securities
of issuers conducting their principal business activities in the same industry,
and the Fund's investments will be diversified among individual issuers.
SMALL COMPANIES. Small companies in which the Fund will invest may have limited
product lines, markets, or financial resources, or may be dependent upon a small
management group, and their securities may be subject to more abrupt or erratic
market movements than larger, more established companies, both because their
securities are typically traded in lower volume and because the issuers are
typically subject to greater degree of changes in their earnings and prospects.
PORTFOLIO TURNOVER. The Fund may sell a portfolio investment soon after its
acquisition if the Adviser believes that such a disposition is consistent with
attaining the investment objective of the Fund. Portfolio investments may be
sold for a variety of reasons, such as a more favorable investment opportunity
or other circumstances bearing on the desirability of continuing to hold such
investments. A high rate of portfolio turnover (over 100%) may involve
correspondingly greater brokerage commission expenses and other transaction
costs, which must be borne directly by the Fund and ultimately by its
shareowners. High portfolio turnover may result in the realization of
substantial net capital gains; to the extent net short-term capital gains are
realized, distributions resulting from such gains will be ordinary income for
federal income tax purposes. (See "Taxes-Federal.") The Fund's portfolio
turnover rate is not expected to exceed 150% although the Fund's annual
portfolio turnover rate will not be a limiting factor in making investment
decisions.
PURCHASE OF SHARES
Shares of the Fund are offered and sold by the distributor for the Fund, B.C.
Ziegler and Company (the "Distributor"), which is independent of the Adviser.
The Distributor is a registered broker/dealer with offices at 215 North Main
Street, West Bend, Wisconsin 53095.
Retail and Institutional Shares of the Fund will be offered at net asset value
per share, plus in the case of Retail Shares the applicable sales charge
described below (unless a waiver applies). Institutional Shares of the Fund
are exclusively sold to and held by (a) trust, agency or custodial accounts
opened through a Firstar Corporation trust department, trust company or trust
affiliate; (b) employer-sponsored qualified retirement plans; and (c) all
clients of FIRMCO. All other persons must purchase Retail Shares of the Fund.
THE MINIMUM INITIAL INVESTMENT FOR RETAIL SHARES IN THE FUND IS $1,000; WITH THE
EXCEPTION OF IRAS, WHICH HAVE A MINIMUM INITIAL INVESTMENT OF $100. The minimum
subsequent investment for Retail Shares in the Fund is $50. The minimum initial
investment will be waived if you participate in the Periodic Investment Plan.
The Fund reserves the right to close your account if the value is less than
$1,000 and you are not currently participating in the Periodic Investment Plan.
For additional information on involuntary redemptions, see "Other Redemption
Information' below. The $1,000 minimum account balance applies only to
accounts opened with Portico on or after February 28, 1997. Accounts opened
with Portico on or before February 27, 1997 must maintain a minimum account
balance of $50.
There is no minimum initial or subsequent investment for Institutional Shares.
HOW TO PURCHASE RETAIL SHARES
Purchase orders for Retail Shares may be placed through the transfer agent of
the Fund, registered representatives of Elan Investment Services, Inc.
("Elan"), or organizations that have entered into distribution or servicing
agreements with the Fund (including Elan, "Shareowner Organizations"). For a
discussion of transactions through Shareowner Organizations, see "Shareowner
Organizations" below.
Once each business day, two share prices of the Retail Shares are calculated for
the Fund: the offering price and the net asset value (NAV). Retail Shares are
purchased at the offering price which is the net asset value plus a sales charge
which varies in accordance with the amount of the purchase as indicated below:
Shareowner
Organization
Sales Charge as a Sales Charge as a Reallowance as a
Amount of Transaction Percentage of Percentage of Net Percentage of
at Offering Price Offering Price Asset Value Offering Price
- ---------------------- -------------- ----------- --------------
Less than $50,000 4.00% 4.16% 3.50%
$50,000 to $99,999 3.00% 3.09% 2.50%
$100,000 to $249,999 2.00% 2.04% 1.50%
$250,000 or more none none none
The Distributor may reallow the entire sales charge to certain Shareowner
Organizations. To the extent that 90% or more of the sales charge is reallowed,
Shareowner Organizations may be deemed to be underwriters under the Act.
You may purchase Retail Shares without a sales charge if: (a) you were a Portico
shareowner as of January 1, 1995 and have continuously maintained a shareowner
account with the Company; (b) you make any purchase within 60 days of a
redemption of Portico Institutional Shares; (c) you are an employee, director or
retiree of Firstar Corporation or its affiliates or of Portico; (d) you maintain
a personal trust account with an affiliate of Firstar Corporation at the time of
purchase; (e) you make any purchase within 60 days of a termination of a
personal trust account with an affiliate of Firstar Corporation; (f) you make
any purchase for your medical savings account for which Firstar Corporation or
an affiliate serves in a custodial capacity; (g) you make any purchase for your
individual retirement account; (h) you make any purchase within 60 days of a
redemption of a mutual fund on which you paid an initial sales charge or a
contingent deferred sales charge; (i) you are a registered investment adviser
that has entered into an agreement with the Distributor to purchase shares for
your own account or for discretionary client accounts; (j) you are a spouse,
parent or child of an individual who falls within the preceding categories (a)
or (d) above; or (k) you are a spouse, parent, sibling or child of an individual
who falls within the preceding category (c) above. In addition, you may
reinvest all or any portion of your proceeds from redemption of shares of the
Fund in Retail Shares of other Portico funds, within 365 days of redemption
without paying a sales charge. Shares so reinvested will be purchased at a
price equal to the net asset value next determined after the transfer agent
receives payment in proper form.
QUANTITY DISCOUNTS. You may be entitled to reduced sales charges through the
Right of Accumulation or under a Letter of Intent, even if you do not make an
investment of a size that would normally qualify for a quantity discount.
To qualify for a reduction of or exception to the sales charge, you must notify
your Shareowner Organization or the Distributor at the time of purchase or
exchange. The reduction in sales charge is subject to confirmation of your
holdings through a check of records. The Fund may modify or terminate quantity
discounts at any time. For more information about quantity discounts, contact
your Shareowner Organization or Portico Investors Services at 1-800-982-8909.
RIGHTS OF ACCUMULATION. A reduced sales charge applies to any purchase of
Retail Shares of any Portico Fund that is sold with a sales charge (an
"Eligible Fund") where an investor's then current aggregate investment is
$50,000 or more. "Aggregate investment" means the total of: (a) the dollar
amount of the then current purchase of shares of an Eligible Fund, and (b) the
value (based on current net asset value) of previously purchased and
beneficially owned shares of any Eligible Fund on which a sales charge has been
paid. If, for example, an investor beneficially owns shares of one or more
Eligible Funds, with an aggregate current value of $49,000 on which a sales
charge has been paid and subsequently purchases shares of an Eligible Fund
having a current value of $1,000, the sales charge applicable to the subsequent
purchase would be reduced to 3.00% of the offering price. Similarly, each
subsequent investment in Eligible Fund shares may be added to an investor's
aggregate investment at the time of purchase to determine the applicable sales
charge.
LETTER OF INTENT. By signing a Letter of Intent (available from the Distributor
and Shareowner Organizations), an investor becomes eligible for the reduced
sales charge applicable to the total number of Eligible Fund shares purchased in
a 13-month period pursuant to the terms and under the conditions set forth in
the Letter of Intent. To compute the applicable sales charge, the offering
price of shares of an Eligible Fund on which a sales charge has been paid,
beneficially owned by an investor on the date of submission of the Letter of
Intent, may be used as a credit toward completion of the Letter of Intent.
However, the reduced sales charge will be applied only to new purchases.
During the term of the Letter of Intent, the Transfer Agent will hold in escrow
shares equal to 5% of the amount indicated in the Letter of Intent for payment
of a higher sales charge if an investor does not purchase the full amount
indicated in the Letter of Intent. The escrow will be released when an investor
fulfills the terms of the Letter of Intent by purchasing the specified amount.
Any redemptions made during the 13-month period will be subtracted from the
amount of purchases in determining whether the Letter of Intent has been
completed. If total purchases qualify for a further sales charge reduction, the
sales charge will be adjusted to reflect an investor's total purchases. If
total purchases are less than the amount specified in the Letter of Intent, an
investor will be requested to remit an amount equal to the difference between
the sales charge actually paid and the sales charge applicable to the total
purchases. If such remittance is not received within 20 days, the transfer
agent, as attorney-in-fact pursuant to the terms of the Letter of Intent and at
the Distributor's direction, will redeem an appropriate number of shares held in
escrow to realize the difference. Signing a Letter of Intent does not bind an
investor to purchase the full amount indicated at the sales charge in effect at
the time of signing, but an investor must complete the intended purchase in
accordance with the terms of the Letter of Intent to obtain the reduced sales
charge. To apply, an investor must indicate his or her intention to do so under
a Letter of Intent at the time of purchase of Shares.
QUALIFICATION FOR DISCOUNTS. For purposes of applying the Rights of
Accumulation and Letter of Intent privileges described above, the scale of sales
charges applies to the combined purchases made by any individual and/or spouse
purchasing securities for his, her or their own account, or the aggregate
investments of a trustee or other fiduciary or IRA for the benefit of the
persons listed above.
PURCHASE ORDERS. Investors may purchase Retail Shares of the Fund through
registered representatives of Elan located at Firstar Banks ("Firstar
Investment Offices'), or directly with the Fund's transfer agent. All checks
must be drawn on a bank located within the United States and must be payable in
U.S. dollars. Subsequent investments in an existing account in the Fund may be
made at any time by sending to the address below a check or money order payable
to the Fund, along with a letter stating the amount of the investment, the name
of the Fund and the account number in which the investment is to be made. A $20
fee will be imposed by the Fund's transfer agent if any check used for
investment in an account does not clear, and the investor involved will be
responsible for any loss incurred by the Fund.
PURCHASE ORDERS PLACED THROUGH REGISTERED REPRESENTATIVES
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
------------------ --------------------
In Person . Complete an application at a . Bring your check to a
Firstar Investment Office. Firstar Investment Office.
Call 1-800-982-8909 for the Call 1-800-982-8909 for the
office nearest you. office nearest you.
By Phone . Call your registered . Call your registered
representative or call 1-800- representative at the number
982-8909 for the office on your statement or call
nearest you. 1-800-982-8909 for the
office nearest you.
Automatically . Call your registered . Complete a Periodic
purchase application which Investment Plan Application
representative to obtain a to automatically purchase
includes information for a more shares.
Periodic Investment Plan.
PURCHASE ORDERS PLACED THROUGH THE TRANSFER AGENT
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
------------------ --------------------
By Mail . Complete an application and . Make your check payable to
mail it along with a check Portico Funds. Please
payable to Portico Funds, include your account number
P.O. Box 3011, on your check and mail it to
Milwaukee, WI 53201-3011. the address on your
statement.
Overnight . Complete an application and . Make your check payable to
Delivery deliver it along with a check Portico Funds. Please
payable to Portico Funds, 615 include your account number
E. Michigan St., Milwaukee, on your check and deliver it
WI 53202. to the address at the left.
In Person . Bring your application and . Bring your check to a
check to a Firstar Investment Firstar Investment Office.
Office. Call 1-800-982-8909 Call 1-800-982-8909 for the
for the office nearest you. office nearest you.
Automatically . Call 1-800-982-8909 to obtain . Complete a Periodic
a purchase application which Investment Plan Application
includes information for a to automatically purchase
Periodic Investment Plan. more shares.
. Open a ConvertiFund(R) account
to automatically invest
proceeds from one account to
another account of the
Portico family of funds.
By Wire . Call 1-800-228-1024 to . Call 1-800-228-1024 to
arrange a wire transaction. arrange a wire transaction.
Ask your bank to transmit Ask your bank to transmit
immediately available funds immediately available funds
by wire in the amount of your by wire as described at the
purchase to Firstar Bank left. Please also include
Milwaukee, N.A., ABA # 0750- your account number.
00022, Account # 112-952-137
for further credit to Portico
Emerging Growth Fund
[name/title on the account].
By Phone . Call 1-800-228-1024 to . Call 1-800-228-1024 to
exchange from another Portico exchange from another
Fund account with the same Portico Fund account with
registration including name, the same registration
address and taxpayer ID including name, address and
number. taxpayer ID number.
Investors making initial investments by wire must promptly complete a Purchase
Application and forward it to the Fund. REDEMPTIONS WILL NOT BE PAID UNTIL THE
COMPLETED APPLICATION HAS BEEN RECEIVED BY THE TRANSFER AGENT.
If an order and payment are received by the transfer agent in proper form (as
described above) before the close of regular trading hours on the New York Stock
Exchange (the "Exchange"), currently 3:00 p.m. Central Time, on a business day,
Fund shares will be purchased as of the determination of net asset value on that
day. Purchase orders which are received after the close of regular trading hours
on the Exchange, or on non-business days, and orders for which payment is not
received by the close of regular trading hours on the Exchange on a business
day, will be executed on the next business day after receipt of both the order
and payment in proper form by the transfer agent.
The Fund will not accept payment in cash or third party checks for the purchase
of shares. Federal regulations require that each investor provide a Social
Security number or other certified taxpayer identification number upon opening
or reopening an account. The Fund reserves the right to reject applications
without such a number or an indication that a number has been applied for. If a
number has been applied for, the number must be provided and certified within
sixty days of the date of the application. Any accounts opened without a proper
number will be subject to backup withholding at a rate of 31% on all
liquidations and dividend and capital gain distributions.
Certificates for shares will be issued only upon shareowner request. The Fund
reserves the right to reject any purchase order. Payment for shares of the Fund
in the amount of $1,000,000 or more may, at the discretion of the Adviser, be
made in the form of securities that are permissible investments for the Fund.
For further information see the Statement of Additional Information or contact
Portico Investor Services at 1-800-982-8909 or 414-287-3710 (Milwaukee area).
HOW TO PURCHASE INSTITUTIONAL SHARES
All Institutional Share purchases are effected pursuant to a customer's account
at Firstar Trust Company ("Firstar Trust") or at another chosen institution
pursuant to procedures established in connection with the requirements of the
account. Confirmations of share purchases and redemptions will be sent to
Firstar Trust or the other institution involved. Firstar Trust and the other
institutions (or their nominees) (collectively referred to as "Institutions")
will normally be the owners of record of Fund shares, and will reflect their
customers' beneficial ownership of shares in the account statements provided by
them to their customers. The exercise of voting rights and the delivery to
customers of shareowner communications from the Fund will be governed by the
customers' account agreements with Firstar Trust and the other Institutions.
Investors wishing to purchase shares of the Fund should contact their account
representatives.
Institutional Shares are sold without a charge imposed by the Fund, although
Institutions may charge fees for providing administrative or other services in
connection with investments in Fund shares.
Purchase orders must be transmitted to the Fund's transfer agent by telephone
(1-800-228-1024; in Milwaukee area: 414-287-3808 or by fax 414-287-3781 only if
preceded by a telephone call) and will be effected by the transfer agent at its
Milwaukee office. Purchase orders that are received by the transfer agent
before the close of regular trading hours on the New York Stock Exchange (the
"Exchange"), currently 3:00 p.m. Central Time, will be executed as of the
close of regular trading hours on the Exchange, provided that payment is
received by the close of regular trading hours. Purchase orders that are
received after the close of regular trading hours on the Exchange or on non-
business days, and orders for which payment is not received by the close of
regular trading hours on the Exchange on a business day, will be executed on the
next business day after receipt of both the order and payment in proper form by
the transfer agent.
Payment for Institutional Shares should be transmitted by wire in immediately
available funds to:
Firstar Bank Milwaukee, N.A.
ABA #0750-00022,
Account #112-952-137
For further credit to
Portico Emerging Growth Fund
[the investor's account number and the name/title of the account].
Payment may also be made by check payable to: Portico Funds, P.O. Box 3011,
Milwaukee, WI 53201-3011, or delivered (via overnight delivery or in person) to
615 E. Michigan St., Milwaukee, WI 53202.
It is the responsibility of Institutions to transmit orders and payment for the
purchase of shares by their customers to the transfer agent on a timely basis,
in accordance with the procedures stated above.
Certificates for shares will be issued only upon the request of an Institution.
The Fund reserves the right to reject any purchase order.
Payment for shares of the Fund in the amount of $1,000,000 or more may, at the
discretion of the Fund, be made in the form of securities that are permissible
investments for the Fund as described in this Prospectus. For further
information see the Statement of Additional Information or contact Portico
Investor Services at 1-800-982-8909 or 414-287-3710 (Milwaukee area).
REDEMPTION OF SHARES
HOW TO REDEEM RETAIL SHARES
Redemption orders are effected at the net asset value per share next determined
after receipt of the order by the transfer agent or Elan. If a redemption order
is received in proper form (as described below) before the close of regular
trading hours on the Exchange, currently 3:00 p.m. Central Time, on a business
day, Fund shares will be redeemed as of the determination of net asset value on
that day. Redemption orders which are received after the close of regular
trading hours on the Exchange, or on non-business days, will be executed on the
next business day. Depending upon the current net asset value of the redeemed
shares at the time of redemption, the value of the shares redeemed may be more
or less than the investor's cost.
Redemption Orders
THROUGH A REGISTERED
THROUGH THE TRANSFER AGENT REPRESENTATIVE
-------------------------- ------------------------
By Phone . Call 1-800-228-1024 with your . Call your registered
account name, account number representative at the number
and amount of redemption on your statement, or
(minimum $500). Redemption 1-800-982-8909.
proceeds will only be sent to
a shareowner's address or bank
account of a commercial bank
located within the United
States as shown on the
transfer agent's records.
[Available only if established
on the account application and
if there has been no change of
address by telephone within
the preceding 15 days.]
By Mail, . Mail your instructions to the . Mail your instructions to the
Overnight Portico Funds, P.O. Box 3011, Portico Funds, P.O. Box 3011,
Delivery Milwaukee, Wisconsin 53201- Milwaukee, WI 53201-3011, or
or In 3011, or deliver them (via deliver them to 615 E.
Person overnight delivery or in Michigan Street, Milwaukee,
person) to 615 E. Michigan WI 53202, or bring your
St., Milwaukee, WI 53202. instructions to your
Include the number of shares registered representative's
or the amount to be redeemed, office.
your shareowner account number
and Social Security number or
other taxpayer identification
number. Your instructions
must be signed by all persons
required to sign for
transactions exactly as their
names appear on the account.
If the redemption amount
exceeds $50,000, or if the
proceeds are to be sent
elsewhere than the address of
record, or the address of
record has been changed within
the preceding 15 days, each
signature must be guaranteed
in writing by either a
commercial bank that is a
member of the FDIC, a trust
company, a credit union, a
savings association, a member
firm of a national securities
exchange or other eligible
guarantor institution.
Automatic . Call 1-800-982-8909 for a . Call your registered
ally Systematic Withdrawal Plan representative to establish a
application ($15,000 account Systematic Withdrawal Plan.
minimum and $100 minimum per
transaction).
Guarantees must be signed by an eligible guarantor institution and "Signature
Guaranteed' must appear with the signature. If certificates have been issued,
the certificates, properly endorsed or accompanied by a properly executed stock
power and accompanied by signature guarantees, must be received by the transfer
agent or Elan. The Fund may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees and
guardians. A redemption request will not be deemed to be properly received
until the transfer agent or Elan receives all required documents in proper form.
Purchases of additional shares concurrently with withdrawals could be
disadvantageous because of the sales charge involved in the additional
purchases.
The transfer agent charges a $12.00 fee for each payment made by wire of
redemption proceeds, which will be deducted from the shareowner's account. The
transfer agent also charges a $15.00 fee for each IRA distribution (unless it is
part of a Systematic Withdrawal Plan), which will be deducted from the
shareowner's account.
In order to arrange for telephone redemptions after an account has been opened
or to change the bank or account designated to receive redemption proceeds, a
written request must be sent to Portico Investor Services at the address listed
above or contact your registered representative. The request must be signed by
each shareowner of the account. Further documentation may be requested from
corporations, executors, administrators, trustees and guardians.
The Fund reserves the right to refuse a telephone redemption if it believes it
is advisable to do so. Procedures for redeeming shares by telephone may be
modified or terminated by the Fund at any time upon notice to shareowners.
During periods of substantial economic or market change, telephone redemptions
may be difficult to implement. If a shareowner is unable to contact the
transfer agent by telephone, shares may also be redeemed by delivering the
redemption request to the transfer agent.
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, Portico and the transfer agent employ reasonable procedures specified
by the Fund to confirm that such instructions are genuine. Among the procedures
used to determine authenticity, investors electing to redeem or exchange by
telephone will be required to provide their account number. All such telephone
transactions will be tape recorded and confirmed in writing to the shareowner.
Portico may implement other procedures from time to time. If reasonable
procedures are not implemented, Portico and/or the transfer agent may be liable
for any loss due to unauthorized or fraudulent transactions. In all other
cases, the shareowner is liable for any loss for unauthorized transactions.
Other Redemption Information
The Fund will make payment for redeemed shares typically within one or two
business days, but no later than the seventh day after receipt by the transfer
agent of a request in proper form, except as provided by the rules of the SEC.
HOWEVER, IF ANY PORTION OF THE SHARES TO BE REDEEMED REPRESENTS AN INVESTMENT
MADE BY CHECK, THE FUND MAY DELAY THE PAYMENT OF THE REDEMPTION PROCEEDS UNTIL
THE TRANSFER AGENT IS REASONABLY SATISFIED THAT THE CHECK HAS BEEN COLLECTED,
WHICH MAY TAKE TWELVE DAYS FROM THE PURCHASE DATE. This procedure does not
apply to shares purchased by wire payment. An investor must have filed a
Purchase Application before any redemption requests can be paid.
The Fund imposes no charge when shares are redeemed and reserves the right to
redeem an account involuntarily, upon sixty days' written notice, if redemptions
cause the account's net asset value to remain at less than $1,000. The Fund may
also redeem shares involuntarily if it is appropriate to do so to carry out the
Fund's responsibilities under the 1940 Act and, in certain cases, may make
payment for redemption in securities. Investors would bear any brokerage or
other transaction costs incurred in converting the securities so received to
cash. See the Statement of Additional Information for examples of when such
redemptions might be appropriate.
Questions concerning the proper form for redemption requests should be directed
to Portico Investor Services at 1-800-228-1024 or 414-287-3808 (Milwaukee area).
HOW TO REDEEM INSTITUTIONAL SHARES
Customers who purchase Institutional Shares of the Fund through accounts at an
Institution may redeem all or part of their shares in accordance with the
instructions and limitations pertaining to such accounts. The procedures will
vary according to the type of account and Institution involved, and customers
should consult their account representatives in this regard.
Redemption orders must be transmitted by an Institution to the transfer agent in
writing or by telephone in the manner described under "How to Purchase
Institutional Shares.' Shares are redeemed at the net asset value per share
next determined after the transfer agent's receipt of the redemption order.
Payment for redeemed shares will normally be wired in federal funds on the next
business day if the redemption order is received by the transfer agent before
3:00 p.m. Central Time. The Fund reserves the right, however, to delay the
wiring of redemption proceeds for up to seven days after receipt of a redemption
order if, in the judgment of the Adviser, an earlier payment could adversely
affect the Fund. However, if any portion of the shares to be redeemed
represents an investment made by check, the Fund may delay the payment of the
redemption proceeds until the transfer agent is reasonably satisfied that the
check has been collected, which may take twelve days from the purchase date.
The transfer agent currently charges a $15.00 fee for each IRA distribution,
which will be deducted from the shareowner's account or, at the request of an
Institution, billed directly to the Institution requesting the redemption.
Portico imposes no charge when shares are redeemed. However, Institutions may
charge a fee for providing administrative or other services in connection with
investments in Fund shares. If a customer has agreed with a particular
Institution to maintain a minimum account balance and the balance falls below
that minimum, the customer may be obliged by the Institution to redeem all or
part of the customer's shares in the Fund to the extent necessary to maintain
the required minimum balance. Portico may also redeem shares of the Fund
involuntarily or make payment for redemption in securities if it appears
appropriate to do so in light of Portico's responsibilities under the 1940 Act.
Investors would bear any brokerage or other transaction costs incurred in
converting the securities received to cash. See the Statement of Additional
Information for examples of when such redemptions might be appropriate.
It is the responsibility of Institutions to transmit redemption orders and
credit their customers' accounts with the redemption proceeds on a timely basis
in accordance with their agreements with the customers and to provide their
customers with account statements with respect to share transactions made for
the accounts.
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, Portico and the transfer agent employ reasonable procedures specified
by the Fund to confirm that such instructions are genuine. Among the procedures
used to determine authenticity, investors electing to redeem or exchange by
telephone will be required to provide their account number. All such telephone
transactions will be tape recorded and confirmed in writing to the shareowner.
Portico may implement other procedures from time to time. If reasonable
procedures are not implemented, Portico and/or the transfer agent may be liable
for any loss due to unauthorized or fraudulent transactions. In all other
cases, the shareowner is liable for any loss for unauthorized transactions.
EXCHANGE OF SHARES
If shares may legally be sold in the state of the investor's residence, Retail
shareowners are generally permitted to exchange their Retail Shares in the Fund
(with a minimum current value of $1,000) for Retail Shares of other funds in the
Portico family of funds without charge or commission by the Fund. A sales
charge will be imposed on the exchange if the shares of the Fund being acquired
have a sales charge and the shares being redeemed were purchased or otherwise
acquired without a sales charge unless a shareowner qualifies for a sales charge
exemption as described in the section "Purchase of Shares". Institutional
shareowners also are generally permitted to exchange their Institutional Shares
in the Fund (with a minimum current value of $1,000) for Institutional Shares of
other funds in the Portico family of funds, provided such other shares may
legally be sold in the state of the investor's residence and the investor is
eligible for Institutional Shares at the time of the exchange. This exchange
privilege does not apply to shares of the Institutional Money Market Fund.
Telephone exchange privileges automatically apply to each shareowner of record
and the representative of record unless and until the transfer agent receives
written instructions from the shareowner(s) of record canceling the privilege.
Portico reserves the right to terminate indefinitely the exchange privilege of
any shareowner, broker, investment adviser, agent, or account representative who
requests more than four exchanges within a calendar year, whether for oneself or
one's customers. Portico may determine to do so with prior notice to the
shareowner, broker, investment adviser, agent, or account representative based
on a consideration of both the number of exchanges the particular shareowner,
broker, investment adviser, agent, or account representative has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Funds or other adverse effects which may result from
the additional exchange requests. If any portion of the shares to be exchanged
represents an investment made by check, a Fund may delay the acquisition of new
shares in an exchange until the transfer agent is reasonably satisfied that the
check has been collected, which may take twelve days from the purchase date.
Investors may find the exchange privilege useful if their investment objectives
or market outlook should change after they invest in the Portico family of
funds. For federal income tax purposes, an exchange of shares is a taxable
event and, accordingly, a capital gain or loss may be realized by an investor.
Before making an exchange request, an investor should consult a tax or other
financial adviser to determine the tax consequences of a particular exchange.
No exchange fee is currently imposed by Portico on exchanges. Portico reserves,
however, the right to impose a charge in the future. In addition, Institutions
may charge a fee for providing administrative or other services in connection
with exchanges.
In order to request an exchange by telephone, a shareowner must give the account
name, account number and the amount or number of shares to be exchanged. During
periods of significant economic or market change, telephone exchanges may be
difficult to implement. If a shareowner is unable to contact the transfer agent
by telephone, shares may also be exchanged by delivering the exchange request to
the transfer agent in person or by mail at the address listed above under
"Redemption of Shares."
The Fund reserves the right to reject any exchange request with prior notice to
a shareowner and the exchange privilege may be modified or terminated at any
time. At least sixty days' notice will be given to shareowners of any material
modification or termination except where notice is not required under SEC
regulations. The responsibility of the Fund and its transfer agent for the
authenticity of telephone exchange instructions is limited as described above
under "Redemption of Shares."
SHAREOWNER SERVICES (Retail Shareowners Only)
The services and privileges described below are available to Retail Shareowners
of the Fund. These may be modified or terminated at any time upon notice to
shareowners.
Shareowner Reports
Shareowners will be provided with a report showing portfolio investments and
other information at least semiannually; and after the close of the Fund's
fiscal year with an annual report containing audited financial statements. To
eliminate unnecessary duplication, only one copy of shareowner reports will be
sent to shareowners with the same mailing address. Shareowners who desire a
duplicate copy of shareowner reports to be mailed to their residence should call
Portico Investor Services at 1-800-982-8909, or write Portico Investor Services
at the address listed above.
In addition, account statements will be mailed to shareowners after each
purchase, reinvestment of dividends and redemption.
Automated Teleresponse Service
Shareowners using a touch-tone telephone can access information on the Fund
twenty-four hours a day, seven days a week. When calling Portico Investor
Services at 1-800-228-1024, shareowners may choose to use the automated
information feature or, during regular business hours (8:00 a.m. to 7:00 p.m.
Central Time, Monday through Friday), speak with a Portico Investor Services
representative.
The automated service provides the information most frequently requested by
shareowners. After calling the 800-number, pressing "2" on their touch-tone
phone, shareowners can:
1. Determine closing prices for the Fund.
2. Learn how the price of the Fund has changed from the previous day.
3. Hear daily yields for Portico money market funds.
Money market fund yields reflect fee waivers in effect, represent past
performance and will vary. If fees were not waived, yields would be reduced.
Past performance is no guarantee of future results. Current yield refers to
income earned by a fund's investments over a 7-day period. It is then
annualized and stated as a percentage of the investment. Effective yield is the
same as current yield except that it assumes the income earned by an investment
in a fund will be reinvested. An investment in any one of the Portico money
market funds is neither insured nor guaranteed by the U.S. Government nor is
there any assurance the funds will be able to maintain a stable net asset value
of $1.00 per share.
To speak with a Portico Investor Services representative anytime during an
automated teleresponse session (during regular business hours), shareowners may
press "0."
For total return information, shareowners must call Portico Investor Services at
1-800-982-8909 or 414-287-3710 (Milwaukee area).
Retirement Plans
The Fund offers individual retirement accounts and prototype defined
contribution plans, including simplified employee, 401(k), profit-sharing and
money purchase pension plans ("Retirement Plans"). For details concerning
Retirement Plans (including service fees), please call Portico Investors
Services at 1-800-982-8909 or 414-287-3710 (Milwaukee area).
DIVIDENDS AND DISTRIBUTIONS
Dividends from the Fund's net investment income are declared and paid annually.
The Fund's net realized capital gains are distributed at least annually to avoid
tax to the Fund.
Dividends and distributions will reduce the net asset value of the Retail and
Institutional Shares by the amount of the dividend or distribution. Dividends
and distributions are automatically reinvested in additional Retail or
Institutional Shares of the Fund (as applicable) on which the dividend or
distribution is paid at their net asset value per share (as determined on the
payable date), unless the shareowner notifies the Fund's transfer agent or
registered representative, as appropriate, that dividends or capital gains
distributions, or both, should be paid in cash. Cash dividends and
distributions will be paid by check unless the Fund's transfer agent receives a
voided check or deposit ticket to enable the dividends or distributions to be
directly deposited into the shareowner's bank account. Cash dividends and
distributions will be paid within five business days after the end of the month
in which dividends are declared or within five business days after a redemption
of all of a shareowner's shares of the Fund. Reinvested dividends and
distributions receive the same tax treatment as those paid in cash.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the direction of the
Board of Directors of the Portico Funds, Inc. ("Portico" or the ""Company").
The Statement of Additional Information contains the name and background
information regarding each Director.
Advisory Services
FIRMCO, a Wisconsin limited liability company and subsidiary of Firstar
Corporation, a bank holding company, serves as investment adviser to the Fund.
FIRMCO, with principal offices at Firstar Center, 777 East Wisconsin Avenue, 8th
Floor, Milwaukee, Wisconsin 53202, has been engaged in the business of providing
investment advisory services since 1986. FIRMCO currently has $19.3 billion in
assets under active management, of which $11.9 billion is invested in fixed-
income and money market securities and $7.4 billion in equity securities.
Subject to the general supervision of the Board of Directors and in accordance
with the investment objective and policies of the Fund, the Adviser manages the
Fund's portfolio, makes decisions with respect to and places orders for all
purchases and sales of the Fund's portfolio securities, and maintains records
relating to such purchases and sales. The Adviser is authorized to allocate
purchase and sale orders for portfolio securities to Shareowner Organizations,
including, in the case of agency transactions, Shareowner Organizations which
are affiliated with the Adviser, if the Adviser believes that the quality of the
transaction and the amount of the commission are comparable to what they would
be with other qualified brokerage firms.
The Adviser is entitled to receive from the Fund a fee, calculated daily and
payable monthly, at the annual rate of 0.75% of the Fund's average daily net
assets. The Adviser may voluntarily waive all or a portion of the advisory fee
otherwise payable by the Fund from time to time. These waivers may be
terminated at any time at the Adviser's discretion.
The Adviser's portfolio management services for the Fund are conducted by Todd
Krieg and Mark Westman. Mr. Krieg and Mr. Westman have been with Firstar since
1992 and have five years of investment management experience. Both Mr. Krieg
and Mr. Westman are Vice Presidents and Senior Portfolio Managers of FIRMCO and
have managed the Emerging Growth Fund since inception. Mr. Krieg and Mr.
Westman are Chartered Financial Analysts.
Administrative Services
Firstar Trust Company ("Firstar Trust") and B. C. Ziegler and Company
("Ziegler") serve as the Co-Administrators (the "Co-Administrators"). The
Co-Administrators have agreed to provide the following administrative services
for the Portico Funds: assist in maintaining office facilities for the Funds;
furnish clerical and certain other services required by the Funds; compile data
for and prepare notices to the SEC; prepare semiannual reports to the SEC and
current shareowners and filings with state securities commissions; coordinate
federal and state tax returns; monitor the arrangements pertaining to the Funds'
agreements with Shareowner Organizations and Institutions; monitor the Funds'
expense accruals; monitor compliance with the Funds' investment policies and
limitations; and generally assist the Funds' operations. As further described
in the Statement of Additional Information, certain services under the Co-
Administration Agreement are provided jointly by Firstar Trust and Ziegler and
other services are provided separately by either Firstar Trust or Ziegler. The
Co-Administrators are entitled to receive a fee for their administrative
services, computed daily and payable monthly, at the annual rate of .125% of
Portico's first $2 billion of average aggregate daily net assets, plus .10% of
Portico's average aggregate daily net assets in excess of $2 billion. The Co-
Administrators may voluntarily waive all or a portion of their administrative
fee from time to time. These waivers may be terminated at any time at the Co-
Administrators' discretion.
Shareowner Organizations
Portico may enter into agreements from time to time with certain Shareowner
Organizations, including affiliates of the Adviser (such as Elan), providing for
certain support and/or distribution services to their customers who are the
beneficial owners of Retail Shares of the Fund. Under the Service Agreements,
shareowner support services, which are described more fully in the Statement of
Additional Information, may include assisting investors in processing purchase,
exchange and redemption requests; processing dividend and distribution payments
from the Funds; providing information periodically to customers showing their
positions in Retail Shares of the Funds; and providing sub-accounting with
respect to Retail Shares beneficially owned by customers or the information
necessary for sub-accounting. In addition, Shareowner Organizations under a
Distribution and Service Agreement may provide the foregoing shareowner support
services and may also provide assistance, such as the forwarding of sales
literature and advertising to their customers, in connection with the
distribution of Retail Shares. For their services, Shareowner Organizations may
be entitled to receive fees from the Fund at annual rates of up to 0.25% of the
average daily net asset value of the Retail Shares covered by their agreements.
Under the terms of their agreements with Portico, Shareowner Organizations are
required to provide a schedule of any fees that they may charge to their
customers relating to the investment of their assets in Retail Shares covered by
the agreements. Investors should read this Prospectus in light of such fee
schedules and under the terms of their Shareowner Organization's agreement with
Portico. In addition, investors should contact their Shareowner Organization
with respect to the availability of shareowner services and the particular
Shareowner Organization's procedures for purchasing and redeeming shares. It is
the responsibility of Shareowner Organizations to transmit purchase and
redemption orders and record those orders in customers' accounts on a timely
basis in accordance with their agreements with customers. At the request of a
Shareowner Organization, the transfer agent's charge of $12.00 for each payment
made by wire of redemption proceeds may be billed directly to the Shareowner
Organization.
The Glass-Steagall Act and other applicable laws, among other things, prohibit
banks from engaging in the business of underwriting securities. Accordingly,
banks will be engaged under agreements with Portico only to perform the
administrative and investor servicing functions described above, and will
represent to Portico that in no event will the services provided by them under
the agreements be primarily intended to result in the sale of Retail Shares.
Conflict-of-interest restrictions may apply to the receipt of compensation paid
by Portico to a Shareowner Organization in connection with the investment of
fiduciary funds in Retail Shares. Institutions, including banks regulated by
the Comptroller of the Currency and investment advisers and other money managers
subject to the jurisdiction of the SEC, the Department of Labor or state
securities commissions, are urged to consult legal counsel before entering into
agreements with Portico.
Agreements that contemplate the provision of distribution services by Shareowner
Organizations are governed by a Distribution and Service Plan (the "Plan") that
has been adopted by Portico pursuant to Rule 12b-1 under the 1940 Act. In the
case of the Fund, no payments are made to its Distributor under the Plan.
However, payments to Shareowner Organizations, including affiliates of the
Adviser, under the Plan are not tied directly to their own out-of-pocket
expenses and therefore may be used as they elect (for example, to defray their
overhead expenses), and may exceed their direct and indirect costs.
Custodian, Transfer and Dividend Disbursing Agent, and Accounting Services Agent
Firstar Trust, an affiliate of the Adviser, provides custodial, transfer agency,
dividend disbursing agency services, and accounting services for the Fund.
Total custodial, transfer agency, dividend disbursing agency, and accounting
services fees paid to Firstar Trust for the first twelve months of the Fund's
operations are expected to be approximately 0.19% of the Fund's average net
assets. Additional information regarding the fees payable by the Fund to
Firstar Trust for these services is provided in the Statement of Additional
Information. Inquiries to the transfer agent may be sent to the following
address: Firstar Trust Company, P.O. Box 3011, Milwaukee, WI 53201-3011.
EXPENSES
Operating expenses borne by the Fund include taxes, interest, fees and expenses
of Directors and officers, Securities and Exchange Commission fees, state
securities and qualification fees, advisory fees, administration fees,
Shareowner Organization fees (Retail Shares only), charges of the custodian and
transfer agent, dividend disbursing agent and accounting services agent, certain
insurance premiums, outside auditing and legal expenses, costs of preparing and
printing prospectuses for regulatory purposes and for distribution to
shareowners, costs of shareowner reports and meetings and any extraordinary
expenses. The Fund also pays any brokerage fees, commissions and other
transaction charges (if any) incurred in connection with the purchase or sale of
portfolio securities.
INVESTMENT LIMITATIONS
Except for the limitations detailed below, the investment objective and policies
of the Fund described in this Prospectus are not fundamental and may be changed
by the Board of Directors without the affirmative vote of the owners of a
majority of the Fund's outstanding shares. If there is a change in the Fund's
investment objective, shareowners should consider whether the Fund remains an
appropriate investment in light of their then current financial position and
needs. The following descriptions summarize several of the Fund's fundamental
investment limitations which are set forth in full in the Statement of
Additional Information.
The Fund May Not:
1. Purchase securities of any one issuer (other than U.S. Government
securities) if more than 5% of the value of its total assets will be
invested in the securities of such issuer, except that up to 25% of the
value of a Fund's total assets may be invested without regard to this 5%
limitation.
2. Subject to the foregoing 25% exception, purchase more than 10% of the
outstanding voting securities of any issuer.
3. Invest 25% or more of its total assets in one or more issuers conducting
their principal business activities in the same industry.
4. Borrow money or enter into reverse repurchase agreements except for
temporary purposes in amounts up to 10% of the value of the total assets at
the time of such borrowing, or mortgage, pledge or hypothecate any assets
except in connection with such borrowings.
Whenever borrowings (including reverse repurchase agreements) exceed 5% of the
Fund's total assets, the Fund will not make any investments. If a percentage
limitation is satisfied at the time of investment, a later increase or decrease
in such percentage resulting from a change in the value of the Fund's portfolio
securities will not constitute a violation of such limitation. If due to market
fluctuations or other reasons the amount of borrowings or reverse repurchase
agreements exceed the 10% limit stated above, the Fund will promptly reduce such
amount.
TAXES
Federal
Portico's management intends that the Fund will qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). Such qualification generally will relieve the Fund of liability for
federal income taxes to the extent its earnings are distributed in accordance
with the Code.
The Fund contemplates declaring as dividends each year at least 90% of its
investment company income. An investor who receives a dividend derived from
investment company taxable income (which includes any excess of net short-term
capital gain over net long-term capital loss) treats it as a receipt of ordinary
income in the computation of his or her gross income, whether such dividend is
paid in the form of cash or additional shares of the Fund.
Any dividend or distribution of the excess of the Fund's net long-term capital
gain over its net short-term capital loss will be taxable to a shareowner of the
Fund as long-term capital gain, regardless of how long the shareowner has held
shares of the Fund.
Before purchasing Fund shares, the impact of dividend or capital gain
distributions which are expected to be declared, or have been declared but not
paid, should be carefully considered. Any dividend or distribution paid by the
Fund shortly after the purchase of shares of the Fund will have the effect of
reducing the per share net asset value by the per share amount of the dividend
or distribution. Such dividends or distributions, although in effect a return
of capital to shareowners, are subject to income taxation.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of the dividends or gross sale proceeds paid to any shareowner (i)
who has provided either an incorrect taxpayer identification number or no number
at all, (ii) who is subject to withholding by the Internal Revenue Service for
failure to properly include on his return payments of interest or dividends, or
(iii) who has failed, when required to do so, to certify that he is not subject
to backup withholding. The Fund generally also will withhold and remit to the
U.S. Treasury 10% of all distributions from individual retirement accounts
(including simplified employee plans) to any investor unless the transfer agent
receives a written request not to withhold federal income tax from the investor
prior to the distribution date; withholding on distributions from other types of
Retirement Plans may be mandatory and may be at a higher rate.
A taxable gain or loss may be realized by a shareowner upon a redemption,
transfer or exchange of Fund shares, depending on the tax basis of the shares
and their price at the time of such disposition.
Generally, a shareowner may include sales charges incurred upon the purchase of
Retail Shares in his or her tax basis for such shares for the purpose of
determining gain or loss on a redemption, transfer or exchange of shares.
However, if the shareowner effects an exchange of such shares for Retail Shares
of another fund of the Company within 90 days of the purchase and is able to
reduce the sales charge applicable to the new shares (by virtue of the Company's
exchange privilege), the amount equal to such reduction may not be included in
the tax basis of the shareowner's exchanged shares, but may be included (subject
to the limitation) in the tax basis of the new shares. If a shareowner held
shares for six months or less, any loss realized by the shareowner will be
treated as long-term loss to the extent of any long-term capital gain
distribution received.
The foregoing is only a brief summary of some of the important federal income
tax considerations generally affecting the Fund and its shareowners, and is not
intended as a substitute for careful tax planning and is based on tax laws and
regulations which are in effect on the date of this Prospectus. Such laws and
regulations may be changed by legislative or administrative action.
Accordingly, investors in the Fund should consult their tax advisers with
specific reference to their own tax situation. Shareowners will be advised at
least annually as to the federal income tax consequences of dividends and
distributions made each year.
State and Local
Investors are advised to consult their tax advisers concerning the application
of state and local tax laws, which may have different consequences from those of
the federal income tax law described above.
DESCRIPTION OF SHARES
The Company was incorporated under the laws of the State of Wisconsin on
February 15, 1988 and is registered with the SEC as an open-end management
company. The Articles of Incorporation authorize the Board of Directors to
issue up to 150 billion full and fractional shares of common stock, $.0001 par
value per share. The Company currently has 18 classes representing interests in
18 existing investment portfolios. Each class of the Funds is currently divided
into two separate series, a Retail and Institutional Series representing
interests in the same Fund. Of these authorized shares, 100 million shares have
been classified for each of the Retail and Institutional Series discussed in
this Prospectus.
Shares of each series bear their pro rata portion of all operating expenses paid
by the Fund, except certain payments of up to 0.25% of the average daily net
assets of the Retail Shares under the Fund's Distribution and Service Plan and
Shareowner Servicing Plan applicable only to Retail Series Shares. In addition,
Retail Shares, subject to certain exceptions described under Purchase of Shares
above, are sold with a maximum sales charge of 4.00% with respect to the
Company's equity funds and 2.00% with respect to the Company's fixed income
funds. Institutional Shares are sold without a sales charge. The differences
in expenses and sales charges will affect the performance of Institutional and
Retail Shares. Institutional Shares are only available to (i) trust, agency or
custodial accounts opened through trust companies or trust departments
affiliated with Firstar Corporation; (ii) all employer-sponsored qualified
retirement plans; and (iii) clients of the Adviser. Retail Shares are available
to any investor who does not fall within the three preceding categories.
Portico Funds offer various services and privileges in connection with Retail
Shares that are not offered in connection with the Institutional Shares,
including a Periodic Investment Plan, ConvertiFunda, and Systematic Withdrawal
Plan. A salesperson and any other person or Shareowner Organization entitled to
receive compensation for selling or servicing shares may receive different
compensation with respect to different series of shares.
For information regarding the other funds and series, contact Portico Investor
Services at 1-800-982-8909 or 414-287-3710 (Milwaukee area) or your Shareowner
Organization.
Portico does not presently intend to hold annual meetings of shareowners except
as required by the 1940 Act or other applicable law. Portico will call a
meeting of shareowners for the purpose of voting upon the question of removal of
a member of the Board of Directors upon written request of shareowners owning at
least 10% of the outstanding shares of Portico that are entitled to vote. To
the extent required by law, Portico will assist in shareowner communication in
such matters.
Shareowners of each class of Portico Funds are entitled to one vote for each
full share held and proportionate fractional votes for fractional shares held,
and will vote in the aggregate and not by Fund except where otherwise required
by law. It is contemplated that shareowners of the Fund will vote separately on
matters relating to its investment advisory agreement and any changes in its
fundamental investment limitations. On any matter submitted to the vote of
shareowners which only pertains to agreements, liabilities or expenses
applicable to the Retail Shares but not the Institutional Shares of the Fund,
only the Retail Shares will be entitled to vote. Shares of Portico have
noncumulative voting rights and, accordingly, the owners of more than 50% of
Portico's outstanding shares (irrespective of Fund) may elect all of the
Directors. As of April 30, 1997, the Adviser and its affiliates held, on behalf
of their underlying accounts, approximately 72% of Portico's shares that were
outstanding on that date.
Each Retail and Institutional Share of the Fund represents an equal
proportionate interest with other shares of the same series in the Fund, and is
entitled to such dividends and distributions earned on its assets as are
declared at the discretion of the Board of Directors. Shares of the Fund do not
have preemptive rights. The Fund is classified as a diversified company under
the 1940 Act.
NET ASSET VALUE AND DAYS OF OPERATION
The net asset value of each series of the Fund for purposes of pricing purchase
and redemption orders is determined as of the close of regular trading hours on
the Exchange, currently, 3:00 p.m. Central Time, on each day the Exchange is
open for trading. As a result, shares of the Fund will not be priced on the
days which the Exchange observes: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Net asset value per Retail and Institutional Share is calculated by dividing the
value of all securities and other assets owned by the Fund that are allocated to
Retail or Institutional Shares, respectively, less the liabilities charged to
the particular series by the number of the Fund's outstanding Shares of that
series.
Securities which are traded on a recognized domestic stock exchange are valued
at the last sale price on the securities exchange on which such securities are
primarily traded or at the last sale price on the national securities market.
Portfolio securities which are primarily traded on foreign securities exchanges
are generally valued at the preceding closing values of such securities on their
respective exchanges, except when an occurrence subsequent to the time a value
was so established is likely to have changed such value. In such an event, the
fair value of those securities will be determined through the consideration of
other factors by or under the direction of the Board of Directors. Exchange-
traded securities for which there were no transactions are valued at the current
bid prices. Securities traded on only over-the-counter markets are valued on
the basis of closing over-the-counter bid prices. Restricted securities,
securities for which market quotations are not readily available and other
assets are valued at fair value by the Adviser under the supervision of the
Board of Directors. Short-term investments having a maturity of 60 days or less
are valued at amortized cost, unless the amortized cost does not approximate
market value.
The Fund's securities may be valued based on valuations provided by an
independent pricing service. These valuations are reviewed by the Adviser. If
the Adviser believes that a valuation received from the service does not
represent a fair value, it values the security by a method that the Board of
Directors believes will determine a fair value. Any pricing service used may
employ electronic data processing techniques, including a "matrix" system, to
determine valuations.
Quotations of foreign securities in foreign currency are converted to U.S.
dollar equivalents using the foreign exchange quotation in effect at the time
net asset value is computed. Foreign securities held by the Fund may trade in
their local markets on days the Fund is closed, and the Fund's net asset value
may, therefore, change on days when investors may not purchase or redeem shares.
PERFORMANCE CALCULATIONS
From time to time, total return data for Retail or Institutional Shares of the
Fund may be quoted in advertisements or in communications to shareowners. The
total return of the Fund's Retail or Institutional Shares will be calculated on
an average annual (compound) total return basis, and may also be calculated on
an aggregate total return basis, for various periods. Average annual total
return reflects the average annual percentage change in value of an investment
in Retail or Institutional shares of the Fund over the measuring period.
Aggregate total return reflects the total percentage change in value over the
measuring period. Both methods of calculating total return assume that
dividends and capital gain distributions made by the Retail and Institutional
Shares of the Fund during the period are reinvested in Retail and Institutional
Shares of the Fund, respectively, and that, for Retail Shares, the maximum sales
charge during the period has been deducted from the investment at the time of
purchase.
The Fund may advertise total return data for Retail Shares of the Fund without
reflecting the sales charge if it is accompanied, in accordance with the SEC
rules, by average annual total return data reflecting the maximum sales charge.
Quotations which do not reflect the sales charge will, of course, be higher than
quotations which do.
The total return of the Fund's Retail and Institutional Shares may be compared
to those of other mutual funds with similar investment objectives and to stock,
bond and other relevant indices or to rankings prepared by independent services
or other financial or industry publications that monitor the performance of
mutual funds. For example, the total return of the Fund's Retail and
Institutional Shares may be compared to data prepared by Lipper Analytical
Services, Inc. In addition, the total return of the Fund's Retail and
Institutional Shares may be compared to the S&P 500 Index; the S&P MidCap 400
Index; the S&P SmallCap 600 Index; the NASDAQ Composite Index, an index of
unmanaged groups of common stocks of domestic companies that are quoted on the
National Association of Securities Quotation System; the Dow Jones Industrial
Average, a recognized unmanaged index of common stocks of 30 industrial
companies listed on the New York Stock Exchange; the Russell 2000 Index; the
Value Line Composite Index, an unmanaged index of nearly 1,700 stocks reviewed
in Ratings & Reports; and the Consumer Price Index. Total return data as
reported in national financial publications, such as Money Magazine, Forbes,
Barron's, Morningstar Mutual Funds, The Wall Street Journal and The New York
Times, or in publications of a local or regional nature, may also be used in
comparing the performance of the Fund.
Performance quotations represent past performance, and should not be considered
as representative of future results. The investment return and principal value
of an investment in the Fund's Retail and Institutional Shares will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Since performance will fluctuate, performance data for the Fund
cannot necessarily be used to compare an investment in the Fund's Retail and
Institutional Shares with bank deposits, savings accounts and similar investment
alternatives which often provide an agreed or guaranteed fixed yield for a
stated period of time. Investors should remember that performance is generally
a function of the kind and quality of the investments held in a portfolio,
portfolio maturity, operating expenses and market conditions. Any fees charged
by Shareowner Organizations directly to their customer accounts in connection
with investments in the Fund will not be included in the Fund's calculations of
total return and will reduce the total return received by the accounts. The
methods used to compute total return are described in more detail in the
Statement of Additional Information.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY ITS DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
TO OPEN AN ACCOUNT OR REQUEST INFORMATION
1-800-982-8909
1-414-287-3710
FOR ACCOUNT BALANCES AND INVESTOR SERVICES
1-800-228-1024
1-414-287-3808
PORTICO INVESTOR SERVICES
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WI 53201-3011
- ------
PORTICO FUNDS, INC.
(Retail and Institutional Series)
Emerging Growth Fund
Form N-1A
Cross Reference Sheet
Part B
Item No. Heading
- -------- -------
10. Cover Page. . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . Table of
Contents
12. General Information and History . . . . . Inapplicable
13. Investment Objectives and Policies. . . . Investment
Objective
andPolicies
14. Management of the Fund. . . . . . . . . . Managementof
the Company
15. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . Managementof
the Company;
Miscellaneous
16. Investment Advisory and Other Services . Managementof
theCompany;
Custodian,
Transfer
Agent and
Accounting
Services
Agent;
17. Brokerage Allocation and Other Practices. Managementof
the Company
18. Capital Stock and Other Securities. . . . Description
ofShares
19. Purchase, Redemption and Pricing of Securities Net Asset
Being Offered . . . . . . . . . . . . . . Value;
Additional
Purchase and
Redemption
Information
20. Tax Status. . . . . . . . . . . . . . . . Additional
Information
Concerning
Taxes
21. Underwriters. . . . . . . . . . . . . . . . Managementof
the Company
22. Calculation of Performance Data . . . . . . Additional
Information
on
Performance
Part C
Information to be included in Part C is set forth under the appropriate item
so numbered in Part C to this Registration Statement.
- -----
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 30, 1997
SUBJECT TO COMPLETION
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 THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE
PORTICO FUNDS, INC.
Statement of Additional Information
for the
Emerging Growth Fund
August , 1997
--
TABLE OF CONTENTS
------------------
Page
Portico Funds ...................................... 3
Investment Objective and Policies .................. 3
Net Asset Value .................................... 13
Additional Purchase and Redemption Information ..... 13
Description of Shares .............................. 17
Additional Information Concerning Taxes ............ 18
Management of the Company .......................... 19
Custodian, Transfer Agent and Accounting Services
Agent ............................................ 25
Independent Accountants ............................ 25
Counsel ............................................ 25
Additional Information on Performance ............. 26
Miscellaneous ...................................... 27
Appendix A ......................................... A-1
This Statement of Additional Information is meant to be read in
conjunction with the Portico Fund Prospectus dated August , 1997, for the
--
Retail and Institutional Shares of the Emerging Growth Fund (the "Fund") and
is incorporated by reference in its entirety into the Prospectus. Because
this Statement of Additional Information is not itself a prospectus, no
investment in shares of this Fund should be made solely upon the information
contained herein. Copies of the Prospectus for the Fund may be obtained by
writing Portico Investor Services at 615 East Michigan Street, P.O. Box
3011, Milwaukee, Wisconsin 53202-3011, or by calling 1-800-982-8909 or 414-
287-3710 (Milwaukee area). Capitalized terms used but not defined herein
have the same meanings as in the Prospectus.
SHARES OF THE FUND ARE NOT BANK DEPOSITS, AND ARE NEITHER ENDORSED BY,
INSURED BY, GUARANTEED BY, OBLIGATIONS OF, NOR OTHERWISE SUPPORTED BY THE
FDIC, THE FEDERAL RESERVE BOARD, FIRSTAR INVESTMENT RESEARCH & MANAGEMENT
COMPANY LLC, FIRSTAR TRUST COMPANY, FIRSTAR CORPORATION, ITS AFFILIATES OR
ANY OTHER BANK, OR OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE PORTICO
FUNDS INVOLVES RISKS INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PORTICO FUNDS
Portico Funds, Inc. (the "Company") is a Wisconsin corporation which
was incorporated on February 15, 1988 as a management investment company. The
Company is authorized to issue separate classes of shares of Common Stock
representing interests in separate investment portfolios. Each class for the
Funds is currently divided into two series, a retail and institutional series.
This Statement of Additional Information pertains to Retail Series and
Institutional Series Shares of the Emerging Growth Fund. The Company also
offers other investment portfolios which are described in separate Prospectuses
and Statements of Additional Information. For information concerning these
other portfolios contact Portico Investor Services at 1-800-982-8909 or write to
777 East Wisconsin Avenue, Suite 900, Milwaukee, Wisconsin 53202.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Emerging Growth Fund is to seek
capital appreciation. The Fund seeks to achieve its objective primarily through
investments in securities of small-sized companies. There is no assurance,
however, that the Fund's investment objective will in fact be attained. The
following policies supplement the Fund's investment objective and policies as
set forth in the Prospectus.
Portfolio Transactions
- ----------------------
Subject to the general supervision of the Board of Directors, the
Adviser is responsible for, makes decisions with respect to, and places orders
for all purchases and sales of portfolio securities for the Fund.
The portfolio turnover rate for the Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the reporting period by
the monthly average value of the portfolio securities owned during the reporting
period. The calculation excludes all securities, including options, whose
maturities or expiration dates at the time of acquisition are one year or less.
Portfolio turnover may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements which enable the Fund to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making portfolio
decisions, and the Fund may engage in short-term trading to achieve its
investment objective.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Unlike transactions on
U.S. stock exchanges which involve the payment of negotiated brokerage
commissions, transactions in foreign securities generally involve the payment of
fixed brokerage commissions which are generally higher than those in the United
States.
Transactions in the over-the-counter market are generally principal
transactions with dealers and the costs of such transactions involve dealer
spreads rather than brokerage commissions. With respect to over-the-counter
transactions, the Adviser will normally deal directly with dealers who make a
market in the securities involved except in those circumstances where better
prices and execution are available elsewhere or as described below.
The Fund may participate, if and when practicable, in bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
The Fund will engage in this practice, however, only when the Adviser in its
sole discretion, believes such practice to be in the Fund's interests.
The Advisory Agreement between the Company and the Adviser provides
that, in executing portfolio transactions and selecting brokers or dealers, the
Adviser will seek to obtain the best overall terms available. In assessing the
best overall terms available for any transaction, the Adviser shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commissions, if any, both
for the specific transaction and on a continuing basis. In addition, the
Agreement authorizes the Adviser to cause the Fund to pay a broker-dealer which
furnishes brokerage and research services a higher commission than that which
might be charged by another broker-dealer for effecting the same transaction,
provided that the Adviser determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer, viewed in terms of either the particular
transaction or the overall responsibilities of the Adviser to the Fund. Such
brokerage and research services might consist of reports and statistics relating
to specific companies or industries, general summaries of groups of stocks or
bonds and their comparative earnings and yields, or broad overviews of the
stock, bond and government securities markets and the economy.
Supplementary research information so received is in addition to, and
not in lieu of, services required to be performed by the Adviser and does not
reduce the advisory fees payable to it by the Fund. The Directors will
periodically review the commissions paid by the Fund to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Fund. It is possible that certain of
the supplementary research or other services received will primarily benefit one
or more other investment companies or other accounts for which investment
discretion is exercised. Conversely, the Fund may be the primary beneficiary of
the research or services received as a result of portfolio transactions effected
for such other account or investment company.
Portfolio securities will not be purchased from or sold to (and
savings deposits will not be made in and repurchase and reverse repurchase
agreements will not be entered into with) the Adviser and the Distributor or an
affiliated person of any of them (as such term is defined in the 1940 Act)
acting as principal. In addition, the Fund will not purchase securities during
the existence of any underwriting or selling group relating thereto of which the
Distributor or its Adviser, or an affiliated person of any of them, is a member,
except to the extent permitted by the Securities and Exchange Commission
("SEC").
Investment decisions for the Fund are made independently from those
for other investment companies and accounts advised or managed by its Adviser.
Such other investment companies and accounts may also invest in the same
securities as the Fund. When a purchase or sale of the same security is made at
substantially the same time on behalf of a Fund and another investment company
or account, the transaction will be averaged as to price and available
investments allocated as to amount, in a manner which the Adviser believes to be
equitable to the Fund and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained or sold by the Fund. To
the extent permitted by law, the Adviser may aggregate the securities to be sold
or purchased for a Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions.
As of October 31, 1996, the Company held securities of its regular
brokers or dealers (as defined under the 1940 Act) or their parents as follows:
the Short-Term Bond Market, Intermediate Bond Market, Bond IMMDEXa, and Balanced
Funds held securities of Lehman Brothers totaling $7,053, $7,375, $13,615, and
$1,647, respectively; the Intermediate Bond Market, Bond IMMDEXa, and Balanced
Funds held securities of Goldman Sachs totaling $9,649, $4,825, and $1,447,
respectively; the Institutional Money Market and Equity Index Funds held
securities of Morgan Stanley totaling $38,808 and $357, respectively; and the
Short-Term Bond Market, Intermediate Bond Market, Balanced, Growth and Income,
and Equity Index Funds held securities of Merrill Lynch totaling $1,088, $131,
$1,034, $6,827 and $555, respectively.
Additional Information On Portfolio Instruments
- -----------------------------------------------
Ratings. The ratings of Standard & Poor's, Moody's and other
nationally recognized rating agencies represent their opinions as to the quality
of debt securities. It should be emphasized, however, that ratings are general
and are not absolute standards of quality, and debt securities with the same
maturity, interest rate and rating may have different yields while debt
securities of the same maturity and interest rate with different ratings may
have the same yield.
The payment of principal and interest on most debt securities
purchased by the Fund will depend upon the ability of the issuers to meet their
obligations. An issuer's obligations under its debt securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the Federal Bankruptcy Code, and laws, if
any, which may be enacted by federal or state legislatures extending the time
for payment of principal or interest, or both, or imposing other constraints
upon enforcement of such obligations. The power or ability of an issuer to meet
its obligations for the payment of interest on, and principal of, its debt
securities may be materially adversely affected by litigation or other
conditions.
Subsequent to its purchase by the Fund, a rated security may cease to
be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Adviser will consider such an event in determining
whether the Fund should continue to hold the security. For a more detailed
description of ratings, see Appendix A to the Statement of Additional
Information.
Securities Lending. Although the Fund does not intend to during the
current fiscal year, it may lend its portfolio securities to unaffiliated
domestic broker/dealers and other institutional investors pursuant to agreements
requiring that the loans be secured by collateral equal in value to at least the
market value of the securities loaned in order to increase return on portfolio
securities. Collateral for such loans may include cash, securities of the U.S.
Government, its agencies or instrumentalities, or an irrevocable letter of
credit issued by a bank which meets the investment standards stated below under
"Money Market Instruments," or any combination thereof. There may be risks of
delay in receiving additional collateral or in recovering the securities loaned
or even a loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Adviser to be of good standing and when, in the Adviser's judgment, the income
to be earned from the loan justifies the attendant risks. When a Fund lends its
securities, it continues to receive interest or dividends on the securities
loaned and may simultaneously earn interest on the investment of the cash
collateral which will be invested in readily marketable, high-quality, short-
term obligations. Although voting rights, or rights to consent, attendant to
securities on loan pass to the borrower, such loans may be called at any time
and will be called so that the securities may be voted by the Fund if a material
event affecting the investment is to occur.
Securities lending arrangements with broker/dealers require that the
loans be secured by collateral equal in value to at least the market value of
the securities loaned. During the term of such arrangements, the Fund will
maintain such value by the daily marking-to-market of the collateral.
Money Market Instruments. As described in the Prospectus, the Fund
may invest from time to time in "money market instruments," a term that
includes, among other things, bank obligations, commercial paper, variable
amount master demand notes and corporate bonds with remaining maturities of
thirteen months or less.
Bank obligations include bankers' acceptances, negotiable certificates
of deposit and nonnegotiable time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions. Although the Fund will invest in money market obligations
of foreign banks or foreign branches of U.S. banks only where the Adviser
determines the instrument to present minimal credit risks, such investments may
nevertheless entail risks that are different from those of investments in
domestic obligations of U.S. banks due to differences in political, regulatory
and economic systems and conditions. All investments in bank obligations are
limited to the obligations of financial institutions having more than $1 billion
in total assets at the time of purchase, and investments by the Fund in the
obligations of foreign banks and foreign branches of U.S. banks will not exceed
25% of the Fund's total assets at the time of purchase. The Fund may also make
interest-bearing savings deposits in commercial and savings banks in amounts not
in excess of 5% of its net assets.
Investments by the Fund in commercial paper will consist of issues
rated at the time A-1 and/or P-1 by Standard & Poor's, Moody's or similar rating
by another nationally recognized rating agency. In addition, the Fund may
acquire unrated commercial paper and corporate bonds that are determined by the
Adviser at the time of purchase to be of comparable quality rated instruments
that may be acquired by the Fund as previously described.
The Fund may also purchase variable amount master demand notes which
are unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Although the notes are
not normally traded and there may be no secondary market in the notes, the Fund
may demand payment of the principal of the instrument at any time. The notes
are not typically rated by credit rating agencies, but issuers of variable
amount master demand notes must satisfy the same criteria as set forth above for
issuers of commercial paper. If an issuer of a variable amount master demand
note defaulted on its payment obligation, the Fund might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default. The Fund will invest
in variable amount master notes only when the Adviser deems the investment to
involve minimal credit risk.
Repurchase Agreements. The Fund may agree to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed upon time and price ("repurchase agreements"). During the term of the
agreement, the Adviser will continue to monitor the creditworthiness of the
seller and will require the seller to maintain the value of the securities
subject to the agreement at not less than 102% of the repurchase price. Default
or bankruptcy of the seller would, however, expose the Fund to possible loss
because of adverse market action or delay in connection with the disposition of
the underlying securities. The securities held subject to a repurchase
agreement may have stated maturities exceeding one year, provided the repurchase
agreement itself matures in less than one year.
The repurchase price under the repurchase agreements described in the
Prospectus generally equals the price paid by the Fund plus interest negotiated
on the basis of current short-term rates (which may be more or less than the
rate on the securities underlying the repurchase agreement). Securities subject
to repurchase agreements will be held by the Fund's custodian or in the Federal
Reserve/Treasury book-entry system or other authorized securities depository.
Repurchase agreements are considered to be loans under the 1940 Act.
Reverse Repurchase Agreements. Reverse repurchase agreements are
considered to be borrowings under the 1940 Act. At the time the Fund enters
into a reverse repurchase agreement (an agreement under which the Fund sells
portfolio securities and agrees to repurchase them at an agreed-upon date and
price), it will place in a segregated custodial account U.S. Government
securities or other liquid high-grade debt securities having a value equal to or
greater than the repurchase price (including accrued interest), and will
subsequently monitor the account to insure that such value is maintained.
Reverse repurchase agreements involve the risk that the market value of the
securities sold by the Fund may decline below the price of the securities it is
obligated to repurchase.
Investment Companies. The Fund currently intends to limit its
investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made: (i) not
more than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company; (ii) not more than 10% of the value of
its total assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund or by the Company as a
whole.
The Fund may invest from time to time in securities issued by other
investment companies which invest in high-quality, short-term debt securities.
Securities of other investment companies will be acquired by the Fund within the
limits prescribed by the 1940 Act. As a shareowner of another investment
company, the Fund would bear, along with other shareowners, its pro rata portion
of the other investment company's expenses, including advisory fees and such
fees and other expenses will be borne indirectly by the Fund's shareowners.
These expenses would be in addition to the advisory and other expenses that the
Fund bears directly in connection with its own operations.
U.S. Government Obligations. Examples of the types of U.S. Government
obligations that may be acquired by the Fund include U.S. Treasury bonds, notes
and bills and the obligations of Federal Home Loan Banks, Federal Farm Credit
Banks, Federal Land Banks, the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, Federal National
Mortgage Association, General Services Administration, Student Loan Marketing
Association, Central Bank for Cooperatives, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Maritime Administration, and
Resolution Trust Corp.
Bank Obligations. For purposes of the Fund's investment policies with
respect to bank obligations, the assets of a bank or savings institution will be
deemed to include the assets of its domestic and foreign branches. The Fund's
investments in the obligations of foreign branches of U.S. banks and of foreign
banks may subject the Fund to investment risks (similar to those discussed below
under "Foreign Securities and American Depository Receipts") that are different
in some respects from those of investments in obligations of U.S. domestic
issuers. Such risks include future political and economic developments, the
possible imposition of withholding taxes on interest income, possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest of such obligations. In
addition, foreign branches of U.S. banks and foreign banks may be subject to
less stringent reserve requirements and to different accounting, auditing,
reporting and record keeping standards than those applicable to domestic
branches of U.S. banks.
Other Investment Considerations
- -------------------------------
The Emerging Growth Fund maintains a long-term investment horizon with
respect to investments in equity securities. However, when a company's growth
in earnings and valuation results in price appreciation that reaches a level
which meets the Fund's established return objective, the stock is normally sold.
Holdings are also sold if there has been significant deterioration in the
underlying fundamentals of the securities involved since their acquisition.
Sale proceeds are either re-invested in money market instruments or in other
securities which meet the Fund's investment criteria.
The increase or decrease of cash equivalents in a Fund is primarily
the residual effect of the research process. The portion of a Fund invested in
cash equivalents tends to rise when the pool of acceptable securities is limited
and tends to fall when the Fund's valuation screening process identifies a large
number of attractive securities. Short-term forecasts for the economy and
financial markets are not an important determinant of the level of cash
equivalents in the Fund. As stated in the Prospectus, however, under normal
market conditions the Fund may hold money market instruments or cash, pending
investment, to meet anticipated redemptions or if in the opinion of the Adviser
other suitable securities are unavailable The Fund does not attempt to "time"
the securities market.
Certain securities owned by the Emerging Growth Fund may be traded
only in the over-the-counter market or on a regional securities exchange, may be
listed only in the quotation service commonly known as the "pink sheets," and
may not be traded every day or in the volume typical of trading on a national
securities exchange. As a result, there may be a greater fluctuation in the
value of redemptions or for other reasons, to sell these securities at a
discount from market prices, to sell during period when such disposition is not
desirable, or to make many small sales over a lengthy period of time.
When-Issued Purchases, Delayed Delivery and Forward Commitments. When
the Fund agrees to purchase securities on a when-issued or delayed delivery
basis or enter into a forward commitment to purchase securities, its custodian
will set aside cash or liquid high grade debt securities equal to the amount of
the commitment in a segregated account. Normally, the custodian will set aside
portfolio securities to satisfy a purchase commitment, and in such a case the
Fund may be required subsequently to place additional assets in the segregated
account in order to ensure that the value of the account remains equal to the
amount of the Fund's commitments. It may be expected that the market value of
the Fund's net assets will fluctuate to a greater degree when it sets aside
portfolio securities to cover such purchase commitments than when it sets aside
cash. Because the Fund will set aside cash or liquid assets to satisfy its
purchase commitments in the manner described, the Fund's liquidity and ability
to manage its portfolio might be affected in the event its commitments ever
exceeded 25% of the value of its assets. In the case of a forward commitment to
sell portfolio securities, the Fund's custodian will hold the portfolio
securities themselves in a segregated account while the commitment is
outstanding. When-issued and forward commitment transactions involve the risk
that the price or yield obtained in a transaction (and therefore the value of a
security) may be less favorable then the price or yield (and therefore the value
of a security) available in the market when the securities delivery takes place.
The Fund will make commitments to purchase securities on a when-issued
basis or to purchase or sell securities on a forward commitment basis only with
the intention of completing the transaction and actually purchasing or selling
the securities. If deemed advisable as a matter of investment strategy, however,
the Fund may dispose of or renegotiate a commitment after it is entered into,
and may sell securities it has committed to purchase before those securities are
delivered to the Fund on the settlement date. In these cases the Fund may
realize a capital gain or loss.
When the Fund engages in when-issued, delayed delivery and forward
commitment transactions, it relies on the other party to consummate the trade.
Failure of such party to do so may result in the Fund incurring a loss or
missing an opportunity to obtain a price considered to be advantageous.
The market value of the securities underlying a when-issued purchase
or a forward commitment to purchase securities, and any subsequent fluctuations
in their market value, are taken into account when determining the net asset
value of the Fund starting on the day the Fund agrees to purchase the
securities. The Fund does not earn interest on the securities it has committed
to purchase until they are paid for and delivered on the settlement date. When
the Fund makes a forward commitment to sell securities it owns, the proceeds to
be received upon settlement are included in the Fund's assets. Fluctuations in
the market value of the underlying securities are not reflected in the Fund's
net asset value as long as the commitment remains in effect.
Other Portfolio Information
- ---------------------------
Foreign Securities and American Depository Receipts ("ADRs"). In
addition to investing directly in foreign securities the Fund may also invest in
sponsored ADRs, which are receipts issued by an American bank or trust company
evidencing ownership of underlying securities issued by a foreign issuer. ADRs
may be listed on a national securities exchange or may trade in the over-the-
counter market. ADR prices are denominated in U.S. dollars; the underlying
security may be denominated in a foreign currency. The underlying security may
be subject to foreign government taxes which would reduce the yield on such
securities. Investments in foreign securities and ADRs also involve certain
inherent risks, such as political or economic instability of the country of
issue, the difficulty of predicting international trade patterns and the
possibility of imposition of exchange controls. Such securities may also be
subject to greater fluctuations in price than securities of domestic
corporations. In addition, there may be less publicly available information
about a foreign company than about a domestic company. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to domestic companies. With
respect to certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, or diplomatic developments which could affect investment
in those countries.
Convertible Securities. The Fund may hold convertible securities.
Convertible securities entitle the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the securities mature or are
redeemed, converted or exchanged. Prior to conversion, convertible securities
have characteristics similar to ordinary debt securities in that they normally
provide a stable stream of income with generally higher yields than those of
common stock of the same or similar issuers. Convertible securities rank senior
to common stock in a corporation's capital structure and therefore generally
entail less risk than the corporation's common stock, although the extent to
which such risk is reduced depends in large measure upon the degree to which the
convertible security sells above its value as a fixed income security.
As described in its Prospectus, the Fund may invest a portion of its
assets in convertible securities that are rated below investment grade.
Warrants. Warrants basically are options to purchase equity securities
at a specific price valid for a specific period of time. They do not represent
ownership of the securities, but only the right to buy them. They have no
voting rights, pay no dividends and have no rights with respect to the assets of
the company issuing them. Warrants differ from call options in that warrants
are issued by the issuer of the security which may be purchased on their
exercise, whereas call options may be written or issued by anyone. The prices
of warrants do not necessarily move parallel to the prices of the underlying
securities.
Investment Limitations
- ----------------------
The Fund is subject to the investment limitations enumerated in this
subsection which may be changed only by a vote of the holders of a majority of
the Fund's outstanding shares (as defined under "Miscellaneous" below).
The Fund may not:
1. Make loans, except that the Fund may purchase and hold debt
instruments and enter into repurchase agreements in accordance with its
investment objective and policies and may lend portfolio securities in an amount
not exceeding 30% of its total assets.
2. Purchase securities of companies for the purpose of exercising
control.
3. Purchase or sell real estate except that the Fund may purchase
securities of issuers which deal in real estate and may purchase securities
which are secured by interests in real estate.
4. Acquire any other investment company or investment company security
except in connection with a merger, consolidation, reorganization or acquisition
of assets or where otherwise permitted by the 1940 Act.
5. Act as an underwriter of securities within the meaning of the
Securities Act of 1933 except insofar as the Fund might be deemed to be an
underwriter upon the disposition of portfolio securities acquired within the
limitation on purchases of restricted securities and except to the extent that
the purchase of securities directly from the issuer thereof in accordance with
the Fund's investment objective, policies and limitations may be deemed to be
underwriting.
6. Write or sell put options, call options, straddles, spreads, or any
combination thereof, except for transactions in options on securities, indices
of securities, futures contracts and options on futures contracts.
7. Purchase securities on margin, make short sales of securities or
maintain a short position except that (a) this investment limitation shall not
apply to the Fund's transactions in futures contracts and related options, and
(b) the Fund may obtain short-term credit as may be necessary for the clearance
of purchases and sales of portfolio securities.
8. Purchase or sell commodity contracts, or invest in oil, gas or mineral
exploration or development programs, except that the Fund may, to the extent
appropriate to its investment objective, purchase publicly traded securities of
companies engaging in whole or in part in such activities and may enter into
futures contracts and related options.
In addition, as summarized in the Prospectus, the Fund may not:
9. Purchase securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities) if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in the securities of such issuer, or more than 10% of
the issuer's outstanding voting securities would be owned by the Fund or Portico
Funds, Inc. ("the Company"), except that up to 25% of the value of the Fund's
total assets may be invested without regard to these limitations. For purposes
of this limitation, a security is considered to be issued by the entity (or
entities) whose assets and revenues back the security. A guarantee of a
security shall not be deemed to be a security issued by the guarantor when the
value of all securities issued and guaranteed by the guarantor, and owned by the
Fund, does not exceed 10% of the value of the Fund's total assets.
10. Purchase any securities which would cause 25% or more of the value of
the Fund's total assets at the time of purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry; provided that, (a) there is no limitation with respect to
instruments issued or guaranteed by the United States, its agencies or
instrumentalities and repurchase agreements secured by such instruments; (b)
wholly owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of the parents; and (c) utilities will be divided according to their
services, for example, gas, gas transmission, electric and gas, electric and
telephone will each be considered a separate industry.
11. Borrow money or issue senior securities, except that the Fund may
borrow from banks and enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of the total assets at the time of
such borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's total assets at
the time of such borrowing. The Fund will not purchase securities while its
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding. Securities held in escrow or separate accounts in
connection with the Fund's investment practices described in this Statement of
Additional Information or in the Prospectus are not deemed to be pledged for
purposes of this limitation.
If a percentage limitation is satisfied at the time of investment, a
later increase or decrease in such percentage resulting from a change in the
value of the Fund's portfolio securities will not constitute a violation of such
limitation. If due to market fluctuations or other reasons the amount of
borrowings and reverse repurchase agreements exceed the limit stated above, the
Fund will promptly reduce such amount.
NET ASSET VALUE
The net asset value per share of the Fund is calculated separately for
the Institutional Series and Retail Series by adding the value of all portfolio
securities and other assets belonging to the Fund that are allocable to a
particular series, subtracting the liabilities charged to that series, and
dividing the result by the number of outstanding shares of that series. Assets
belonging to the Fund consist of the consideration received upon the issuance of
shares of the Fund together with all net investment income, realized
gains/losses and proceeds derived from the investment thereof, including any
proceeds from the sale of such investments, any funds or payments derived from
any reinvestment of such proceeds, and a portion of any general assets of the
Company not belonging to a particular investment portfolio. The liabilities that
are charged to the Fund are borne by each share of the Fund, except for certain
payments under the Fund's Distribution and Service Plan and Shareowner Servicing
Plan applicable only to Retail Shares. Subject to the provisions of the Articles
of Incorporation, determinations by the Board of Directors as to the direct and
allocable liabilities, and the allocable portion of any general assets, with
respect to the Fund are conclusive.
The value of the Fund's portfolio securities that are traded on stock
exchanges outside the United States are based upon the price on the exchange as
of the close of business of the exchange immediately preceding the time of
valuation, except when an occurrence subsequent to the time a value was so
established is likely to have changed such value. Securities trading in over-
the-counter markets in European and Pacific Basin countries is normally
completed well before 3:00 P.M. Central Time. In addition, European and Pacific
Basin securities trading may not take place on all business days. Furthermore,
trading takes place in Japanese markets on certain Saturdays and in various
foreign markets on days which are not business days in New York and on which net
asset value of the Fund is not calculated. The calculation of the net asset
value of the Fund may not take place contemporaneously with the determination of
the prices of portfolio securities used in such calculation. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and 3:00 P.M. Central Time, and at other times, may not be reflected
in the calculation of net asset value of the Fund.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Computation of Offering Price of the Funds. An illustration of the
computation of the initial offering price per share of the Retail Shares of the
Emerging Growth Fund, follows:
Net Assets $ 9.60
Numbers of Shares Outstanding
Net Asset Value $ 9.60
Per Share
Sales Charge, 4.00% of Offering Price $ .40
(4.16% of net asset value per share) ------
Public Offering Price $10.00
Retail Shares are sold with a front-end sales charge. A front-end
sales charge will not be imposed on reinvested dividends or distributions.
Likewise, there is no front-end sales charge (provided the status of the
investment is explained at the time of investment) on purchases of Retail Shares
if (a) you were a Portico shareowner as of January 1, 1995 and have continuously
maintained a shareowner account with the Company; (b) you make any purchase
within 60 days of a redemption of Portico Institutional Shares, (c) you are an
employee, director or retiree of Firstar Corporation or its affiliates or of
Portico; (d) you maintain a personal trust account with an affiliate of Firstar
Corporation at the time of purchase; (e) you make any purchase within 60 days of
a termination of a personal trust account with an affiliate of Firstar
Corporation; (f) you make any purchase for your medical savings account for
which an affiliate of Firstar Corporation serves in a custodial capacity; (g)
you make any purchase for your individual retirement account; (h) you make any
purchase within 60 days of a redemption of a mutual fund on which you paid an
initial sales charge or a contingent deferred sales charge; (i) you are a
registered investment adviser that has entered into an agreement with the
Distributor to purchase shares for your own account or for discretionary client
accounts; (j) you are a spouse, parent or child of an individual who falls
within the preceding categories (a) or (d) above; or (k) you are a spouse,
parent, sibling or child of an individual who falls within the preceding
category (c) above. These exemptions to the imposition of a front-end sales
charge are due to the nature of the investors and/or the reduced sales efforts
that will be needed in obtaining such investments.
Shareowner Organizations or Institutions may be paid by the Fund for
advertising, distribution or shareowner services. Depending on the terms of the
particular account, Shareowner Organizations or Institutions also may charge
their customers fees for automatic investment, redemption and other services
provided. Such fees may include, for example, account maintenance fees,
compensating balance requirements or fees based upon account transactions,
assets or income. Shareowner Organizations or Institutions are responsible for
providing information concerning these services and any charges to any customer
who must authorize the purchase of Fund shares prior to such purchase.
Shares of the Fund for which a redemption order is received in proper
form by the transfer agent or Elan before the close of the Exchange (currently
3:00 p.m. Central Time) on a business day will be redeemed as of the
determination of net asset value on that day. Orders for a redemption received
on a day after the close of the Exchange on a business day or on a non-business
day will be priced as of the determination of net asset value on the next day on
which shares of the particular Fund are priced. If a shareowner requests that
redemption proceeds be paid by federal funds wire, the proceeds will be wired to
a correspondent member bank if the investor's designated bank is not a member of
the Federal Reserve System.
Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment for shares during any period when (a) trading on
the Exchange is restricted by applicable rules and regulations of the SEC; (b)
the Exchange is closed for other than customary weekend and holiday closings;
(c) the SEC has by order permitted such suspension; or (d) an emergency exists
as determined by the SEC. (The Fund may also suspend or postpone the recording
of the transfer of its shares upon the occurrence of any of the foregoing
conditions.)
The Company's Articles of Incorporation permit the Fund to redeem an
account involuntarily, upon sixty days' notice, if redemptions cause the
account's net asset value to remain at less than $1,000.
In addition to the situations described in the Fund's Prospectus under
"Redemption of Shares," the Fund may redeem shares involuntarily to reimburse
the Fund for any loss sustained by reason of the failure
of a shareowner to make full payment for shares purchased by the shareowner or
to collect any charge relating to a transaction effected for the benefit of a
shareowner which is applicable to Fund shares as provided in the Prospectus from
time to time.
Exchange Privilege By use of the exchange privilege, shareowners
authorize the transfer agent to act on telephonic or written exchange
instructions from any person representing himself to be the shareowner or in
some cases, the shareowner's registered representative of record, and believed
by the transfer agent to be genuine. The transfer agent's records of such
instructions are binding. The exchange privilege may be modified or terminated
at any time upon notice to shareowners.
Exchange transactions described in paragraphs A, B, and C below will
be made on the basis of the relative net asset values per share of the Funds
involved in the transaction.
A. Retail Shares of any Fund purchased with a sales charge may be
exchanged without a sales charge for Retail Shares of any other Fund offered by
the Company with a sales charge.
B. Shares of any Fund offered by the Company acquired by a previous
exchange transaction involving Retail Shares on which a sales charge has
directly or indirectly been paid (e.g. shares purchased with a sales charge or
issued in connection with an exchange involving shares that had been purchased
with a sales charge) as well as additional Shares acquired through reinvestment
of dividends or distributions on such Shares may be exchanged without a sales
charge for Retail Shares of any other Fund offered by the Company with a sales
charge. To accomplish an exchange under the provisions of this paragraph,
investors must notify the transfer agent of their prior ownership of Retail
Shares and their account number.
C. Shares of any Fund offered by the Company may be exchanged without
a sales charge for Shares of any other Fund of the Company that is offered
without a sales charge.
Except as stated above, a sales charge will be imposed when Shares of
a Fund that were purchased or otherwise acquired without a sales charge are
redeemed and the proceeds are used to purchase Retail Shares of another Fund of
the Company with a sales charge.
Shares in a Fund from which the shareowner is withdrawing an
investment will be redeemed at the net asset value per share next determined on
the date of receipt. Shares of the new Fund into which the shareowner is
investing will be purchased at the net asset value per share next determined
(plus any applicable sales charge) after acceptance of the request by the
Company in accordance with the policies for accepting investments. Exchanges of
Shares will be available only in states where they may legally be made.
For federal income tax purposes, share exchanges are treated as sales
on which the shareowner may realize a gain or loss, depending upon whether the
value of the shares to be given up in exchange is more or less than the basis in
such shares at the time of the exchange. Investors exercising the exchange
privilege should request and review the Prospectus for the shares to be acquired
in the exchange prior to making an exchange.
Additional Information Regarding Shareowner Services for Retail Shares
- ----------------------------------------------------------------------
The Retail Shares of the Fund offer a Periodic Investment Plan whereby
a shareowner may automatically make purchases of shares of the Fund on a
regular, monthly basis ($50 minimum per transaction). Under the Periodic
Investment Plan, a shareowner's designated bank or other financial institution
debits a preauthorized amount on the shareowner's account each month and applies
the amount to the purchase of Retail Shares. The Periodic Investment Plan must
be implemented with a financial institution that is a member of the Automated
Clearing House. No service fee is currently charged by the Fund for
participation in the Periodic Investment Plan. A $20 fee will be imposed by the
transfer agent if sufficient funds are not available in the shareowner's account
or the shareowner's account has been closed at the time of the automatic
transaction.
The Periodic Investment Plan permits an investor to use "Dollar Cost
Averaging' in making investments. Instead of trying to time market
performance, a fixed dollar amount is invested in Retail Shares at predetermined
intervals. This may help investors to reduce their average cost per share
because the agreed upon fixed investment amount allows more Retail Shares to be
purchased during periods of lower Retail Share prices and fewer Retail Shares to
be purchased during periods of higher Retail Share prices. In order to be
effective, Dollar Cost Averaging should usually be followed on a sustained,
consistent basis. Investors should be aware, however, that Retail Shares bought
using Dollar Cost Averaging are purchased without regard to their price on the
day of investment or to market trends. Dollar Cost Averaging does not assure a
profit and does not protect against losses in a declining market. In addition,
while investors may find Dollar Cost Averaging to be beneficial, it will not
prevent a loss if an investor ultimately redeems his Retail Shares at a price
which is lower than their purchase price. An investor may want to consider his
financial ability to continue purchases through periods of low price levels.
The Retail Shares of the Fund permit shareowners to effect
ConvertiFundR transactions, an automated method by which a Retail shareowner may
invest proceeds from one account to another account of the Retail Shares of the
Portico family of funds. Such proceeds include dividend distributions, capital
gain distributions and systematic withdrawals. ConvertiFundR transactions may be
used to invest funds from a regular account to another regular account, from a
qualified plan account to another qualified plan account, or from a qualified
plan account to a regular account.
The Retail Shares of the Fund offer shareowners a Systematic
Withdrawal Plan, which allows a shareowner who owns shares of a Fund worth at
least $15,000 at current net asset value at the time the shareowner initiates
the Systematic Withdrawal Plan to designate that a fixed sum ($50 minimum per
transaction) be distributed to the shareowner or as otherwise directed at
regular intervals. Purchase of additional shares concurrently with withdrawals
will be disadvantageous because of the sales charge involved in the additional
purchases.
Special Procedures for In-Kind Payments
- ---------------------------------------
Payment for shares of the Fund may, in the discretion of the Fund, be
made in the form of securities that are permissible investments for the Fund as
described in its Prospectus. For further information about this form of
payment, contact Investor Services at 414-287-3710. In connection with an
in-kind securities payment, the Fund will require, among other things, that the
securities be valued on the day of purchase in accordance with the pricing
methods used by the Fund; that the Fund receive satisfactory assurances that it
will have good and marketable title to the securities received by it; that the
securities be in proper form for transfer to the Fund; that adequate information
be provided to the Fund concerning the basis and other tax matters relating to
the securities; and that the amount of the purchase be at least $1,000,000.
DESCRIPTION OF SHARES
The Company's Articles of Incorporation authorize the Board of
Directors to issue up to 150,000,000,000 full and fractional shares of common
stock, $.0001 par value per share, divided into thirty classes (each, a
"Class" or "Fund"). Each Class is divided into two series designated as
Institutional Series and Series A/Retail Series (each, a "Series") and, in the
case of the Fund, consists of the number of shares set forth in the table below:
Class-Series of Fund in which Stock Number of Authorized
Common Stock Represents Interest Shares in Each Series
- ---------------- -------------------- ----------------------
18-Institutional Emerging Growth Fund 100 Million
18-A/Retail 100 Million
The Board of Directors has also authorized the issuance of Classes 1
through 18 common stock representing interests in eighteen other separate
investment portfolios which are described in separate Statements of Additional
Information. The remaining authorized shares are classified into twelve
additional classes representing interests in other potential future investment
portfolios of the Company. The Directors may similarly classify or reclassify
any particular class of shares into one or more additional series.
In the event of a liquidation or dissolution of the Company or the
Fund, shareowners of the Fund would be entitled to receive the assets available
for distribution belonging to the Fund, and a proportionate distribution, based
upon the relative assets of the Company's respective investment portfolios, of
any general assets not belonging to any particular portfolio which are available
for distribution. Subject to the allocation of certain costs, expenses, charges
and reserves attributed to the operation of a particular series as described in
the Fund's Prospectus, shareowners of the Fund are entitled to participate
equally in the net distributable assets of the Fund on liquidation, based on the
number of shares of the Fund that are held by each shareowner.
Shareowners of the Fund, as well as those of any other investment
portfolio offered by the Company, will vote together in the aggregate and not
separately on a portfolio-by-portfolio basis, except as otherwise required by
law or when the Board of Directors determines that the matter to be voted upon
affects only the interests of the shareowners of a particular class or a
particular series within a class. Rule 18f-2 under the 1940 Act provides that
any matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Company shall not be deemed to
have been effectively acted upon unless approved by the shareowners of each
portfolio affected by the matter. A portfolio is affected by a matter unless it
is clear that the interests of each portfolio in the matter are substantially
identical or that the matter does not affect any interest of the portfolio.
Under the Rule, the approval of an investment advisory agreement or any change
in a fundamental investment policy would be effectively acted upon with respect
to a portfolio only if approved by a majority of the outstanding shares of such
portfolio. However, the Rule also provides that the ratification of the
appointment of independent accountants, the approval of principal underwriting
contracts and the election of Directors may be effectively acted upon by
shareowners of the Company voting together in the aggregate without regard to
particular portfolios. Similarly, on any matter submitted to the vote of
shareowners which only pertains to agreements, liabilities or expenses
applicable to one series of the Fund (such as the Distribution and Service Plan
applicable to Retail Shares) but not the other series of the Fund, only the
affected series will be entitled to vote.
When issued for payment as described in the Fund's Prospectus and this
Statement of Additional Information, shares of the Fund will be fully paid and
non-assessable by the Company, except as provided in Section 180.0622(2)(b) of
the Wisconsin Business Corporation Law, as amended, which in general provides
for personal liability on the part of a corporation's shareowners for unpaid
wages of employees. The Company does not intend to have any employees and, to
that extent, the foregoing statute will be inapplicable to holders of Fund
shares and will not have a material effect on the Company.
The Articles of Incorporation authorize the Board of Directors,
without shareowner approval (unless otherwise required by applicable law), to:
(a) sell and convey the assets belonging to a series of shares to another
management investment company for consideration which may include securities
issued by the purchaser and, in connection therewith, to cause all outstanding
shares of such series to be redeemed at a price which is equal to their net
asset value and which may be paid in cash or by distribution of the securities
or other consideration received from the sale and conveyance; (b) sell and
convert the assets belonging to a series of shares into money and, in connection
therewith, to cause all outstanding shares of such series to be redeemed at
their net asset value; or (c) combine the assets belonging to a series of shares
with the assets belonging to one or more other series of shares if the Board of
Directors reasonably determines that such combination will not have a material
adverse effect on the shareowners of any series participating in such
combination and, in connection therewith, to cause all outstanding shares of any
such series to be redeemed or converted into shares of another series of shares
at their net asset value.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional tax
considerations generally affecting the Fund and its shareowners that are not
described in the Fund's Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareowners, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning. Investors are advised to consult their tax advisers with
specific reference to their own tax situations.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). The Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any capital gain net
income with respect to each calendar year to avoid liability for this excise
tax.
The Fund is treated as a separate tax entity under the Code. Although
the Fund expects to qualify as a "regulated investment company" and to be
relieved of all or substantially all federal income taxes, depending upon the
extent of the Company's activities in states and localities in which its offices
are maintained, in which its agents or independent contractors are located or in
which it is otherwise deemed to be conducting business, the Fund may be subject
to the tax laws of such states or localities. In addition, in those states and
localities which have income tax laws, the treatment of the Fund and its
shareowners under such laws may differ from their treatment under federal income
tax laws.
If for any taxable year the Fund does not qualify for the special
federal income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to federal income tax at regular corporate rates
(without any deduction for distributions to its shareowners). In such event,
dividend distributions would be taxable as ordinary income to shareowners to the
extent of the Fund's current and accumulated earnings and profits, and would be
eligible for the dividends received deduction in the case of corporate
shareowners.
The Fund will designate any distribution of the excess of net long-
term capital gain over net short-term capital loss as a capital gain dividend in
a written notice mailed to shareowners within 60 days after the close of the
Fund's taxable year.
Income received by the Fund from sources within foreign countries may
be subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes.
The foregoing discussion is based on federal tax laws and regulations
which are in effect on the date of this Statement of Additional Information;
such laws and regulations may be changed by legislative or administrative
action.
MANAGEMENT OF THE COMPANY
Directors and Officers
- ----------------------
The Directors and Officers of the Company, their addresses, principal
occupations during the past five years and other affiliations are as follows:
Principal
Position with Occupations During Past 5
Name, Address & Age the Company Years and Other Affiliations
- ---------------------- ------------- ----------------------------
James M. Wade* Chairman, Vice President and Chief Financial
2802 Wind Bluff Circle President and Officer, Johnson Controls, Inc. (a
Wilmington, NC 28409 Treasurer controls manufacturing company)
Age: 53 January 1987-May 1991.
Glen R. Bomberger Director Executive Vice President, Chief
One Park Plaza Financial Officer
11270 West Park Place and Director, A.O. Smith Corporation
Milwaukee, WI 53224-3690 (a diversified manufacturing company)
Age: 59 since January 1987. Director
of companies affiliated with A.O.
Smith Corporation; Chief Financial
Officer, Director and Vice
President, Smith Investment
Company; Officer and Director
of companies affiliated with Smith
Investment Company.
Principal
Position with Occupations During Past 5
Name, Address & Age the Company Years and Other Affiliations
- ------------------- ----------- ----------------------------
Jerry G. Remmel Director Vice President, Treasurer and Chief
16650A Lake Circle Financial Officer of Wisconsin Energy
Brookfield, WI 53005 Corporation 1994-1996; Treasurer of
Age: 65 Wisconsin Electric Power Company 1973-
1996; Director Wisconsin Electric
Power Company 1989-1996; Senior Vice
President, Wisconsin Electric Power
Company 1988-1994; Chief Financial
Officer, Wisconsin Electric Power
Company 1983-1996; Vice President
and Treasurer, Wisconsin Electric
Power Company 1983-1989.
Richard K. Riederer Director President, Chief Executive Officer,
400 Three Springs Drive and Chief Operating Officer of Weirton
Weirton, WV 26062-4989 Steel since 1995; Executive Vice
Age: 52 President and Chief Financial Officer,
Weirton Steen January 1994-1995; Vice
President of Finance and Chief
Financial Officer, Weirton Steel
January 1989-1994; Member-Board
of Directors of American Iron and
Steel Institute since 1995; Member-
Board of Directors, National
Association of Manufacturers since
1995.
Charles R. Roy* Director Vice President - Finance, Chief
14245 Heatherwood Court Financial Officer and Secretary,
Elm Grove, WI 53122 Rexnord Corporation (an equipment
Age: 66 manufacturing company), 1988 - 1992;
Vice President - Finance and
Administration, Rexnord Inc., 1982 -
1988; Officer and Director of several
Rexnord subsidiaries until 1992.
Mary Ellen Stanek Vice President President and Chief Operating Officer,
777 East Wisconsin Avenue FIRMCO since 1994, Director since 1992
Suite 800 and Director of Fixed Income
Milwaukee, WI 53202 Securities of FIRMCO since 1990.
Age: 41
W. Bruce McConnel, III Secretary Partner of the law firm of Drinker
Philadelphia National Biddle & Reath LLP.
Bank Building
1345 Chestnut Street
Philadelphia, PA 19107
Age: 53
* Messrs. Wade and Roy are considered by the Company to be "interested
directors" of the Company as defined in the 1940 Act.
The following chart provides certain information about the Director
fees for the year ended October 31, 1996 of the Company's Directors.
PENSION OR
RETIREMENT TOTAL
BENEFITS ESTIMATED COMPENSATION FROM
AGGREGATE ACCRUED AS ANNUAL COMPANY
COMPENSATION PART OF BENEFITS AND FUND
NAME OF FROM THE FUND UPON COMPLEX* PAID TO
PERSON/POSITION COMPANY EXPENSES RETIREMENT DIRECTORS
- --------------- ------- -------- ---------- ---------
James M. Wade $15,000 $0 $0 $15,000
President,
Treasurer and
Chairman of the
Board
Glen R. $12,000+ $0 $0 $12,000
Bombeger
Director
Jerry G. Remmel $12,000 $0 $0 $12,000
Director
Richard K. $12,000 $0 $0 $12,000
Riederer
Director
Charles R. Roy $12,000 $0 $0 $12,000
Director
*The "Fund Complex" includes only the Company.
+Includes $12,000 which Mr. Bomberger elected to defer under the Company's
deferred compensation plan.
Each Director receives an annual fee of $7,000, a $1,000 per meeting
attendance fee and reimbursement of expenses incurred as a Director. The
Chairman of the Board is entitled to receive an additional $3,000 per annum for
services in such capacity. For the fiscal year ended October 31, 1996, the
Directors and Officers received aggregate fees and reimbursed expenses of
$63,000. Ms. Stanek receives no fees from the Company for her services as Vice
President, although FIRMCO, of which she is President, receives fees from the
Company for advisory services. Drinker Biddle & Reath LLP, of which Mr.
McConnel is a partner, receives legal fees as counsel to the Company. As of the
date of this Statement of Additional Information, the Directors and Officers of
the Company, as a group, owned less than 1% of the outstanding shares of the
Fund.
Advisory Services
FIRMCO is the Investment Adviser to the Fund. In its Investment
Advisory Agreement, the Adviser has agreed to pay all expenses incurred by it in
connection with its advisory activities, other than the cost of securities and
other investments, including brokerage commissions and other transaction
charges, if any, purchased or sold for the Funds. The Advisor may voluntarily
waive advisory fees otherwise payable by the fund.
In addition to the compensation stated in the prospectus, the Adviser
is entitled to 4/10ths of the gross income earned by the Fund on each loan of
its securities, excluding capital gains or losses, if any. Pursuant to current
policy of the Securities and Exchange Commission, the Adviser does not intend to
receive separate compensation for securities lending activity.
Under its Investment Advisory Agreement, the Adviser is not liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of such Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or from
its reckless disregard of its duties and obligations under the Agreement.
Banking Laws and Regulations. Banking laws and regulations, including
the Glass-Steagall Act as presently interpreted by the Board of Governors of the
Federal Reserve System, (a) prohibit a bank holding company registered under the
Federal Bank Holding Company Act of 1956 or any bank or non-bank affiliate
thereof from sponsoring, organizing, controlling or distributing the shares of a
registered, open-end investment company continuously engaged in the issuance of
its shares, and prohibit banks generally from underwriting securities, but (b)
do not prohibit such a bank holding company or affiliate or banks generally from
acting as investment adviser, transfer agent or custodian to such an investment
company or from purchasing shares of such a company as agent and upon order of a
customer. In 1971, the United States Supreme Court held in Investment Company
Institute vs. Camp that the Glass-Steagall Act prohibits a national bank from
operating a fund for the collective investment of managing agency accounts.
Subsequently, the Board of Governors of the Federal Reserve System (the
"Board") issued a regulation and interpretation to the effect that the Glass-
Steagall Act and such decision forbid a bank holding company registered under
the Federal Bank Holding Company Act of 1956 (the "Holding Company Act"), or
any non-bank affiliate thereof from sponsoring, organizing or controlling a
registered, open-end investment company continuously engaged in the issuance of
its shares, but did not prohibit such a holding company or affiliate from acting
as investment adviser, transfer agent and custodian to such an investment
company. In 1981, the United States Supreme Court held in Board of Governors of
the Federal Reserve System v. Investment Company Institute that the Board did
not exceed its authority under the Holding Company Act when it adopted its
regulation and interpretation authorizing bank holding companies and their non-
bank affiliates to act as investment advisers to registered closed-end
investment companies. FIRMCO and Firstar Trust Company are subject to such
banking laws and regulations.
FIRMCO and Firstar Trust Company believe that they may perform the
services for the Fund contemplated by their respective agreements with the
Company without violation of the Glass-Steagall Act or other applicable banking
laws or regulations. These companies further believe that, if the question were
properly presented, a court should hold that these companies may each perform
such activities without violation of the Glass-Steagall Act or other applicable
banking laws and or regulations. It should be noted, however, there have been
no cases deciding whether banks and their affiliates may perform services
comparable to those performed by these companies, and future changes in either
federal or state statutes and regulations relating to permissible activities of
banks or trust companies and their subsidiaries or affiliates, as well as
further judicial or administrative decisions or interpretations of present and
future statutes and regulations, could prevent such companies from continuing to
perform such services for the Fund. If the companies were prohibited from
continuing to perform advisory, accounting, shareowner servicing and custody
services for the Fund, it is expected that the Board of Directors would
recommend that the Fund enter into new agreements or would consider the possible
termination of the Fund. Any new advisory agreement would be subject to
shareowner approval.
Shares of the Fund are not bank deposits, are neither endorsed by,
insured by, or guaranteed by, obligations of, nor otherwise supported by the
FDIC, the Federal Reserve Board, Firstar Trust Company or FIRMCO LLC, their
affiliates or any other bank, or any other governmental agency. An investment
in the Fund involves risks including possible loss of principal.
Administration and Distribution Services
- ----------------------------------------
Firstar Trust Company ("Firstar") and B. C. Ziegler and Company
("Ziegler") serve as the Co-Administrators. Under the Co-Administration
Agreement, the following administrative services will be provided jointly by the
Co-Administrators: assist in maintaining office facilities; furnish clerical
services and stationery and office supplies; monitor the Company's arrangements
with respect to services provided by Shareowner Organizations and Institutions;
and generally assist in the Funds' operations. The following administrative
services will be provided by Ziegler: review and comment upon the registration
statement and amendments thereto prepared by Firstar or counsel to the Company,
as requested by Firstar; review and comment upon sales literature and
advertising relating to the Company, as requested by Firstar; assist in the
administration of the marketing budget; periodically review Blue Sky
registration and sales reports for the Funds; attend meetings of the Board of
Directors, as requested by the Board of Directors of the Funds; and such other
services as may be requested in writing and expressly agreed to by Ziegler. The
following administrative services will be provided by Firstar: compile data for
and prepare with respect to the Fund timely Notices to the Securities and
Exchange Commission required pursuant to Rule 24f-2 under the 1940 Act and Semi-
Annual Reports on Form N-SAR; coordinate execution and filing by the Company of
all federal and state tax returns and required tax filings other than those
required to be made by the Company's custodian and transfer agent; prepare
compliance filings and Blue Sky registrations pursuant to state securities laws
with the advice of the Company's counsel; assist to the extent requested by
the Company with the Company's preparation of Annual and Semi-Annual Reports to
Fund shareowners and Registration Statements for the Funds; monitor the Fund's
expense accruals and cause all appropriate expenses to be paid on proper
authorization from the Fund; monitor the Fund's status as a regulated investment
company under Subchapter M of the Code; maintain the Fund's fidelity bond as
required by the 1940 Act; and monitor compliance with the policies and
limitations of the Fund as set forth in the Prospectus, Statement of Additional
Information, By-laws and Articles of Incorporation.
Each of the Co-Administrators have agreed to pay all expenses incurred
by it in connection with its administrative activities. Under the Co-
Administration Agreement, the Co-Administrators are not liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of the Co-Administration Agreement, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the Co-
Administrators in the performance of their respective duties or from their
reckless disregard of their duties and obligations under the Agreement.
The Distributor provides distribution services for the Fund as
described in the Fund's Prospectus pursuant to a Distribution Agreement with the
Fund under which the Distributor, as agent, sells shares of the Fund on a
continuous basis. The Distributor has agreed to use its best efforts to solicit
orders for the sale of shares, although it is not obliged to sell any particular
amount of shares. The Distributor causes expenses to be paid for the cost of
printing and distributing prospectuses to persons who are not shareowners of the
Fund (excluding preparation and printing expenses necessary for the continued
registration of the Fund's shares) and of printing and distributing all sales
literature. The Distributor is not entitled to receive fees from the Fund for
its distribution services.
Shareowner Organizations
- ------------------------
As stated in the Fund's Prospectus, for Retail Shares the Fund intends
to enter into agreements from time to time with Shareowner Organizations
providing for support and/or distribution services to customers of the
Shareowner Organizations who are the beneficial owners of Retail Shares of the
Fund. Under the agreements, the Fund may pay Shareowner Organizations up to
0.25% (on an annualized basis) of the average daily net asset value of Retail
Shares beneficially owned by their customers. Support services provided by
Shareowner Organizations under their Service Agreements or Distribution and
Service Agreements may include: (i) processing dividend and distribution
payments from the Fund; (ii) providing information periodically to customers
showing their share positions; (iii) arranging for bank wires; (iv) responding
to customer inquiries; (v) providing sub-accounting with respect to shares
beneficially owned by customers or the information necessary for sub-accounting;
(vi) forwarding shareowner communications; (vii) assisting in processing share
purchase, exchange and redemption requests from customers; (viii) assisting
customers in changing dividend options, account designations and addresses; and
(ix) other similar services requested by the Fund. In addition, Shareowner
Organizations, under the Distribution and Service Plan, may provide assistance
(such as the forwarding of sales literature and advertising to their customers)
in connection with the distribution of Retail Shares. All fees paid under these
agreements are borne exclusively by the Fund's Retail Shares.
The Fund's arrangements with Shareowner Organizations under the
agreements are governed by two Plans (a Service Plan and a Distribution and
Service Plan), which have been adopted by the Board of Directors. Because the
Distribution and Service Plan contemplates the provision of services related to
the distribution of Retail Shares (in addition to support services), that Plan
has been adopted in accordance with Rule 12b-1 under the 1940 Act. In
accordance with the Plans, the Board of Directors reviews, at least quarterly, a
written report of the amounts expended in connection with the Fund's
arrangements with Shareowner Organizations and the purposes for which the
expenditures were made. In addition, the Fund's arrangements with Shareowner
Organizations must be approved annually by a majority of the Directors,
including a majority of the Directors who are not "interested persons" of the
Funds as defined in the 1940 Act and have no direct or indirect financial
interest in such arrangements (the "Disinterested Directors").
The Fund believes that there is a reasonable likelihood that its
arrangements with Shareowner Organizations will benefit the holders of Retail
Shares as a way of allowing Shareowner Organizations to participate with the
Fund in the provision of support and distribution services to customers of the
Shareowner Organization who own Retail Shares. Any material amendment to the
arrangements with Shareowner Organizations under the agreements must be approved
by a majority of the Board of Directors (including a majority of the
Disinterested Directors), and any amendment to increase materially the costs
under the Distribution and Service Plan with respect to the Fund must be
approved by the holders of a majority of the outstanding Retail Shares of the
Fund. So long as the Plans are in effect, the selection and nomination of the
members of the Board of Directors who are not "interested persons" (as defined
in the 1940 Act) of the Fund will be committed to the discretion of such
disinterested Directors.
CUSTODIAN, TRANSFER AGENT, DISBURSING AGENT AND ACCOUNTING SERVICES AGENT
Firstar Trust serves as custodian of all the Fund's assets. Under
the Custody Agreement, Firstar Trust has agreed to (i) maintain a separate
account in the name of the Fund, (ii) make receipts and disbursements of money
on behalf of the Fund, (iii) collect and receive all income and other payments
and distributions on account of the Fund's portfolio investments, (iv) respond
to correspondence from shareowners, security brokers and others relating to its
duties and (v) make periodic reports to the Company concerning the Fund's
operations. Firstar Trust Company may, at its own expense, open and maintain a
custody account or accounts on behalf of the Fund with other banks or trust
companies, provided that Firstar Trust Company shall remain liable for the
performance of all of its duties under the Custody Agreement notwithstanding any
delegation. For its services as custodian, Firstar Trust is entitled to receive
a fee, payable monthly, based on the annual rate of $0.20 per $1,000 of the
market value of the Fund's first $2 billion of assets, $0.15 per $1,000 of the
market value of the Fund's next $2 billion of assets, and $0.10 per $1,000 on
the balance of such assets. In addition, Firstar Trust, as custodian, is
entitled to certain charges for securities transactions and reimbursement for
expenses.
Firstar Trust also serves as transfer agent and dividend disbursing
agent for the Fund under a Shareowner Servicing Agent Agreement. As transfer
and dividend disbursing agent, Firstar Trust has agreed to (i) issue and redeem
shares of the Fund, (ii) make dividend and other distributions to shareowners of
the Fund, (iii) respond to correspondence by Fund shareowners and others
relating to its duties, (iv) maintain shareowner accounts, and (v) make periodic
reports to the Fund. For its transfer agency and dividend disbursing services
for the Fund, Firstar Trust is entitled to receive fees at the rate of $15.00
per shareowner account with an annual minimum of $24,000 per portfolio, plus
certain other transaction charges and reimbursement for expenses.
In addition, the Fund has entered into a Fund Accounting Servicing
Agreement with Firstar Trust Company pursuant to which Firstar Trust has agreed
to maintain the financial accounts and records of the Fund in compliance with
the 1940 Act and to provide other accounting services to the Fund. For its
accounting services, Firstar Trust is entitled to receive fees, payable monthly,
at the following annual rates of the market value of the Fund's assets: --
$27,500 on the first $40 million, 1.25/100th of 1% on the next $200 million, and
6.25/1000ths of 1% on the balance, plus out-of-pocket expenses, including
pricing expenses.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, independent accountants, 100 East Wisconsin
Avenue, Suite 1500, Milwaukee, Wisconsin, 53202, serve as auditors for the
Company.
COUNSEL
Drinker Biddle & Reath LLP (of which Mr. McConnel, Secretary of the
Company, is a partner), Philadelphia National Bank Building, 1345 Chestnut
Street, Philadelphia, Pennsylvania 19107, serve as counsel to the Company and
will pass upon the legality of the shares offered by the Fund's Prospectus.
ADDITIONAL INFORMATION ON PERFORMANCE
From time to time, the total return of the Retail Shares and
Institutional Shares of the Fund may be quoted in advertisements, shareowner
reports or other communications to shareowners. Performance information is
generally available by calling the Portico Investors Services at 1-800-982-8909.
Total Return Calculations.
- --------------------------
The Fund computes "average annual total return" separately for its
Retail and Institutional Shares by determining the average annual compounded
rates of return during specified periods that equate the initial amount invested
in a particular series to the ending redeemable value of such investment in the
series. This is done by dividing the ending redeemable value of a hypothetical
$1,000 initial payment by $1,000 and raising the quotient to a power equal to
one divided by the number of years (or fractional portion thereof) covered by
the computation and subtracting one from the result. This calculation can be
expressed as follows:
ERV 1/n
T = [(-----) - 1]
P
Where: T = average annual total return.
ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms
of years.
The Fund computes its aggregate total returns separately for Retail
and Institutional Shares, by determining the aggregate rates of return during
specified periods that likewise equate the initial amount invested in a
particular series to the ending redeemable value of such investment in the
series. The formula for calculating aggregate total return is as follows:
ERV
T = [(-----) - 1]
P
The calculations of average annual total return and aggregate total
return assume the reinvestment of all dividends and capital gain distributions
on the reinvestment dates during the period. The ending redeemable value
(variable "ERV" in each formula) is determined by assuming complete redemption
of the hypothetical investment and the deduction of all nonrecurring charges at
the end of the period covered by the computations. In addition, the Fund's
average annual total return and aggregate total return reflect the deduction of
the maximum front-end sales charge of 4% in connection with the purchase of
Retail Shares. The Fund may also advertise total return data without reflecting
sales charges in accordance with the rules of the Securities and Exchange
Commission. Quotations that do not reflect the sales charge will, of course, be
higher than quotations that do reflect the sales charge.
The Fund may also from time to time include discussions or
illustrations of the effects of compounding in advertisements. "Compounding"
refers to the fact that, if dividends or other distributions on the Fund's
investment are reinvested by being paid in additional Fund shares, any future
income or capital appreciation of the Fund would increase the value, not only of
the original Fund investment, but also of the additional Fund shares received
through reinvestment. As a result, the value of the Fund investment would
increase more quickly than if dividends or other distribution had been paid in
cash. The Fund may also include discussions or illustrations of the potential
investment goals of a prospective investor, investment management techniques,
policies or investment suitability of the Fund, economic conditions, the effects
of inflation and historical performance of various asset classes, including but
not limited to, stocks, bonds and Treasury bills. From time to time
advertisements or communications to shareowners may summarize the substance of
information contained in shareowner reports (including the investment
composition of the Fund), as well as the views of the Adviser as to market,
economic, trade and interest rate trends, legislative, regulatory and monetary
developments, investment strategies and related matters believed to be of
relevance to the Fund. The Fund may also include in advertisements, charts,
graphs or drawings which illustrate the potential risks and rewards of
investment in various investment vehicles, including but not limited to stocks,
bonds, treasury bills and shares of the Fund. In addition, advertisement or
shareowner communications may include a discussion of certain attributes or
benefits to be derived by an investment in the Fund. Such advertisements or
communications may include symbols, headlines or other materials which highlight
or summarize the information discussed in more detail therein.
MISCELLANEOUS
As used in this Statement of Additional Information and in the Fund's
Prospectus, a majority of the outstanding shares of the Fund or portfolio means,
with respect to the approval of an investment advisory agreement or a charge in
a fundamental investment policy, the lesser of (1) 67% of the shares of the Fund
or portfolio represented at a meeting at which the holders of more than 50% of
the outstanding shares of the Fund or portfolio are present in person or by
proxy, or (2) more than 50% of the outstanding shares of the Fund or portfolio.
As of April 30, 1997 the Adviser and its affiliates held of record
substantially all of the outstanding shares of each of the Company's investment
portfolios as agent, custodian, trustee or investment adviser on behalf of their
customers.
At such date, Firstar Trust Company, P.O. Box 2054, Milwaukee,
Wisconsin 53201, and its affiliated banks held as beneficial owner five percent
or more of the outstanding shares of the following investment portfolios of the
Company because they possessed sole voting or investment power with respect to
such shares: Money Market Fund (6%), Institutional Money Market Fund (87%); Tax-
Exempt Money Market Fund (48%); U.S. Treasury Money Market Fund (39%); U.S.
Government Money Market Fund (68%); Growth and Income Fund (66%); Short-Term
Bond Market Fund (69%); Special Growth Fund (75%); Bond IMMDEXTM Fund (79%);
Equity Index Fund (76%); Balanced Fund (80%); Intermediate Bond Market Fund
(78%); MidCore Growth Fund (85%); Tax-Exempt Intermediate Bond Fund (67%);
International Equity Fund (89%); and MicroCap Fund (85%). At such date, no
other person was known by the Company to hold of record or beneficially 5% or
more of the outstanding shares of any investment portfolio of the Company.
APPENDIX A
----------
Commercial Paper Ratings
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market. The following summarizes the rating categories used by Standard and
Poor's for commercial paper.
"A-1" - Issue's degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics are
denoted "A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory. However,
the relative degree of safety is not as high as for issues designated "A-1."
"A-3" - Issue has an adequate capacity for timely payment. It is
however, somewhat more vulnerable to the adverse effects of changes and
circumstances than an obligation carrying a higher designation.
"B"- Issue has only a speculative capacity for timely payment.
"C" - Issue has a doubtful capacity for payment.
"D" - Issue is in payment default.
Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of 9 months. The following summarizes the rating categories used by
Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are considered to
have a superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protection; broad margins in earning
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
"Prime-2" - Issuer or related supporting institutions are considered to
have a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.
"Prime-3" - Issuer or related supporting institutions have an acceptable
capacity for repayment of short-term promissory obligations. The effects of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuer does not fall within any of the Prime rating
categories.
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D- 1," ""D- 2" and "D- 3." Duff
& Phelps employs three designations, "D- 1+," "" D- 1" and "D- 1-," within
the highest rating category. The following summarizes the rating categories
used by Duff & Phelps for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.
"D-2" - Debt possesses good certainty for timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.
"D-3" - Debt possesses satisfactory liquidity, and other protection
factors qualify issue as investment grade. Risk factors are larger and subject
to more variation. Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.
"D-5" - Issuer failed to meet scheduled principal and/or interest
payments.
Fitch short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years. The following
summarizes the rating categories used by Fitch for short-term obligations:
"F-1+" - Securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of assurance
for timely payment.
"F-1" - Securities possess very strong credit quality. Issues assigned
this rating reflect an assurance of timely payment only slightly less in degree
than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues assigned this
rating have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as the "F-1+" and ""F-1" categories.
"F-3" - Securities possess fair credit quality. Issues assigned this
rating have characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could cause these
securities to be rated below investment grade.
"F-S" - Securities possess weak credit quality. Issues assigned this
rating have characteristics suggesting a minimal degree of assurance for timely
payment and are vulnerable to near-term adverse changes in financial and
economic conditions.
"D" - Securities are in actual or imminent payment default.
Fitch may also use the symbol "LOC" with its short-term ratings to
indicate that the rating is based upon a letter of credit issued by a
commercial bank.
Thomson BankWatch short-term ratings assess the likelihood of an untimely
payment of principal or interest of unsubordinated instruments having a
maturity of one year or less which is issued by United States commercial banks,
thrifts and non-bank banks; non-United States banks; and broker-dealers. The
following summarizes the ratings used by Thomson BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's highest rating
category and indicates a very high likelihood that principal and interest will
be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents the lowest investment grade
category and indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher ratings,
the capacity to service principal and interest in a timely fashion is
considered adequate.
"TBW-4" - This designation indicates that the debt is regarded as non-
investment grade and therefore speculative.
IBCA assesses the investment quality of unsecured debt with an original
maturity of less than one year which is issued by bank holding companies and
their principal bank subsidiaries. The following summarizes the rating
categories used by IBCA for short term debt ratings:
"A1+" - Obligations which posses a particularly strong credit feature
and are supported by the highest capacity for timely repayment.
"A1" - Obligations are supported by the highest capacity for timely
repayment.
"A2" - Obligations are supported by a good capacity for timely
repayment.
"A3" - Obligations are supported by a satisfactory capacity for timely
repayment.
"B" - Obligation for which there is an uncertainty as to the capacity to
ensure timely repayment.
"C" - Obligations for which there is a high risk of default or which are
currently in default.
Corporate and Municipal Long-Term Debt Ratings
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - This designation represents the highest rating assigned by
Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to pay interest
and repay principal and differs from AAA issues only in small degree.
"A" - Debt is considered to have a strong capacity to pay interest and
repay principal although such issues are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt
in higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay interest
and repay principal. Whereas such issues normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
"BB," "B," "CCC," "CC," and "C" - Debt is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
"CI" - This rating is reserved for income bonds on which no interest is
being paid.
"D" - Debt is in payment default. This rating is used when interest
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes such payments will
be made during such grace period. Rating is also used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid, and
certain other obligations that S & P believes may experience high volatility or
high variability in expected returns due to non-credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only and principal only mortgage securities.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged.' Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A" - Bonds possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing;
"Ca" represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds
may be in default.
Con. (--) - Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes the probable credit stature
upon completion of construction or elimination of basis of condition.
(P) - When applied to forward delivery bonds, indicates that the rating is
provisional pending delivery of the bonds. The ratings may be revised prior to
delivery if changes occur in the legal documents or the underlying credit
quality of the bonds.
Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the issuer ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issuer ranks at the lower end of its generic rating
category.
The following summarizes the long-term debt ratings used by Duff & Phelps
for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered of high quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
"A" - Debt possesses protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
"BBB" - Debt possesses below average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of
these ratings is considered to be below investment grade. Although below
investment grade, debt rated "BB" is deemed likely to meet obligations when
due. Debt rated "B" possesses the risk that obligations will not be met when
due. Debt rated "CCC" is well below investment grade and has considerable
uncertainty as to timely payment of principal, interest or preferred dividends.
Debt rated "DD" is a defaulted debt obligation, and the rating "DP"
represents preferred stock with dividend arrearages.
To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within these major categories.
The following summarizes the highest four ratings used by Fitch for
corporate and municipal bonds:
"AAA" - bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debts of these issuers is generally
rated "F-1+."
"A" - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
"BB," "B," "CCC," "CC," "C," "DDD," "DD," and "D" - bonds that
possess one of these ratings are considered by Fitch to be speculative
investments. The ratings "BB" to "C" represent Fitch's assessment of the
likelihood of timely payment of principal and interest in accordance with the
terms of obligation for bond issues not in default. For defaulted bonds, the
rating "DDD" to ""D" is an assessment of the ultimate recovery value through
reorganization or liquidation.
To provide more detailed indications of credit quality, the Fitch ratings
from and including "AA" to "C" may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within these major rating
categories.
Thomson BankWatch assesses the likelihood of an untimely repayment of
principal or interest over the term to maturity of long-term debt and preferred
stock which are issued by United States commercial banks, thrifts and non-bank
banks; non-United States banks; and broker-dealers. The following summarizes
the rating categories used by Thomson BankWatch for long-term debt ratings:
"AAA" - This designation represents the highest category assigned by
Thomson BankWatch to long-term debt and indicates that the ability to repay
principal and interest on a timely basis is very high.
"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis with limited incremental risk versus
issues rated in the highest category.
"A" - This designation indicates that the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BB," ""B," "CCC," and "CC" - These designations are assigned by
Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree
of speculation and "CC" the highest degree of speculation.
"D" - this designation indicates that the long-term debt is in default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through ""CC" may include
a plus or minus sign designation which indicates where within the respective
category the issue is placed.
IBCA assesses the investment quality of unsecured debt with an original
maturity of more than one year which is issued by bank holding companies and
their principal bank subsidiaries. The following summarizes the rating
categories used by IBCA for long-term ratings:
"AAA" - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
"AA" - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk albeit not very significantly.
"A" - Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions may lead
to increased investment risk.
"BBB" - Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial
conditions are more likely to lead to increased investment risk than for
obligations in other categories.
"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one of
these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree
of speculation and indicates that the obligations are currently in default.
IBCA may append a rating of plus (+) or minus (-) to a rating to denote
relative status within major rating categories.
Municipal Note Ratings
A Standard and Poor's rating reflects the liquidity concerns and market
access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Rating Group for municipal
notes:
"SP-1" - The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1" / "VMIG-1" - Loans bearing this designation are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
"MIG-2" / "VMIG-2" - Loans bearing this designation are of high
quality, with margins of protection ample although not so large as in the
preceding group.
"MIG-3" / "VMIG-3" - Loans bearing this designation are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well established.
"MIG-4" / "VMIG-4" - Loans bearing this designation are of adequate
quality, carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
"SG" - Loans bearing this designation are of speculative quality and
lack margins of protection.
Duff & Phelps and Fitch use the short-term ratings described under commercial
Paper Ratings for Municipal notes.
- --------
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements for the Emerging Growth Fund:
(1) None.
(b) Exhibits
(1) (a) Articles of Incorporation filed February 19,
1988 is incorporated by reference to Exhibit
(1)(a) to Post-Effective Amendment No. 28 to
the Registration Statement, filed
February 15, 1996 ("Post-Effective Amendment
No. 28").
(b) Amendment No. 1 to the Articles of
Incorporation filed June 30, 1989 is
incorporated by reference to Exhibit (1)(b)
to Post-Effective Amendment No. 28.
(c) Amendment No. 2 to the Articles of
Incorporation filed June 30, 1989 is
incorporated by reference to Exhibit (1)(c)
to Post-Effective Amendment No. 28.
(d) Amendment No. 3 to the Articles of
Incorporation filed November 12, 1991 is
incorporated by reference to Exhibit (1)(d)
to Post-Effective Amendment No. 28.
(e) Amendment No. 4 to the Articles of
Incorporation filed August 18, 1992 is
incorporated by reference to Exhibit (1)(e)
to Post-Effective Amendment No. 28.
(f) Amendment No. 5 to the Articles of
Incorporation filed October 23, 1992 is
incorporated by reference to Exhibit (1)(f)
to Post-Effective Amendment No. 28.
(g) Amendment No. 6 to the Articles of
Incorporation filed January 26, 1993 is
incorporated by reference to Exhibit (1)(g)
to Post-Effective Amendment No. 28.
(h) Amendment No. 7 to the Articles of
Incorporation filed February 10, 1994 is
incorporated by reference to Exhibit (1)(h)
to Post-Effective Amendment No. 28.
(i) Amendment No. 8 to the Articles of
Incorporation filed December 29, 1994 is
incorporated by reference to Exhibit (1)(i)
to Post-Effective Amendment No. 28.
(j) Amendment No. 9 to the Articles of
Incorporation filed July 20, 1995 is
incorporated by reference to Exhibit (1)(j)
to Post-Effective Amendment No. 28.
(k) Amendment No. 10 to the Articles of
Incorporation filed November 10, 1995 is
incorporated by reference to Exhibit (1)(k)
to Post-Effective Amendment No. 28.
(l) Form of Amendment No. 11 to Articles of
Incorporation.
(2) (a) Registrant's By-laws dated September 9, 1988
are incorporated by reference to Exhibit
(2)(a) to Post-Effective Amendment No. 28.
(b) Amendment to By-Laws as approved by the
Registrant's Board of Directors on
February 23, 1990 is incorporated by
reference to Exhibit (2)(b) to Post-Effective
Amendment No. 28.
(c) Amendment to By-Laws as approved by the
Registrant's Board of Directors on
February 15, 1991 is incorporated by
reference to Exhibit (2)(c) to Post-Effective
Amendment No. 28.
(d) Amendment to By-Laws as approved by the
Registrant's Board of Directors on June 21,
1991 is incorporated by reference to
Exhibit (2)(d) to Post-Effective Amendment
No. 28.
(3) None.
(4) (a) See Articles V and VII of the Articles of
Incorporation which are incorporated by
reference to Exhibits (1)(a) and (1)(i) to
Post-Effective Amendment No. 28 and Article
II, Sections 1, 9 and 10 of Article III,
Sections 1, 2 and 3 of Article V and Section
II of Article VII of the By-laws which are
incorporated by reference to Exhibits 2(a)-
2(d) of Post-Effective Amendment No. 28.
(5) (a) Investment Advisory Agreement between
Registrant and First Wisconsin Trust Company
dated August 29, 1991 with respect to the
Money Market Fund, U.S. Government Money
Market Fund, Tax-Exempt Money Market Fund,
Income and Growth Fund, Short-Intermediate
Fixed Income Fund, Special Growth Fund, Bond
IMMDEXt Fund, Equity Index Fund,
Institutional Money Market Fund and U.S.
Federal Money Market Fund is incorporated by
reference to Exhibit (5)(a) to Post-Effective
Amendment No. 28.
(b) Assumption and Guarantee Agreement between
First Wisconsin Trust Company and First
Wisconsin Asset Management dated February 3,
1992 is incorporated by reference to Exhibit
(5)(b) to Post-Effective Amendment No. 28.
(c) Investment Advisory Agreement between
Registrant and First Wisconsin Asset
Management dated March 27, 1992 with respect
to the Balanced Fund is incorporated by
reference to Exhibit (5)(c) to Post-Effective
Amendment No. 28.
(d) Addendum No. 1 dated December 27, 1992 to
Investment Advisory Agreement between
Registrant and Firstar Investment Research
and Management Company dated March 27, 1992
with respect to the MidCore Growth Fund and
Intermediate Bond Market Fund is incorporated
by reference to Exhibit (5)(d) to Post-
Effective Amendment No. 28.
(e) Addendum No. 2 dated February 5, 1993, to
Investment Advisory Agreement between the
Registrant and Firstar Investment Research
and Management Company dated March 27, 1992
with respect to the Tax-Exempt Intermediate
Bond Fund is incorporated by reference to
Exhibit (5)(e) to Post-Effective Amendment
No. 28.
(f) Assumption and Guarantee Agreement between
Firstar Trust Company and Firstar Investment
Research and Management Company dated
June 17, 1993 with respect to the Income and
Growth Fund is incorporated by reference to
Exhibit (5)(f) to Post-Effective Amendment
No. 28.
(g) Addendum No. 3 dated April 26, 1994, to
Investment Advisory Agreement between the
Registrant and Firstar Investment Research
and Management Company dated March 27, 1992
with respect to the International Equity Fund
is incorporated by reference to Exhibit
(5)(g) to Post-Effective Amendment No. 28.
(h) Sub-Advisory Agreement among Firstar
Investment Research and Management Company,
the Registrant and State Street Bank and
Trust Company dated April 26, 1994, with
respect to the International Equity Fund is
incorporated by reference to Exhibit (5)(h)
to Post-Effective Amendment No. 28.
(i) Addendum No. 4 to the Investment Advisory
Agreement between Registrant and Firstar
Investment Research and Management Company
dated March 27, 1992 with respect to the
MicroCap Fund is incorporated by reference to
Exhibit (5)(i) to Post-Effective Amendment
No. 28.
(j) Form of Addendum No. 5 to the Investment
Advisory Agreement between Registrant and
Firstar Investment Research & Management
Company dated March 27, 1992 with respect to
the Balanced Income Fund is incorporated by
reference to Exhibit (5)(j) to Post-Effective
Amendment No. 28.
(k) Form of Addendum No. 6 to the Investment
Advisory Agreement between Registrant and
Firstar Investment Research & Management
Company with respect to the Emerging Growth
Fund.
(6) (a) Distribution Agreement between Registrant and
B.C. Ziegler & Company dated as of January 1,
1995, with respect to Money Market Fund, U.S.
Government Money Market Fund, Tax-Exempt
Money Market Fund, Growth and Income Fund,
Short-Term Bond Market Fund, Special Growth
Fund, Bond IMMDEXt Fund, Equity Index Fund,
Institutional Money Market Fund, U.S.
Treasury Money Market Fund, Balanced Fund,
Intermediate Bond Market Fund, MidCore Growth
Fund, Tax-Exempt Intermediate Bond Fund and
International Equity Fund is incorporated by
reference to Exhibit (6)(a) to Post-Effective
Amendment No. 28.
(b) Addendum No. 1 to the Distribution Agreement
between Registrant and B.C. Ziegler and
Company dated as of January 1, 1995 with
respect to the MicroCap Fund is incorporated
by reference to Exhibit (6)(b) to Post-
Effective Amendment No. 28.
(c) Form of Addendum No. 2 to the Distribution
Agreement between Registrant and B.C. Ziegler
and Company dated as of January 1, 1995 with
respect to the Balanced Income Fund is
incorporated by reference to Exhibit (6)(c)
to Post-Effective Amendment No. 28.
(d) Form of Addendum No. 3 to the Distribution
Agreement between Registrant and B.C. Ziegler
and Company with respect to the Emerging
Growth Fund.
(7) Deferred Compensation Plan dated September 16,
1994 and Deferred Compensation Agreement between
Registrant and its Directors is incorporated by
reference to Exhibit (7) to Post-Effective
Amendment No. 28.
(8) (a) Custodian Agreement between Registrant and
First Wisconsin Trust Company dated July 29,
1988 is incorporated by reference to
Exhibit (8)(a) to Post-Effective Amendment
No. 28.
(b) Letter dated December 28, 1989 with respect
to the Custodian Agreement with respect to
the Equity Index Fund is incorporated by
reference to Exhibit (8)(b) to Post-Effective
Amendment No. 28.
(c) Revised Mutual Fund Custodial Agent Service
Annual Fee Schedule dated February 23, 1990
to the Custodian Agreement is incorporated by
reference to Exhibit (8)(c) to Post-Effective
Amendment No. 28.
(d) Amendment dated May 1, 1990 to the Custodian
Agreement between Registrant and First
Wisconsin Trust Company is incorporated by
reference to Exhibit (8)(d) to Post-Effective
Amendment No. 28.
(e) Letter dated April 19, 1991 with respect to
the Custodian Agreement with respect to the
Institutional Money Market Fund and U.S.
Federal Money Market Fund is incorporated by
reference to Exhibit (8)(e) to Post-Effective
Amendment No. 28.
(f) Letter dated March 27, 1992 with respect to
the Custodian Agreement with respect to the
Balanced Fund is incorporated by reference to
Exhibit (8)(f) to Post-Effective Amendment
No. 28.
(g) Letter dated December 27, 1992 with respect
to the Custodian Agreement with respect to
the Intermediate Bond Market Fund and MidCore
Growth Fund is incorporated by reference to
Exhibit (8)(g) to Post-Effective Amendment
No. 28.
(h) Letter dated February 5, 1993 with respect to
the Custodian Agreement with respect to the
Tax-Exempt Intermediate Bond Fund is
incorporated by reference to Exhibit (8)(h)
to Post-Effective Amendment No. 28.
(i) Custodian Arrangement between Registrant and
State Street Bank and Trust Company dated
April 26, 1994 is incorporated by reference
to Exhibit (8)(i) to Post-Effective Amendment
No. 29 to the Registration Statement, filed
October 28, 1996 ("Post-Effective Amendment
No. 29").
(j) Letter Agreement dated August 1, 1995 with
respect to the Custodian Agreement with
respect to the MicroCap Fund is incorporated
by reference to Exhibit (8)(j) to Post-
Effective Amendment No. 28.
(k) Form of Letter Agreement with respect to the
Custodian Agreement with respect to the
Balanced Income Fund is incorporated by
reference to Exhibit (8)(k) to Post-Effective
Amendment No. 28.
(l) Form of Letter Agreement with respect to the
Custodian Agreement with respect to the
Emerging Growth Fund.
(9) (a) Co-Administration Agreement Among the
Registrant, B.C. Ziegler & Company and
Firstar Trust Company dated as of January 1,
1995 is incorporated by reference to
Exhibit (9)(a) to Post-Effective Amendment
No. 28.
(b) Addendum No. 1 to the Co-Administration
Agreement among the Registrant, B.C. Ziegler
and Company and Firstar Trust Company dated
as of January 1, 1995 with respect to the
MicroCap Fund is incorporated by reference to
Exhibit (9)(b) to Post-Effective Amendment
No. 28.
(c) Form of Addendum No. 2 to the Co-
Administration Agreement among the
Registrant, B.C. Ziegler and Company and
Firstar Trust Company dated as of January 1,
1995 with respect to the Balanced Income Fund
is incorporated by reference to Exhibit
(9)(c) to Post-Effective Amendment No. 28.
(d) Fund Accounting Servicing Agreement dated
March 23, 1988 between Registrant and First
Wisconsin Trust Company is incorporated by
reference to Exhibit (9)(d) to Post-Effective
Amendment No. 28.
(e) Letter dated July 29, 1988 with respect to
the Fund Accounting Servicing Agreement is
incorporated by reference to Exhibit (9)(e)
to Post-Effective Amendment No. 28.
(f) Letter dated December 28, 1989 with respect
to the Fund Accounting Servicing Agreement
with respect to the Equity Index Fund is
incorporated by reference to Exhibit (9)(f)
to Post-Effective Amendment No. 28.
(g) Letter dated April 19, 1991 with respect to
the Fund Accounting Servicing Agreement with
respect to the Institutional Money Market
Fund and U.S. Federal Money Market Fund is
incorporated by reference to Exhibit (9)(g)
to Post-Effective Amendment No. 28.
(h) Letter dated March 27, 1992 with respect to
the Fund Accounting Servicing Agreement with
respect to the Balanced Fund is incorporated
by reference to Exhibit (9)(h) to Post-
Effective Amendment No. 28.
(i) Letter dated December 27, 1992 with respect
to the Fund Accounting Servicing Agreement
with respect to the Intermediate Bond Market
Fund and MidCore Growth Fund is incorporated
by reference to Exhibit (9)(i) to Post-
Effective Amendment No. 28.
(j) Letter dated February 5, 1993 with respect to
the Fund Accounting Servicing Agreement with
respect to the Tax-Exempt Intermediate Bond
Fund is incorporated by reference to Exhibit
(9)(j) to Post-Effective Amendment No. 29.
(k) Revised Fund Valuation and Accounting Fee
Schedule dated February 23, 1990 to the Fund
Accounting Servicing Agreement with respect
to the Money Market Fund, Tax-Exempt Money
Market Fund and U.S. Government Money Market
Fund is incorporated by reference to Exhibit
(9)(k) to Post-Effective Amendment No. 28.
(l) Revised Fund Valuation and Accounting Fee
Schedule dated February 23, 1990 to the Fund
Accounting Servicing Agreement with respect
to the Equity Index Fund is incorporated by
reference to Exhibit (9)(l) to Post-Effective
Amendment No. 28.
(m) Revised Fund Valuation and Accounting Fee
Schedule dated November 1, 1990 to the Fund
Accounting and Servicing Agreement with
respect to the Equity Index Fund, Income and
Growth Fund, Special Growth Fund, Short-
Intermediate Fixed Income Fund, and Bond
IMMDEXt Fund is incorporated by reference to
Exhibit (9)(m) to Post-Effective Amendment
No. 28.
(n) Letter Agreement dated August 1, 1995 with
respect to the Fund Accounting Servicing
Agreement with respect to the MicroCap Fund
is incorporated by reference to Exhibit
(9)(n) to Post-Effective Amendment No. 28.
(o) Form of Letter Agreement with respect to the
Fund Accounting Servicing Agreement with
respect to the Balanced Income Fund is
incorporated by reference to Exhibit (9)(o)
to Post-Effective Amendment No. 28.
(p) Shareholder Servicing Agent Agreement dated
March 23, 1988 between Registrant and First
Wisconsin Trust Company is incorporated by
reference to Exhibit (9)(p) to Post-Effective
Amendment No. 28.
(q) Letter dated July 29, 1988 with respect to
Shareholder Servicing Agent Agreement is
incorporated by reference to Exhibit (9)(q)
to Post-Effective Amendment No. 28
(r) Letter dated December 28, 1989 with respect
to the Shareholder Servicing Agent Agreement
with respect to the Equity Index Fund is
incorporated by reference to Exhibit (9)(r)
to Post-Effective Amendment No. 28.
(s) Letter dated April 23, 1991 with respect to
the Shareholder Servicing Agent Agreement
with respect to the Institutional Money
Market Fund and U.S. Federal Money Market
Fund is incorporated by reference to Exhibit
(9)(s) to Post-Effective Amendment No. 28.
(t) Letter dated March 27, 1992 with respect to
the Shareholder Servicing Agent Agreement
with respect to the Balanced Fund is
incorporated by reference to Exhibit (9)(t)
to Post-Effective Amendment No. 28.
(u) Letter dated December 27, 1992 with respect
to the Shareholder Servicing Agent Agreement
with respect to the Intermediate Bond Market
Fund and MidCore Growth Fund is incorporated
by reference to Exhibit (9)(u) to Post-
Effective Amendment No. 28.
(v) Letter dated February 5, 1993 with respect to
the Shareholder Servicing Agent Agreement
with respect to the Tax-Exempt Intermediate
Bond Fund is incorporated by reference to
Exhibit (9)(v) to Post-Effective Amendment
No. 29.
(w) Letter dated April 26, 1994 with respect to
the Shareholder Servicing Agent Agreement
with respect to the International Equity Fund
is incorporated by reference to Exhibit
(9)(w) to Post-Effective Amendment No. 28.
(x) Amendment dated May 1, 1990 to the
Shareholder Servicing Agent Agreement between
Registrant and First Wisconsin Trust Company
is incorporated by reference to Exhibit
(9)(x) to Post-Effective Amendment No. 28.
(y) Letter Agreement dated August 1, 1995 with
respect to Shareholder Servicing Agent
Agreement with respect to the MicroCap Fund
is incorporated by reference to Exhibit
(9)(y) to Post-Effective Amendment No. 28.
(z) Form of Letter with respect to Shareholder
Servicing Agent Agreement with respect to the
Balanced Income Fund is incorporated by
reference to Exhibit (9)(z) to Post-Effective
Amendment No. 28.
(aa) Plan of Reorganization is incorporated by
reference to Exhibit (9)(aa) to Post-
Effective Amendment No. 28.
(ab) Purchase and Assumption Agreement dated
February 22, 1988 is incorporated by
reference to Exhibit (9)(ab) to Post-
Effective Amendment No. 28.
(ac) Form of Addendum No. 3 to the Co-
Administration Agreement among the
Registrant, B.C. Ziegler and Company and
Firstar Trust Company with respect to the
Emerging Growth Fund.
(ad) Form of Letter Agreement with respect to the
Fund Accounting Servicing Agreement with
respect to the Emerging Growth Fund.
(ae) Form of Letter Agreement with respect to
Shareholder Servicing Agent Agreement with
respect to the Emerging Growth Fund.
(10) Opinion and Consent of Counsel.
(11) (a) Consent of Drinker Biddle & Reath LLP.
(b) Consent of Price Waterhouse LLP
(12) None.
(13) (a) Purchase Agreement between Registrant and
ALPS Securities, Inc. is incorporated by
reference to Exhibit (13)(a) to Post-
Effective Amendment No. 29.
(b) Purchase Agreement between ALPS Securities,
Inc. and Sunstone Financial Group, Inc. is
incorporated by reference to Exhibit (13)(b)
to Post-Effective Amendment No. 29.
(14) Individual Retirement Account Documents is
incorporated by reference to Exhibit (14) to Post-
Effective Amendment No. 28.
(14) (a) Amended and Restated Distribution and Service
Plan and Form of Distribution and Servicing
Agreement is incorporated by reference to
Exhibit (14)(a) to Post-Effective Amendment
No. 30.
(15) (a) Schedule for Computation of Performance
Quotations -- Money Market Fund is
incorporated by reference to Exhibit (16)(a)
to Post-Effective Amendment No. 28.
(b) Schedule for Computation of Performance
Quotations -- Tax-Exempt Money Market Fund is
incorporated by reference to Exhibit (16)(b)
to Post-Effective Amendment No. 28.
(c) Schedule for Computation of Performance
Quotations -- U.S. Government Money Market
Fund is incorporated by reference to Exhibit
(16)(c) to Post-Effective Amendment No. 28.
(d) Schedule of Computation of Performance
Quotations -- Growth and Income Fund is
incorporated by reference to Exhibit (16)(d)
to Post-Effective Amendment No. 28.
(e) Schedule of Computation of Performance
Quotations -- Short-Term Bond Market Fund is
incorporated by reference to Exhibit (16)(e)
to Post-Effective Amendment No. 28.
(f) Schedule of Computation of Performance
Quotations -- Special Growth Fund is
incorporated by reference to Exhibit (16)(f)
to Post-Effective Amendment No. 28.
(g) Schedule of Computation of Performance
Quotations -- Bond IMMDEXt Fund is
incorporated by reference to Exhibit (16)(g)
to Post-Effective Amendment No. 28.
(h) Schedule of Computation of Performance
Quotations -- Equity Index Fund is
incorporated by reference to Exhibit (16)(h)
to Post-Effective Amendment No. 28.
(i) Schedule of Computation of Performance
Quotations -- Institutional Money Market Fund
is incorporated by reference to Exhibit
(16)(i) to Post-Effective Amendment No. 28.
(j) Schedule of Computation of Performance
Quotations -- U.S. Treasury Money Market Fund
is incorporated by reference to Exhibit
(16)(j) to Post-Effective Amendment No. 28.
(k) Schedule of Computation of Performance
Quotations -- Balanced Fund is incorporated
by reference to Exhibit (16)(k) to Post-
Effective Amendment No. 28.
(l) Schedule of Computation of Performance
Quotations -- MidCore Growth Fund is
incorporated by reference to Exhibit (16)(l)
to Post-Effective Amendment No. 28.
(m) Schedule of Computation of Performance
Quotations -- Intermediate Bond Market Fund
is incorporated by reference to Exhibit
(16)(m) to Post-Effective Amendment No. 28.
(n) Schedule of Computation of Performance
Quotations -- Tax-Exempt Intermediate Bond
Fund is incorporated by reference to Exhibit
(16)(n) to Post-Effective Amendment No. 28.
(o) Schedule of Computation of Performance
Quotations -- International Equity Fund is
incorporated by reference to Exhibit (16)(o)
to Post-Effective Amendment No. 28.
(p) Schedule of Computation of Performance
Quotations -- MicroCap Fund is incorporated
by reference to Exhibit (16)(p) to Post-
Effective Amendment No. 29.
(17) Financial Data Schedules - None.
(18)(a) Amended and Restated Plan Pursuant to Rule
18f-3 for Operation of a Multi-Series System.
(b) Form of Amended and Restated Plan Pursuant to
Rule 18f-3 for Operation of a Multi-Series
System.
Item 25. Persons Controlled By or Under Common Control with Registrant
-------------------------------------------------------------
Registrant is controlled by its Board of Directors.
Item 26. Number of Holders of Securities
-------------------------------
As of April 30, 1997:
Number of
Title of Class Series Record Holders
- ---------------------------------------------------------------------------
Money Market Fund 1-A 5,567
Tax-Exempt Money Market Fund 2-A 386
U.S. Government Money Market Fund 3-A 327
Institutional Money Market Fund 4-A 75
U.S. Treasury Money Market Fund 5-A 117
Special Growth Fund 6-Institutional 460
6-A 6,689
Bond IMMDEXt Fund 7-Institutional 132
7-A 890
Equity Index Fund 8-Institutional 179
8-A 1,796
Growth and Income Fund 9-Institutional 194
9-A 3,459
Short-Term Bond Market Fund 10-Institutional 65
10-A 1,514
Balanced Fund 11-Institutional 182
11-A 1,459
MidCore Growth Fund 12-Institutional 100
12-A 841
Intermediate Bond Market Fund 13-Institutional 36
13-A 259
Tax-Exempt Intermediate Bond Fund 14-Institutional 15
14-A 153
International Equity Fund 15-Institutional 41
15-A 321
MicroCap Fund 16-Institutional 23
16-A 168
Item 27. Indemnification
---------------
Indemnification of Registrant's principal underwriter,
custodians and transfer agents against certain losses is provided
for, respectively, in Section 1.9 of the Distribution Agreement,
incorporated by reference as Exhibit (6)(a) hereto, Section 11 of
the Custodian Agreement, incorporated by reference as Exhibit
(8)(a) hereto, and Section 6(c) of the Shareholder Servicing
Agent Agreement incorporated by reference as Exhibit (9)(p)
hereto. Registrant has obtained from a major insurance carrier a
directors' and officers' liability policy covering certain types
of errors and omissions.
Article IX of Registrant's Articles of Incorporation,
incorporated by reference as Exhibit (1)(a) hereto, provides for
the indemnification of Registrant's directors and officers to the
full extent permitted by the Wisconsin Business Corporation Law
and the Investment Company Act of 1940.
Article VII of the By-laws of the Registrant,
incorporated by reference as Exhibit (2)(a) hereto, provides that
officers and directors of the Registrant shall be indemnified by
the Registrant against judgments, penalties, fines, excise taxes,
settlements and reasonable expenses (including attorney's fees)
incurred in connection with a legal action, suit or proceeding to
the full extent permissible under the Wisconsin Business
Corporation Law, the Securities Act of 1933 and the Investment
Company Act of 1940.
In no event will Registrant indemnify any of its
directors or officers against any liability to which such person
would otherwise be subject by reason of his willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. Registrant will
comply with Rule 484 under the Securities Act of 1933 and Release
No. 11330 under the Investment Company Act of 1940 in connection
with any indemnification.
Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, 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 Registrant of expenses incurred or paid by a director,
officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, 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 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 Connections of Investment Adviser
----------------------------------------------------
Firstar Investment Research and Management Company,
investment adviser to the Money Market Fund, Institutional Money
Market Fund, U.S. Treasury Money Market Fund, U.S. Government
Money Market Fund, Tax-Exempt Money Market Fund, Short-Term Bond
Market Fund, Growth and Income Fund, Special Growth Fund, Bond
IMMDEX/tm Fund, Equity Index Fund, Balanced Fund, Intermediate Bond
Market Fund, MidCore Growth Fund, Tax-Exempt Intermediate Bond
Fund, International Equity Fund and MicroCap Fund, is a
registered investment adviser under the Investment Advisers Act
of 1940.
To Registrant's knowledge, none of the directors or
senior executive officers of Firstar Investment Research and
Management Company, except those set forth below, is, or has been
at any time during Registrant's past two fiscal years, engaged in
any other business, profession, vocation or employment of a
substantial nature, except that certain directors and officers of
Firstar Investment Research and Management Company also hold
various positions with, and engage in business for, their
respective affiliates. Set forth below are the names and
principal businesses of the directors and certain of the senior
executive officers of Firstar Investment Research and Management
Company who are or have been engaged in any other business,
profession, vocation or employment of a substantial nature.
FIRSTAR INVESTMENT RESEARCH AND MANAGEMENT COMPANY
Position with
Firstar Investment
Research and Other Business Type of
Name Management Company Connections Business
- ----------------------------------------------------------------------------
John A. Becker Director President, Firstar Bank
Corporation, 777 E. Holding Co.
Wisconsin Avenue,
Milwaukee, WI 53201
J. Scott Harkness Director and None
Chairman
Steven R. Parish Director Executive Vice Bank
President, Firstar Holding Co.
Corporation, 777
E. Wisconsin Avenue,
Suite 800
Milwaukee, WI 53201
Mary Ellen Stanek Director, Chief Vice President, Investment
Operating Officer Portico Funds, Inc.Company
and President Portico Funds
Center, 615 East
Michigan Street,
P.O. Box 3011,
Milwaukee, WI
53201-3011
Matthew Uselman Director Senior Vice Bank
President,
Firstar Bank
Wisconsin
1 South Pinckney,
Suite 401
Madison, WI 53703
Robert L. Webster Director President, Trust
Firstar Trust Company
Company, 777 E.
Wisconsin Avenue,
Milwaukee, WI 53202
State Street Global Advisors serves as sub-investment adviser
tothe International Equity Fund. State Street Global Advisors is an area of
StateStreet Bank and Trust Company, a Massachusetts bank, and currently manages
largeinstitutional accounts and collective investment funds.
To Registrant's knowledge, none of the directors or
seniorexecutive officers of State Street Global Advisors except those set forth
below, is, or has been at any time during Registrant's past two fiscal years,
engaged in any other business, profession, vocation or employment of a
substantial nature, except that certain directors and officers of State Street
Global Advisors also hold various positions with, and engage in business for,
their respective affiliates. Set forth below are the names and principal
businesses of the directors and certain of the senior executive officers of
State Street Global Advisors who are or have been engaged in any other business,
profession, vocation or employment of a substantial nature.
STATE STREET GLOBAL ADVISORS
Position with Other Business
State Street Connections and
Name Global Advisors Address*
Tenley E. Albright, Director Chairman, Western
M.D. Resources, Inc.
Joseph A. Baute Director Consultant to Markem Corporation
Former Chairman/CEO
L. MacAlister Booth Director Retired Chairman, President and
CEO, Polaroid Corporation
Marshall N. Carter Chairman Director, Euroclear;
and CEO Director, Orbis Inter-
national
James I. Cash, Jr. Director Professor of Business
Administration, Harvard
Business School
Truman S. Casner Director Partner, Ropes & Gray
Nader F. Darehshori Director Chairman, President and CEO,
Houghton Mifflin Company
Arthur L. Goldstein Director Chairman and CEO, Ionics,
Incorporated
Charles F. Kaye Director President, Transportation
Investments, Inc.
John M. Kucharski Director Chairman and CEO,
EG&G, Inc.
Charles R. LaMantia Director President and CEO,
Arthur D. Little, Inc.
David B. Perini Director Chairman and President,
Perini Corporation
Dennis J. Picard Director Chairman and CEO, Raytheon
Company, Position with State
Street other Business
Alfred Poe Director Former President, Meal Enhancement
Group, Campbell Soup Company
Bernard W. Reznicek Director National Director - Utility Marketing
Central States Indemnity Co. of Omaha
David A. Spina President and Chairman, Massachusetts Housing
Chief Oper- Investment Corporation, Director,
ating Officer Metropolitan Boston Housing
Partnership, Inc., Chairman,
Dana Hall School
Robert E. Weissman Director Chairman and CEO,
Cognizant Corporation
* Address of all individuals: State Street Boston Corporation, 225
Franklin Street, Boston, Massachusetts 02110.
Item 29. Principal Underwriter
---------------------
(a) B.C. Ziegler & Company ("B.C. Ziegler"), the
Registrant's current principal underwriter, serves as principal
underwriter of the shares of the Principal Preservation Funds,
American Tax-Exempt Bond Trust, Series 1 (and subsequent series);
Ziegler U.S. Government Securities Trust, Series 1 (and
subsequent series); American Income Trust, Series 1 (and
subsequent series); Ziegler Money Market Trust; and The Insured
American Tax-Exempt Bond Trust, Series 1 (and subsequent series).
(b) To the best of Registrant's knowledge, the
directors and executive officers of B.C. Ziegler & Company are as
follows:
Positions and
Name and Principal Position and Offices Offices with
Business Address with B. C. Ziegler Registrant
- ------------------ -------------------- --------------
Peter D. Ziegler President, Chief
Executive Officer
and Director None
S. Charles O'Meara Senior Vice
President and
General Counsel and
Director None
D. A. Wallestad Senior Vice
President -
Acquisition
Chief Finanacial
Officer None
Donald A. Carlson, Jr. Senior Vice
President None
J.C. Wagner Senior Vice
President -
Retail Sales and
Director None
Neil L. Fuerbringer Senior Vice
President -
Administration None
Michael P. Doyle Senior Vice
President - Retail
Operations None
Ronald N. Spears Senior Vice
President None
Jeffrey C. Vredenbregt Vice President,
Treasurer,
Controller and
Director None
Charles G. Stevens Vice President -
Marketing Director None
Jack H. Downer Vice President -
MIS Director None
Robert J. Tuszynski Senior Vice
President None
Gerry Aman Vice President -
Insurance None
Sheila K. Hittman Vice President -
Personnel None
Robert J. Johnson Vice President -
Compliance None
James M. Bushman Vice President -
Recruiting and
Training Coordinator None
Lay C. Rosenheimer Vice President -
Bond Sales Control None
Darrell P. Frank Vice President -
Director of
Strategic Change None
M.L. McBain Vice President -
Equity Securities None
James L. Brendemuehl Vice President -
Managed Products None
Ronald C. Strzok Vice President -
Administration None
Jerome Ferrara, Jr. Assistant Vice
President - Mutual
Funds None
Janine R. Yovanovich Corporate Secretary None
Kathleen A. Lochen Assistant Secretary None
The address of each of the foregoing is 215 North Main Street,
West Bend, Wisconsin 53095, (414) 334-5521.
(e) None.
Item 30. Location of Accounts and Records
--------------------------------
(1) Firstar Trust Company, 615 E. Michigan Street,
Milwaukee, WI 53201 (records relating to its function
as custodian, transfer agent, fund accounting servicing
agent, shareholder servicing agent and co-
administrator).
(2) Firstar Investment Research and Management Company,
First Wisconsin Center, 777 E. Wisconsin Avenue, Suite
1800, Milwaukee, WI 53202 (records relating to its
function as investment adviser).
(3) State Street Global Advisors, Two International Plaza,
Boston, MA 02110, (records relating to its function as
sub-investment adviser for the International Equity
Fund).
(4) State Street Bank and Trust Company, Two International
Plaza, Boston, MA 02110, (records relating to its
function as custodian and fund accounting service agent
for the International Equity Fund).
(5) B.C. Ziegler & Company, 215 North Main Street, West
Bend, Wisconsin 53095-3348 (records relating to its
functions as distributor and co-administrator).
(6) Drinker Biddle & Reath LLP, Philadelphia National Bank
Building, 1345 Chestnut Street, Philadelphia,
Pennsylvania 19107 (Registrant's Articles of
Incorporation, By-laws and Minute Books).
Item 31. Management Services
-------------------
None.
Item 32. Undertakings
------------
(1) 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.
(2) The Registrant hereby undertakes to file a post-
effective amendment using financial statements which
need not be certified, within four to six months from
the effective date of this Post-Effective Amendment No.
31 to Registrant's 1933 Act registration statement.
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant has
duly caused this Post-Effective Amendment No. 31 to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Philadelphia, and Commonwealth of Pennsylvania, on the 30th day
of May, 1997.
PORTICO FUNDS, INC.
Registrant
By *James M. Wade
-----------------
President
Pursuant to the requirements of the Securities Act of
1933, this Post-Effective Amendment No. 31 to the Registration
Statement of the Registrant has been signed by the following
persons in the capacities and on the dates indicated:
Signature Title Date
Chairman, President
*James M. Wade and Treasurer May 30, 1997
- --------------------
(James M. Wade)
*Richard Riederer Director May 30, 1997
- --------------------
(Richard Riederer)
*Jerry Remmel Director May 30, 1997
- --------------------
(Jerry Remmel)
*Glen R. Bomberger Director May 30, 1997
- --------------------
(Glen R. Bomberger)
*Charles R. Roy Director May 30, 1997
- --------------------
(Charles R. Roy)
*By /s/W. Bruce McConnel III May 30, 1997
- ----------------------------
W. Bruce McConnel, III
Attorney-in-fact
PORTICO FUNDS, INC.
Certificate of Secretary
The following resolution was duly adopted by the Board of
Directors of Portico Funds, Inc. on May 23, 1997 and remains in
effect on the date hereof:
FURTHER RESOLVED, that the directors and officers of
the Company who may be required to execute any amendments to
the Registration Statement of the Company be, and each of
them hereby is, authorized to execute a Power of Attorney
appointing James M. Wade and W. Bruce McConnel, III, and
either of them, their true and lawful attorney or attorneys,
to execute in their name, place and stead, in their capacity
as director or officer, or both, of the Company any and all
amendments to said Registration Statement, and all
instruments necessary or incidental in connection therewith,
and to file the same with the Securities and Exchange
Commission; and either of said attorneys shall have the
power to act thereunder with or without the other said
attorney and shall have full power of substitution and
resubstitution; and either of said attorneys shall have full
power and authority to do in the name and on behalf of said
directors and officers, or any or all of them, in any and
all capacities, every act whatsoever requisite or necessary
to be done in the premises, as fully and to all intents and
purposes as each of said directors or officers, or any or
all of them, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises, as fully
and to all intents and purposes as each of said directors or
officers, or any or all of them, might or could do in
person, said acts of said attorneys, or either of them,
being hereby ratified and approved.
PORTICO FUNDS, INC.
By: /s/ W. Bruce McConnel III
-------------------------
W. Bruce McConnel, III
Secretary
Dated: May 30, 1997
EXHIBIT INDEX
Exhibit No. Item
(1)(l) Form of Amendment No. 11 to Articles of
Incorporation.
(5)(k) Form of Addendum No. 6 to the Investment Advisory
Agreement between Registrant and Firstar
Investment Research & Management Company LLC with
respect to the Emerging Growth Fund.
(6)(d) Form of Addendum No. 3 to the Distribution
Agreement between Registrant and B.C. Ziegler and
Company with respect to the Emerging Growth Fund.
(8)(l) Form of Letter Agreement with respect to the
Custodian Agreement with respect to the Emerging
Growth Fund.
(9)(ac) Form of Addendum No. 3 to the Co-Administration
Agreement among Registrant, B.C. Ziegler and
Company and Firstar Trust Company dated with
respect to the Emerging Growth Fund.
(9)(ad) Form of Letter Agreement with respect to the Fund
Accounting Servicing Agreement with respect to the
Emerging Growth Fund.
(9)(ae) Form of Letter Agreement with respect to
Shareholder Servicing Agent Agreement with respect
to the Emerging Growth Fund.
(11)(a) Consent of Drinker Biddle & Reath LLP.
(11)(b) Consent of Price Waterhouse LLP
(18)(b) Form of Amended and Restated Plan Pursuant to Rule
18f-3 for Operation of a Multi-Series System.
<24> Power of Attorney
POWER OF ATTORNEY
- -----------------
Charles R. Roy, whose signature appears below, does
hereby constitute and appoint James M. Wade and W. Bruce
McConnel, III, and either of them, his true and lawful attorneys
and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them,
may deem necessary or advisable or which may be required to
enable Portico Funds, Inc. (the "Company") to comply with the
Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "Acts"), and any rules, regulations
or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness
of the Company's Registration Statement under the said Acts, and
any and all amendments (including post-effective amendments)
thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as a director and/or
officer of the Company said Registration Statement and any and
all such amendments thereto that are filed with the Securities
and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorneys and
agents, or either of them, shall do or cause to be done by
virtue hereof.
Date: February 23, 1990 /s/ Charles R. Roy
------------------
Charles R. Roy
POWER OF ATTORNEY
- -----------------
Glen R. Bomberger, whose signature appears below, does
hereby constitute and appoint James M. Wade and W. Bruce
McConnel, III, and either of them, his true and lawful attorneys
and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them,
may deem necessary or advisable or which may be required to
enable Portico Funds, Inc. (the "Company") to comply with the
Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "Acts"), and any rules, regulations
or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness
of the Company's Registration Statement under the said Acts, and
any and all amendments (including post-effective amendments)
thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as a director and/or
officer of the Company said Registration Statement and any and
all such amendments thereto that are filed with the Securities
and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorneys and
agents, or either of them, shall do or cause to be done by
virtue hereof.
Date: February 23, 1990 /s/ Glen R. Bomberger
---------------------
Glen R. Bomberger
POWER OF ATTORNEY
James M. Wade, whose signature appears below, does
hereby constitute and appoint W. Bruce McConnel, III his true
and lawful attorney and agent, with power of substitution or
resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorney and agent may deem
necessary or advisable or which may be required to enable
Portico Funds, Inc. (the "Company") to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as
amended (the "Acts"), and any rules, regulations or requirements
of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Company's
Registration Statement under the said Acts, and any and all
amendments (including post-effective amendments) thereto,
including specifically, but without limiting the generality of
the foregoing, the power and authority to sign in the name and
on behalf of the undersigned as a director and/or officer of the
Company said Registration Statement and any and all such
amendments thereto that are filed with the Securities and
Exchange Commission under said Acts, and any other instruments
or documents related thereto, and the undersigned does hereby
ratify and confirm all that said attorney and agent shall do or cause
to be done by virtue hereof.
Date: February 23, 1990 /s/ James M. Wade
-----------------
James M. Wade
POWER OF ATTORNEY
Richard K. Riederer, whose signature appears below,
does hereby constitute and appoint James M. Wade and W. Bruce
McConnel, III, and either of them, his true and lawful attorneys
and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them,
may deem necessary or advisable or which may be required to
enable Portico Funds, Inc. (the "Company") to comply with the
Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "Acts"), and any rules, regulations
or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness
of the Company's Registration Statement under the said Acts, and
any and all amendments (including post-effective amendments)
thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as a director and/or
officer of the Company said Registration Statement and any and
all such amendments thereto that are filed with the Securities
and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorneys and
agents, or either of them, shall do or cause to be done by
virtue hereof.
Date: February 23, 1990 /s/ Richard K. Riederer
-----------------------
Richard K. Riederer
POWER OF ATTORNEY
Jerry Remmel, whose signature appears below, does
hereby constitute and appoint James M. Wade and W. Bruce
McConnel, III, and either of them, his true and lawful attorneys
and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them,
may deem necessary or advisable or which may be required to
enable Portico Funds, Inc. (the "Company") to comply with the
Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "Acts"), and any rules, regulations
or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness
of the Company's Registration Statement under the said Acts, and
any and all amendments (including post-effective amendments)
thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as a director and/or
officer of the Company said Registration Statement and any and
all such amendments thereto that are filed with the Securities
and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorneys and
agents, or either of them, shall do or cause to be done by
virtue hereof.
Date: February 23, 1990 /s/ Jerry Remmel
----------------
Jerry Remmel
Exhibit (1)(l)
ARTICLES OF AMENDMENT Stock(for profit)
Kenneth L. Greenberg, Esquire
DRINKER BIDDLE & REATH
PNB Building, 11th Floor
1345 Chestnut Street
Philadelphia, PA 19107
<- Please indicate where you
would like the acknowledgement
copy of the filed document sent.
Please include complete name and
mailing address.
Your phone number during the day: (215) 988-1152
INSTRUCTIONS (Ref. sec. 180.1006 Wis. Stats. for document content)
Submit one original and one exact copy to Secretary of
State, P.O. Box 7846, Madison, Wisconsin, 53707-7846. (If sent
by Express or Priority U.S. mail, address to 30 W. Mifflin
Street, 9th Floor, Madison, WI 53703). The original must
include an original manual signature (sec. 180.0120(3)(c), Wis. Stats).
If you have any additional questions, please call the
Corporations Division at 608-266-3590.
A. State the name of the corporation (before any changes effected by this
amendment) and the text of the amendment(s). The text should recite the
resolution adopted (e.g.) "RESOLVED, THAT, Article 1 of the Articles of
Incorporation is hereby amended to read as follows.... etc.").
If an amendment provides for an exchange, reclassification or
cancellation of issued shares, state the provisions for implementing the
amendment if not contained in the amendment itself.
B. Enter the date of adoption of the amendment(s). If there is more than
one amendment, identify the date of adoption of each. Mark one of the three
choices to indicate the method of adoption of the amendment(s).
By Board of Directors - Refer to sec. 180.1002 Wis. Stats. for specific
information on the character of amendments that may be adopted by the Board of
Directors without shareholder action.
By Board of Directors and Shareholders - Amendments proposed by the
Board of Directors and adopted by shareholder approval. Voting requirements
differ with circumstances and provisions in the articles of incorporation.
See sec. 180.1003 Wis. Stats. for specific information.
By Incorporators or Board of Directors - Before issuance of shares - See
sec. 180.1005 Wis. Stats. for conditions attached to the adoption of an
amendment approved by a vote or consent of less than 2/3rds of the shares
subscribed for.
C. Enter the date of execution and the name and title of the person signing
the document. The document must be signed by one of the following: An
officer (or incorporator if directors have not been elected) of the
corporation or the fiduciary if the corporation is in the hands of a receiver,
trustee, or other court appointed fiduciary. At least one copy must bear an
original manual signature.
D. If the document is executed in Wisconsin, sec. 14.38(14) Wis. Stats.
provides that it shall not be filed unless the name of the drafter (either an
individual or a governmental agency) is printed in a legible manner. If
document is NOT drafted in Wisconsin, please so state.
FILING FEES
Submit the document with a minimum filing fee of $40.00, payable to
SECRETARY OF STATE. If the amendment causes an increase in the number of
authorized shares, provide an additional fee of 1 cent for each new authorized
share. When the document has been filed, an acknowledgement copy stamped
"FILED" will be sent to the address indicated above.
ARTICLES OF AMENDMENT
Stock (for profit)
A. Name of Corporation: Portico Funds, Inc.
----------------------------------------------
(prior to any change effected by this amendment)
Text of Amendment (Refer to the existing articles of incorporation and
instruction A. Determine those items to changed and set forth below the
number identifying the paragraph being changed and how the amended
paragraph is to read.)
RESOLVED, THAT, the articles of incorporation be amended as
follows:
SEE ATTACHED
B. Amendment(s) adopted on May 23, 1997
-------------
(date)
Indicate the method of adoption by checking the appropriate choice
below:
( X )In accordance with sec. 180.1002, Wis. Stats. (By the Board of
Directors)
OR
( )In accordance with sec. 180.1003, Wis. Stats. (By the Board of
Directors and Shareholders)
OR
( )In accordance with sec. 180.1005, Wis. Stats. (By Incorporators or
Board of Directors, before issuance of shares)
C. Executed on behalf of the
corporation on --------------------
(date)
--------------------
(signature)
--------------------
(printed name)
--------------------
(officer's title)
D. This document was drafted by Kenneth L.Greenberg, Esq.
-----------------------------------
(name of individual required by law)
FILING FEE - $40.00 OR MORE
SEE REVERSE for Instructions, Suggestions, Filing Fees and Procedures
AMENDMENT TO ARTICLES OF INCORPORATION
ADOPTED BY BOARD OF DIRECTORS ON MAY 23, 1997
PURSUANT SECTION 180.1002 OF THE WISCONSIN STATUTES.
(a) The name of the Company is Portico Funds, Inc.
(b) and (c) The text of the Amendment which determines the terms of the
Company's Class 18 - Institutional Series and Class 18-A Series
Common Stock and the number of shares thereof is as follows:
RESOLVED, that pursuant to Article V of the Articles of
Incorporation of the Company, One Hundred Million authorized,
unissued and unclassified shares of Class 18 Common Stock of the
Company be, and hereby are, divided into and classified as Class
18- Institutional Series and One Hundred Million authorized,
unissued and unclassified shares of Class 18 Common Stock of the
Company be and hereby are divided into and classified as Class
18-A Series Common Stock, with all of the preferences,
limitations and relative rights set forth in Article V. B. of
said Articles of Incorporation.
(d) No shares of the Company's Class 18 - Institutional Series and
Class 18-A Series Common Stock have been issued.
(e) The Amendment was adopted on May 23, 1997.
(f) The Amendment was unanimously adopted by the Board of Directors
and shareholder action was not required.
Exhibit (5)(k)
ADDENDUM NO. 6 TO THE INVESTMENT ADVISORY AGREEMENT
This Addendum, dated as of the day of , 1997,
--- ---------
is entered into between PORTICO FUNDS, INC. (the "Company"), a
Wisconsin corporation, and Firstar Investment Research and
Management Company LLC (the "Investment Adviser").
WHEREAS, the Company and the Investment Adviser have entered
into an Investment Advisory Agreement dated as of March 27, 1992
(the "Advisory Agreement"), pursuant to which the Company
appointed the Investment Adviser to act as investment adviser to
the Company for its Balanced Fund;
WHEREAS, Section 1(b) of the Advisory Agreement provides
that in the event the Company establishes one or more additional
investment portfolios with respect to which it desires to retain
the Investment Adviser to act as the investment adviser under the
Advisory Agreement, the Company shall so notify the Investment
Adviser in writing, and if the Investment Adviser is willing to
render such services it shall notify the Company in writing, and
the compensation to be paid to the Investment Adviser shall be
that which is agreed to in writing by the Company and the
Investment Adviser; and
WHEREAS, pursuant to Section 1(b) of the Advisory Agreement,
the Company has notified the Investment Adviser that it has
established the Emerging Growth Fund and that it desires to
retain the Investment Adviser to act as the investment adviser
therefor, and the Investment Adviser has notified the Company
that it is willing to serve as investment adviser for the
Emerging Growth Fund (the "Fund");
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Appointment. The Company hereby appoints the
Investment Adviser to act as investment adviser to the Company
for the Emerging Growth Fund for the period and the terms set
forth herein and in the Advisory Agreement. The Investment
Adviser hereby accepts such appointment and agrees to render the
services set forth herein and in the Advisory Agreement, for the
compensation herein provided.
2. Compensation. For the services provided and the
expenses assumed with respect to the Emerging Growth Fund
pursuant to the Advisory Agreement and this Addendum, the Company
will pay the Investment Adviser and the Investment Adviser will
accept as full compensation therefor (a) 4/10 of the gross income
earned by the Fund on the loan of its securities (excluding
capital gains and losses if any), plus (b) a fee, computed daily
and paid monthly, at the annual rate of .75% of the Fund's
average daily net assets.
3. Miscellaneous. Except to the extent supplemented
hereby, the Advisory Agreement shall remain unchanged and in full
force and effect and is hereby ratified and confirmed in all
respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this
Addendum as of the date and year first above written.
PORTICO FUNDS, INC.
By:
-------------------------------
Title:
-------------------------------
FIRSTAR INVESTMENT RESEARCH
AND MANAGEMENT COMPANY, LLC
By:
-------------------------------
Title:
-------------------------------
Exhibit (6)(d)
ADDENDUM NO. 3 TO THE DISTRIBUTION AGREEMENT
This Addendum, dated as of the day of , 1997, is
--- -----------
entered into between Portico Funds, Inc. (the "Company"), a Wisconsin
corporation, and B.C. Ziegler and Company, a Wisconsin corporation
("BCZ").
WHEREAS, the Company and BCZ have entered into a Distribution
Agreement dated as of January 1, 1995 and amended as of August 1, 1995,
(the "Distribution Agreement"), pursuant to which the Company appointed
BCZ to provide distribution services to the Company for its Money
Market Fund, Tax-Exempt Money Market Fund, Growth and Income Fund,
Short-Term Bond Market Fund, Bond IMMDEXTM Fund, Special Growth Fund,
U.S. Government Money Market Fund, Equity Index Fund, Institutional
Money Market Fund, U.S. Treasury Money Market Fund, Balanced Fund,
MidCore Growth Fund, Intermediate Bond Market Fund, Tax-Exempt
Intermediate Bond Fund, International Equity Fund, and MicroCap Fund,
and any other Portico Funds that may be contemplated;
WHEREAS, the Company is establishing one additional investment
portfolio to be known as the Emerging Growth Fund and desires to retain
BCZ to act as the distributor under the Distribution Agreement; and
WHEREAS, BCZ is willing to serve as distributor for the Emerging
Growth Fund (the "Fund");
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Appointment. The Company hereby appoints BCZ to act as
distributor to the Company for the Emerging Growth Fund for the period
and the terms set forth herein and in the Distribution Agreement. BCZ
hereby accepts such appointment and agrees to render the services set
forth herein and in the Distribution Agreement.
2. Miscellaneous. Except to the extent supplemented hereby, the
Distribution Agreement shall remain unchanged and in full force and
effect and is hereby ratified and confirmed in all respects as
supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as
of the date and year first above written.
PORTICO FUNDS, INC.
By:
------------------------
Title:
------------------------
B.C. ZIEGLER AND COMPANY
By:
------------------------
Title:
------------------------
Exhibit (8)(l)
CUSTODIAN AGREEMENT
(Addition of the Emerging Growth Fund)
Firstar Trust Company
P.O. Box 2054
Milwaukee, WI 53201
Gentlemen:
Pursuant to Paragraph 16 of the Custodian Agreement
dated as of July 29, 1988 and amended as of May 1, 1990, between
you and Portico Funds, Inc. (formerly, Elan Funds, Inc.) (the
"Company"), the Company requests that you render services as
Custodian under the terms of said agreement with respect to the
Emerging Growth Fund, an additional portfolio which the Company
is establishing. Your compensation for the services provided
under said agreement for said additional portfolio shall be
determined in accordance with the fee schedule attached hereto.
Please sign two copies of this letter where indicated
to signify your agreement to serve as Custodian and to the
compensation terms set forth on the attached fee schedule.
Sincerely,
Dated: , 1997 PORTICO FUNDS, INC.
-------------
By:
---------------------
(Authorized Officer)
ACKNOWLEDGED AND AGREED:
FIRSTAR TRUST COMPANY
By: Dated:
--------------------- ------------------
(Authorized Officer)
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
MUTUAL FUND CUSTODIAL AGENT SERVICE ANNUAL FEE SCHEDULE
FOR
Emerging Growth Fund
Annual Fee based on total assets of the Portico Fund:
0.02% on the first $2 billion
0.15% on the next $2 billion
0.01% on the balance in excess of $4 billion
Investment Transactions: Purchase, sale, exchange, tender,
redemption (maturity), receipt and delivery.
$12.00 per Book Entry Securities (Depository or Federal
Reserve System).
$25.00 per Definitive Security (Physical).
$75.00 per Euroclear.
$ 8.00 per Principal reduction on pass-through certificates.
$35.00 per Option/Futures Contract.
$15.00 per variation margin transaction.
$25.00 per Mutual Fund trade
$15.00 perFed Wire deposit or withdrawal
Extraordinary expenses based on time and complexity involved.
Out-of-Pocket Expenses: Charged on the account.
Fees are billed quarterly based on the value at the beginning of
the quarter.
Exhibit (9)(ac)
ADDENDUM NO. 3 TO THE CO-ADMINISTRATION AGREEMENT
This Addendum, dated as of the day of , 1997,
--- ---------
is entered into among Portico Funds, Inc. (the "Company"), a
Wisconsin corporation, Firstar Trust Company, a Wisconsin
corporation ("Firstar"), and B.C. Ziegler and Company, a
Wisconsin corporation ("BCZ").
WHEREAS, the Company, Firstar and BCZ have entered into a
Co-Administration Agreement dated as of January 1, 1995 and
amended as of August 1, 1995 (the "Co-Administration Agreement"),
pursuant to which the Company appointed Firstar and BCZ to
provide certain co-administrative services to the Company for its
Money Market Fund, Tax-Exempt Money Market Fund, Growth and
Income Fund, Short-Term Bond Market Fund, Bond IMMDEXTM Fund,
Special Growth Fund, U.S. Government Money Market Fund, Equity
Index Fund, Institutional Money Market Fund, U.S. Treasury Money
Market Fund, Balanced Fund, MidCore Growth Fund, Intermediate
Bond Market Fund, Tax-Exempt Intermediate Bond Fund,
International Equity Fund, MicroCap Fund, and any other Portico
Funds that may be contemplated (collectively, the "Funds");
WHEREAS, the Company is establishing one additional
investment portfolio to be known as the Emerging Growth Fund and
desires to retain Firstar and BCZ to act as the co-administrators
under the Co-Administration Agreement; and
WHEREAS, Firstar and BCZ are willing to serve as co-
administrators for the Emerging Growth Fund;
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Appointment. The Company hereby appoints Firstar and
BCZ to act as co-administrators to the Company for the Emerging
Growth Fund for the period and the terms set forth herein and in
the Co-Administration Agreement. Firstar and BCZ hereby accept
such appointment and agree to render the services set forth
herein and in the Co-Administration Agreement, for the
compensation herein provided.
2. Compensation. For the services provided and the
expenses assumed with respect to the Emerging Growth Fund and the
other Funds pursuant to the Co-Administration Agreement and this
Addendum, the Company will pay Firstar and BCZ, and Firstar and
BCZ will accept as full compensation therefor, a fee, computed
daily and payable monthly, at the annual rate of .125% of the
Funds' first $2 billion of average aggregate daily net assets,
plus 0.10% of the Funds' average aggregate daily net assets in
excess of $2 billion. Such fee as is attributable to the
Emerging Growth Fund shall be a separate charge to such Fund and
shall be the obligation of the Emerging Growth Fund.
3. Miscellaneous. Except to the extent supplemented
hereby, the Co-Administration Agreement shall remain unchanged
and in full force and effect and is hereby ratified and confirmed
in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this
Addendum as of the date and year first above written.
PORTICO FUNDS, INC.
By:
--------------------------
Title:
-----------------------
FIRSTAR TRUST COMPANY
By:
--------------------------
Title:
-----------------------
B.C. ZIEGLER AND COMPANY
By:
--------------------------
Title:
-----------------------
Exhibit (9)(ad)
FUND ACCOUNTING SERVICING AGREEMENT
(Addition of Emerging Growth Fund)
Firstar Trust Company
P.O. Box 2054
Milwaukee, WI 53201
Gentlemen:
Pursuant to Paragraph 4 of the Fund Accounting
Servicing Agreement dated March 23, 1988 that you and we have
entered into, we are writing to request that you render
accounting services under the terms of said agreement with
respect to the Emerging Growth Fund, one additional portfolio we
are establishing. Your compensation for the services provided
under said agreement for said additional portfolio shall be
determined in accordance with the fee schedule attached hereto.
Please sign two copies of this letter where indicated to signify
your agreement to provide said services and to the compensation
terms set forth on the attached fee schedule.
Sincerely,
Dated: , 1997 PORTICO FUNDS, INC.
------------
By:
------------------------
(Authorized Officer)
ACKNOWLEDGED AND AGREED:
FIRSTAR TRUST COMPANY
By: Dated: , 1997
------------------------ --------------
(Authorized Officer)
FIRSTAR TRUST COMPANY
FUND VALUATION AND ACCOUNTING
FOR
PORTICO FUNDS, INC.
Emerging Growth Fund
Portfolio Services
Annual fee schedule for Emerging Growth Fund based on market
value of assets.
$27,500 for first $40,000,000.00
1.25/100 of 1% on the next $200,000,000.00
6.25/100 of 1% on the balance.
Out-of-Pocket Expenses: Charged on the Account.
Fees are billed monthly.
Exhibit (9)(ae)
SHAREHOLDER SERVICING AGENT AGREEMENT
(Addition of the Emerging Growth Fund)
Firstar Trust Company
P.O. Box 2054
Milwaukee, WI 53201
Gentlemen:
Pursuant to Paragraph 7 of the Shareholder Servicing
Agent Agreement dated as of March 23, 1988 and amended as of May
1, 1990, between you and Portico Funds, Inc. (formerly, Elan
Funds, Inc.) (the "Company"), the Company requests that you
render services as Shareholder Servicing Agent under the terms of
said agreement with respect to the Emerging Growth Fund, one
additional portfolio the Company is establishing. Your
compensation for the services provided under said agreement for
said additional portfolio shall be determined in accordance with
the fee schedule attached hereto.
Please sign two copies of this letter where indicated
to signify your agreement to so serve as Shareholder Servicing
Agent for the Emerging Growth Fund and to the compensation terms
set forth on the attached fee schedule for the new Fund, which
terms are to become effective as of the date set forth below.
Sincerely,
Dated: , 1997 PORTICO FUNDS, INC.
------------
By:
-------------------
(Authorized Officer)
ACKNOWLEDGED AND AGREED:
FIRSTAR TRUST COMPANY
By: Dated: , 1997
-------------------------- ------------
(Authorized Officer)
FIRSTAR TRUST COMPANY
MUTUAL FUND SHAREHOLDER SERVICES
FOR
PORTICO FUNDS, INC.
Emerging Growth Fund
Annual Fee Schedule
$15.00 per Shareholder account
$ 5.00 per telephone exchange
$12.00 per wire transfer
Minimum annual fee of $24,000 per Fund.
Account fees shall be waived on the initial 800 accounts per
series.
Fees billed monthly.
Plus out-of-pocket expenses including, but not limited to:
- Telephone--Toll-free lines
- Postage
- Programming
- Stationery/Envelopes
- Mailing
- Proxies
- Insurance
- Retention of Records
- Microfilm/Microfiche of Records
- Special Reports
- All other out-of pocket expenses
Plus, with respect to Two-Dimensional Transaction:
$1.00 per shareholder account to set-up
$1.00 per shareholder account to alter
AUTOMATIC INVESTMENT PLAN PROCESSING
$125.00 per cycle
$ 0.50 per account set-up and/or change
$ 0.50 per item for AIP purchases
$ 3.50 per correction, reversal or return item
Exhibit (11)(a)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to
the reference to our Firm under the caption "Counsel" in the
Statement of Additional Information that is included in Post-
Effective Amendment No. 31 to the Registration Statement (No. 33-
18255) on Form N-1A under the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, of Portico Funds,
Inc. This consent does not constitute a consent under section 7
of the Securities Act of 1933, and in consenting to the use of
our name and the references to our Firm under such caption we
have not certified any part of the Registration Statement and do
not otherwise come within the categories of persons whose consent
is required under said section 7 or the rules and regulations of
the Securities and Exchange Commission thereunder.
DRINKER BIDDLE & REATH LLP
Philadelphia, Pennsylvania
May 30, 1997
Exhibit (11)(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference to us under the heading "Independent
Accountants" in the Statement of Additional Information constituting part of
this Post-Effective Amendment No. 31 to the Portico Funds, Inc. registration
statement on Form N-1A.
/s/Price Waterhouse LLP
Milwaukee, Wisconsin
May 29, 1997
Exhibit (18)(b)
PORTICO FUNDS, INC.
(the "Company")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3 FOR OPERATION OF
A MULTI-SERIES SYSTEM
I. INTRODUCTION
---------------
On February 23, 1995, the Securities and Exchange
Commission (the "Commission") promulgated Rule 18f-3 under the
Investment Company Act of 1940, as amended (the "1940 Act") which
permits the creation and operation of a multi-class distribution
structure (or in the case of the Company, a multi-series
distribution structure) without the need to obtain an exemptive
order under Section 18 of the 1940 Act. Rule 18f-3, which became
effective on April 3, 1995, requires an investment company to
file with the Commission a written plan specifying all of the
differences among classes, including the various services offered
to shareholders, different distribution arrangements for each
class, methods for allocating expenses relating to those
differences and any conversion features or exchange privileges.
Currently, the Company operates a multi-series distribution
structure pursuant to an exemptive order granted by the
Commission on December 6, 1994. On March 17, 1995, the Board of
Directors of the Company authorized the Company to operate its
current multi-series distribution structure in compliance with
Rule 18f-3. This Plan pursuant to Rule 18f-3 for operation of a
multi-series system became effective on April 3, 1995, was hereby
amended and restated on June 16, 1995 and September 15, 1995 and
is hereby amended and restated on June ,1997.
--
II. ATTRIBUTES OF SERIES
------------------------
A. Generally
The Company shall initially offer two series--
Institutional and Series A ("Retail") shares. In general, shares
of each series shall be identical except for different expense
variables (which will result in different returns for each
series), certain related rights and certain shareholder services.
More particularly, the Institutional and Retail shares of an
investment portfolio (a "Fund") of the Company shall represent
interests in the same portfolio of investments of the particular
Fund, and shall be identical in all respects, except for: (a) the
impact of (i) expenses assessed to a series pursuant to a Service
Plan and Distribution and Service Plan (collectively, the
"Plans"), and (ii) any other incremental expenses subsequently
identified that should be properly allocated to one series so
long as any subsequent changes in expense allocations are
reviewed and approved by a vote of the Board of Directors,
including a majority of the independent directors; (b) the fact
that the series shall vote separately with respect to a Fund's
Plans and any matter submitted to shareholders relating to series
expenses; (c) the different exchange privileges of the series of
shares; (d) the designation of each series of shares of a Fund;
(e) the sales load applicable to Retail shares and (f) the
different shareholder services relating to a series of shares.
B. Distribution Arrangements, Expenses and Sales Charges
- ----------------------------------------------------------
Retail Shares- Non-Money Market Funds
Retail shares of the Growth and Income Fund, Short-Term
Bond Market Fund, Special Growth Fund, Bond IMMDEXt Fund, Equity
Index Fund, Balanced Fund, MidCore Growth Fund, Intermediate Bond
Market Fund, Tax-Exempt Intermediate Bond Fund, International
Equity Fund, MicroCap Fund, Balanced Income Fund and Emerging
Growth Fund (the "Non-Money Market Funds") shall be offered to
the general public and shall be subject to a shareholder
servicing and/or distribution fee payable pursuant to the Plans
which shall not initially exceed 0.25% (on an annual basis) of
the average daily net assets attributable to Retail shares of the
Non-Money Market Funds. Retail shares of the Growth and Income
Fund, Special Growth Fund, Equity Index Fund, Balanced Fund,
MidCore Growth Fund, International Equity Fund, Balanced Income
Fund, MicroCap Fund and Emerging Growth Fund shall be further
subject to a sales charge which shall not initially exceed 4.0%
of the offering price of the Retail shares of those Funds.
Retail shares of the Short-Term Bond Market Fund, Bond IMMDEXt
Fund, Intermediate Bond Market Fund and Tax-Exempt Intermediate
Bond Fund shall be further subject to a sales charge which shall
not initially exceed 2.0% of the offering price of the Retail
shares of those Funds.
Shareholder services under the Plans may include: (i)
processing dividend and distribution payments; (ii) providing
information periodically to customers showing their positions in
Retail shares; (iii) arranging for bank wires; (iv) responding to
customer inquiries relating to the services performed by
shareholder service organizations; (v) providing subaccounting
with respect to Retail shares beneficially owned by customers or
the information necessary for subaccounting; (vi) forwarding
shareholder communications (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend,
distribution and tax notices) to customers; (vii) processing
exchange and redemption requests from customers and placing net
exchange and redemption orders with the Company's service
contractors; (viii) assisting customers in changing dividend
options, account designations and addresses; and (ix) developing,
monitoring and providing ongoing consulting services regarding
expedited purchase, redemption and exchange programs (the
"Program") relating to the purchase of Retail Shares by customers
who also own shares of other unaffiliated investment companies;
(x) reviewing the description of the Program in the materials
prepared by the Company and such other investment companies for
distribution to customers; (xi) responding to telephone inquiries
from customers regarding the Programs and their investments in
Retail Shares; (xii) acting as a liaison between customers and
the company, including assistance in correcting errors and
resolving problems; (xiii) providing such statistical and other
information as the Company may reasonably request or may be
necessary for us to comply with applicable federal and state
laws. In addition, distribution services may be provided under
the Distribution and Service Plan such as assistance by
broker/dealers in forwarding sales literature and advertising to
customers.
Retail Shares - Money Market Funds
Retail shares of the Money Market Fund, Tax-Exempt
Money Market Fund, U.S. Government Money Market Fund,
Institutional Money Market Fund and U.S. Treasury Money Market
Fund (the "Money Market Funds") shall be offered to institutional
investors and the general public and, except for the
Institutional Money Market Fund, shall be subject to a
shareholder servicing and/or distribution fee payable pursuant to
the Plans which shall not initially exceed 0.25% (on an annual
basis) of the average daily net assets attributable to Retail
shares of the Money Market Funds. Retail shares of the Money
Market Funds shall not be subject to a sales charge.
Institutional Shares - Non-Money Market Funds
Institutional shares of the Non-Money Market Funds
shall be offered to (i) all trust, agency or custodial accounts
opened through trust companies or trust departments affiliated
with Firstar Corporation, (ii) all employer-sponsored qualified
retirement plans and (iii) all clients of Firstar Investment
Research & Management Company. Institutional shares shall be
offered without a sales charge and shall not be subject to a
shareholder servicing and/or distribution fee payable pursuant to
the Plans.
C. Exchange Privileges
- ------------------------
Retail Shares (Except the Institutional Money Market
Fund)
Retail shareholders shall be generally permitted to
exchange their shares in a Fund for Retail shares of other Funds
of the Company without charge or commission by the Fund (except a
wire redemption fee which may be waived). A sales charge shall
be imposed on the exchange, in accordance with the regulations of
the Securities and Exchange Commission, if the shares of the Fund
being acquired have a sales charge and the shares being redeemed
were purchased without a sales charge.
Institutional Shares
The Company shall not initially offer Institutional
shares an exchange privilege.
D. Shareholder Services
- -------------------------
1. Periodic Investment Plan
------------------------
Retail Shares
Retail shares of the Funds shall initially offer a
periodic investment plan whereby a shareholder may automatically
make purchases of shares of a Fund on a regular, periodic basis.
Institutional Shares
The Company shall not initially offer Institutional
shares a periodic investment plan.
2. Convertifund(tm) Transactions
-----------------------------
Retail Shares
Retail shares shall initially permit shareholders to
effect Convertifundt transactions whereby a Retail shareholder
may invest proceeds, including dividend distributions, capital
gain distributions and systematic withdrawals, from one account
to another account of the Retail shares of the Company.
Convertifundt transactions may be used to invest funds from a
regular account to another regular account, from a qualified plan
to another qualified plan account or from a qualified plan
account to a regular account.
Institutional Shares
The Company shall not initially offer Institutional
shares the Convertifundt transaction service.
3. Systematic Withdrawal Plan
--------------------------
Retail Shares
Retail shares shall initially offer a systematic
withdrawal plan which allows a shareholder to designate a fixed
sum to be distributed to the shareholder or as otherwise directed
at regular intervals.
Institutional Shares
The Company shall not initially offer Institutional
shares a systematic withdrawal plan.
E. Methodology for Allocating Expenses Between Series
--------------------------------------------------
In allocating expenses a determination shall be made as
to which expenses are series level and which expenses are Fund
level.
Prior to determining the day's net asset value or
dividends/distributions, the following expense items must be
calculated as indicated:
1. Adviser's Fee
The current day's accrual shall be calculated using the
beginning of the day's total net assets of the Fund, and shall be
allocated to each series based upon the relative "adjusted net
assets" of each series or the relative "value of adjusted
dividend shares" of each series as appropriate.
2. Distribution and Service and Shareholder Service
Fees ("Service Fees")
The current day's accrual shall be calculated using the
beginning of the day's net assets attributable to Retail shares,
based on the rates as stated in the Plans. Service fees shall
not be charged to the Institutional shares.
3. Other Series Specific Expenses
Daily accruals shall be made for each series based on
budgeted expenses attributable to each such series.
4. Other Expenses
Daily accruals shall be determined from expense budgets
and will be allocated to each series based upon the relative
"adjusted net assets" of each series or the relative "value of
adjusted dividend shares" of each series, as appropriate.
