PORTICO FUNDS(R)
BALANCED INCOME FUND
This Prospectus describes the Balanced Income Fund, one of the eighteen mutual
funds in the Portico family of funds. The Balanced Income Fund seeks current
income and the preservation of capital through a balanced portfolio of dividend
paying equity and fixed income securities. Portico Funds offer a variety of
portfolios with different investment objectives designed to meet the needs of
individual and institutional investors, including fixed income, balanced,
domestic and international equity and money market funds, which are described in
separate prospectuses.
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 Balanced Income
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 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.
NOVEMBER 1, 1997
TABLE OF CONTENTS
Page
----
Expense Summary........................................... 2
Performance History....................................... 3
Investment Objective and Policies......................... 4
Other Investment Information.............................. 6
Purchase of Shares........................................ 12
Redemption of Shares...................................... 18
Exchange of Shares........................................ 21
Shareowner Services (Retail Shareowners Only)............. 22
Dividends and Distributions............................... 23
Management of the Fund.................................... 24
Expenses.................................................. 26
Investment Limitations.................................... 26
Taxes..................................................... 27
Description of Shares..................................... 28
Net Asset Value and Days of Operation..................... 29
Performance Calculations.................................. 30
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 Balanced Income Fund during its first twelve months of operations. An
example based on the summary is also shown.
Retail Institutional
Shares Shares
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 After Fee
Waivers<F2>.................. 0.30% 0.30%
12b-1 Fees .................. 0% <F3> 0%
All Other Expenses After Fee
Waivers
Shareowner Servicing Fees.. 0.25%<F3> 0%
Other Expenses After
Fee Waivers<F4>.......... 0.45% 0.70% 0.45% 0.45%
----- ----- ----- -----
Total Fund Operating Expenses
After Fee Waivers<F5>...... 1.00% 0.75%
===== =====
<F1> A fee of $12.00 is charged for each wire redemption on Retail Shares. See
"Redemption of Shares."
<F2> The Adviser has voluntarily agreed to waive a portion of its fees to the
extent that the Fund's total operating expenses exceed 1.00% for Retail
Shares and 0.75% for Institutional Shares during the first twelve months of
operations. Absent such waivers, advisory fees 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
National Association of Securities Dealers.
<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 0.52% for both Retail and Institutional Shares.
<F5> Absent fee waivers, total operating expenses would be 1.52% and 1.27% 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
------ -------
Retail Shares $50 $71
Institutional Shares $8 $24
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 Balanced Income 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.
Performance History
Average Annual Total Return*
Since inception
1 Year 3 Years 5 Years (inception date)
------ ------- ------- ---------------
Total Return Balanced Income Fund 25.48% 20.52% 14.75% 15.49%
(Institutional Shares) (Jan. 1, 1989)
Total Return Balanced Income Fund 20.22% 18.65% 13.56% 14.70%
(Retail Shares) (Jan. 1, 1989)
* Average annual total return calculations are for periods ended September 30,
1997 and reflect the 4.00% front end sales charge for retail shares.
The performance above is the performance of a common trust fund managed by
FIRMCO which operated during the periods prior to commencement of operations of
the Portico Balanced Income Fund using substantially similar investment
objectives, policies and restrictions as the Portico Balanced Income Fund.
In connection with the commencement of operations of the Balanced Income Fund,
the common trust fund will transfer its assets to the Balanced Income Fund.
The common trust fund is not registered under the Investment Company Act of
1940 (the "1940 Act"), and is not subject to certain restrictions that are
imposed by the 1940 Act and the Internal Revenue Code. If the common trust
fund had been registered under the 1940 Act, performance may have been
adversely affected. The performance of the common trust fund has been
restated to reflect Portico Balanced Income Fund's expenses set forth in the
Expense Summary for both Institutional and Retail shares. The performance of
the common trust fund also has been restated to reflect Portico Balanced
Income Fund's maximum 4.00% sales charge on retail shares.
Performance assumes the reinvestment of all net investment income and
capital gains and reflects fee waivers. In the absence of fee waivers,
performance would be reduced. Performance quotations represent past
performance, and should not be considered as representative of future results.
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective. The investment objective of the Balanced Income Fund is
to seek current income and the preservation of capital through investment in a
balanced portfolio of dividend paying equity and fixed income securities.
Common stocks purchased by the Fund will be selected primarily from a universe
of domestic companies that have established dividend-paying histories. Fixed
income securities will be selected in an effort to provide an annual rate of
total return with respect to the fixed income portion of the Fund's portfolio
that is similar to the annual rate of total return of the Lehman Brothers
Intermediate Government/Corporate Bond Index on a consistent basis. In
investing in fixed income securities, the Adviser will use specialized
quantitative investment techniques. (For a description of the Lehman Brothers
Intermediate Government/Corporate Bond Index and the specialized quantitative
investment techniques see "Investment Techniques" below). There is no
assurance that the Fund's investment objective will be attained. An investor
should not consider an investment in the Fund to be a complete investment
program.
Currently, it is expected that, in general, the Fund will invest approximately
50% of the value of its total assets in fixed income securities and 50% of the
value of its total assets in equity securities. The Fund's policy is to invest
at least 40% of the value of its total assets in fixed income securities and at
least 20% and no more than 60% in equity securities during normal market
conditions. The actual percentage of assets invested in fixed income and equity
securities will vary from time to time, depending on the judgment of the Adviser
as to the general market and economic conditions, trends and yields, interest
rates and fiscal and monetary developments.
Investment Techniques. Common stocks purchased by the Fund will be selected
primarily from a universe of domestic companies that have established dividend-
paying histories, although up to 25% of its total assets may be invested, either
directly or through investments in sponsored American Depository Receipts, in
the securities of foreign issuers. Each company initially selected for
inclusion in the Fund's portfolio must pay a current dividend. From time to
time, the Fund may also acquire bonds, notes, debentures and preferred stocks
convertible into common stocks but only to the extent that those securities also
provide a current interest or dividend payment stream. Although convertible
securities frequently have speculative characteristics and may be acquired by
the Fund without regard to minimum quality ratings, the Fund intends to invest
less than 5% of its net assets in non-investment grade securities. The Fund may
also purchase put and call options, sell covered call options and enter into
transactions involving futures contracts and options on futures as described
later in this Prospectus.
The Fund primarily invests in companies that the Adviser considers to be well-
managed and to have "attractive fundamental financial characteristics."
Attractive fundamental financial characteristics 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. Companies in
which the Fund may make equity investments generally will have stock market
capitalizations over $750 million. The median stock market capitalization is
generally anticipated to be between $3 billion and $5 billion and the weighted
average stock market capitalization between $10 billion and $20 billion. Stock
market capitalizations are calculated by multiplying the total number of common
shares outstanding by the market price per share. The Fund may also invest from
time to time a portion of its assets, not to exceed 20% of total assets at the
time of purchase, in companies with larger or smaller market capitalizations.
In constructing and maintaining the fixed income portion of the portfolio, the
Adviser attempts to achieve an annual rate of total return, before fund
expenses, comparable to that of its benchmark, the Lehman Brothers Intermediate
Government/Corporate Bond Index. Specialized structured investment management
techniques are used in conjunction with traditional methods of investment
management that rely on economic, financial and market analysis to select
portfolio investments. The Fund may invest a substantial portion of its fixed
income portfolio in securities that are not included in its benchmark index.
The Fund therefore is not an "index" fund, which typically holds only
securities that are included in the index it attempts to replicate.
The approach employed by the Adviser in managing the fixed income portion of the
Fund's portfolio is to define and measure the various duration characteristics
of the Lehman Brothers Intermediate Government/Corporate Bond Index.
"Duration" is a term used to express the average time to receipt of expected
cash flows (discounted to their present value) on a particular fixed-income
instrument or a portfolio of instruments. For example, the duration of a five-
year zero coupon bond which pays no interest or principal until the maturity of
the bond is five years. This is because a zero coupon bond produces no cash
flow until the maturity date. On the other hand, a coupon bond that pays
interest semiannually and matures in five years will have a duration of less
than five years reflecting the semiannual cash flows resulting from coupon
payments.
Duration generally defines the effect of interest rate changes on bond prices.
However, for large interest rate changes (generally changes of 1% or more) this
measure will not completely explain the interest rate sensitivity of a bond.
The Lehman Brothers Intermediate Government/Corporate Bond Index is a market
value weighted total return index measuring both the principal price change of
and income provided by the underlying universe of securities underlying the
index. The Lehman Brothers Intermediate Government/Corporate Bond Index is
intended to measure performance of its respective fixed-rate debt market over
given time intervals. Securities included in the Lehman Brothers Intermediate
Government/Corporate Bond Index must meet the following criteria, as defined by
Lehman Brothers:
. Fixed as opposed to variable rate
. From one to ten years remaining until maturity
. Minimum outstanding principal value of $100 million
. Minimum quality rating of Baa by Moody's or, if unrated by Moody's BBB by
S&P
As of August 31, 1997, 3,847 issues were included in the Lehman Brothers
Intermediate Government/Corporate Bond Index representing $2.4 trillion in
market value.
The Lehman Brothers Intermediate Government/Corporate Bond Index is a trademark
of Lehman Brothers. The Fund, its Adviser and the Co-Administrators are not
affiliated in any way with Lehman Brothers. See "Management of the Funds."
Inclusion of a security in the bond index in no way implies an opinion by Lehman
Brothers as to its attractiveness or appropriateness as an investment. Lehman
Brothers' publication of the bond index is not made in connection with any sale
or offer for sale of securities or any solicitations of orders for the purchase
of securities.
Fixed income securities purchased by the Fund may include a broad range of
corporate, government, government agency, stripped government, asset-backed and
mortgage-backed obligations. The Fund may purchase fixed income securities
without regard to any maturity limitation.
Debt obligations acquired by the Fund will be "investment grade" at the time
of purchase; that is, obligations rated within the four highest rating
categories by S&P (AAA, AA, A and BBB), Moody's (Aaa, Aa, A and Baa) or other
nationally recognized rating agencies or obligations that are unrated but
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 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. 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.
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 same 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
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 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.
Government Obligations. To the extent consistent with its objectives, the Fund
may invest in a variety of U.S. Treasury obligations consisting of bills, notes
and bonds, which principally differ only in their interest rates, maturities and
time of issuance. The Fund may also invest in other securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities, such as the Government
National Mortgage Association ("GNMA"), are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Export-Import Bank of
the United States, are supported by the right of the issuer to borrow from the
Treasury; others, such as those of the Federal National Mortgage Association
("FNMA"), are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; still others, such as those of the Student
Loan Marketing Association, are supported only by the credit of the agency or
instrumentality issuing the obligation. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored agencies
or instrumentalities if it is not obligated to do so by law.
Mortgage-Backed and Asset-Backed Securities. The Fund may purchase residential
and commercial mortgage-backed securities, as well as other asset-backed
securities (i.e., securities backed by credit card receivables, automobile loans
or other assets). The average life of these securities varies with the
maturities of the underlying instruments which, in the case of mortgages, have
maximum maturities of thirty years. The average life of a mortgage-backed
instrument may be substantially less than the original maturity of the mortgages
underlying the securities as the result of scheduled principal payments and
mortgage prepayments. The rate of such mortgage prepayments, and hence the life
of the certificates, will be a function of current market rates and current
conditions in the relevant housing and commercial markets. In periods of
falling interest rates, the rate of mortgage prepayments tends to increase.
During such periods, the reinvestment of prepayment proceeds by the Fund will
generally be at lower rates than the rates that were carried by the obligations
that have been prepaid. As a result, the relationship between mortgage
prepayments and interest rates may give some high-yielding mortgage-related
securities less potential for growth in value than non-callable bonds with
comparable maturities. In calculating the average weighted maturity of the
Fund, the maturity of asset-backed securities will be based on estimates of
average life. There can be no assurance that these estimates will be accurate.
Presently there are several types of mortgage-backed securities which provide
the holder with a pro rata interest in the underlying mortgages, and
collateralized mortgage obligations ("CMOs") which provide the holder with a
specified interest in the cash flow of a pool of underlying mortgages or other
mortgage-backed securities. CMOs are issued in multiple classes, each with a
specified fixed or floating interest rate and a final distribution date. The
relative payment rights of the various CMO classes may be subject to greater
volatility and interest rate risk than other types of mortgage-backed
obligations.
Asset-backed securities may involve certain risks that are not presented by
mortgage-backed securities arising primarily from the nature of the underlying
assets (i.e., credit card and automobile loan receivables as opposed to real
estate mortgages). For example, credit card receivables are generally unsecured
and may require the repossession of personal property upon the default of the
debtor which may be difficult or impracticable in some cases.
Non-mortgage asset-backed securities do not have the benefit of the same
security in the collateral as mortgage-backed securities. Credit card
receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
have given debtors the right to reduce the balance due on the credit cards.
Most issuers of automobile receivables permit the servicers to retain possession
of the underlying obligations. If the servicer were to sell these obligations
to another party, there is the risk that the purchaser would acquire an interest
superior to that of the owners of related automobile receivables. In addition,
because of the large number of vehicles involved in a typical issuance and
technical requirements under state laws, the trustee for the owners of the
automobile receivables may not have an effective security interest in all of the
obligations backing such receivables. Therefore, there is a possibility that
payments on the receivables together with recoveries on repossessed collateral
may not, in some cases, be able to support payments on these securities.
Asset-backed securities may be subject to greater risk of default during periods
of economic downturn than other instruments. Also, while the secondary market
for asset-backed securities is ordinarily quite liquid, in times of financial
stress the secondary market may not be as liquid as the market for other types
of securities, which could result in the Fund experiencing difficulty in valuing
or liquidating such securities.
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,
over-the-counter options, 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.
Stripped Securities. To the extent consistent with its investment objective,
the Fund may purchase participation in trusts that hold U.S. Treasury and agency
securities (such as TIGRs and CATs) and also may purchase Treasury receipts and
other "stripped" securities that evidence ownership in either the future
interest payments or the future principal payments of U.S. Government
obligations. These participations are issued at a discount to their "face
value," and may (particularly in the case of stripped mortgage-backed
securities) exhibit greater price volatility than ordinary debt securities
because of the manner in which their principal and interest are returned to
investors. The SEC staff believes that participations in CATs and TIGRs and
other similar trusts are not U.S. Government securities.
Options. The Fund may purchase put and call options in an amount not to exceed
5% of its net assets. Such options may relate to particular securities or
various stock indices and may or may not be listed on a national securities
exchange and issued by the Options Clearing Corporation. Purchasing options is
a specialized investment technique which entails a substantial risk of a
complete loss of the amount paid as premiums to the writer of the option.
The Fund may purchase put options on portfolio securities at or about the same
time that it purchases the underlying security or at a later time. By buying a
put, the Fund limits its risk of loss from a decline in the market value of the
security until the put expires. Any appreciation in the value of and yield
otherwise available from the underlying security, however, will be partially
offset by the amount of the premium paid for the put option and any related
transaction costs. Call options may be purchased by the Fund in order to
acquire the underlying security at a later date at a price that avoids any
additional cost that would result from an increase in the market value of the
security. A call option may also be purchased to increase the Fund's return to
investors at a time when the call is expected to increase in value due to
anticipated appreciation of the underlying security. Prior to its expiration, a
purchased put or call option may be sold in a "closing sale transaction" (a sale
by the Fund, prior to the exercise of the option that it has purchased, of an
option of the same series), and profit or loss from the sale will depend on
whether the amount received is more or less than the premium paid for the option
plus the related transaction costs.
In addition, the Fund may write call options on securities and on various stock
indices. The Fund may write a call option only if the option is "covered" by
the Fund's holding a position in the underlying securities or otherwise, which
would allow for immediate satisfaction of its obligation. Such options will be
listed on a national securities exchange and the aggregate value of the Fund's
assets subject to options written by the Fund will not exceed 5% of the value of
its net assets during the current year. In order to close out an option
position, the Fund will be required to enter into a "closing purchase
transaction" (the purchase of a call option on a security or an index with the
same exercise price and expiration date as the call option which it previously
wrote on the same security or index).
By writing a covered call option on a security, the Fund foregoes the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price except insofar as the premium represents such
a profit, and it is not able to sell the underlying security until the option
expires or is exercised or the Fund effects a closing purchase transaction by
purchasing an option of the same series. Except to the extent that a written
call option on an index is covered by an option on the same index purchased by
the Fund, movements in the index may result in a loss to the Fund; however, such
losses may be mitigated by changes in the value of securities held by the Fund
during the period the option was outstanding. The use of covered call options
will not be a primary investment technique of the Fund. For additional
information relating to option trading practices and related risks, see the
Statement of Additional Information.
Futures Contracts and Related Options. The Adviser may determine that it would
be in the interest of the Fund to purchase or sell futures contracts, or options
thereon, as a hedge against changes resulting from market conditions in the
value of the securities held by the Fund, or of securities which it intends to
purchase, to maintain liquidity, to have fuller exposure to price movements in a
security index or to reduce transaction costs. For example, the Fund may
enter into transactions involving a stock index futures contract which is a
bilateral agreement pursuant to which the parties agree to take or make delivery
of an amount of cash equal to a specified dollar amount times the difference
between the index value (which assigns relative values to the common stocks
included in the index) at the close of the last trading day of the contract and
the price at which the futures contract is originally struck. No physical
delivery of the underlying bonds or stocks in the index is made. The Adviser
may also determine it would be in the interest of the Fund to purchase or sell
interest rate futures contracts, or options thereon, which provide for the
future delivery of specified fixed-income securities. The Fund will not use
futures contracts for speculative purposes.
Risks associated with the use of futures contracts include (a) imperfect
correlation between the change in market values of the securities held by the
Fund and the prices of bond or stock index futures contracts, and (b) the
possible lack of a liquid secondary market for futures contracts and the
resulting inability of the Fund to close open futures positions. During the
current fiscal year, the Fund intends to limit its transactions in futures
contracts and related options so that not more than 5% of its net assets are at
risk. For a more detailed description of futures contracts and futures options,
including a discussion of the limitations imposed by federal tax law, see
Appendix A to the Statement of Additional Information.
Convertible Securities. 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 rated below 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, 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 the 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.
Concentration. The Adviser anticipates that from time to time certain industry
sectors will not be represented in the Funds' portfolios 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 a 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 investment will be diversified among individual
issuers.
Small Companies. Small companies in which the Fund may 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 their realization of
substantial net capital gains; to the extent net short-term capital gains are
realized, distributions resulting from such gains may be ordinary income for
federal income tax purposes. (See "Taxes-Federal.") The Funds' portfolio
turnover rate is not expected to exceed 75% per year, and the portfolio turnover
rate for the equity portion of the Fund is not expected to exceed 100%.
Warrants. 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 the 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.
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 Firstar Investment Services, Inc.
("FIS"), or organizations that have entered into distribution or servicing
agreements with the Fund (including FIS, "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 Reallowance as a
Amount of Transaction Percentage of a Percentage of Percentage of
at Offering Price Offering Price Net 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 Firstar Investment Services, Inc. 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 . Bring your check to a
at a Firstar Investment Firstar Investment
Office. Call 1-800- Office. Call 1-800-982-
982-8909 for the office 8909 for the office
nearest you. nearest you.
By Phone . Call your registered . Call your registered
representative or call representative at the
1-800-982-8909 for the number on your
office nearest you. statement or call 1-
800-982-8909 for the
office nearest you.
Automatic . Call your registered . Complete a Periodic
ally representative to Investment Plan
obtain a purchase Application to
application which automatically purchase
includes information more shares.
about a Periodic
Investment Plan.
PURCHASE ORDERS PLACED THROUGH THE TRANSFER AGENT
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
By Mail . Complete an application . Make your check payable
and mail it along with a to Portico Funds. Please
check payable to Portico include your account
Funds, P.O. Box 3011, number on your check and
Milwaukee, WI 53201- mail it to the address on
3011. your statement.
Overnight . Complete an application . Make your check payable
Delivery and deliver it along with to Portico Funds. Please
a check payable to include your account
Portico Funds, 615 E. number on your check and
Michigan St., Milwaukee, deliver it to the address
WI 53202. at the left.
In Person . Bring your application . Bring your check to a
and check to a Firstar Firstar Investment
Investment Office. Call Office. Call 1-800-982-
1-800-982-8909 for the 8909 for the office
office nearest you. nearest you.
Automatical . Call 1-800-982-8909 to . Complete a Periodic
ly obtain a purchase Investment Plan
application which Application to
includes information for automatically purchase
a Periodic Investment more shares.
Plan.
. Open a ConvertiFundR
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 arrange a wire
transaction. Ask your transaction. Ask your
bank to transmit bank to transmit
immediately available immediately available
funds by wire in the funds by wire as
amount of your purchase described at the left.
to Firstar Bank Please also include your
Milwaukee, N.A., ABA # account number.
0750-00022, Account #
112-952-137 for further
credit to Portico
Balanced Income Fund
[name/title on the
account].
By Phone . Call 1-800-228-1024 to . Call 1-800-228-1024 to
exchange from another exchange from another
Portico Fund account with Portico Fund account with
the same registration the same registration
including name, address including name, address
and taxpayer ID number. and 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 414-287-3610 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 Balanced Income 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 FIS. 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 . Call your registered
your account name, representative at the
account number and number on your
amount of redemption statement, or 1-800-
(minimum $500). 982-8909.
Redemption 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 . Mail your instructions
Overnight to the Portico Funds, to the Portico Funds,
Delivery P.O. Box 3011, P.O. Box 3011,
or In Milwaukee, Wisconsin Milwaukee, WI 53201-
Person 53201-3011, or deliver 3011, or deliver them
them (via overnight to 615 E. Michigan
delivery or in person) Street, Milwaukee, WI
to 615 E. Michigan St., 53202, or bring your
Milwaukee, WI 53202. instructions to your
Include the number of registered
shares or the amount to representative's
be redeemed, your office.
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 . Call your registered
ally a Systematic Withdrawal representative to
Plan application establish a Systematic
($15,000 account minimum Withdrawal Plan.
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 FIS. 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 FIS 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 any time 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 quarterly.
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 $22.4 billion in
assets under active management, of which $13.1 billion is invested in fixed
income and money market securities and $9.3 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 Marian
Zentmyer and Warren Pierson. Ms. Zentmyer has been with Firstar since 1982 and
has nineteen years of investment experience. She is a Senior Vice President and
Senior Portfolio Manager of FIRMCO. Mr. Pierson joined Firstar in 1985 and has
twelve years of fixed income experience at Firstar. He is a Vice President and
Senior Portfolio Manager of FIRMCO. Both Ms. Zentmyer and Mr. Pierson are
Chartered Financial Analysts. In addition, Ms. Zentmyer is a Certified
Financial Planner.
Administrative Services
Firstar Trust Company, 615 East Michigan Street, Milwaukee, WI 53202 ("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 0.125% of Portico's
first $2 billion of average aggregate daily net assets, plus 0.10% 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 FIS), 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 0.21% 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, cost of shareowner reports and meetings and any extraordinary
expenses. The Fund also pays any brokerage fees, commissions and other
transactions 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 holders 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 taxable income.
Any dividend or distribution out of "net capital gain" (the excess of the
Fund's net long-term capital gain over its net short-term capital loss), if any,
of the Fund, and out of the portion of such net capital gain that constitutes
mid-term capital gain, will be taxable to a shareowner of the Fund as long-term
capital gain or mid-term capital gain, as the case may be, regardless of how
long the shareowner has held shares of the Fund. All other distributions, to
the extent that they are taxable, are taxed to shareowners as ordinary income.
The Fund will notify its shareholders annually as to the tax status of dividend
and capital gains distributions paid by the Fund. A sale or redemption of
shares of the Fund is a taxable event and may result in a capital gain or loss.
Dividend distributions, capital gains distributions and capital gains or losses
from redemptions may be subject to state and local taxes.
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 taxes.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of the dividends or gross proceeds paid to any shareowner (i) who
has provided either an incorrect Social Security or 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 or she is not subject to backup withholding. The Fund generally
will also 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 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 September 30, 1997, the Adviser and its affiliates held, on
behalf of their underlying accounts, approximately 73% 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, Martin Luther King, Jr. 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 rules
of the Securities and Exchange Commission, 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 Wilshire Top 750 Index, an
index of all domestic equity issues which are traded over the national exchanges
(consists of approximately 5,000 issues); the Value Line Composite Index, an
unmanaged index of nearly 1,700 stocks reviewed in Ratings & Reports; Lehman
Brothers Intermediate Government/Corporate Bond Index; 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
