IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS REGISTRATION STATEMENT IS
BEING FILED IN PAPER PURSUANT TO A CONTINUING HARDSHIP EXEMPTION.
As filed with the Securities and Exchange Commission on May 8, 1995
Securities Act File No. 33-----------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
|_| Pre-Effective Amendment No. ---- |_| Post-Effective Amendment No.----
(Check appropriate box or boxes)
SMITH HAYES Trust, Inc.
----------------------------
(Exact Name of Registrant as specified in Charter)
(402) 476-3000
-----------------------------
(Area Code and Telephone Number)
500 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508
-----------------------------------------------------------------------
(Address of Principal Executive Offices:
Number, Street, City, State, Zip Code)
Thomas C. Smith
SMITH HAYES Trust, Inc.
500 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508
-----------------------------------------------------------------------
(Name and Address of Agent for Service)
With a copy to:
Donald F. Burt
Cline, Williams, Wright, Johnson & Oldfather
1900 FirsTier Bank Building
13th and "M" Streets
Lincoln, Nebraska 68508
It is proposed that this filing will become effective on June 7, 1995,
pursuant to Rule 488.
Approximate date of proposed public offering: As soon as practicable after
the Registration Statement under the Securities Act of 1933 becomes effective.
No filing fee is required because an indefinite number of shares is being
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Pursuant to Rule 429, this Registration Statement relates to shares for which a
registration statement on Form N-1A has been filed.
<PAGE>
SMITH HAYES TRUST, INC.
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
Information Statement
Form N-14 Item No. and Prospectus Caption
- ------------------ ---------------------
Part A
- ------
Item 1. Beginning of Registration Prospectus Cover
Statement and Outside Front
Cover Page of Prospectus
Item 2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
Item 3. Synopsis Information and Summary; Risk Factors
Risk Factors
Item 4. Information About the The Plan; Reasons for the
Transaction Exchange; Tax Consequences;
Capitalization
Item 5. Information About the Summary; The Trust and The Fund
Registrant
Item 6. Information About the Summary; The Partnership
Company Being Acquired
Item 7. Voting Information Introduction; Certain Affiliations
Item 8. Interest of Certain Persons Certain Affiliations
and Experts
Item 9. Additional Information Required Not Applicable
for Reoffering by Persons
Deemed to be Underwriters
<PAGE>
Statement of Additional
Part B Information Caption
- ------ ----------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. Additional Information Appendix I to Statement of
About Registrant Additional Information
Item 13. Additional Information About Not Applicable
the Company Being Acquired
Item 14. Financial Statements Financial Statements of the
Partnership; Pro Forma Financial
Information;Appendix I to
Statement of Additional
Information;
Part C
- ------
The information required in Part C is included therein under the appropriate
heading for the item.
<PAGE>
CONLEY PARTNERS LIMITED PARTNERSHIP
444 Regency Parkway
Omaha, Nebraska 68114-3779
Dear Limited Partner:
In my capacity as President of the general partner of Conley Partners
Limited Partnership (the "Partnership"), I am proposing that the Partnership
exchange (the "Exchange") all or substantially all of the assets of the
Partnership for shares of SMITH HAYES Trust, Inc.--Capital Builder Fund (the
"Fund"). After the Exchange, the Partnership will dissolve and limited partners
of the Partnership will become shareholders of SMITH HAYES Trust, Inc. (the
"Trust"). The Trust is an open-end management investment company issuing its
shares in series, each series representing a distinct portfolio with its own
investment objectives and policies. The Capital Builder Fund is one "portfolio"
or "fund" of the Trust. The Fund has been designed by myself and the Trust as
the successor to the Partnership, and its investment portfolio will be managed
by CONLEY-SMITH, Inc. (the "Fund Adviser") in substantially the same manner as
the Partnership's assets have been managed. The Fund Adviser will bear all
expenses incurred in connection with the Exchange.
As a shareholder of the Fund, you will be able to redeem your shares on
each business day at their net asset value. Daily redemption is not currently
available to you as a limited partner of the Partnership.
I have proposed the Exchange in order to eliminate some administrative
burdens associated with operating a partnership and to permit the limited
partners of the Partnership to pursue substantially the same investment goals,
as shareholders of a larger fund. The attached Prospectus/Information Statement
and accompanying materials describe the Exchange and the reasons for it, as well
as how I have sought to avoid any adverse tax and other consequences to you and
the other limited partners of the Partnership in connection with the Exchange.
It also describes the Trust, the Fund, and its proposed operations, including
the fees payable by the Fund, in some detail.
As a limited partner of the Partnership, you are entitled to vote on the
Exchange. Please take a few minutes to consider the materials enclosed and then
exercise your right to vote by completing, dating, and signing the enclosed
voting instruction form. A self-addressed, postage-paid envelope has been
enclosed for your convenience. It is very important that you vote and that I
receive your voting instructions not later than June 29, 1995.
I recommend that you vote in favor of the Exchange. If you have any
questions about the Exchange or the enclosed materials, please contact me. I can
be reached by telephone at (402) 391-1840 or at the above-referenced address.
<PAGE>
I look forward to continuing to serve you as portfolio manager of the
Fund.
Sincerely,
John H. Conley, President
Conley Investment Counsel, Inc.,
General Partner of
Conley Partners Limited Partnership
June ---, 1995
<PAGE>
PROSPECTUS/INFORMATION STATEMENT DATED June __, 1995
Acquisition of the assets of
CONLEY PARTNERS LIMITED PARTNERSHIP
c/o Conley Investment Counsel, Inc.
Attention: John H. Conley, President
444 Regency Parkway
Omaha, NE 68114-3779
(402) 391-1840
By and in exchange for the shares of
SMITH HAYES TRUST, INC.--
CAPITAL BUILDER FUND
c/o Thomas C. Smith
500 Centre Terrace
1225 "L" Street
Lincoln, NE 68508
(402) 476-3000
This Prospectus/Information Statement relates to the proposed transfer of
all or substantially all of the assets of Conley Partners Limited Partnership
(the "Partnership"), a limited partnership formed under the laws of the State of
Nebraska, to SMITH HAYES Trust, Inc. (the "Trust"), in exchange for shares of
beneficial interest, par value $.001 per share (the "Shares") in Capital Builder
Fund (the "Fund") of the Trust. The Shares received in the exchange transaction
(the "Exchange") will be distributed by the Partnership to its partners in
liquidation of the Partnership, after which the Partnership will be dissolved.
As a result of the Exchange, each partner of the Partnership will become a
shareholder of the Trust, receiving Shares that are expected to have an initial
value of $10.00 per Share and in the aggregate a value equal to the value of the
partner's interest in the Partnership on the business day immediately preceding
the date of the Exchange. As a part of the Exchange, the partners of the
Partnership are also being asked to approve a Facilitating Amendment (as defined
below) to the Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement") to facilitate the Exchange. A vote in favor of the
Exchange constitutes a vote in favor of the Facilitating Amendment. See
"Amendment to the Partnership Agreement."
The Trust has proposed that at or about the time of the Exchange three
portfolios of the Trust (aggregating approximately $11,500,000 in net assets) be
merged into the Fund. Such transaction is contingent upon approval of the
shareholders of the three portfolios but is not contingent upon consummation of
the Exchange. See "Capitalization".
<PAGE>
Limited partners of the Partnership ("Limited Partners") as of the close
of business on [one week before date of Prospectus], 1995, will be entitled to
vote on the Exchange. A voting instruction form accompanies this
Prospectus/Information Statement for this purpose.
The Fund is an open-end management investment company with an investment
objective of seeking long-term capital appreciation with a secondary objective
of providing current income. This Prospectus/Information Statement sets forth
concisely the information about the Fund that Limited Partners of the
Partnership should know before voting on the Exchange or investing in the Fund
and should be retained for future reference. The Prospectus of the Fund dated
April 6, 1995 accompanies this Prospectus/Information Statement as Exhibit "B"
and is incorporated by reference herein.
Additional information about the Exchange, contained in a Statement of
Additional Information, has been filed with the Securities and Exchange
Commission and is available without charge by calling SMITH HAYES Financial
Services Corporation at either (402) 476-3000 or (800) 279-7437, or by using the
request form included in this Prospectus/Information Statement. Additional
information about the Fund is contained in the Fund's Statement of Additional
Information, which has been filed with the Securities and Exchange Commission,
is dated the date of the Fund's Prospectus referred to above and is attached as
Appendix I to the Statement of Additional Information relating to this
Prospectus/Information Statement. The Statement of Additional Information
relating to this Prospectus/Information Statement bears the same date as this
Prospectus/Information Statement and is incorporated by reference in its
entirety into this Prospectus/Information Statement.
This Prospectus/Information Statement and accompanying materials are
expected to be sent to Limited Partners on or about June __, 1995.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
Introduction............................................................... 1
Summary.................................................................... 1
Risk Factors............................................................... 7
The Plan................................................................... 8
Tax Consequences........................................................... 9
Reasons for the Exchange; Benefits to Limited Partners..................... 10
Differences in Rights...................................................... 11
Capitalization............................................................. 13
The Trust and the Fund..................................................... 14
The Partnership............................................................ 14
Amendment to the Partnership Agreement..................................... 14
Voting Information......................................................... 15
Certain Affiliations....................................................... 15
Expenses................................................................... 16
Financial Statements and Experts........................................... 16
Legal Matters.............................................................. 16
Exhibit A -- Form of Agreement and Plan of Exchange
Exhibit B -- Prospectus of the Fund
Exhibit C -- Opinion of Counsel
<PAGE>
INTRODUCTION
This Prospectus/Information Statement is being furnished to Limited
Partners in connection with the solicitation of their votes for the approval or
disapproval of an Agreement and Plan of Exchange (the "Plan") between the
Partnership, the Trust, and Conley Investment Counsel, Inc. ("CIC"), as the
General Partner (the "General Partner") of the Partnership. The Plan provides
for the consummation of the Exchange, pursuant to which all or substantially all
of the assets of the Partnership will be transferred to the Fund in exchange for
Shares at net asset value. The Partnership intends to distribute Shares received
to its partners as a step in the complete liquidation and dissolution of the
Partnership. The terms and conditions under which the Exchange will be
consummated are set forth in the Plan, a form of which is attached as Exhibit
"A" to this Prospectus/Information Statement.
Approval of the Plan requires the affirmative vote of partners holding
limited partnership interests which represent fifty percent (50%) or more of the
market value of the Partnership assets. If such approval of the Plan is not
received prior to June 29, 1995 (or such later date as the Partnership and the
Trust may agree on), CIC intends to continue to operate the Partnership until
approval is received or until December 31, 1995. If approval is not received by
such time, the Partnership will be dissolved.
SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus/Information Statement or in the attached Exhibits and is
qualified by reference to the more complete information contained in this
Prospectus/Information Statement and those Exhibits.
Comparison of the Partnership and the Fund
- ------------------------------------------
The Trust is an open-end management investment company organized in 1988
and is registered under the Investment Company Act of 1940 (the "1940 Act"). The
Trust's objective is to issue its shares in series, each series representing a
distinct portfolio with its own investment objectives and policies. The
Prospectus/Information Statement relates only to the Capital Builder Fund. The
Fund was designed as the successor investment vehicle to the Partnership. The
Fund has had no operations prior to the date of this Prospectus/Information
Statement. Shares will be offered to the public, without the imposition of a
sales charge, on a continuous basis upon the completion of the Exchange. The
Fund will have substantially the same investment objective and policies as the
Partnership.
The Trust has proposed that at or about the time of the Exchange three
portfolios of the Trust (aggregating approximately $11,500,000 in net assets) be
merged into the Fund. Such transaction is contingent upon approval of the
shareholders of the three portfolios but is not contingent upon consummation of
the Exchange. See "Capitalization".
Investment Objective and Policies. The Partnership and the Fund have
similar investment objectives. The investment objective of the Partnership is
capital appreciation coupled with moderate investment income. The investment
objective of the Fund is to seek long-term capital appreciation with a secondary
objective of providing current income.
<PAGE>
The investment adviser for the Fund is CONLEY-SMITH, Inc. (the "Fund
Adviser"). The Fund will invest in a diversified portfolio of common and
preferred stocks, securities convertible in common stocks, United States
Government Securities, repurchase agreements, mortgaged backed securities, and
money market instruments. At least 65% of the Fund's total assets will be
invested in common and preferred stocks and securities convertible into common
stocks. In making selections for the Fund, the Fund Adviser will utilize an
investment approach based on fundamental analysis incorporating a value and
growth philosophy. There can, of course, be no assurance that the investment
objectives of the Fund will be met.
The Fund Adviser will maintain a portfolio of securities broadly
diversified among industries and companies so as to reduce its exposure to
certain investment and market risks. Stock selection criteria are value and
growth-oriented with an emphasis on price in relation to either earnings, cash
flow, or book value. Generally, the Fund Adviser will look for companies that
are selling at a discount relative to their peer group and/or relative to the
market as a whole. Dividend or interest income, although considered, is not the
primary factor in the selection of securities for the Fund.
The Fund will be growth-oriented and invest its assets primarily in common
stock. If the market condition, in the Fund Adviser's judgment, is unfavorable
for investments in common stock, the Fund may choose temporarily to take
defensive positions by investing all or part of its assets in United States
Government Securities, corporate debt securities, or money market instruments.
Corporate debt securities purchased by the Fund will be of investment grade
rated BBB-Baa or better by Standard & Poor's ("S&P") or by Moody's Investors
Service ("Moody's").
In the event that the rating of an investment grade security is lowered to
below investment grade, the Fund Adviser will assess the creditworthiness of the
issuer, evaluate the likelihood of the security's being upgraded to investment
grade or being further down-graded, and may choose to hold or sell the security
as appropriate. The Fund may also write listed covered call options on the
securities in its portfolio, purchase exchange listed put and call options, and
enter into closing purchase and sale transactions with respect thereto.
The Fund is subject to certain investment restrictions which are
considered fundamental and which may not be changed without shareholder
approval. These restrictions include the following: (1) the Fund may not
purchase any securities which would, at the time of purchase, cause 25% or more
of the value of its total assets to be invested in any one industry (this
restriction does not apply to securities of the United States Government or its
agencies and instrumentalities and repurchase agreements relating thereto); (2)
the Fund may not purchase a security of any one issuer, if at the time of
purchase, such investment would result in the Fund holding more than 5% of the
value of its total assets in such security or hold more than 10% of the
outstanding voting securities of such issuer, except that up to 25% of the value
of the Fund's total assets may be invested without regard to such limitations.
For a further discussion regarding the investment policies and restrictions of
the Fund, see the sections entitled "Investment Objective and Policies,"
"Investment Restrictions," "Borrowing," and "Temporary Defensive Positions" in
the Prospectus of the Fund accompanying this Exchange Offer. Some of these
restrictions are imposed on the Trust by state securities commissions in states
where Shares will be offered, or are necessary in order for the Trust to qualify
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code").
<PAGE>
The Fund may borrow money from banks for temporary or emergency purposes
in an amount of up to 10% of the value of the Fund's total assets. Interest paid
by the Fund on borrowed funds would decrease the net earnings of the Fund. The
Fund will not purchase portfolio securities while outstanding borrowings exceed
5% of the value of the Fund's total assets. The Fund may mortgage, pledge, or
hypothecate its assets in an amount not exceeding 10% of the value of its total
assets to secure temporary or emergency borrowing. The policies set forth in
this paragraph are fundamental and may not be changed with respect to the Fund
without the approval of a majority of the Fund's shares, as noted below.
The Fund may deviate from its fundamental and non-fundamental investment
policies during periods of adverse or abnormal market, economic, political, and
other circumstances requiring immediate action to protect assets. In such cases,
the Fund may invest up to 100% of its assets in United States Government
Securities, investment grade corporate debt securities, rated BBB, Baa or better
by S&P or by Moody's and any Money Market Instrument as described in the Fund's
Prospectus.
If a percentage restriction is adhered to at the time of an investment, a
later increase or decrease in percentage resulting from changes in values or
assets will not constitute a violation of such restrictions. The foregoing
investment restrictions, as well as all investment objectives and policies
designated by the Fund as fundamental policies, may not be changed without the
approval of a "majority" of the Fund's shares outstanding, defined as the lesser
of (a) 67% of the votes cast at a meeting of shareholders for the Fund at which
more than 50% of the shares are represented in person or by proxy, or (b) a
majority of the outstanding voting shares of the Fund. The Fund Adviser may also
agree to certain additional non-fundamental investment policies from time to
time in order to qualify the shares of the Fund in various states.
The Partnership invests in securities which are similar to those permitted
by the Fund. The Partnership is not, however, subject to the diversification
tests under the Investment Company Act of 1940 or the Code for regulated
investment companies. Nevertheless, the Partnership adopted certain investment
restrictions which are generally consistent with, but somewhat more flexible
than those of the Fund. The Partnership may not purchase securities on margin,
make short sales of securities nor borrow money except for temporary emergency
purposes in an amount up to 5% of the value of the Partnership's assets. The
Partnership is prohibited to act as a securities underwriter or invest in real
estate, commodities or commodity contracts or other tax shelter type of
investments and may not participate on a joint or several basis in securities
trading accounts. Finally the Partnership may not make a new purchase of a
security that will result in the position in such security exceeding 25% of the
value of the Partnership's assets (except United States Government or United
States Government Agency securities).
Unlike the Fund, the Partnership is not subject to the restrictions on
concentration, exercising control or management, and issuing senior securities.
Nevertheless the Partnership has not engaged in any of these activities over the
last two years and all of the securities that the Partnership currently owns can
be transferred to the Fund without violating any of the Fund's investment
restrictions.
Although the Partnership enjoys greater flexibility than the Fund in
making investments and is not subject to some of these limits, the Partnership
has followed investment guidelines in
<PAGE>
its operations that are similar to those that will be followed by the Fund. For
this reason, the restrictions on the Fund's investment activities are not
expected to affect the Fund's ability to operate in a substantially similar
manner as the Partnership.
Fees and Expenses. The Partnership is managed by CIC (the "Partnership
Adviser"), which also serves as the General Partner of the Partnership. The
Partnership pays the Partnership Adviser a quarterly fee for its services at the
annual rate of 1.00% of the Partnership's net assets. CIC, in its capacity as
General Partner of the Partnership, receives no salary or compensation from the
Partnership. In addition to the advisory fee, the Partnership pays all
transaction costs, including brokers' commissions, transfer and issuance taxes,
interest on borrowed funds, any other taxes and Partnership fees payable to
governmental agencies, and all extraordinary legal fees not relating to normal
day-to-day Partnership activities. The Partnership also pays all its direct
expenses, including custodial expenses, day-to-day legal fees, auditing costs,
reports to partners, and the like. The Partnership bears a pro rata share of the
overhead expenses of the Partnership Adviser, including office rents, utilities,
telephone, furniture and equipment, supplies, electrical quotations supplies,
electronic quotations equipment, and administrative and clerical costs, based
upon the ratio of the annual market value of the Partnership to the annual
market value of all assets managed by the Partnership Adviser; provided,
however, that any direct expenses of the Partnership plus its pro rata share of
the Partnership Adviser's overhead expenses which, in the aggregate, exceed 0.5%
of the average quarterly net asset value of the Partnership are borne by the
General Partner. For the fiscal years ended December 31, 1993 and 1994, the
Partnership's aggregate expenses totalled $56,735 and $51,675, respectively.
The table below provides information regarding the estimated expenses
which may be incurred by the Fund and the expenses which have been incurred by
the Partnership during the last fiscal year expressed as annual percentages of
average net assets of the respective entities. There are no sales charges,
loads, or maintenance charges of any kind imposed upon the purchase or
redemption of Fund shares or Partnership interests. "Other Expenses" of the Fund
are estimated.
Annual Operating Expenses
-------------------------
Fund Partnership
---- -----------
Management and Administration Fees 1.00% 1.00%
12b-1 Fees .50% 0%
Other Expenses .25% .50%
--- ---
Total Expenses 1.75% 1.50%
The Fund Adviser will furnish the Fund with investment advice and, in
general, supervise the management and investment programs of the Trust. The Fund
Adviser will furnish at its own expense all necessary administrative services,
office space, equipment, and clerical personnel for servicing the investments of
the Fund, and investment advisory facilities and executive and supervisory
personnel for managing the investments and effecting the securities transactions
of the Fund. In addition, the Fund Adviser will pay the salaries and fees of all
officers and directors of the Trust who are affiliated persons of the Fund
Adviser. Under the Investment Advisory
<PAGE>
Agreement, the Fund Adviser will receive a monthly fee computed separately for
the Fund at an annual rate of .75% of the daily average net asset value of the
Fund.
Lancaster Administrative Services, Inc. (the "Administrator") has been
retained as the Trust's Administrator under a Transfer Agent and Administrative
Services Agreement with the Trust. The Administrator provides, or contracts with
others to provide, the Trust with all necessary recordkeeping services and share
transfer services. The Administrator receives an administration fee, computed
and paid monthly at an annual rate of 0.25% of the Fund's daily average net
assets.
The expenses paid by the Fund are deducted from total income before
dividends are paid. In addition to the management fees paid to the Fund Adviser
and the Administrator, the Fund will pay all expenses of operations not
specifically assumed by the Fund Adviser. These expenses include, but are not
limited to, taxes, interest, ordinary and extraordinary legal and auditing fees,
distribution expenses pursuant to the Rule 12b-1 Plan, custodial charges,
registration and blue sky fees incurred in registering and qualifying the Fund
under state and federal securities laws, association fees, and fees paid to
directors who are not affiliated with the Fund Adviser. Any general expenses of
the Trust that are not readily identifiable as belonging to a particular fund
will be allocated among the Funds on a pro rata basis at the time such expenses
are accrued. The Fund pays its own brokerage commissions and related transaction
costs.
It is hoped that the pro rata portion of the Fund's expenses will decrease
as the Fund's assets increase as a result of the proposed merger of certain
Trust portfolios into the Fund (see "Capitalization") and the public offering of
Shares after the Exchange, although it is not possible to predict whether the
Fund will grow in asset size and, if it does, at what rate.
Distribution and Purchase Procedures and Exchange Rights. The profits and
losses of the Partnership for any calendar quarterly period are allocated in
accordance with the Partnership percentage of each Limited Partner determined in
accordance with the Partnership's Limited Partnership Agreement. Quarterly, at
the end of each calendar quarterly period, each Limited Partner's account is
adjusted by any increases or decreases in the market value of the assets of the
Partnership at that date, plus any additional capital contributions, less any
withdrawals of capital or income by the partner. On a quarterly basis, existing
Limited Partners may contribute additional capital to the Partnership at the
discretion of the General Partner. The General Partner may also, on a quarterly
basis and without the consent or approval of existing Limited Partners, add new
partners in accordance with the terms and conditions of the Partnership's
Limited Partnership Agreement. Any new investor admitted by the General Partner
must initially contribute a minimum of $100,000 (unless specifically waived by
the General Partner). No automatic distributions of income, dividends, or
recognized gains are made to the Limited Partners. A Limited Partner may assign
his or her interest in the Partnership only effective at the beginning of a
quarterly period and only upon the written consent of the General Partner. The
General Partner may withhold consent if it is not satisfied such assignment will
be in compliance with federal or state securities laws.
It is the intention of the Trust to distribute any net investment income
and any net realized capital gains of the Fund to its shareholders at such times
as may be required to maintain the status of the Fund as a regulated investment
company under the Code. Dividends will also be
<PAGE>
automatically reinvested or distributed in cash when declared. Cash payment of
dividends, if requested, will be mailed within five (5) days of the date
declared. The taxable status of income dividends and/or net capital gains
distributions is not affected by whether they are reinvested in additional
Shares or paid in cash. Shareholders may elect to receive dividends in cash by
so directing on the Trust's application form included with the Fund's Prospectus
delivered herewith. The Fund intends to declare and distribute capital gains on
an annual basis.
SMITH HAYES Financial Services Corporation is the Trust's distributor (the
"Distributor"). The Trust has adopted a Distribution Plan pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), pursuant to which the Distributor is entitled
to reimbursement each month (subject to the limitation discussed below) for its
actual expenses incurred in the distribution and promotion of the Trust's
shares. These expenses include, but are not limited to, compensation paid to
investment executives of the Distributor and to broker-dealers which have
entered into sales agreements with the Distributor, expenses incurred in the
printing of reports used for sales purposes, preparation and printing of sales
literature, advertising, promotion, marketing and sales expenses, payments to
banks for shareholder services and accounting services and other
distribution-related expenses. Reimbursement to the Distributor for the Fund may
not exceed 0.50% per annum of the average daily net assets of the Fund.
Compensation will be paid out of such amounts to the Distributor's investment
executives, to broker-dealers which have entered into sales agreements with the
Distributor, and to banks which provide services to the Trust for the Fund. The
Glass-Steagall Act and other applicable laws prohibit banks from engaging in the
business of underwriting, selling, or distributing securities. Insofar as banks
are compensated, their only function will be to perform administrative and
shareholder services for their clients who wish to invest in the Fund. If a bank
at a future date is prohibited from acting in this capacity, the shareholder may
lose the services provided by the bank; however, it is not expected that the
shareholders would incur any adverse financial consequences. It is intended that
none of the services provided by such banks other than through registered
brokers will involve the solicitation or sale of shares of the Fund. In the
event distribution expenses for the Fund in any one year exceed the maximum
reimbursable under the Plan, such expenses may not be carried forward to the
following year. In its sole discretion, the Distributor can waive all or part of
payments under the Plan. Any such waiver can be discontinued at any time.
Redemption Procedures. Limited Partners of the Partnership may withdraw
amounts from their capital accounts on a quarterly basis provided that they give
at least thirty (30) days' written notice to the General Partner. The General
Partner will make payment to such partner, in cash or in kind, as the General
Partner shall determine, within sixty (60) days after the end of the quarterly
period. The General Partner has the right to charge against the amount of
withdrawal of any Limited Partner the costs and expenses incurred in connection
with such withdrawal and a reserve for certain Partnership liabilities. The
General Partner also has the right to cause the mandatory withdrawal of any
Limited Partner on the last day of any quarterly period by giving written notice
to such Limited Partner prior to the end of such period. Payment of such a
Limited Partner's capital account will be made within sixty (60) days of the end
of such period.
Shares of the Fund, in any amount, may be redeemed at any time at their
current net asset value next determined after a request in "good order" is
received by the Distributor plus any accrued but unpaid dividends thereon.
To redeem shares of the Fund, an investor must make a redemption request
through an investment executive or other broker-dealer of the Distributor.
If
<PAGE>
the redemption request is made to a broker-dealer other than the Distributor,
such broker-dealer will wire a redemption request to the Distributor immediately
following the receipt of such a request. For an explanation of what constitutes
a redemption request which is in "good order," see the Fund's Prospectus under
the heading "Redemption of Shares."
Normally, the Fund will make payment for all shares redeemed within five
business days, but in no event will payment be made more than seven days after
receipt by the Distributor of a redemption request in good order. However,
payment may be postponed or the right of redemption suspended for more than
seven days under unusual circumstances, such as when trading is not taking place
on the New York Stock Exchange. Payment of redemption proceeds may also be
delayed until the check used to purchase the shares to be redeemed has cleared
the banking system, which may take up to 15 days from the purchase date.
A shareholder may request that the Trust transmit redemption proceeds by
bank wire to a bank account designated on the shareholder's account application
form provided such bank wire redemptions are in amounts of $5,000 or more and
all requisite account information is provided to the Trust. The Fund reserves
the right to redeem a shareholder's account at any time the net asset value of
the account falls below $500 as the result of a redemption or transfer request.
Shareholders will be notified in writing that the value of their account is less
than $500 and will be allowed 30 days to make additional investments before the
redemption is processed.
There is no charge for redemption of the shares of the Fund. The
redemption price will be the Fund's net asset value per share next computed
following the receipt of the redemption request.
Tax Considerations
- ------------------
The Partnership and the Trust have received an opinion of counsel to
the effect, among other things, that no gain or loss will be recognized by
the Partnership, the Trust, or the former partners of the Partnership as a
result of the Exchange. See "Tax Consequences."
RISK FACTORS
Because of the similarity in investment objectives and policies between
the Partnership and the Fund, an investment in the Fund involves investment
risks that are substantially the same as those of the Partnership. These
investment risks, in general, are those typically associated with investing in a
managed portfolio of common stocks and other securities convertible into equity
securities, such as rights, warrants, convertible bonds, and preferred stock.
The Fund Adviser will also, when it believes that prevailing market or economic
conditions warrant a temporary defensive investment position, invest a portion
or all of its assets in United States Government securities, corporate debt
securities, or money market instruments. Corporate debt securities purchased by
the Fund will be of investment grade rated BBB-Baa or better by Standard &
Poor's ("S&P") or by Moody's Investors Service ("Moody's"). In making selections
for the Fund, the Fund Adviser will utilize an investment approach based on
fundamental analysis incorporating a value and growth philosophy. For further
information regarding the investment objective and policies and investment
restrictions of the Fund, as well as information
<PAGE>
regarding the investment practices of the Fund Adviser, see the Prospectus of
the Fund accompanying this Prospectus/Information Statement.
The risks associated with an investment in the Partnership that are not
associated with an investment in the Fund include the limited liquidity of
shares of limited partnership interests, the lack of a market for those
interests, and the limitations on transferability of those interests.
In addition the Partnership is not subject to the same rules on
diversification under the Investment Company Act of 1940 or the Code and is not
subject to the rules on concentration that the Fund will be subject to under the
Investment Company Act of 1940. As a result, an investment in the Partnership
could result in risks associated with the investment flexibility afforded the
Partnership by not being subject to such restrictions. Finally, it should be
noted that as the Partnership is not currently subject to the restrictions
imposed by the regulatory scheme of the Investment Company Act of 1940, an
investor in the Partnership does not enjoy all of the protections afforded to
regulated investment companies including record and bookkeeping requirements,
prohibitions against self dealing, composition of the Board of Directors and
other organizational requirements.
THE PLAN
The following summary of the important terms and conditions of the Plan is
qualified in its entirety by reference to the form of the Plan attached as
Exhibit "A". The Plan provides that, prior to the general offering of Shares to
the public, the Trust will exchange Shares for all or substantially all of the
portfolio securities of the Partnership. The Fund will not acquire securities
from the Partnership if, in the Fund Adviser's opinion, the acquisition would
result in a violation of the Fund's investment objective, policies, or
restrictions. Securities will be acquired and will be valued by the Fund after
the Exchange at their current market prices in accordance with valuation methods
adopted by the Board of Directors of the Trust and set forth in the Fund's
Prospectus. The Fund will not acquire or incur any of the actual or contingent
liabilities of the Partnership. Accordingly, the Partnership will retain
sufficient assets to pay its outstanding liabilities which CIC expects to be
very small or nonexistent. After the Exchange, the Partnership will dissolve and
distribute Shares to all its former partners, including the General Partner,
along with any cash proceeds received from the sale of any portfolio securities
not acquired by the Fund. Limited Partners will not be liable for any other
expense or liability of the Partnership. The dissolution of the Partnership is
expected to occur on the same day as the Exchange, but will occur in any event
as soon as practicable after the Exchange. Immediately following the Exchange,
the former partners of the Partnership will hold the only outstanding Shares of
the Fund. After the Exchange has been completed, the Trust will commence a
continuous offering of Shares of the Fund to the public.
The Plan provides that CIC will indemnify the Trust against losses and
claims that may arise relating to the Exchange. The Plan does not provide for
any indemnification of CIC by the Trust or the Fund.
Unless postponed by the Partnership and the Trust, the Exchange is
expected to occur on or before July 3, 1995, on the basis of the net asset value
of interests in the Partnership as of 4:00 p.m., Omaha time, on the business day
of the Exchange. The Exchange will not be effected
<PAGE>
until certain conditions are satisfied, including (1) that the Plan has been
properly approved by the Limited Partners, and (2) that an order of the
Securities and Exchange Commission (the "Commission") approving the Exchange has
been received. The Trust has applied to the Commission for this order because
the acquisition by the Trust of Partnership assets for Trust shares (of the
Fund) could be viewed as a sale to the Trust of securities by an affiliated
person of the Trust in violation of the 1940 Act.
The Plan may be amended at any time prior to the Exchange.
TAX CONSEQUENCES
The Trust has received an opinion of Cline, Williams, Wright, Johnson &
Oldfather that the Exchange will have the following federal income tax
consequences to Limited Partners: (1) the distribution of the Shares and cash
(if any) from the Partnership to a Limited Partner, which will be in liquidation
of an interest in the Partnership, will not cause taxable gain or loss to be
recognized by the Limited Partner (Code Section 731(a)); (2) a Limited Partner's
basis for Shares will be equal to the Limited Partner's adjusted basis in the
former Partnership interest minus the amount of cash received pursuant to the
liquidation of the Partnership interest (Code Section 732(b)); and (3) a Limited
Partner's holding periods with respect to Shares will include the Partnership's
holding periods with respect to such Shares (Code Sections 735(b) and 1223).
To the extent the Trust does not acquire certain of the Partnership's
portfolio securities and the Partnership then sells any of these portfolio
securities, such sales may result in a taxable gain or loss being realized by
the Limited Partners. Any cash received pursuant to these sales and distributed
to the Limited Partners will not, as a general rule, result in any additional
tax liability.
The Exchange may result in adverse tax consequences under certain
circumstances to persons who acquire Fund shares in continuous offering after
the Exchange. As a result of the Exchange, the Fund may acquire securities that
have appreciated or depreciated in value from the date they were acquired. If
appreciated securities were to be sold by the Fund after the Exchange, the
amount of the gain would be taxable to new shareholders as well as to former
Limited Partners. New shareholders would be taxed on a distribution that
represents a return of the purchase price of their Shares rather than an
increase in the value of the investment. The effect on former Limited Partners
would be to reduce their potential liability for tax on capital gains by
spreading it over a larger asset base. The opposite result may occur if the Fund
acquires securities having an unrealized capital loss. In that case, Limited
Partners will be unable to utilize the loss to offset gains, but, because the
Exchange will not result in any gains, the inability of Limited Partners to
utilize unrealized losses will have no immediate tax effect. For new
shareholders, to the extent that unrealized losses are realized by the Fund, new
shareholders may benefit by any reduction in net tax liability attributable to
the losses. The Fund Adviser cannot predict whether securities acquired in the
Exchange will have unrealized gains or losses on the date of the Exchange.
Consistent with its duties as investment adviser, the Fund Adviser may, however,
take tax consequences to investors into account when making decisions to sell
portfolio assets in connection with the Exchange, including the impact of
realized capital gains on shareholders of the Fund.
<PAGE>
REASONS FOR THE EXCHANGE; BENEFITS TO LIMITED PARTNERS
The effect of the Exchange will be to establish the Fund as a successor
investment vehicle to the Partnership.
Reasons for the Exchange. The Exchange is being proposed primarily for two
reasons. First, the Exchange will permit Limited Partners to pursue as
shareholders of the Fund substantially the same investment objective and
policies in a larger investment vehicle. The Partnership was formed as a private
investment fund for a small number of investors, and it was not registered as an
investment company under the 1940 Act in reliance on an exemption contained in
the 1940 Act for issuers whose outstanding securities are beneficially owned by
not more than 100 persons and which are not making or proposing to make a public
offering of securities. As a general rule, partnerships are less expensive to
form than registered investment companies and are not subject to the regulatory
restrictions applicable to registered companies. However, since the number of
Limited Partners cannot exceed 100 and the Partnership has neared this point,
the Partnership's growth in asset size depends on whether existing Limited
Partners make additional capital contributions. In contrast to the Partnership,
the Fund, as a part of a registered investment company, is not subject to any
limitation on the number of its shareholders. Second, the Fund will be simpler
to operate than the Partnership. As a partnership, the Partnership needed to
allocate profits and losses among partners taking the holding period of
Partnership assets as well as the holding period of interests in the Partnership
into account. These allocation calculations, which are quite complicated, would
not apply to the Fund, which could utilize the simpler allocation rules under
Subchapter M of the Code. Operation as a portfolio of a registered investment
company would also eliminate other administrative burdens and other requirements
currently faced by the Partnership as a limited partnership.
Benefits to Limited Partners. After the Exchange, Limited Partners will
hold Shares representing a pro rata interest in substantially the same pool of
assets as previously held by the Partnership. Of course, the Fund's assets will
change over time due to decisions made by the Fund Adviser and redemptions and
new purchases of Shares. Certain immediate benefits will accrue to Limited
Partners as shareholders of the Fund, even prior to the general offering of
Shares to the public. First, as shareholders of the Fund, Limited Partners will
secure the ongoing investment advisory skills of the Fund Adviser. Second, as
shareholders of the Fund, Limited Partners will enjoy greater liquidity and
ability to transfer their investment than they had as Limited Partners of the
Partnership. Additional benefits may accrue to Limited Partners as the Fund's
net assets increase. The conversion to a mutual fund may result in some tax
savings for some Limited Partners. No assurance can be made however that any tax
benefit will result or be realized by any Limited Partner as a result of the
Exchange. Presently, Partnership expenses are deductible for federal income tax
purposes as "other itemized deductions." However, other itemized deductions are
not deductible unless they exceed an amount equal to 2% of the taxpayer's
adjusted gross income. As a result, some Limited Partners may not be presently
able to deduct any of the Partnership's expenses. On the other hand, mutual fund
expenses are not subject to the 2% exclusion and are netted against fund income
before income is distributed to fund shareholders. As a result, all Fund
expenses are deductible for all shareholders. For a discussion of certain tax
benefits that may accrue to Limited Partners as a result of the Exchange, see
"Tax Consequences."
<PAGE>
DIFFERENCES IN RIGHTS
The Trust. The Trust is authorized to issue a total of one billion shares
of common stock in series with a par value of $.001 per share. Fifty million of
these shares have been authorized by the Board of Directors to be issued in the
series designated Capital Builder Fund. All shares, when issued, will be fully
paid and non-assessable and will be redeemable and freely transferable. All
shares have equal voting rights. They can be issued as full or fractional
shares. A fractional share has pro rata the same kind of rights and privileges
as a full share. The shares possess no preemptive or conversion rights.
Each share of the Trust has one vote (with proportionate voting for
fractional shares) irrespective of the relative net asset value of the shares.
On some issues, such as the election of directors, if more than one series of
shares has been designated, all shares of the Trust vote together as one series.
Cumulative voting is not authorized. This means that the holders of more than
50% of the shares voting for the election of directors can elect 100% of the
directors if they choose to do so, and, in such event, the holders of the
remaining shares will be unable to elect any directors. On an issue affecting
only the Fund, the shares of the Fund vote as a separate series. Examples of
such issues would be proposals to (i) change a fund's Investment Advisory
Agreement, (ii) change a fundamental investment restriction pertaining to only a
fund, or (iii) change a fund's Distribution Plan. In voting on the Investment
Advisory Agreement or proposals affecting only one fund, approval of such an
agreement or proposal by the shareholders of one fund would make the agreement
effective as to that fund whether or not the agreement or proposal had been
approved by the Trust's other funds.
As in all corporations, the Trust's Board of Directors has the primary
responsibility for overseeing the business of the Trust. The Board of Directors
meets periodically to review the activities of the Fund and the Fund Adviser and
to consider policy matters relating to the Fund and the Trust. Pursuant to the
Investment Advisory Agreement, the Fund Adviser provides the Fund with
continuous investment advice and is responsible for the overall management of
the Trust's business affairs, subject to supervision of the Trust's Board of
Directors.
The Trust has proposed an amendment to its Articles of Incorporation,
which could become effective at or about the time the Exchange is completed,
which would permit the Board of directors to subdivide existing series of Trust
shares into classes. Classes could be utilized to create differing expense and
fee structures for investors in the same Fund. The creation by the Board of
Directors of any such classes of shares would require compliance with the
applicable regulations of the Securities and Exchange Commission.
The Trust does not intend to hold annual or periodically scheduled regular
meetings of shareholders unless it is required to do so. Minnesota corporation
law requires only that the Board of Directors convene shareholder meetings when
it deems appropriate. However, Minnesota law provides that if a regular meeting
of shareholders has not been held during the immediately preceding 15 months, a
shareholder or shareholders holding 3% or more of the voting shares of the Trust
may demand a regular meeting of shareholders by written notice given to the
chief executive officer or chief financial officer of the Trust. Within 30 days
after receipt of the demand, the Board of Directors shall cause a regular
meeting of shareholders to be called, which meeting shall be held no later than
90 days after receipt of the demand, all at the expense
<PAGE>
of the Trust. In addition, the 1940 Act requires a shareholder vote for all
amendments to fundamental investment policies and restrictions, for all
investment advisory contracts and amendments thereto, and for all amendments to
Rule 12b-1 distribution plans. Finally, the Trust's Articles of Incorporation
provide that shareholders also have the right to remove Directors upon
two-thirds vote of the outstanding shares and may call a meeting to remove a
Director upon the application of 10% or more of the outstanding shares. The
Trust is obligated to facilitate shareholder communications in this situation if
certain conditions are met.
It is the intention of the Trust to distribute any net investment income
and any net realized capital gains of the Fund to its shareholders at such times
as may be required to maintain the status of the Fund as a "regulated investment
company" under the Code. To maintain its status as a "regulated investment
company," the Fund intends to distribute substantially all of its taxable
income, including any realized capital gains and, as a result, will not incur
federal income taxes. Dividends will be automatically reinvested or distributed
in cash when declared. Cash payment of dividends, if requested, will be mailed
within five (5) days of the date declared. The taxable status of income
dividends and/or net capital gains distribution is not affected by whether they
are reinvested in additional shares or paid in cash. Shareholders may elect to
receive dividends in cash by so directing on the Trust's application form when
initially investing or by submitting an amended application form thereafter. If
a shareholder redeems all Shares owned, all dividends declared up to and
including the date of redemption are paid with the proceeds of the redemption.
Shareholders of the Fund may exchange their Shares, without a sales charge, for
shares in any of the other Funds of the Trust.
The Partnership. Limited Partners of the Partnership receive, at the end
of each calendar quarterly period, an allocation of profits and losses in
accordance with the Limited Partnership Agreement. Limited Partners may withdraw
from the Partnership by redeeming their shares of limited partnership interests,
provided they give at least thirty (30) days' advance written notice to the
General Partner. In the event of such a withdrawal, the General Partner makes
payment to each such Limited Partner, in cash or in kind, as the General Partner
shall determine, within sixty (60) days after the end of the quarterly period.
CIC, as the General Partner of the Partnership, has complete control of
the business of the Partnership, and Limited Partners take no part in the
operation or management of the Partnership. Limited Partners are not liable for
the debts or obligations of the Partnership in excess of the value of their
investment. However, when Limited Partners receive a return of their
contribution to the capital of the Partnership, they remain liable for the
amount necessary for the Partnership to discharge its liability to creditors who
extended credit or whose claims arose before such return of capital was made. No
substantive changes in the Partnership Agreement may be made without the
approval of the holders of a majority in interest of the shares of limited
partnership interest. Without the consent of the partner affected, no amendment
may be made to the Partnership Agreement that would reduce the number of shares
of limited partnership interest held by a partner or that would affect the
partner's rights of investment or redemption. Limited Partners may not assign
their shares of limited partnership interest without the consent of CIC and
without an opinion of counsel, if required.
<PAGE>
CAPITALIZATION
The following table shows (1) the capitalization (adjusted net assets) of the
Conley Partners Limited Partnership as of December 31, 1994 (adjusted for
partners capital withdrawals and purchase on January 1, 1995) (2) the
capitalization of Capital Builder Fund immediately before the exchange and (3)
the pro forma initial capitalization of the Capital Builder Fund after giving
effect to the proposed exchange at net asset value:
CONLEY
PARTNERS CAPITAL PRO FORMA
LIMITED BUILDER INITIAL
PARTNERSHIP FUND (2) CAPITALIZATION
(1)
Total Net Assets $2,818,437 $ - $2,818,437
Shares of Authorized Capital Stock - 50,000,000 50,000,000
Shares of Outstanding Capital - - 281,844
Stock
Net Asset Value Per Share - - $ 10.00
(1) Conley Partners Limited Partnership has no partner units or limited
partner units
(2) Initial capitalization to come from exchange of capital stock for net
assets of Conley Partner Limited Partnership
The following table shows pro forma capitalization of (1) the pro forma initial
capitalization of the Capital Builder Fund after the exchange described above
(2) the capitalization, at net asset value at December 31, 1994, of the three
additional funds (as adjusted for planned liquidation of securities) to be
combined with Capital Builder Fund following the exchange with Conley Limited
Partners Partnership and (3) the pro forma combined capitalization of the
Capital Builder Fund after giving effect to all proposed exchanges at net asset
value.
PRO FORMA ASSET PRO FORMA
INITIAL ALLOCATION BALANCED VALUE COMBINED
CAPITALIZATIO FUND FUND FUND CAPITALIZATION
Total Net Assets $2,818,437 $3,567,628 $4,691,380 $3,253,798 $14,331,243
Shares of
Authorized
Capital Stock 50,000,000 10,000,000 10,000,000 10,000,000 50,000,000
Shares of
Outstanding
Capital Stock 281,844 402,348 453,780 330,781 1,433,124
Net Asset Value
Per Share $ 10.00 $ 8.87 $ 10.34 $ 9.84 $ 10.00(3)
(3) Assumes that all transactions occurred on same date.
<PAGE>
THE TRUST AND THE FUND
Information concerning the operations and management of the Trust,
including a discussion of the risks associated with investing in the Fund, is
incorporated by reference into this Prospectus/Information Statement from its
current Prospectus.
The Trust is subject to the informational requirements of the Securities
Exchange Act of 1934 and the 1940 Act, and in accordance with those laws files
reports, proxy statements, and other information with the Commission. Reports,
proxy statements, and other information filed by the Trust may be inspected and
copied at the public reference facilities of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. Copies of such materials can also be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
THE PARTNERSHIP
The Partnership was organized by CIC on August 24, 1989, as a limited
partnership under the laws of the State of Nebraska. The Partnership is an
investment partnership whose investment objective is capital appreciation
coupled with moderate investment income. In order to achieve this objective,
investments are made principally in common and preferred stocks, bonds,
debentures, and warrants. The Partnership also has the option of investing in
covered call options and may invest in short-term liquid securities, including
United States Government securities, commercial paper, bank certificates of
deposit, other fixed-income securities, or money market funds investing in these
securities. As General Partner of the Partnership, CIC has the exclusive and
complete responsibility and obligation to manage the Partnership. The General
Partner has entered into a Management and Investment Advisory Agreement with the
Partnership Adviser to provide all investment advice, make all recommendations
for portfolio transactions, and manage the assets of the Partnership. Purchases
and sales of securities for the Partnership are based upon the recommendations
and advice of the Partnership Adviser.
CIC is the corporate General Partner of the Partnership and also acts as
the Partnership Adviser. The Trust will receive its investment advice from the
Fund Adviser.
AMENDMENT TO THE PARTNERSHIP AGREEMENT
In order to facilitate the Exchange, the General Partner has proposed an
amendment to the Partnership Agreement of the Partnership specifically
authorizing the dissolution and liquidation of the Partnership upon approval of
the Exchange (the "Facilitating Amendment"). The General Partner proposes to
amend the Partnership Agreement by inserting a new Section 9.04 to the
Partnership Agreement. The new proposed Section 9.04 is set forth verbatim as
follows:
9.04 In addition to the dissolution and liquidation provisions of 9.01,
9.02 and 9.03, the Partnership shall terminate, liquidate and dissolve
upon the General Partner's receipt of affirmative votes of Limited
Partners holding limited partnership interests which represent fifty
percent (50%) or more of the market value of the
<PAGE>
Partnership assets approving a transfer of all or substantially all of the
assets of the Partnership to SMITH HAYES Trust, Inc. (the "Trust") in
exchange for shares of beneficial interest, par value $.001 per share (the
"Shares") in Capital Builder Fund (the "Fund") of the Trust upon the terms
and conditions set forth in the Prospectus/Information Statement sent to
Limited Partners in connection with the solicitation of the Limited
Partners' approval of the transaction (the "Exchange"). The termination,
liquidation and dissolution of the Partnership pursuant to the provisions
of this section shall be made in accordance with the terms and conditions
of the Exchange and, where not in conflict with the Exchange, the
provisions of the Partnership Agreement.
A vote in favor of the Exchange will be deemed a vote in favor of the
Facilitating Amendment. The General Partner has recommended that the partners
vote in favor of the Exchange, which includes approving the Facilitating
Amendment. The Facilitating Amendment will become effective only upon the
receipt by the General Partner of written affirmative votes by partners holding
limited partnership interests which represent fifty percent (50%) or more of the
market value of the Partnership assets.
VOTING INFORMATION
Voting instructions from Limited Partners are being solicited by CIC (as
General Partner of the Partnership) which will pay all costs incurred in
soliciting Limited Partner votes. The solicitations will be made primarily by
mail, but solicitations may also be made by telephone, telegraph, or personal
interviews conducted by agents or employees of CIC. Approval of the Plan
requires the affirmative vote of Limited Partners holding limited partnership
interests which represent fifty percent (50%) or more of the market value of the
Partnership assets. Voting instructions must be received by CIC on or before
June 29, 1995, and may be revoked by written notice received by CIC before that
date. CIC and its representatives will count the ballots and provide the overall
supervision of the voting process. Limited Partners returning a ballot
indicating that they are abstaining from the vote will have the same practical
effect as casting a vote against the Exchange Plan. Similarly, the failure to
return a ballot will also have the same practical effect as casting a vote
against the Exchange Plan. The Uniform Limited Partnership Act of the State of
Nebraska does not provide appraisal rights for Limited Partners who do not
approve the Plan.
As of the date of this Prospectus/Information Statement, no one held
beneficially or of record any Shares of the Fund.
CERTAIN AFFILIATIONS
Upon completion of the Exchange and certain related transactions, John H.
Conley will be the owner of approximately 5% of the outstanding voting
securities of Consolidated Investment Corporation, the parent of the Fund
Adviser, Administrator and Distributor of the Fund. Mr. Conley will also be
President of the Fund Adviser, portfolio manager of the Fund and a director of
the Trust. Thomas C. Smith is the owner of 77% of the outstanding voting
<PAGE>
securities of Consolidated Investment Corporation, is Chairman of the Fund
Adviser, Chairman, President and a director of the Trust.
EXPENSES
The Fund Adviser will pay all of the expenses incurred by the Partnership
and the Trust in connection with the Exchange, including the costs of
transferring portfolio securities to the Fund's custodian and costs of issuing
Shares in the Exchange. The Fund Adviser will also assume all the legal fees and
expenses incurred in connection with this Prospectus/Information Statement.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial statements of the Partnership included in the
Statement of Additional Information have been audited by KPMG Peat Marwick LLP,
independent certified public accountants, Two Central Park Plaza, Suite 1501,
Omaha, NE 68102, for the periods indicated in their reports. The statements
examined by KPMG Peat Marwick LLP have been incorporated herein by reference in
reliance upon their reports given on their authority as experts in accounting
and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of Shares in the Exchange
and certain tax matters will be passed upon for the Trust and the Partnership by
Cline, Williams, Wright, Johnson & Oldfather, 1900 FirsTier Bank Building, 13th
and "M" Streets, Lincoln, Nebraska 68508. Cline, Williams, Wright, Johnson &
Oldfather acts as legal counsel to CIC, the Partnership, the Partnership
Adviser, the Trust, the Fund Adviser, and the Distributor.
<PAGE>
CONLEY PARTNERS LIMITED PARTNERSHIP
VOTING INSTRUCTION FORM
-----------------------
This Voting Instruction Form relates to the proposal to exchange (the
"Exchange") all or substantially all of the assets of Conley Partners Limited
Partnership for shares of SMITH HAYES Trust, Inc.--Capital Builder Fund. A vote
in favor of the Exchange includes a vote in favor of the Facilitating Amendment
(as defined in the Prospectus/Information Statement accompanying this ballot).
|_| I vote in favor of the Exchange.
|_| I vote against the Exchange.
|_| I abstain, (a vote to abstain is counted as a vote
against the Exchange).
Date: ---------------, 1995
---------------------------------------
Signature of Limited Partner(s)
---------------------------------------
Signature of Limited Partner(s)
PLEASE CHECK ONE BOX, SIGN, DATE AND RETURN THIS VOTING INSTRUCTION FORM
AS SOON AS POSSIBLE to Conley Investment Counsel, Inc., Suite 202, 444
Regency Parkway, Omaha, NE 68114. A stamped, return envelope is enclosed
for your convenience.
<PAGE>
CONLEY PARTNERS LIMITED PARTNERSHIP
REQUEST FOR A STATEMENT OF ADDITIONAL INFORMATION
If you would like a Statement of Additional Information relating to the
proposal to exchange all or substantially all of the assets of Conley Partners
Limited Partnership for shares of SMITH HAYES Trust, Inc.--Capital Builder Fund,
kindly print your name and address below and mail this request to:
SMITH HAYES Financial Services Corporation
500 Centre Terrace
1225 "L" Street
Lincoln, NE 68508
A Statement of Additional Information can also be obtained by calling Conley
Investment Counsel, Inc. at (402) 391-1840 or calling toll-free 1 (800)
279-7437.
- ---------------------------------------
Name
- ---------------------------------------
Address
- ---------------------------------------
City, State
- ---------------------------------------
Zip Code
<PAGE>
Exhibit "A"
AGREEMENT AND PLAN OF EXCHANGE
AGREEMENT AND PLAN OF EXCHANGE (the "Agreement"), dated ---------------,
1995, between Conley Partners Limited Partnership, a Nebraska limited
partnership (the "Partnership"), SMITH HAYES Trust, Inc. - Capital Builders
Fund, a Minnesota corporation (the "Fund"), Conley Investment Counsel, Inc.
("CIC"), a Nebraska corporation and SMITH HAYES Portfolio Management, Inc. a
Nebraska corporation ("Adviser").
WHEREAS, CIC, as general partner of the Partnership, and the Board of
Directors of the Fund have determined it is in the best interests of the
Partnership and the Fund, respectively, that substantially all of the assets of
the Partnership be acquired by the Fund pursuant to this Agreement and in
accordance with the applicable statutes of the State of Nebraska; and
WHEREAS, CIC, the Partnership, the Fund, and the Adviser desire to
enter into a Plan of Exchange; and
WHEREAS, Adviser, as investment adviser to the Fund and the Partnership,
and CIC, as the general partner of the Partnership, have agreed to certain terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the Partnership, the Fund, CIC and Adviser agree as follows:
PLAN OF EXCHANGE
The exchange will consist of the acquisition by the Fund of substantially
all of the properties and assets of the Partnership in exchange for shares of
beneficial interest, par value $.001 per share, of the Fund (the "Fund Shares"),
and the subsequent distribution to the limited partners of the Partnership,
including CIC as the general partner (together, the "Partners"), in the complete
liquidation and dissolution of the Partnership of all of the Fund Shares
received in exchange for their interests in the Partnership ("Partnership
Interests"), all upon and subject to the terms hereinafter set forth. Upon such
distribution of the Fund Shares, each Partner will be entitled to receive that
portion of such shares that the Partnership Interest owned by such Partner prior
to the exchange bears to the number of outstanding Partnership Interests of all
Partners on the same date. Any assets retained by the Partnership in excess of
amounts needed to pay or provide for its liabilities will be distributed to the
Partners of record as of the Exchange Date (as defined in Section 6 of the
Agreement set forth below).
<PAGE>
AGREEMENT
In consideration of the covenants and agreements herein contained, the
Partnership, the Fund, and CIC agree as follows:
1. Representations and Warranties of the Partnership. The
Partnership represents and warrants to and agrees with the Fund that:
(a) The Partnership is a limited partnership duly formed and validly
existing under the laws of the State of Nebraska and has power to own all
of its properties and assets and, subject to the approval of its limited
partners (the "Limited Partners"), to carry out this Agreement.
(b) Except as shown on the financial statements of the Partnership
for the years ended December 31, 1994 and 1993 and as incurred in the
ordinary course of the Partnership's business since December 31, 1994, the
Partnership has no known liabilities of a material amount, contingent or
otherwise, and there are no material legal, administrative, or other
proceedings pending or, to the knowledge of CIC, threatened against the
Partnership.
(c) At both the Valuation Time (as defined in Section 3(d) hereof)
and the Exchange Date, the Partnership will have full right, power, and
authority to sell, assign, transfer, and deliver the assets and properties
to be transferred by it hereunder. Upon such transfer as contemplated by
this Agreement, the Fund will acquire such assets subject to no
encumbrances, liens, security interests, and without any restrictions upon
the transfer thereof (other than encumbrances, liens, security interests,
or restrictions created by the Fund).
(d) No registration under the Securities Act of 1933, as amended
(the "1933 Act"), of any of the securities to be transferred by the
Partnership hereunder would be required if they were, as of the time of
such transfer, the subject of a public distribution by the Partnership.
2. Representations and Warranties of the Fund. The Fund represents
and warrants to and agrees with the Partnership that:
(a) The Fund is a corporation duly established and validly existing
in conformance with the laws of the State of Minnesota and has power to
carry on its business as it is now being conducted and to carry out this
Agreement.
(b) The Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end, diversified management
investment company; and such registration has not been revoked or
rescinded and is in full force and effect.
(c) At the Exchange Date, the Fund Shares to be issued to the
Partnership will have been duly authorized and, when issued and delivered
pursuant to this Agreement,
<PAGE>
will be legally and validly issued and will be fully paid and
nonassessable; and no shareholder of the Fund will have any preemptive right of
subscription or purchase in respect thereof.
3. Transfer of Assets.
------------------
(a) Subject to the requisite approval of the Limited Partners and to the
terms and conditions contained herein, the Fund agrees to acquire from the
Partnership, and the Partnership agrees to acquire from the Fund, on the
Exchange Date all of the securities and cash of the Partnership (subject to the
retention by the Partnership of assets sufficient, in the judgment of the
Partnership, to pay the Partnership's debts, obligations, and liabilities and
any assets which the Fund is not permitted, or which it has reasonably
determined to be unsuitable for it, to acquire) in exchange for that number of
the Fund Shares provided in Section 4 hereof. The Partnership, as soon as
practicable after the Exchange Date, will distribute all the Fund Shares
received by it to the Partners in exchange for their Partnership Interests. Any
assets retained by the Partnership, after paying or providing for the payment of
all of its liabilities, shall be distributed by the Partnership or its agent to
the Partners of record as of the Exchange Date.
(b) The Partnership will pay or cause to be paid to the Fund any interest
or dividends received on or after the Exchange Date with respect to securities
transferred to the Fund hereunder. The Partnership will transfer to the Fund any
distributions, rights, stock dividends, or other securities received by the
Partnership after the Exchange Date as distributions on or with respect to the
securities transferred, which shall be deemed included in assets transferred to
the Fund on the Exchange Date and shall not be separately valued unless the
securities in respect of which such distribution is made shall have gone "ex"
such distribution prior to the Valuation Time. Notwithstanding the foregoing,
the Fund shall not be entitled to receive any interest or dividends or other
distributions on securities not transferred to the Fund hereunder.
(c) The Fund shall not assume, and shall not be obligated to assume, any
liabilities (absolute or contingent) of the Partnership.
(d) The Valuation Time shall be 4:00 p.m., Omaha, Nebraska, time, on June
30, 1995 (the "Valuation Date"), or such earlier or later date and time as may
be mutually agreed upon by the Partnership and the Fund (the "Valuation Time").
4. Shares Issued in Exchange for Assets and Valuation. Full Fund Shares
and, to the extent necessary, a fractional Fund Share of an aggregate net asset
value equal to the value of the assets of the Partnership acquired shall be
issued by the Fund in exchange for such assets of the Partnership. Value in all
cases shall be determined as of the Valuation Time. The value of the assets of
the Partnership to be acquired by the Fund and the net asset value per share of
the Fund Shares shall be determined in accordance with the procedures for
determining the value of the Fund's assets set forth in the Fund's Articles of
Incorporation and in the prospectus that forms part of the Fund's Registration
Statement on Form N-1A under the caption "Valuation of Shares." The Fund shall
issue the Fund Shares to the Partnership. In lieu of delivering certificates for
the Fund Shares, the Fund shall credit the Fund Shares to the Partnership's
account on the stock record books of the Fund and shall deliver a confirmation
thereof to the Partnership. The
<PAGE>
Partnership shall then deliver written instructions to the Fund's transfer agent
to set up accounts for the Partners on the stock record books of the Fund.
5. Limited Partners' Approval. The Partnership agrees, as soon as
is practicable after the effective date of the Fund's Registration Statement
on Form N-14, to solicit the approval of the Limited Partners of this
Agreement and the transactions contemplated hereby.
6. Delivery of Assets; Exchange Date. Delivery of the assets of the
Partnership to be transferred and the Fund Shares to be issued shall be made on
the next full business day following the Valuation Time, or such other date and
time agreed to by the Partnership and the Fund, the date and time upon which
such delivery is to take place being referred to herein as the "Exchange Date."
Assets transferred shall be delivered on the Exchange Date to Union Bank,
Lincoln, Nebraska, the Fund's custodian (the "Custodian"), for the account of
the Fund, with all securities not in bearer form duly endorsed, or accompanied
by duly endorsed separate assignments or stock powers, in proper form for
transfer, with signatures guaranteed, and with all necessary state stock
transfer stamps, sufficient to transfer good and marketable title thereto
(including all accrued interest and dividends and rights pertaining thereto) to
the Custodian for the account of the Fund free and clear of all liens,
encumbrances, rights, restrictions, and claims. Securities held at the
Depository Trust Company need not be delivered to the Custodian. All cash
delivered shall be in the form of currency and immediately available funds
payable to the order of the Custodian for the account of the Fund.
7. The Fund's Conditions Precedent. The obligations of the Fund
hereunder shall be subject to the following conditions:
(a) That the Partnership shall have furnished to the Fund a
statement of the Partnership's net assets, including a list of securities
owned by the Partnership with their respective tax costs and values
determined as provided in Section 4 hereof, all as of the Valuation Time.
(b) That as of the Valuation Time and as of the Exchange Date, all
representations and warranties of the Partnership made in this Agreement
are true and correct as if made at and as of each such date, and the
Partnership has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such
dates.
8. The Partnership's Conditions Precedent. The obligations of the
Partnership hereunder shall be subject to the condition that as of the Valuation
Time and as of the Exchange Date, all representations and warranties of the Fund
made in this Agreement are true and correct as if made at and as of each such
date, and that the Fund has complied with all of the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to such
dates.
9. The Fund's and the Partnership's Conditions Precedent. The
obligations of both the Fund and the Partnership hereunder shall be subject
to the following conditions:
<PAGE>
(a) That this Agreement and the transactions contemplated hereby
shall have been approved by the affirmative consent of the Limited
Partners, holding a majority of Partnership Interests, by June 30, 1995 or
such later date as shall be mutually agreeable but in no event later than
December 31, 1995.
(b) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement.
(c) That the Fund's Registration Statements on Form N-1A and Form
N-14 (together, the "Registration Statements") shall have become effective
under the 1933 Act, and no stop order suspending such effectiveness shall
have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Partnership, shall be contemplated
by the Commission.
10. Indemnification by CIC. CIC will indemnify and hold harmless the Fund
against any and all expense, losses, claims, damages, and liabilities at any
time imposed upon or reasonably incurred by it in connection with, arising out
of, or resulting from any claim, action, suit, or proceeding in which it may be
involved or threatened by reason of (i) any additional taxes owing or claimed to
be owing to the Fund, the Partnership, or the Limited Partners as a result of
the transactions contemplated hereby that are not disclosed in the Fund's
Registration Statement on Form N-14; or (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statements, or
any amendment or supplement thereto, or arising out of or based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
including without limitation any amounts paid by the Fund in a reasonable
compromise or settlement of any such claim, action, suit, or proceeding or
threatened claim, action, suit, or proceeding made with the consent of CIC. The
Fund will notify CIC in writing within ten (10) days of the receipt by the Fund
of any notice of legal process of any suit brought against or claim made against
the Fund as to any matters covered by this Section 10(b). CIC shall be entitled
to participate at its expense in the defense of any claim, suit, action, or
proceeding covered by this Section 10, or, if it so elects, to assume at its
expense by counsel satisfactory to the Fund the defense of any such claim, suit,
action, or proceeding, and if CIC elects to assume such defense, the Fund shall
be entitled to participate in the defense of any such claim, suit, action, or
proceeding at its own expense. CIC's obligation under this Section 10 to
indemnify and hold harmless the Fund shall constitute a guarantee of payment so
that CIC will pay in the first instance any expenses, losses, claims, damages,
and liabilities required to be paid by it under this Section 10 without the
necessity of the Fund's first paying the same.
11. Obligations of the Adviser. Whether or not the transactions
contemplated hereby are consummated, the Adviser agrees to pay all expenses
incurred (including but not limited to printing expenses, brokerage commissions,
mailing costs, and fees and disbursements of counsel and accountants) by the
Partnership and the Fund in connection with the exchange.
<PAGE>
12. Broker or Finder's Fee. The Partnership and the Fund each represent
that there is no person who has dealt with it and who by reason of such dealings
is entitled to any finder's or other similar fee or commission arising out of
the transactions contemplated by this Agreement.
13. Termination of Agreement. This Agreement may be terminated and the
exchange contemplated hereby abandoned at any time (whether before or after the
approval thereof by the Limited Partners) prior to the Exchange Date by mutual
consent of CIC as the general partner of the Partnership and the Board of
Directors of the Fund evidenced by appropriate resolutions. This Agreement shall
terminate if the exchange shall not have taken place by December 31, 1995.
In the event of the termination of this Agreement and abandonment of the
exchange contemplated hereby pursuant to the provisions of this Section 13, this
Agreement shall become void and have no effect, without any liability on the
part of any party hereto or the directors, officers, or shareholders of the
Fund, the Limited Partners, or CIC as the general partner of the Partnership in
respect of this Agreement, except the obligation of Adviser to pay expenses.
14. Restrictions on Transfer. Pursuant to Rule 145 under the 1933 Act, the
Fund will, in connection with the issuance of any of the Fund Shares to any
person who at the time of the transaction contemplated hereby is deemed to be an
affiliate of a party to the transaction pursuant to Rule 145(c), cause to be
affixed upon the certificates issued to such person (if any) a legend as
follows:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO CAPITAL
BUILDER FUND OR ITS PRINCIPAL UNDERWRITER UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (2) IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE FUND SUCH REGISTRATION IS NOT REQUIRED.
and, further, that stop transfer instructions will be issued to the Fund's
transfer agent with respect to such Fund Shares. The Partnership will provide
the Fund on the Exchange Date with the name of any Partner who is to the
knowledge of the Partnership an affiliate of it on such date.
15. Waiver. At any time prior to the Exchange Date, CIC as the general
partner of the Partnership or the Board of Directors of the Fund may (a) extend
the time for the performance of any of the obligations or other acts of the
other; (b) waive any inaccuracy in the representations of the other; and (c)
waive compliance by the other with any of the agreements or conditions set forth
herein. Any agreement on behalf of either to any such extension or waiver shall
be valid only if set forth in an instrument in writing duly executed and
delivered on behalf of such party.
<PAGE>
16. No Survival of Representations. None of the representations or
warranties included or provided for herein shall survive the Exchange Date.
17. Agreement Entire; Governing Law. Except as provided herein, this
Agreement supersedes all previous correspondence or oral communications between
the parties regarding the exchange, constitutes the only understanding with
respect to the exchange, may not be changed except by an agreement signed by
each party, and shall be construed in accordance with and governed by the laws
of the State of Nebraska; provided, however, that the due authorization,
execution, and delivery of this Agreement with respect to any party shall be
construed in accordance with and governed by the laws of the jurisdiction of
formation, organization, or incorporation of such party.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be deemed to
be an original.
IN WITNESS WHEREOF, each of the Partnership, the Fund, and CIC has caused
this Agreement and Plan of Exchange to be executed and attested on its behalf by
its duly authorized representatives and its seal, if any, to be affixed hereto,
all as of the _____ day of __________, 1995.
CONLEY INVESTMENT COUNSEL, INC.
on its behalf as and General Partner
of CONLEY PARTNERS LIMITED
PARTNERSHIP
ATTEST: -------------------------- By:---------------------------------
Title: -------------------------- Title: President
SMITH HAYES TRUST, INC.
ATTEST: -------------------------- By:---------------------------------
Title: -------------------------- Title: President
SMITH HAYES PORTFOLIO
MANAGEMENT, INC.
ATTEST: -------------------------- By:---------------------------------
Title: -------------------------- Title: President
<PAGE>
Exhibit "B"
THE FUND'S PROSPECTUS
<PAGE>
PROSPECTUS
Capital Builder Fund
200 Centre Terrace
1225 L Street
Lincoln, Nebraska 68508
(402) 476-3000
1-(800)-279-7437
The Capital Builder Fund (the "Fund") is a diversified open-end management
company organized as a series of the SMITH HAYES Trust, Inc. (the "Trust") The
Trust is a Minnesota Corporation offering its shares in series, each series
operating as separate investment management companies with their own investment
objectives and policies. This Prospectus relates only to the Fund.
The primary investment objective of the Fund is to seek long-term
capital appreciation with a secondary objective of providing current income. The
Fund invests in a diversified portfolio of common and preferred stocks,
convertible securities, U.S. Government Securities, repurchase agreements,
mortgage backed securities, corporate debt securities and money market
instruments. At least 65% of the Fund's total assets will be invested in common
and preferred stocks and securities convertible in to common stocks. In making
selections for the Fund, the adviser will utilize an investment approach based
on fundamental analysis incorporating a value and growth philosophy. See
"Investment Objective and Policies."
Shares of the Fund are not deposits or obligations of, or insured,
guaranteed, or endorsed by, the U.S. government, any bank, the Federal Deposit
Insurance Corporation, the Federal Reserve, or any other agency, entity or
person. The purchase of shares necessarily involves investment risks, including
the possible loss of principal.
This Prospectus concisely describes information about the Fund that an
investor ought to know before investing. Please read it carefully before
investing and retain it for future reference. A Statement of Additional
Information about the Fund dated as of the date of this Prospectus is available
free of charge by writing to the Fund, 200 Centre Terrace, 1225 L Street,
Lincoln, Nebraska 68508, or telephone (402) 476-3000 or 1-(800) 279-7437. The
Statement of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated in its entirety by reference in this
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.
The date of this Prospectus is April 6, 1995.
<PAGE>
[THIS PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
INTRODUCTION
The Fund is a diversified open-end management investment company organized
as a series of the Trust. The Trust is a Minnesota corporation, commonly called
a series mutual fund. The Trust, which was organized in 1988, has one class of
capital stock that is issued in series, each series referred to as a fund which
is operated as a separate open-end management investment company. This
Prospectus only relates to the series Capital Builder Fund. For information
regarding the Trust's other funds, call or write to the Trust at the address and
telephone number on the cover page of this Prospectus.
The Investment Advisor and Administrator
The Trust is managed by CONLEY-SMITH, Inc. ("CSI") formerly SMITH HAYES
Portfolio Management, Inc., a wholly owned subsidiary of Consolidated Investment
Corporation ("Consolidated"). CSI acts as the investment adviser for the Fund
("Adviser"). The Administrator of the Trust is Lancaster Administrative
Services, Inc. ("LAS"). LAS acts as transfer agent and provides or contracts
with others to provide all necessary recordkeeping services. The Trust pays LAS
a monthly fee for such services. The Trust pays the Adviser a monthly fee for
advisory services rendered.
The Distributor
SMITH HAYES Financial Services Corporation ("SMITH HAYES"), also a wholly
owned subsidiary of Consolidated, acts as the distributor ("Distributor") of the
Trust's shares. Pursuant to the Trust's Rule 12b-1 Plan, the Trust will
reimburse the Distributor monthly for certain expenses incurred in connection
with the distribution and promotion of the Trust's shares, not to exceed .50%
annually of the Fund's average net assets. See "Distribution of Portfolio
Shares."
Purchase of Shares
Shares of the Fund are offered to the public at the next determined net asset
value after receipt of an order by the Distributor, without a sales charge. The
minimum initial investment in the Fund is $1,000, and subsequent investments can
be made in any amount.
Certain Risk Factors to Consider
An investment in the Fund is subject to certain risks, as set forth in
detail under "Investment Objective and Policies." As with other mutual funds,
there can be no assurance that the Fund will achieve its objective.
Shareholder Inquiries
Any questions or communications regarding a shareholder account should be
directed to the Fund or your investment executive or other broker-dealer.
General inquiries regarding the Fund should be directed to one of the telephone
numbers set forth on the cover page of this Prospectus.
<PAGE>
Redemptions
Shares of the Fund may be redeemed at any time at their net asset value
next determined after receipt of a redemption request by the Distributor. The
Trust reserves the right, upon 30 days' written notice, to redeem a
shareholder's investment in the Fund if the net asset value of the shares held
by such shareholder falls below $500 as a result of redemptions or transfers.
See "Redemption of Shares-Involuntary Redemption."
Expenses
The payments made by the Fund under the Rule 12b-1 Plan may result in
long-term shareholders paying more than the economic equivalent of the maximum
front end sales charge permitted by the National Association of Securities
Dealers, Inc.
The table below is provided to assist the investor in understanding the
various expenses that an investor in the Fund will bear, whether directly or
indirectly, through an investment in the Fund. For more complete descriptions of
the various costs and expenses, see "Management-Investment Adviser and
Administrator", "Management-Expenses" and "Distribution of Portfolio Shares."
Annual Operating Expenses
The table below provides information regarding expenses for the Fund
expressed as annual percentages of average net assets. "Other Expenses" is
estimated.
Management Fees
Investment Advisory Fees .75%
Administration Fees .25%
-----
Total Management Fees 1.00%
12b-1 Fees .50%
Other Expenses .25%
----
Total Fund Operating Expenses 1.75%
====
Example: You would pay these expenses on a $1,000 investment assuming (1)
5% annual return and (2) redemption at the end of each time period.
1 year 3 years 5 years 10 years
$18 $55 $95 $207
The example should not be considered a representation of past or future
expenses or yield. Actual expenses and yield may be greater or lower than those
shown.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
Investment Objectives
The primary investment objective of the Fund is to seek long-term capital
appreciation with a secondary objective of providing current income. The Fund
invests in a diversified portfolio of common and preferred stocks, securities
convertible in common stocks, U.S. Government Securities, repurchase agreements,
mortgage backed securities, corporate debt securities and money market
instruments. At least 65% of the Fund's total assets will be invested in common
and preferred stocks and securities convertible into common stocks. In making
selections for the Fund, the Adviser will utilize an investment approach based
on fundamental analysis incorporating a value and growth philosophy.
Investment Policies and Techniques
The Adviser will maintain a portfolio of securities broadly diversified
among industries and companies so as to reduce its exposure to certain
investment and market risks. Stock selection criteria are value and
growth-oriented with an emphasis on price in relation to either earnings, cash
flow, or book value. Generally, the Advisers look for companies that are selling
at a discount relative to their peer group and/or relative to the market as a
whole. Dividend or interest income, although considered, is not the primary
factor in the selection of securities by the Fund.
The Fund will be growth oriented and invest its assets primarily in common
stock. If the market condition, in the Advisers' judgment, is unfavorable for
investments in common stock the Fund may choose temporarily to take defensive
positions by investing all or part of its assets in U.S. Government securities,
corporate debt securities or money market instruments. Corporate debt securities
purchased by the Fund will be of investment grade rated BBB-Baa or better by
Standard & Poor's ("S&P") or by Moody's Investors Service ("Moody's").
In the event that the rating of an investment grade security is lowered to
below investment grade, the Investment Adviser will assess the creditworthiness
of the issuer, evaluate the likelihood of the security's being upgraded to
investment grade or being further down-graded and may choose to hold or sell the
security as appropriate.
The Fund may also write listed covered call options on the securities in
its portfolio, purchase exchange listed put and call options, and enter into
closing purchase and sale transactions with respect thereto. See "Special
Investment Methods - Options Transactions."
Portfolio Turnover
While it is not the policy of the Fund to trade actively for short-term
(less than six months) profits, the Fund will dispose of securities without
regard to the time they have been held when such action appears advisable to the
Adviser, subject to, among other factors, the constraints imposed on regulated
investment companies by Subchapter M of the Internal Revenue Code. See
"Dividends and Taxes." In the case of the Fund, frequent changes will result in
increased brokerage and other costs. In
<PAGE>
conjunction with the objective of long-term capital appreciation, the turnover
in the Fund is not expected to exceed 50% annually.
The method of calculating portfolio turnover rate is set forth in the
Statement of Additional Information under "Investment Objectives, Policies and
Restrictions-Portfolio Turnover."
The investment objectives of the Fund described above are fundamental and
may not be changed without shareholder approval. The investment policies and
techniques employed in pursuit of the Fund's objectives described above are
considered non-fundamental and do not require shareholder approval to be
changed. In view of the risks inherent in all investments in securities, there
is no assurance that these objectives will be achieved.
SPECIAL INVESTMENT METHODS
The Fund may invest in U.S. Government Securities, mortgage-related
securities, repurchase agreements, convertible securities, options, and money
market instruments. Descriptions of such securities, and the inherent risks of
investing in such securities are set forth below.
U.S. Government Securities
The Fund may invest in U.S. Government Securities which are obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
Obligations issued by the U.S. Treasury include Treasury Bills, Notes and Bonds
which differ from each other mainly in their interest rates and the length of
their maturity at original issue. In this regard, Treasury Bills have a maturity
of one year or less, Treasury Notes have maturities of one to ten years and
Treasury Bonds generally have maturities greater than ten years. Such Treasury
Securities are backed by the full faith and credit of the U.S. Government.
Obligations of certain agencies and instrumentalities of the U.S.
Government, such as the Government National Mortgage Association, are supported
by the full faith and credit of the U.S. Treasury; others, such as those of the
Federal National Mortgage Association, are supported by the right of the issuer
to borrow from the Treasury; others, such as those of the Student Loan Marketing
Association and the Federal Home Loan Banks, are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; still
others, such as those of the Federal Farm Credit Banks or the Federal Home Loan
Mortgage Corporation, are supported only by the credit of the instrumentality.
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. The Fund will invest in the obligations of such
agencies or instrumentalities only when the Adviser believes that the credit
risk is minimal.
As with all fixed income securities, various market forces influence the
value of such securities. There is an inverse relationship between the market
value of such securities and yield. As interest rates
<PAGE>
rise, the value of the securities falls; conversely, as interest rates fall, the
market value of such securities rises.
Repurchase Agreements
The Fund may also enter into repurchase agreements on U.S. Government
Securities to invest cash awaiting investment and/or for temporary defensive
purposes. A repurchase agreement involves the purchase by the Fund of U.S.
Government Securities with the condition that after a stated period of time
(usually seven days or less) the original seller will buy back the same
securities ("collateral") at a predetermined price or yield. Repurchase
agreements involve certain risks not associated with direct investment in
securities. In the event the original seller defaults on its obligation to
repurchase, as a result of its bankruptcy or otherwise, the Fund will seek to
sell the collateral, which action could involve costs or delays. In such case,
the Fund's ability to dispose of the collateral to recover such investment may
be restricted or delayed. While collateral will at all times be maintained in an
amount equal to the repurchase price under the agreement (including accrued
interest due thereunder), to the extent proceeds from the sale of collateral
were less than the repurchase price, a Fund would suffer a loss.
Mortgage-Backed Securities
Mortgage loans made by banks, savings and loans institutions, and other
lenders are often assembled into pools which are issued and guaranteed by an
agency or instrumentality of the U.S. Government, though not necessarily backed
by the full faith and credit of the U.S. Government itself. Pools are also
created directly by banks, savings and loans and other mortgage lenders with
mortgage loans that have been made by these institutions. Interest in such loans
are described as "Mortgage-Backed Securities". These include securities issued
by the Government National Mortgage Association ("GNMA"), Federal Home Loan
Mortgage Corporation ("FHLMC"), and the Federal National Mortgage Association
("FNMA"). The Fund may invest in U.S. Government mortgage-related securities
representing undivided ownership interests in pools of mortgage loans, including
GNMA, FHLMC, FNMA Certificates and loans issued directly by banks, savings, and
loans and other mortgage lenders. All mortgage backed securities purchased by
the Fund will have investment grade BBB or Baa by S&P's or Moody's or be of
comparable grade and none will be "interest only" or "principal only".
Options Transactions
The Fund may write covered call options, with respect to the securities in
which they may invest. A put option is sometimes referred to as a "standby
commitment" and a call option is sometimes referred to as a "reverse standby
commitment". By writing a call option, the Fund becomes obligated during the
term of the option to deliver the securities underlying the option upon payment
of the exercise price if the option is exercised. By writing a put option, the
Fund becomes obligated during the term of the option to purchase the securities
underlying the option at the exercise price if the option is exercised.
The Fund may write only "covered" options. This means that so long as the
Fund is obligated as the writer of a call option, it will own the underlying
securities subject to option (or comparable securities satisfying the cover
requirements of securities exchanges). The Fund will be considered "covered"
with
<PAGE>
respect to a put option it writes if, so long as it is obligated as the writer
of a put option, it deposits and maintains with its custodian cash, U.S.
Government Securities or other liquid high-grade debt obligations having a value
equal to or greater than the exercise price of the option.
The principal reason for writing call or put options is to obtain, through
the receipt of premiums, a greater current return than would be realized on the
underlying securities alone. The Fund receives premiums from writing call or put
options, which it retains whether or not the options are exercised. By writing a
call option, the Fund might lose the potential for gain on the underlying
security while the option is open, and by writing a put option the Fund might
become obligated to purchase the underlying security for more than its current
price upon exercise.
The Fund may purchase put options, solely for hedging purposes, in order to
protect portfolio holdings in an underlying security against a substantial
decline in the market value of such holdings ("protective puts"). Such
protection is provided during the life of the put because the Fund may sell the
underlying security at the put exercise price, regardless of a decline in the
underlying security's market price. Any loss to the Fund is limited to the
premium paid for, and transaction costs paid in connection with, the put plus
the initial excess, if any, of the market price of the underlying security over
the exercise price. However, if the market price of such security increases, the
profit a portfolio realizes on the sale of the security will be reduced by the
premium paid for the put option less any amount for which the put is sold.
The Fund may only purchase and sell exchange-traded put and call options.
Exchange-traded options are third party contracts with standardized strike
prices and expiration dates and are purchased from a clearing corporation.
Exchange-traded options have a continuous liquid market while other options may
not. See "Special Investment Methods - Investment Restrictions."
Convertible Securities
The Fund may invest in convertible securities which are rated investment
grade BBB/Baa or better by S&P or by Moody's. In the event that the rating of an
investment grade security is lowered to below investment grade, the Investment
Adviser will assess the creditworthiness of the issuer, evaluate the likelihood
of the security's being upgraded to investment grade or being further
down-graded and may choose to hold or sell the security as appropriate.
Convertible Securities are equity type securities that may be exchanged or
converted into a predetermined number of the issuer's underlying common shares
at the option of the holder during a specified time period. Convertible
securities may take the form of convertible preferred stock, convertible bonds
or debentures, and stock purchase warrants, or a combination of the features of
these securities. The investment characteristics of convertible securities vary
widely, allowing convertible securities to be employed for different investment
objectives.
Convertible bonds and convertible preferred stocks are fixed income
securities entitling the holder to receive the fixed income of a bond or the
dividend preference of a preferred stock until the holder elects to exercise the
conversion privilege. Holders of convertible securities have a claim on the
assets of the issuer prior to the common stockholders but may be subordinated to
holders of similar non-convertible securities of the same issuer. The interest
income and dividends from convertible bonds and preferred
<PAGE>
stocks provide a stream of income with generally higher yields than common
stocks, but lower than non-convertible securities of similar quality.
The value of convertible securities is influenced by both the yield of
non-convertible securities of comparable issuers and by the value of the
underlying common stock. The value of a convertible security viewed without
regard to its conversion feature (i.e., strictly on the basis of its yield) is
sometimes referred to as its "investment value." The investment value of the
convertible security will typically fluctuate inversely with changes in
prevailing interest rates. However, at the same time, the convertible security
will be influenced by its "conversion value," which is the market value of the
underlying common stock that would be obtained if the convertible security were
converted. Conversion value fluctuates directly with the price of the underlying
common stock.
If, because of a low price of the common stock, the conversion value is
substantially below the investment value of the convertible security, the price
of the convertible security is governed principally by its investment value. If
the conversion value of a convertible security increases to a point that
approximates or exceeds its investment value, the value of the security will be
principally influenced by its conversion value. A convertible security will sell
at a premium over its conversion value to the extent investors place value on
the right to acquire the underlying common stock while holding a fixed income
security.
Money Market Instruments
The Fund may invest in money market instruments which include:
(i) U.S. Treasury Bills;
(ii) U.S. Treasury Notes with maturities of 18 months or less;
(iii) U.S. Government Securities subject to repurchase agreements;
(iv) Obligations of domestic branches of U.S. banks (including
certificates of deposit and banker's acceptances with
maturities of 18 months or less) which at the date of
investment have capital, surplus, and undivided profits (as of
the date of their most recently published financial
statements) in excess of $10,000,000 and obligations of other
banks or savings and loan associations if such obligations are
insured by the Federal Deposit Insurance Corporation ("FDIC");
(v) Commercial paper which at the date of investment is rated A-1
by S&P or P-1 by Moody's or, if not rated, is issued or
guaranteed as to payment of principal and interest by
companies which at the date of investment have an outstanding
debt issue rated AA or better by S&P or Aa or better by
Moody's;
<PAGE>
(vi) Short-term (maturing in one year or less) corporate
obligations which at the date of investment are rated AA or
better by S&P or Aa or better by Moody's;
(vii) Shares of no-load money market mutual funds (subject to the
ownershiprestrictions of the Investment Company Act of 1940).
See "Investment Policies and Restrictions" in the Statement
of Additional Information.
Investment by the Fund in shares of a money market mutual fund indirectly
results in the investor paying not only the advisory fee and related fees
charged by the Fund, but also the advisory fees and related fees charged by the
adviser and other entities providing services to the money market mutual fund.
Borrowing
The Fund may borrow money from banks for temporary or emergency purposes in
an amount of up to 10% of the value of the Fund's total assets. Interest paid by
the Fund on borrowed funds would decrease the net earnings of the Fund. The Fund
will not purchase portfolio securities while outstanding borrowings exceed 5% of
the value of the Fund's total assets. The Fund may mortgage, pledge, or
hypothecate its assets in an amount not exceeding 10% of the value of its total
assets to secure temporary or emergency borrowing. The polices set forth in this
paragraph are fundamental and may not be changed with respect to a Fund without
the approval of a majority of the Fund's shares.
Temporary Defensive Positions
The Fund may deviate from its fundamental and non-fundamental investment
policies during periods of adverse or abnormal market, economic, political and
other circumstances requiring immediate action to protect assets. In such cases,
the Fund may invest up to 100% of its assets in U.S. Government Securities
investment grade corporate debt securities, rated BBB, Baa or better by S&P or
by Moody's and any Money Market Instrument described above.
Investment Restrictions
The Fund has adopted certain investment restrictions, which are set forth
in detail in the Statement of Additional Information. These restrictions, which
are fundamental and may not be changed without shareholder approval, include the
following: (1) the Fund may not purchase any securities which would, at the time
of purchase, cause 25% or more of the value of its total assets to be invested
in any one industry (this restriction does not apply to securities of the U.S.
Government or its agencies and instrumentalities and repurchase agreements
relating thereto; (2) the Fund may not purchase a security of any one issuer, if
at the time of purchase, such investment would result in the Fund holding more
than 5% of the value of its total assets in such security or hold more than 10%
of the outstanding voting securities of such issuer, except that up to 25% of
the value of the Fund's total assets may be invested without regard to such
limitations. Additional investment restrictions are set forth in the Statement
of Additional Information.
<PAGE>
If a percentage restriction set forth under "Investment Objective and
Policies" is adhered to at the time of an investment, a later increase or
decrease in percentage resulting from changes in values or assets will not
constitute a violation of such restrictions. The foregoing investment
restrictions, as well as all investment objectives and policies designed by the
Fund as fundamental policies in the Statement of Additional Information, may not
be changed without the approval of a "majority" of the Fund's shares
outstanding, defined as the lesser of: (a) 67% of the votes cast at a meeting of
shareholders for the Fund at which more than 50% of the shares are represented
in person or by proxy, or (b) a majority of the outstanding voting shares of the
Fund. The Adviser may also agree to certain additional non-fundamental
investment policies from time to time in order to qualify the shares of the Fund
in various states.
MANAGEMENT
Board of Directors
As in all corporations, the Trust's Board of Directors has the primary
responsibility for over seeing the business of the Trust. The Board of Directors
meets periodically to review the activities of the Fund and the Adviser and to
consider policy matters relating to the Fund and the Trust.
Investment Adviser and Administrator
CONLEY-SMITH, Inc. ("CSI") has been retained under an Investment Advisory
Agreement with the Trust to act as the Fund's Adviser subject to the authority
of the Board of Directors. CONLEY-SMITH, Inc. was incorporated in October, 1987,
under the name SMITH HAYES Portfolio Management, Inc. and changed its name in
April of 1995. CSI has advised and managed the Trust since it inception. CSI is
a wholly owned subsidiary of Consolidated Investment Corporation, which is
engaged through its subsidiaries in various aspects of the financial services
industry. Thomas C. Smith is a controlling person of Consolidated Investment
Corporation and Mr. Smith is an officer and director of the Trust. John H
Conley, the Fund's Portfolio Manager, owns 5% of the voting stock of
Consolidated Investment Corporation. The address of the Adviser is 200 Centre
Terrace, 1225 L Street, Lincoln, Nebraska 68508.
The Adviser furnishes the Fund with investment advice and, in general,
supervises the management and investment programs of the Trust. The Adviser
furnishes at its own expense all necessary administrative services, office
space, equipment, and clerical personnel for servicing the investments of the
Fund, and investment advisory facilities and executive and supervisory personnel
for managing the investment and effecting the securities transactions of the
Fund. In addition, the Adviser pays the salaries and fees of all officers and
directors of the Trust who are affiliated persons of the Adviser and pays the
advisory fee to Conley. Under the Investment Advisory Agreement, the Adviser
receives a monthly fee computed separately for the Fund at an annual rate of
.75% of the daily average net asset value of the Fund.
<PAGE>
John H. Conley, President of the Adviser, and will have the day-to-day
responsibility of managing the Fund investments. Mr. Conley is a Chartered
Financial Analyst with a finance and business degree from Nebraska Wesleyan
University. Mr. Conley has been an investment analyst since 1974 and Mr. Conley
was the President and owner of Conley Investment Counsel, Inc. an investment
advisory firm which transferred all of investment advisery business to CSI on or
about April 7, 1995. At the time of the transfer of the investment advisery
business to CSI, Mr. Conley managed over $40 million in assets.
Lancaster Administrative Services, Inc. ("LAS") has been retained as the
Trust's Administrator under a Transfer Agent and Administrative Services
Agreement with the Trust. LAS is a wholly owned subsidiary of Consolidated
Investment Corporation. The Administrator provides, or contracts with others to
provide, the Trust with all necessary recordkeeping services and share transfer
services. The Administrator receives an administration fee, computed and paid
monthly at an annual rate of 0.25% of the Fund's daily average net assets.
Expenses
The expenses paid by the Fund are deducted from total income before
dividends are paid. These expenses include, but are not limited to, the fees
paid to the Adviser and the Administrator, taxes, interest, ordinary and
extraordinary legal and auditing fees, distribution expenses pursuant to the
Rule 12b-1 Plan, custodial charges, registration and blue sky fees incurred in
registering and qualifying the Fund under state and federal securities laws,
association fees paid to directors who are not affiliated with the Adviser and
any other fees not expressly assumed by the Adviser or Administrator. Any
general expenses of the Trust that are not readily identifiable as belonging to
a particular Fund will be allocated among the Funds on a pro rata basis at the
time such expenses are accrued. The Fund pays its own brokerage commissions and
related transaction costs.
Portfolio Brokerage
The primary consideration in effecting transactions for the Fund is
execution at the most favorable prices. The Adviser has complete freedom as to
the markets in which, and the broker-dealers through or with which (acting on an
agency basis or as principal), it seeks this result. The Adviser may consider a
number of factors in determining which broker-dealers to use for the Fund's
transactions. These factors, which are more fully discussed in the Statement of
Additional Information, include, but are not limited to, research services, the
reasonableness of commissions and quality of services and execution. Fund
transactions may be effected through SMITH HAYES, which also acts as the
Distributor of the Trust's shares (see "Distribution of Fund Shares" below) if
the commissions, fees or other remuneration received by SMITH HAYES are
reasonable and fair compared to the commissions, fees or other remuneration paid
to other brokers in connection with comparable transactions involving similar
securities being purchased or sold on an exchange during a comparable period of
time. SMITH HAYES has represented that, in executing Fund transactions for the
Trust, it intends to charge commissions which are substantially less than
non-discounted retail commissions. In effecting portfolio transactions through
SMITH HAYES, the Fund intends to comply with Section 17(e)(1) of the Investment
Company Act of 1940 (the "1940 Act"), as amended.
<PAGE>
DISTRIBUTION OF PORTFOLIO SHARES
SMITH HAYES acts as the principal distributor of the Trust's shares. The
Trust has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act
(the "Plan"), pursuant to which SMITH HAYES is entitled to reimbursement each
month (subject to the limitation discussed below) for its actual expenses
incurred in the distribution and promotion of the Trust's shares. These expenses
include, but are not limited to, compensation paid to investment executives of
SMITH HAYES and to broker-dealers which have entered into sales agreements with
SMITH HAYES, expenses incurred in the printing of reports used for sales
purposes, preparation and printing of sales literature, advertising, promotion,
marketing and sales expenses, payments to banks for shareholder services and
accounting services and other distribution-related expenses. Reimbursement to
SMITH HAYES for the Fund may not exceed 0.50% per annum of the average daily net
assets of the Fund. Compensation will be paid out of such amounts to SMITH HAYES
investment executives, to broker-dealers which have entered into sales
agreements with SMITH HAYES and to banks which provide services to the Trust for
the Fund. The Glass-Steagall Act and other applicable laws prohibit banks from
engaging in the business of underwriting, selling, or distributing securities.
Insofar as banks are compensated, their only function will be to perform
administrative and shareholder services for their clients who wish to invest in
the Fund. If a bank at a future date is prohibited from acting in this capacity,
the shareholder may lose the services provided by the bank; however, it is not
expected that the shareholders would incur any adverse financial consequences.
It is intended that none of the services provided by such banks other than
through registered brokers will involve the solicitation or sale of shares of
the Fund. In the event distribution expenses for the Fund in any one year exceed
the maximum reimbursable under the Plan, such expenses may not be carried
forward to the following year. In its sole discretion, SMITH HAYES can waive all
or part of payments under the Plan. Any such waiver can be discontinued at any
time. Further information regarding the Plan is contained in the Statement of
Additional Information.
PURCHASE OF SHARES
The Fund's shares may be purchased at the net asset value per share from
SMITH HAYES and from certain other broker-dealers who have sales agreements with
SMITH HAYES. The address of SMITH HAYES is that of the Trust. Shareholders will
receive written confirmation of their purchases. Stock Certificates will not be
issued. SMITH HAYES reserves the right to reject any purchase order. Shares of
the Fund are offered to the public without a sales charge at the net asset value
per share next determined following receipt of an order by SMITH HAYES.
Investors may purchase shares by completing the Purchase Application
included in this Prospectus and submitting it with a check payable to:
SMITH HAYES Trust, Inc.
200 Centre Terrace
1225 L Street
Lincoln, Nebraska 68508
<PAGE>
For subsequent purchases, the name of the account and account number should
be included with any purchase order to properly identify your account.
Payment for shares may also be made by bank wire. To do so the investor
must direct his or her bank to wire immediately available funds directly to the
Custodian as indicated below.
1. Telephone the Trust (402) 476-3000 and furnish the name, the account
number and the telephone number of the investor, as well as the amount
being wired and the name of the wiring bank. If a new account is being
opened, additional account information will be requested and an account
number will be provided.
2. Instruct the bank to wire the specific amount of immediately available
funds to the Custodian. The Trust will not be responsible for the
consequences of delays in the bank or Federal Reserve wire system. The
investor's bank must furnish the full name of the investor's account
and the account number. The wire should be addressed as follows:
UNION BANK AND TRUST COMPANY
Lincoln, Nebraska
Trust Department, ABA# 104910795
Lincoln, Nebraska 68506
Account of SMITH HAYES Trust, Inc.
FBO (Account Registration name)
3. Complete a Purchase Application and mail it to the Trust if shares
being purchased by bank wire transfer represent an initial purchase.
(The completed Purchase Application must be received by the Trust
before subsequent instructions to redeem Trust shares will be
accepted.) Banks may impose a charge for the wire transfer of funds.
Acquiring Shares in Exchange for Securities
Shares may also be purchased by transferring to the Fund marketable
securities for which market quotations are readily available and which are
acceptable to the Fund. The minimum value of securities or securities and cash
accepted is $5,000. Investors contemplating an exchange of securities for shares
should contact the Fund before delivering a purchase application or any
securities in certificate form to determine specific procedures and to determine
whether the securities are acceptable to the Fund. Exchanging securities for
Fund shares may result in a tax consequence to the investor and investors are
encouraged to consult with their tax advisor regarding the Federal, State and or
local tax consequences of such transactions.
<PAGE>
Minimum Investment
A minimum initial aggregate investment of $1,000 is required. Subsequent
investments can be made in any amount.
All investments must be made through your SMITH HAYES investment executive or
other broker-dealer.
REDEMPTION OF SHARES
Redemption Procedure
Shares of the Fund, in any amount, may be redeemed at any time at their
current net asset value next determined after a request in good order is
received by SMITH HAYES plus any accrued but unpaid dividends thereon. To redeem
shares of the Fund, an investor must make a redemption request through a SMITH
HAYES investment executive or other broker-dealer. If the redemption request is
made to a broker-dealer other than SMITH HAYES, such broker-dealer will wire a
redemption request to SMITH HAYES immediately following the receipt of such a
request. A redemption request will be considered to be in "good order" if made
in writing and accompanied by the following:
1. a letter of instruction or stock assignment specifying the number or
dollar value of shares to be redeemed, signed by all owners of the
shares in the exact names in which they appear on the account, or by an
authorized officer of a corporate shareholder indicating the capacity
in which such officer is signing;
2. a guarantee of the signature of each owner by an eligible institution
which is a participant in the Securities Transfer Agent Medallion
Program which includes many U.S. commercial banks and members of
recognized securities exchanges; and
3. other supporting legal documents, if required by applicable law, in
the case of estates, trusts, guardianships, custodianships, corporations
and pension and profit-sharing plans.
Payment of Redemption Proceeds
Normally, the Fund will make payment for all shares redeemed within five
business days, but in no event will payment be made more than seven days after
receipt by SMITH HAYES of a redemption request in good order. However, payment
may be postponed or the right of redemption suspended for more than seven days
under unusual circumstances, such as when trading is not taking place on the New
York Stock Exchange. Payment of redemption proceeds may also be delayed until
the check used to purchase the shares to be redeemed has cleared the banking
system, which may take up to 15 days from the purchase date.
<PAGE>
A shareholder may request that the Trust transmit redemption proceeds by
bank wire to a bank account designated on the shareholder's account application
form provided such bank wire redemptions are in amounts of $5,000 or more and
all requisite account information is provided to the Trust.
Involuntary Redemption
The Fund reserves the right to redeem a shareholder's account at any time
the net asset value of the account falls below $500 as the result of a
redemption or transfer request. Shareholders will be notified in writing that
the value of their account is less than $500 and will be allowed 30 days to make
additional investments before the redemption is processed.
VALUATION OF SHARES
The Fund determines its net asset value on each day the New York Stock
Exchange (the "Exchange") is open for business, provided that the net asset
value need not be determined when no portfolio shares are tendered for
redemption and no order for Fund shares is received. The calculation is made as
of the close of the Exchange (currently 3:00 p.m. Lincoln, Nebraska time) after
the Fund has declared any applicable dividends.
The net asset value per share for the Fund is determined by dividing the
value of the securities owned by the Fund plus any cash and other assets
(including interest accrued and dividends declared but not collected) less all
liabilities by the number of Fund shares outstanding. For the purposes of
determining the aggregate net assets of the Fund, cash and receivables will be
valued at their face amounts. Interest will be recorded as accrued and dividends
will be recorded on the ex-dividend date. Securities traded on a national
securities exchange or on the NASDAQ National Market System are valued at the
last reported sale price that day. Securities traded on a national securities
exchange or on the NASDAQ National Market System for which there were no sales
on that day and securities traded on other over-the-counter markets for which
market quotations are readily available are valued at the mean between the bid
and asked prices. If the Fund should have an open short position as to a
security, the valuation of the contract will be at the average of the bid and
asked prices. Portfolio securities underlying actively traded options will be
valued at their market price as determined above. The current market value of
any exchange-traded option held or written by the Fund is its last sales price
on the exchange prior to the time when assets are valued unless the bid price is
higher or the asked price is lower, in which event such bid or asked price is
used. Lacking any sales that day, the options will be valued at the mean between
the current closing bid and asked prices. Securities and other assets for which
market prices are not readily available, are valued at fair value as determined
in good faith by the Board of Directors. With the approval of the Board of
Directors, the Fund may utilize a pricing service, bank, or broker-dealer
experienced in such matters to perform any of the above-described functions.
<PAGE>
DIVIDENDS AND TAXES
Dividends
All net investment income dividends and net realized capital gains with
respect to the shares of the Fund will be payable in additional shares of the
Fund unless the shareholder notifies his or her SMITH HAYES investment executive
or other broker-dealer of an election to receive cash. The taxable status of the
income dividends and/or net capital gains distributions is not affected by
whether they are reinvested or paid in cash.
The Fund will pay dividends from net investment income to its shareholders
at least annually or as may be required to remain a regulated investment company
under the Internal Revenue Code and distribute net realized capital gains, if
any, to its shareholders on an annual basis.
Taxes
The Fund will be treated as a separate entity for federal income tax
purposes. The Trust intends to qualify the Fund as a "regulated investment
company" as defined in the Internal Revenue Code (the "Code"). Provided certain
distribution requirements are met, the Fund will not be subject to federal
income tax on its net investment income and net capital gains that it
distributes to its shareholders.
Shareholders subject to federal income taxation will receive taxable
dividend income or capital gains, as the case may be, from distributions,
whether paid in cash or reinvested in the form of additional shares. Promptly
after the end of each calendar year, each shareholder will receive a statement
of the federal income tax status of all dividends and distributions paid during
the year.
The Trust is subject to the backup withholding provisions of the Code and
is required to withhold income tax from dividends and/or redemptions paid to a
shareholder, if such shareholder fails to furnish the Trust with a taxpayer
identification number or under certain other circumstances. Accordingly,
shareholders are urged to complete and return Form W-9 when requested to do so
by the Trust.
This discussion is only a summary and relates solely to federal tax
matters. Dividends may also be subject to state and local taxation. Shareholders
are urged to consult with their personal tax advisors. See "Dividends and Taxes"
in the Statement of Additional Information.
GENERAL INFORMATION
Capital Stock
The Trust is authorized to issue a total of one billion shares of common
stock, with a par value of $.001 per share. Of these shares, the Board of
Directors has authorized the issuance of 50,000,000 shares in a series
designated Capital Builder Fund shares. The Board of Directors is empowered
under the Trust's Articles of Incorporation to issue other series of the Trust's
common stock without
<PAGE>
shareholder approval or to designate additional authorized but unissued shares
for issuance by one or more existing funds. The Trust presently has authorized
the issuance of shares in nine other series.
All shares, when issued, will be fully paid and nonassessable and will be
redeemable and freely transferable. All shares have equal voting rights. They
can be issued as full or fractional shares. A fractional share has pro rata the
same rights and privileges as a full share. The shares possess no preemptive or
conversion rights.
Voting Rights
Each share of the Fund has one vote (with proportionate voting for
fractional shares) irrespective of the relative net asset value of the Trust's
shares. On some issues, such as the election of directors, all shares of the
Trust, irrespective of series, vote together as one series. Cumulative voting is
not authorized. This means that the holders of more than 50% of the shares
voting for the election of directors can elect 100% of the directors if they
choose to do so, and, in such event, the holders of the remaining shares will be
unable to elect any directors.
On an issue affecting only the Fund, the shares of the Fund vote as a
separate series. Examples of such issues would be proposals to (i) change a
Fund's Investment Advisory Agreement, (ii) change a fundamental investment
restriction pertaining to only a Fund or (iii) change a Fund's Distribution
Plan. In voting on the Investment Advisory Agreement or proposals affecting only
one Fund, approval of such an agreement or proposal by the shareholders of one
Fund would make that agreement effective as to that Fund whether or not the
agreement or proposal had been approved by the Trust's other Funds.
Shareholders Meeting
The Trust does not intend to hold annual or periodically scheduled regular
meetings of shareholders unless it is required to do so. Minnesota corporation
law requires only that the Board of Directors convene shareholder meetings when
it deems appropriate. However, Minnesota law provides that if a regular meeting
of shareholders has not been held during the immediately preceding 15 months, a
shareholder or shareholders holding 3% or more of the voting shares of the Trust
may demand a regular meeting of shareholders by written notice given to the
chief executive officer or chief financial officer of the Trust. Within 30 days
after receipt of the demand, the Board of Directors shall cause a regular
meeting of shareholders to be called, which meeting shall be held no later than
90 days after receipt of the demand, all at the expense of the Trust. In
addition, the 1940 Act requires a shareholder vote for all amendments to
fundamental investment policies and restrictions, for all investment advisory
contracts and amendments thereto, and for all amendments to Rule 12b-1
distribution plans. Finally, the Trust's Articles of Incorporation provide that
shareholders also have the right to remove Directors upon two-thirds vote of the
outstanding shares and may call a meeting to remove a Director upon the
application of 10% or more of the outstanding shares. The Trust is obligated to
facilitate shareholder communications in this situation if certain conditions
are met.
<PAGE>
Allocation of Income and Expenses
The assets received by the Trust for the issue or sale of shares of the
Fund, and all income, earnings, profits, and proceeds thereof, subject only to
the rights of creditors, are allocated to the Fund, and constitute the
underlying assets of the Fund. The underlying assets of the portfolio are
required to be segregated on the books of account, and are to be charged with
the expenses of the Fund and with a share of the general expenses of the Trust.
Any general expenses of the Trust not readily identifiable as belonging to a
particular series are allocated among all series based upon the relative net
assets of each series at the time such expenses were accrued.
Transfer Agent, Dividend Disbursing Agent and Custodian
Union Bank and Trust Company, Lincoln Nebraska, serves as Custodian for the
Trust's portfolio securities and cash. The Administrator acts as Transfer Agent
and Dividend Disbursing Agent. In its capacity as Transfer Agent and Dividend
Disbursing Agent, the Administrator performs many of the clerical and
administrative functions for the Funds.
Total Return and Performance Comparisons
Advertisements and other sales literature for the Fund may refer to "total
return". Total return is the percentage change between the public offering price
of a Fund share at the beginning of a period and the net asset value of such
share at the end of the period, with dividends and capital gains distributions
treated as reinvested. In addition, comparative performance information may be
used from time to time in advertising the Fund's shares, including data from
Lipper Analytical Services, Inc. and the S&P 500 Index.
Report to Shareholders
The Trust will issue semi-annual reports which will include a list of
securities of the Fund owned by the Trust and financial statements, which in the
case of the annual report, will be examined and reported upon by the Trust's
independent auditor.
Legal Opinion
The legality of the shares offered hereby will be passed upon, and the opinion
with respect to all tax matters will be rendered by, Messrs. Cline, Williams,
Wright, Johnson & Oldfather, 1900 FirsTier Bank Building, Lincoln, Nebraska
68508.
Auditors
The Trust's auditors are Deloitte Touche LLP, Lincoln, Nebraska,
independent certified public accountants.
<PAGE>
SMITH HAYES TRUST, Inc. Date -------------------
500 Centre Terrace, 1225 L Street, Lincoln, NE 68508 ount # -------------------
In accordance with the terms and conditions set forth in this form, the current
prospectus, and my instructions below, I wish to establish or revise a
Shareholder Account as follows:
ACCOUNT REGISTRATION (Please Print)
NOTE: In the case of two or more co-owners, the account will be registered "
Joint Tenants with Right of Survivorship" and not as "Tenants-in-common" unless
otherwise specified.
O Individual
- --------------------------------------------------------------- O Jt. WROS
Name of Shareholder O Corporation
O Trust
- ----------------------------------------------------------- O Other
Name of Co-Owner (if any)
- --------------------------------------------------------------------------------
Street Address City State Zip Code
- ----------------------- Citizen of--------U.S.----- Other(specify)------------
Social Security or T.I.N. #
- ------------------------------------ -----------------------------------------
(Area Code) Home Telephone (Area Code) Business Telephone
DIVIDEND AND INVESTMENT OPTION (One box must be checked)
O Reinvest all dividends and capital gains distributions. O Reinvest capital
gain distributions only. O Receive all dividends and capital gain distributions
in cash.
SYSTEMATIC WITHDRAWAL PLAN
Mail a check for $----------------- prior to the last day of each -- O Month
O Quarter O Year First check to be mailed -----------------(specify month)
SHAREHOLDER AUTHORIZATION AND CERTIFICATION
I authorize any instructions contained herein and certify under penalties of
perjury:(Strike number 2 if not true) 1. that the social security or other
taxpayer identification number is correct; 2. that I am not subject to
withholding either because of a failure to report all interest or dividends
or I was subject to withholding and the Internal Revenue Service has
notified me that I am no longer subject to withholding.
O Exempt from backup withholding
O Non-exempt from backup withholding
X---------------------------- X---------------------------------------------
Signature of Shareholder/or Authorized Officer Signature of Co-Owner (if any)
FOR DEALER ONLY (We hereby authorize SMITH HAYES Trust, Inc. as our agent in
connection with transactions under this authorization form. We guarantee the
shareholder's signature.)
- ---------------------------- -----------------------------------------------
Dealer Name Signature of Registered Representative
- ---------------------------- -----------------------------------------------
Home Office Address Address of Office Serving Account
- ---------------------------- -----------------------------------------------
City State Zip Code City State Zip Code
- ---------------------------- ----------------------------------------------
Authorized Signature of Dealer Branch No. Reg. Rep. No. Reg. Rep. Last Name
<PAGE>
TABLE OF CONTENTS
Introduction..................................... 3
Annual Operating Expenses........................ 4
Investment Objective
and Policies..................................... 5
Special Investment Methods....................... 6
Management....................................... 11
Distribution of Portfolio Shares................. 13
Purchase of Shares............................... 13
Redemption of Shares............................. 15
Valuation of Shares.............................. 16
Dividends and Taxes.............................. 17
General Information.............................. 17
No dealer, sales representative or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus (and/or in the Statement of Additional Information referred to on the
cover page of this Prospectus), and, if given or made, such information or
representations must not be relied upon as having been authorized by the Fund or
SMITH HAYES Financial Services Corporation. This Prospectus does not constitute
an offer or solicitation by anyone in any state in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation.
<PAGE>
SMITH HAYES TRUST, INC.
CAPITAL BUILDER
FUND
PROSPECTUS
INVESTMENT ADVISER
CONLEY-SMITH, INC.
ADMINISTRATOR,
TRANSFER AGENT AND
DIVIDEND PAYING AGENT
Lancaster Administrative
Services, Inc.
DISTRIBUTOR
SMITH HAYES Financial
Services Corporation
CUSTODIAN
Union Bank and Trust Company
Lincoln, Nebraska
April 6, 1995
<PAGE>
May 4, 1995
John H. Conley, President
Conley Investment Counsel, Inc.
444 Regency Parkway
Suite 202
Omaha, NE 68114-3779
Dear Mr. Conley:
You have asked us for our opinion concerning certain federal income tax
consequences to the limited partners ("Limited Partners") of Conley Partners
Limited Partnership (the "Partnership") when the Limited Partners receive shares
("Shares") of beneficial interest, par value $.001 per share, of SMITH HAYES
Trust, Inc. - Capital Builder Fund (the "Fund") and perhaps cash in liquidation
of their limited partnership interests in the Partnership pursuant to a
termination of the Partnership as described in section 708(b)(1)(A) of the
Internal Revenue Code of 1986. No Limited Partner will receive an amount of cash
in excess of his adjusted basis in his limited partnership interest when such
interest is liquidated. The only assets of the Partnership immediately prior to
its termination will be Shares and cash.
We have reviewed such documents and certain representations from you as
President of the General Partner of the Partnership, as we have considered
necessary for the purpose of rendering this opinion. In rendering this opinion,
we have assumed that such documents when executed will conform to the proposed
forms of such documents that we have examined. In addition, we have assumed the
genuineness of all signatures, the capacity of each party executing a document
so to execute such document, the authenticity of all documents submitted to us
as originals and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. We have made inquiry as to the
underlying facts which we considered to be relevant to the conclusions set forth
in this letter. The opinions expressed in this letter are based upon certain
factual statements and representations of the Partnership and the Fund set forth
in the Registration Statements on Form N-1A and N-14 filed by the Fund and
representations to us by you. We have no reason to believe that these
representations and facts are not valid, but we have not attempted to verify
independently any of these representations and facts, and this opinion is based
upon the assumption that each of them is accurate.
<PAGE>
Conley Investment Counsel, Inc.
May 4, 1995
Page 2
The conclusions expressed herein are based upon the Internal Revenue Code
of 1986, Treasury Regulations, published and private letter rulings and
procedures of the Internal Revenue Service and judicial decisions, all as in
effect on the date of this letter.
Based upon the foregoing, it is our opinion that:
(A) The transfer by the Partnership of its assets, subject to any
liabilities, to the Fund in exchange for all of the Shares of the Fund will not
be a taxable event for the Partnership.
(B) Upon the termination of the Partnership, the Partnership's taxable
year will close; and each Limited Partner will include in income the Limited
Partner's allocable share of the Partnership's gain or loss for the taxable
year. The Limited Partner's federal income tax adjusted basis in the partnership
interest will be increased by the amount of any allocable gain and will be
reduced (but not below zero) by the amount of any allocable loss and any cash
distributions made to such Limited Partner.
(C) A Limited Partner will not recognize, for federal income tax purposes,
taxable gain or loss upon receipt of Shares and cash in liquidation of the
partnership interest in the Partnership and if the amount of cash received is
less than the adjusted basis in the partnership interest.
(D) A Limited Partner's federal income tax basis in the Shares will be
equal to the federal income tax adjusted basis in the former partnership
interest in the Partnership minus the amount of cash received pursuant to the
liquidation of the partnership interest.
(E) A Limited Partner's holding periods with respect to the Shares, for
federal income tax purposes, will include the holding periods with respect to
the interest in the Partnership.
(F) Because the State of Nebraska uses Federal Adjusted Gross Income as
its definition for Nebraska Adjusted Gross Income, no current income tax
consequences should result from the transfer of assets by the Partnership or
distribution of Fund shares to the Partners.
Except as provided herein, we express no opinion as to the federal, state
or local tax consequences to the Fund, the Partnership, any shareholder of the
Fund, or any partner of the Partnership regarding the above described
liquidations and termination or any other transactions.
Very truly yours,
CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
June __, 1995
Acquisition of the assets of
CONLEY PARTNERS LIMITED PARTNERSHIP
c/o Conley Investment Counsel, Inc.
Attention: John H. Conley, President
444 Regency Parkway
Omaha, NE 68114-3779
(402) 391-1840
By and in exchange for the shares of
SMITH HAYES TRUST, INC.--
CAPITAL BUILDER FUND
c/o Thomas C. Smith
500 Centre Terrace
1225 "L" Street
Lincoln, NE 68508
(402) 476-3000
This Statement of Additional Information (the "Statement") relates to the
proposed transfer of all or substantially all of the assets of Conley Partners
Limited Partnership (the "Partnership") to the Capital Builder Fund (the "Fund")
of SMITH HAYES Trust, Inc. (the "Trust") in exchange for shares of the Fund. The
Statement is not a prospectus and is meant to be read in conjunction with the
Prospectus/Information Statement dated the date hereof that this Statement
accompanies. A Statement of Additional Information relating to the Trust and the
Fund dated April 6, 1995, is attached as Appendix I to this Statement of
Additional Information.
<PAGE>
TABLE OF CONTENTS
Page
The Exchange...............................................................B-1
Financial Statements of the Partnership....................................B-2
Independent Auditors' Reports
Statements of Net Assets at December 31, 1994 and
at commencement of business January 1, 1995
Statements of Operations for the years ended December 31, 1994 and 1993.
Schedule of Investments in Securities at
December 31, 1995
Statements of Partnership Capital for years ended December 31, 1994 and
1993 which give effect to changes at commencement of business January 1,
1995 and 1994
Notes to Financial Statements
Pro Forma Financial Information............................................B-10
<PAGE>
THE EXCHANGE
The limited partners of the Partnership ("Limited Partners") are being
asked to approve an Agreement and Plan of Exchange (the "Plan"). Under the Plan,
substantially all of the assets of the Partnership will be acquired by the Trust
in exchange for shares of the Fund. The Trust, a open-end management investment
company organized as a Minnesota corporation, was formed in 1988 but has not yet
commenced offering shares of the Fund to the public.
For detailed information about the Plan and the proposed Exchange, Limited
Partners should refer to the Prospectus/Information Statement. For further
information about the Trust or the Fund, Limited Partners should refer to the
Trust's Prospectus dated April 6, 1995, that is attached to the
Prospectus/Information Statement as Exhibit "B" and the Trust's Statement of
Additional Information dated April 6, 1995, which is attached as Appendix I to
this Statement.
<PAGE>
KPMG PEAT MARWICK LLP
Two Central Park Plaza
Suite 1501
Omaha, NE 68102
233 South 13th Street, Suite 1600
Lincoln, NE 68508-2041
INDEPENDENT AUDITORS' REPORT
----------------------------
The Partners
Conley Partners Limited Partnership:
We have audited the accompanying statements of net assets of Conley Partners
Limited Partnership, including the schedule of investments in securities, as of
December 31, 1994 and at commencement of business January 1, 1995, the
statements of operations for the years ended December 31, 1994 and 1993 and the
statements of partnership capital for the years ended December 31, 1994 and 1993
which give effect to changes at commencement of business January 1, 1995 and
1994. These financial statements are the responsibility of the general partner.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1994 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets of Conley Partners Limited Partnership at
December 31, 1994 and as of the commencement of business January 1, 1995, the
results of its operations for the years ended December 31, 1994 and 1993 and the
changes in partnership capital for the years ended December 31, 1994 and 1993
which give effect to changes at commencement of business January 1, 1995 and
1994, in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
January 11, 1995
<PAGE>
CONLEY PARTNERS LIMITED PARTNERSHIP
Statements of Net Assets
December 31, 1994 and at commencement of
business January 1, 1995
Assets: Dec.31,1994 Jan.1,1995
----------- ----------
Investments in securities,
at market(identified cost -
December 31, 1994, $2,502,156) $2,643,821 2,643,821
Temporary cash investments 297,971 297,971
Accrued interest and dividends receivable 12,504 12,504
Organizational expenses, net - -
Other assets 83,440 83,440
Subscriptions receivable (note 2) - 8,935
--------- --------
Total assets 3,037,736 3,046,671
--------- ---------
Liabilities:
Fees payable to investment advisor 11,454 11,454
Due partners for withdrawals (note 2) - 221,780
----- -------
Total Liabilities 11,454 233,234
------ -------
Net assets at market value representing
partnership capital $3,026,282 2,813,437
========== =========
See accompanying notes to financial statements.
<PAGE>
CONLEY PARTNERS LIMITED PARTNERSHIP
Statements of Operations
Years ended December 31, 1994 and 1993
Investment income: 1994 1993
---- ----
Interest $29,628 28,414
Dividends 56,894 53,519
Net realized gains on securities
as classified for Federal income
tax purposes (note 3):
Long-term 119,865 94,956
Short-term 479 26,314
Other miscellaneous income 2,876 -
------- ------
Total realized income 209,742 203,203
------- -------
Expenses:
Advisory fee (note 5) 33,850 38,601
Direct (note 5) 16,925 16,934
Amortization 900 1,200
------ -----
Total expenses 51,675 56,735
------ ------
Net realized income 158,067 146,468
Change in unrealized appreciation in
market value of securities (243,470) 62,784
--------- ------
Increase (decrease) in net assets
at market value from operations $(85,403) 209,252
========== =======
See accompanying notes to financial statements.
<PAGE>
CONLEY PARTNERS LIMITED PARTNERSHIP
Statements of Partnership Capital
Years ended December 31, 1994 and 1993
which give effect to changes at commencement of
business January 1, 1995 and 1994
1994 and 1993 and
Jan.1,1995 Jan.1,1994
---------- ----------
Beginning partnership capital at
January 1, 1994 and 1993 $3,620,285 3,728,011
Increase (decrease) in net assets at
market value from operations (85,403) 209,252
Capital share transactions (note 2) (508,600) (237,965)
--------- ---------
Partnership capital at December 31, 1994 and
1993, including net unrealized appreciation 3,026,282 3,699,298
Subscriptions effective January 1, 1995 and
1994 (note 2) 8,935 24,667
Withdrawals effective January 1, 1995 and
1994 (note 2) (221,780) (103,680)
-------- --------
Partnership capital at January 1, 1995 and 1994 $2,813,437 3,620,285
========== =========
Represented by the partnership's:
Cost basis of net assets 2,671,774 3,235,152
Unrealized appreciation (note 4) 141,663 385,133
------- -------
$2,813,437 3,620,285
========== =========
See accompanying notes to financial statements.
<PAGE>
CONLEY PARTNERS LIMITED PARTNERSHIP
Schedule of Investments in Securities
December 31, 1994
Shares Market
or Units Cost value
- ------- ------ -------
Common stocks - 83.2%
3,472 Archer-Daniels Midlands $62,400 71,620
2 Berkshire Hathaway, Inc.* 16,800 40,800
5,000 Calgon Carbon Corp. 100,080 50,000
3,990 Chemical Banking 125,442 143,141
4,671 Coastal Corp. 139,435 120,278
1,500 ConAgra 42,528 46,875
2,000 Eastman Kodak Co. 91,645 95,500
3,000 Federal Home Loan Mortgage Corporation 159,244 151,500
7,800 Hanson PLC ADR 146,816 140,400
7,700 Integon Inc. 136,507 101,063
6,000 Kentucky Electric Steel* 73,250 52,500
2,000 MBIA Inc. 75,223 112,250
5,000 Masco Corp. 157,375 113,125
3,450 Merck & Co. Inc. 83,268 131,531
5,000 Newell Co. 89,193 105,000
3,000 Pacific Scientific 76,550 121,500
6,667 Pall Corp. 127,710 125,006
4,800 Rouse Co. 87,550 92,400
1,300 Schlumberger LTD 82,020 65,488
3,000 Sears 147,550 138,000
4,000 Thermo Electron* 110,005 179,500
3,750 Trinity Industries 68,563 118,125
4,000 Unocal Corp. 108,574 109,000
700 Wells Fargo 82,328 101,500
------ -------
Total common stocks 2,390,056 2,526,102
--------- ---------
Interest-bearing bonds - 3.9%:
100,000 NIFA CMO Zero Coupon 17,290 17,500
100,000 Ford Motor Credit, 8.25% due July 1996 94,810 100,219
------ -------
Total interest-bearing bonds 112,100 117,719
------- -------
Total investments in securities - 87.1% $2,502,156 2,643,821
==========
Temporary cash investments - 9.8 297,971
Accrued interest and
dividends receivable - .4 12,504
Other assets - 2.7 83,440
--- ------
Total net assets - 100.0% $3,037,736
====== =========
*Nonincome-producing investment.
See accompanying notes to financial statements.
<PAGE>
CONLEY PARTNERS LIMITED PARTNERSHIP
Notes to Financial Statements
December 31, 1994 and at commencement
of business January 1, 1995
(1) Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------
Conley Partners Limited Partnership (the Partnership) is an investment
Partnership open to qualified investors. The primary objective of the
Partnership is to produce long-term growth of partners' capital in a
portfolio consisting of primarily equity and debt instruments.
(a) Investments in Securities
Investments in securities are stated at market value determined using
the following valuation methods:
Securities traded on a national or regional securities exchange are
valued at the last sales price if the security is traded on the
valuation date.
Securities not listed on an exchange or securities in which there
were no reported transactions are valued at the mean between the
last current closing bid and ask prices.
(b) Security Transactions
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recognized on the ex-dividend
date and interest income, including amortization of premium and
discount is accrued quarterly. Gains and losses are calculated using
the first-in, first-out method.
(c) Income Taxes
No provision has been made in the accompanying statements for Federal
and state income taxes as any liability accruing from operations is
that of the partners and not that of the Partnership.
(d) Organizational Costs
Organizational costs of the Partnership are being amortized using a
straight-line method over a 60-month period.
<PAGE>
CONLEY PARTNERS LIMITED PARTNERSHIP
Notes to Financial Statements
(2) Partnership Capital Changes
---------------------------
The Partnership agreement provides partners the option of contributing or
withdrawing capital on the first day of each calendar quarter. At January
1, 1995 and 1994 changes effected in the Partnership capital were as
follows:
(a) Subscriptions in the form of commitments to contribute additional
capital of $8,935 at January 1, 1995 were addressed to the general
partner.
(b) Withdrawals totaling $221,780 at January 1, 1995 were charged against
the partner' capital accounts pursuant to partners' requests in the
form of commitments addressed to the general partner.
Capital contributions by partners for the year ended December 31, 1994
aggregated $257,361 (less withdrawals of $765,961).
Capital contributions by partners for the year ended December 31, 1993
aggregated $301,127 (less withdrawals of $539,092).
(3) Sales of Securities
-------------------
Proceeds on sales of securities aggregated $1,167,478 and $860,433 in 1994
and 1993, respectively, with the cost of these securities being $1,047,134
and $739,163, respectively.
(4) Unrealized Appreciation
-----------------------
At December 31, 1994 and 1993 and January 1, 1995 and 1994, unrealized
appreciation consisted of the following gross unrealized gains and gross
unrealized losses:
1994 and 1993 and
Jan.1,1995 Jan.1,1994
---------- ---------
Unrealized gains $354,294 606,443
Unrealized losses (212,631) 221,310)
--------- --------
Net unrealized appreciation $141,663 385,133
======== =======
(5) Related Parties
---------------
The Partnership has retained the services of an investment advisor to
provide investment advice and asset management to the Partnership. Under
terms of the advisory agreement, the Partnership pays a quarterly fee to
its investment advisor, Conley Investment Counsel, Inc., who also acts as
the general partner to the Partnership.
The fee is calculated quarterly as .25% of the average monthly ending on
the market value of the Partnership, as defined.
The Partnership bears its own direct expenses up to .5% of the annualized
average market value of the Partnership. Expenses in excess of this limit
are paid by the advisor.
At December 31, 1994 and January 1, 1995 the market value of the general
partner's capital account was $48,619.
<PAGE>
SMITH HAYES TRUST, INC. CAPITAL BUILDER FUND
(FORMERLY CONLEY PARTNERS LIMITED PARTNERSHIP AND SMITH HAYES TRUST, INC.
ASSET ALLOCATION, VALUE, AND BALANCED PORTFOLIOS)
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
The following pro forma statement of assets and liabilities is based upon the
assumption that Conley Partners Limited Partnership and the three identified
portfolios of the SMITH HAYES Trust, Inc. were all acquired through exchange of
Capital Builder Fund shares on December 31, 1994. The information includes pro
forma adjustments as explained in the notes to the pro forma statement of assets
and liabilities.
The pro forma financial statements should be read in conjunction with the notes
thereto and other financial information included in this filing.
<PAGE>
<TABLE>
<CAPTION>
SMITH HAYES TRUST, INC.
LIMITED
CAPITAL BUILDER FUND
PRO FORMA STATEMENT OF ASSETS AND
LIABILITIES
DECEMBER 31, 1994
(UNAUDITED)
HISTORICAL PRO FORMA SMITH HAYES TRUST, INC.
CONLEY CONLEY ------------------------------------------------------- PRO FORMA
PARTNERS PARTNERS ASSET PRO FORMA CAPITAL
LIMITED PRO FORMA LIMITED ALLOCATION BALANCED VALUE PRO FORMA COMBINED BUILDER
PARTNERSHIP ADJUSTMENTS PARTNERSHIP PORTFOLIO PORTFOLIO PORTFOLIO ADJUSTMENTS PORTFOLIOS FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities,
at market value $2,643,821 - 2,643,821 3,493,915 4,001,845 3,191,188 (10,686,948)(C) - 2,643,821
Cash equivalents 297,971 (212,845)(A) 85,126 264,509 1,001,346 86,032 10,672,448 (C)12,024,335 12,109,461
Accrued interest and
dividends receivable 12,504 - 12,504 33,401 54,760 4,080 - 92,241 104,745
Receivable for securities sold - - - - - 369,449 - 369,449 369,449
Receivable for portfolio shares
sold - - - 50 1,169 1,086 - 2,305 2,305
Other assets 83,440 - 83,440 - - - - - 83,440
Organizational expenses, net - 5,000 (B) 5,000 - - - - - 5,000
--------- --------- --------- --------- --------- -------- ---------- ---------- ---------
Total asset 3,037,736 (207,845) 2,829,891 3,791,875 5,059,120 3,651,835 (14,500) 12,488,330 15,318,221
--------- --------- --------- --------- --------- -------- ---------- ---------- ---------
LIABILITIES:
Accrued expenses, including
investment management and service
fees and distribution expense
reimbursement payable to
adviser/administrator
and distributor 11,454 - 11,454 7,935 9,912 7,443 - 25,290 36,744
Payable for portfolios shares
redeemed - - - 212,712 354,728 382,794 - 950,234 950,234
------ ------- ------ ------- ------- ------- --------- -------- --------
Total liabilities 11,454 - 11,454 220,647 364,640 390,237 - 975,524 986,978
------ ------- ------ ------- ------- ------- --------- -------- --------
Net assets applicable to
outstanding capital stock $3,026,282 (207,845) 2,818,437 3,571,228 4,694,480 3,261,598 (14,500) 11,512,806 14,331,243
========== ========= ========= ========= ========= ========= ========= ========== ==========
<FN>
See accompanying notes to financial statements.
Pro Forma adjustments:
(A) To reflect net partner withdrawals on January 1, 1995.
(B) To reflect organization costs pertaining to creation of Capital Builder
Fund.
(C) To reflect liquidation of investments prior to exchange less cost of
disposal.
</FN>
</TABLE>
<PAGE>
SMITH HAYES TRUST, INC. CAPITAL BUILDER FUND
(FORMERLY CONLEY PARTNERS LIMITED PARTNERSHIP AND SMITH HAYES TRUST, INC.
ASSET ALLOCATION, VALUE, AND BALANCED PORTFOLIOS)
PRO FORMA STATEMENTS OF OPERATIONS
The pro forma statements of operations reflect the assumed results for the year
ended June 30, 1994 (fiscal year of Capital Builder Fund) and the six months
ended December 31, 1994, as if the exchange had been consummated at the
beginning of the year or period. The pro forma statements of operations are not
necessarily indicative of the financial results that would have occurred had the
exchange been effective as of the beginning of the year or period, and should
not be viewed as indicative of operations in future periods.
The pro forma financial statements should be read in conjunction with the notes
thereto and other financial information included in this filing.
<PAGE>
<TABLE>
<CAPTION>
SMITH HAYES TRUST, INC.
CAPITAL BUILDER FUND
PRO FORMA STATEMENT OF
OPERATIONS
SIX MONTHS ENDED DECEMBER 31,
1994
(UNAUDITED) HISTORICAL PRO FORMA
CONLEY CONLEY PRO FORMA
PARTNERS PARTNERS PRO FORMA CAPITAL
LIMITED PRO FORMA LIMITED COMBINED BUILDER
PARTNERSHIP ADJUSTMENTS PARTNERSHIP PORTFOLIOS FUND
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $28,827 - 28,827 83,673 112,500
Interest 18,943 - 18,943 212,590 231,533
------- ------- ------ ------- --------
Total investment income 47,770 - 47,770 296,263 344,033
------- ------- ------ ------- --------
EXPENSES:
Investment advisery and
administration fees 15,602 - 15,602 80,814 96,416
Distribution expenses - 7,801 (A) 7,801 40,364 48,165
Custodial fees - - - 5,970 5,970
Other operating expenses 7,801 (3,901)(B) 3,900 17,049 20,949
Amortization expenses 300 200 (C) 500 - 500
------- ------- ------ ------- --------
Total expenses 23,703 4,100 27,803 144,197 172,000
------- ------- ------ ------- --------
Net investment income 24,067 (4,100) 19,967 152,066 172,033
------- ------- ------ ------- --------
REALIZED AND UNREALIZED GAIN
(LOSS)ON INVESTMENTS:
Net realized gain 171,853 - 171,853 491,541 663,394
------- ------- ------- ------- --------
Net unrealized depreciation
Beginning of period 328,106 - 328,106 784,908 1,113,014
End of period 141,663 - 141,663 342,479 484,142
------- ------- ------ ------- --------
Net unrealized
depreciation (186,443) - (186,443) (442,429) (628,872)
------- ------- ------ ------- --------
Net realized and
unrealized gain on investments (14,590) - (14,590) 49,112 34,522
------- ------- ------ ------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 9,477 (4,100) 5,377 201,178 206,555
======== ======= ====== ======= =======
<FN>
See accompanying notes to financial statements.
Pro Forma adjustments:
(A) To reflect distribution expense of .50% per annum of
average net assets.
(B) To reflect change in other expenses from .50% to .25%
per annum of average net assets.
(C) To reflect $500 of amortization on organization costs pertaining to creation
of Capital Builder Fund and eliminate $300 of amortization on
organization costs pertaining to creation of Conley Partners Limited
Partnership.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITH HAYES TRUST, INC.
ASSET ALLOCATION, BALANCED, AND VALUE PORTFOLIOS
COMBINED PRO FORMA STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1994
(UNAUDITED)
HISTORICAL
----------------------------------------
PRO
ASSET FORMA
ALLOCATION BALANCED VALUE COMBINED PRO FORMA COMBINED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIOS ADJUSTMENT PORTFOLIOS
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $26,996 24,395 32,282 83,673 - 83,673
Interest 90,616 119,252 2,722 212,590 - 212,590
------- ------- ------ ------- ------- -------
Total investment income 117,612 143,647 35,004 296,263 - 296,263
------- ------- ------ ------- ------- -------
EXPENSES:
Investment advisery and administration fees 29,193 37,072 29,702 95,967 (15,153) (A) 80,814
Distribution expenses 12,273 15,593 12,498 40,364 - 40,364
Custodial fees 2,328 1,486 2,156 5,970 - 5,970
Other operating expenses 5,676 5,221 6,152 17,049 - 17,049
------- ------- ------ ------- ------- -------
Total expenses 49,470 59,372 50,508 159,350 (15,153) 144,197
------- ------- ------ ------- ------- -------
Net investment income (loss) 68,142 84,275 (15,504) 136,913 15,153 152,066
------- ------- ------ ------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain 148,063 199,051 144,427 491,541 - 491,541
------- ------- ------ ------- ------- -------
Net unrealized depreciation
Beginning of period 117,050 252,523 415,335 784,908 - 784,908
End of period (49,173) 171,702 219,950 342,479 - 342,479
------- ------- ------ ------- ------- -------
Net unrealized depreciation (166,223) (80,821) (195,385) (442,429) - (442,429)
------- ------- ------ ------- ------- -------
Net realized and unrealized
gain (loss) on investments (18,160) 118,230 (50,958) 49,112 - 49,112
------- ------- ------ ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS $49,982 202,505 (66,462) 186,025 15,153 201,178
RESULTING FROM OPERATIONS ======= ======= ======== ======= ======= =======
<FN>
See accompanying notes to financial statements.
Pro Forma adjustment:
(A) To reflect change in investment advisor fee from 1.1875% to 1.00% per annum
of average net assets, which is a reduction of $4,609 for the Asset Allocation
Portfolio, a reduction of $5,854 for the Balanced Portfolio and a reduction
of $4,690 for the Value Portfolio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITH HAYES TRUST, INC.
CAPITAL BUILDER FUND
PRO FORMA STATEMENT OF
OPERATIONS
YEAR ENDED JUNE 30, 1994
(UNAUDITED)
HISTORICAL PRO FROMA
CONLEY CONLEY PRO FORMA
PARTNERS PARTNERS PRO FORMA CAPITAL
LIMITED PRO FORMA LIMITED COMBINED BUILDER
PARTNERSHIP ADJUSTMENTS PARTNERSHIP PORTFOLIOS FUND
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $57,552 - 57,552 287,987 345,539
Interest 29,553 - 29,553 214,221 243,774
------- ------- ------ ------- -------
Total investment income 87,105 - 87,105 502,208 589,313
------- ------- ------ ------- -------
EXPENSES:
Investment advisery and
administration fees 38,236 - 38,236 192,884 231,120
Distribution expenses - 19,118 (A) 19,118 96,229 115,347
Custodial fees - - - 11,416 11,416
Other operating expenses 16,751 (8,376) (B) 8,375 38,332 46,707
Amortization expenses 1,200 (200) (C) 1,000 - 1,000
------- ------- ------ ------- -------
Total expenses 56,187 10,542 66,729 338,861 405,590
------- ------- ------ ------- -------
Net investment income 30,918 (10,542) 20,376 163,347 183,723
------- ------- ------ ------- -------
REALIZED AND UNREALIZED GAIN
(LOSS)ON INVESTMENTS:
Net realized gain 32,907 - 32,907 1,896,675 1,929,582
------- ------- ------ ------- -------
Net unrealized depreciation
Beginning of period 403,432 - 403,432 3,246,165 3,649,597
End of period 328,106 - 328,106 784,908 1,113,014
-------- ------- ------- --------- ---------
Net unrealized
depreciation (75,326) - (75,326)(2,461,257)(2,536,583)
-------- ------- ------- --------- ---------
Net realized and
unrealized loss
on investments (42,419) - (42,419) (564,582) (607,001)
-------- ------- ------- --------- ---------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (11,501) (10,542) (22,043) (401,235) (423,278)
========== ========= ======== ======== =========
<FN>
See accompanying notes to financial statements.
Pro Forma adjustments:
(A) To reflect distribution expense of .50% per annum of
average net assets.
(B) To reflect change in other expenses from .50% to .25%
per annum of average net assets.
(C) To reflect $1,000 of amortization on organization costs pertaining to
creation of Capital Builder Fund and eliminate $1,200 of amortization on
organization costs pertaining to creation of Conley Partners Limited
Partnership.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITH HAYES TRUST, INC.
ASSET ALLOCATION, BALANCED, AND VALUE PORTFOLIOS
COMBINED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1994
(UNAUDITED)
HISTORICAL
--------------------------------------------
ASSET PRO FORMA
ALLOCATION BALANCED VALUE COMBINED PRO FORMA COMBINED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIOS ADJUSTMENTS PORTFOLIOS
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $128,606 72,688 86,693 287,987 - 287,987
Interest 29,756 179,950 4,515 214,221 - 214,221
-------- ------- ------ ------- -------- --------
Total investment income 158,362 252,638 91,208 502,208 - 502,208
-------- ------- ------ ------- -------- --------
EXPENSES:
Investment advisery and administration fees 72,484 84,464 72,102 229,050 (36,166)(A) 192,884
Distribution expenses 30,422 35,488 30,319 96,229 - 96,229
Custodial fees 3,667 3,312 4,437 11,416 - 11,416
Other operating expenses 12,758 12,376 13,198 38,332 - 38,332
-------- ------- ------ ------- -------- -------- -
Total expenses 119,331 135,640 120,056 375,027 (36,166) 338,861
-------- ------- ------- ------- -------- --------
Net investment income (loss) 39,031 116,998 (28,848) 127,181 36,166 163,347
-------- ------- ------- ------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain 1,051,128 502,539 343,008 1,896,675 - 1,896,675
--------- ------- ------- --------- -------- ---------
Net unrealized depreciation
Beginning of period 1,225,866 1,013,495 1,006,804 3,246,165 - 3,246,165
End of period 117,050 252,523 415,335 784,908 - 784,908
--------- ------- ------- --------- -------- ---------
Net unrealized depreciation (1,108,816) (760,972) (591,469)(2,461,257) - (2,461,257)
--------- ------- ------- --------- -------- ---------
Net realized and unrealized
loss on investments (57,688) (258,433) (248,461) (564,582) - (564,582)
--------- ------- ------- --------- -------- ---------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(18,657) (141,435) (277,309) (437,401) 36,166 (401,235)
========= ========= ========= ======= ====== ========
<FN>
See accompanying notes to financial statements.
Pro Forma adjustment:
(A) To reflect change in investment advisor fee from 1.1875% to 1.00% per annum
of average net assets, which is a reduction of $11,445 for the Asset
Allocation Portfolio, a reduction of $13,336 for the Balanced
Portfolio and a reduction of $11,385 for the Value Portfolio.
</FN>
</TABLE>
<PAGE>
SMITH HAYES TRUST, INC. CAPITAL BUILDER FUND
(FORMERLY CONLEY PARTNERS LIMITED PARTNERSHIP)
PRO FORMA STATEMENT OF OPERATIONS
The pro forma statement of operations which follows reflects the assumed results
for the year ended December 31, 1994 (calendar year used by the Conley Partners
Limited Partnership) of the Conley Partners Limited Partnership as if it had the
expense structure and charges that will be used by the Capital Builder Fund.
The pro forma statements of operations are not necessarily indicative of the
financial results that would have occurred had the exchange been effective as of
the beginning of the year or period, and should not be viewed as indicative of
operations in future periods.
The pro forma financial statements should be read in conjunction with the notes
thereto and other financial information included in this filing.
<PAGE>
SMITH HAYES TRUST, INC.
CONLEY PARTNERS LIMITED PARTNERSHIP
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
HISTORICAL PRO
FORMA
CONLEY CONLEY
PARTNERS PARTNERS
LIMITED PRO LIMITED
FORMA
PARTNERSHIP ADJUSTMENTS PARTNERSHIP
INVESTMENT INCOME:
Dividends $56,894 - 56,894
Interest 32,504 - 32,504
------ ------- ------
Total investment income 89,398 - 89,398
------ ------- ------
EXPENSES:
Investment advisery and
administration fees 33,850 - 33,850
Distribution expenses - 16,925 (A) 16,925
Other operating expenses 16,925 (8,463) (B) 8,462
Amortization expenses 900 100 (C) 1,000
------ ------- ------
Total expenses 51,675 8,562 60,237
------ ------- ------
Net investment income 37,723 (8,562) 29,161
------ ------- ------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain 120,344 - 120,344
Net unrealized appreciation
Beginning of period 385,133 - 385,133
End of period 141,663 - 141,663
-------- ------- ------
Net unrealized
depreciation (243,470) - (243,470)
-------- ------- ------
Net realized and
unrealized loss
on investments (123,126) - (123,126)
-------- ------- ------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $(85,403) (8,562) (93,965)
========== ======== ========
See accompanying notes to financial statements.
Pro Forma adjustments:
(A) To reflect distribution expense of .50% per annum of average net assets.
(B) To reflect change in other expenses from .50% to .25% per annum of
average net assets.
(C) To reflect $1,000 of amortization on organization costs pertaining
to creation of Capital Builder Fund and eliminate $900 of amortization on
organization cost pertaining to creation of Conley Partners Limited
Partnership.
<PAGE>
Apprendix "1"
-------------
to Statement of
Additional Information
<PAGE>
SMITH HAYES Trust, Inc.
Capital Builder Fund
STATEMENT OF ADDITIONAL INFORMATION
April 6, 1995
Table of Contents
Page
Investment Objectives, Policies and Restrictions .......................2
Directors and Executive Officers .......................................4
Investment Advisory and Other Services .................................5
Distribution Plan ..................................................... 6
Portfolio Transactions and Brokerage
Allocations ...................................................8
Capital Stock and Control ..............................................9
Net Asset Value and Public Offering Price ..............................9
Redemption ............................................................10
Tax Status ............................................................10
Calculation of Performance Data .......................................11
Auditors ..............................................................11
Appendix A - Ratings of Corporate
Obligations and Commercial Paper ............................A-1
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the Prospectus dated April 6,
1995, and should be read in conjunction there with. A copy of the Prospectus may
be obtained from the Trust at 200 Centre Terrace, 1225 L Street, Lincoln,
Nebraska 68508.
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The shares of SMITH HAYES Trust, Inc. (the "Fund") are offered in
series. This Statement of Additional Information only relates to the Capital
Builder Fund (referred to herein as a "Fund").
Repurchase Agreements
The Fund may invest in repurchase agreements on U.S. Government
Securities. The Fund's Custodian will hold the securities underlying any
repurchase agreement or such securities will be part of the Federal Reserve Book
Entry System. The market value of the collateral underlying the repurchase
agreement will be determined on each business day. If at any time the market
value of the collateral falls below the repurchase price of the repurchase
agreement (including any accrued interest), the Fund will promptly receive
additional collateral so that the total collateral is an amount at least equal
to the repurchase price plus accrued interest.
Portfolio Turnover
Portfolio turnover is the ratio of the lesser of annual purchases or
sales of portfolio securities to the average monthly value of portfolio
securities, not including short-term securities maturing in less than 12 months.
A 100% portfolio turnover rate would occur, for example, if the lesser of the
value of purchases or sales of portfolio securities for a particular year were
equal to the average monthly value of the portfolio securities owned during such
year. The turnover rate will not be a limiting factor when management deems
portfolio changes appropriate.
Investment Restrictions
In addition to the investment objectives and policies set forth in the
Prospectus, the Fund is subject to certain investment restrictions, as set forth
below, which may not be changed without the vote of a majority of the Fund's
outstanding shares. "Majority," as used in the Prospectus and in this Statement
of Additional Information, means the lesser of (a) 67% of the Fund's outstanding
shares voting at a meeting of shareholders at which more than 50% of the
outstanding shares are represented in person or by proxy or (b) a majority of
the Fund's outstanding shares.
Unless otherwise specified below, the Fund will not:
1. Invest more than 5% of its assets in the securities of any one
issuer with regard to 75% of the value of its assets (other than
securities of the U.S. Government or its agencies or
instrumentalities), up to 25% may be invested without such
limitations.
2. Purchase more than 10% of any class of securities of any one
issuer (taking all preferred stock issues of an issuer as a
single class and all debt issues of an issuer as a single class)
or acquire more than 10% of the outstanding voting securities of
an issuer. In the aggregate, the Fund may not own more than 15%
of any class of securities or more than 10% of the outstanding
voting securities of an issuer.
<PAGE>
3. Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business
activities in any one industry. This restriction does not apply
to securities of the U.S. Government or its agencies and
instrumentalities and repurchase agreements relating thereto.
4. Invest more than 5% of the value of its total assets in the
securities of any issuers which, with their predecessors, have a
record of less than three years' continuous operation.
(Securities of such issuers will not be deemed to fall within
this limitation if they are guaranteed by an entity in
continuous operation for more than three years. The value of all
securities issued or guaranteed by such guarantor and owned by
the Fund shall not exceed 10% of the value of the total assets
of the Fund).
5. Issue any senior securities (as defined in the Investment
Company Act of 1940, as amended), except to the extent that
using options contracts or purchasing or selling securities on a
when-issued or forward commitment basis may be deemed to
constitute issuing a senior security.
6. Borrow money except from banks for temporary or emergency
purposes. The amount of such borrowing may not exceed 10% of the
value of the Fund's total assets. The Fund will not purchase
securities while outstanding borrowing exceeds 5% of the value
of the Fund's total assets. The Fund will not borrow money for
leverage purposes.
7. Mortgage, pledge or hypothecate its assets except in an amount
not exceeding 10% of the value of its total assets to secure
temporary or emergency borrowing. For purposes of this policy,
collateral arrangements for margin deposits on futures contracts
or with respect to the writing of options are not deemed to be a
pledge of assets.
8. Make short sales of securities or maintain a short position.
9. Purchase any securities on margin except to obtain such
short-term credits as may be necessary for the clearance of
transactions.
10. Purchase or retain the securities of any issuer if, to the
Fund's knowledge, those officers or directors of the Fund or its
affiliates or of its investment adviser who individually own
beneficially more than 0.5% of the outstanding securities of
such issuer, or together own more than 5% of such outstanding
securities.
11. Invest for the purpose of exercising control or management.
12. Purchase or sell commodities or commodity futures contracts.
13. Purchase or sell real estate or real estate mortgage loans,
except that the Fund may invest in securities secured by real
estate or interests therein or issued by companies that invest
in real estate or interest therein.
14. Purchase or sell oil, gas or other mineral leases, rights or
royalty contracts, except that the Fund may purchase or sell
securities of companies investing in the foregoing.
<PAGE>
15. Participate on a joint or a joint and several basis in any
securities trading account (as prohibited by Section 12(a)2 of
the Investment Company Act of 1940) except to the extent that
the staff of the Securities and Exchange Commission may in the
future grant exemptive relief therefrom.
16. Act as an underwriter of securities of other issuers.
17. Invest more than 5% of the Fund's net assets in restricted
securities or more than 10% of the Fund's net assets in
repurchase agreements with a maturity of more than seven days,
and other illiquid assets, such as securities with no readily
available market quotation.
18. Purchase the securities of other investment companies except as
provided by Section 12(d)(1) of the Investment Company Act of
1940.
Any investment restriction or limitation referred to above or in the
Prospectus, except the borrowing policy, which involves a maximum percentage of
securities or assets, shall not be considered to be violated unless an excess
over the percentage occurs immediately after an acquisition of securities or
utilization of assets and results therefrom.
DIRECTORS AND EXECUTIVE OFFICERS
The names, addresses and principal occupations during the past five
years of the directors and executive officers of the Fund are as follows:
<TABLE>
<S> <C>
Name, Position with Fund and Address Principal Occupation Last Five Years
*Thomas C. Smith, Chairman, President, Chief Chairman, CONLEY-SMITH, Inc., Omaha, Nebraska;
Executive Officer and Treasurer; 200 Centre Chairman and President, SMITH HAYES
Terrace, 1225 L Street, Lincoln, Nebraska 68508 Financial Services Corporation, Lincoln, Nebraska;
Chairman and President, Lancaster Administrative
Services, Inc., Lincoln, Nebraska; Chairman
and President, Consolidated Investment Corporation,
Lincoln, Nebraska; Vice President and Director,
Consolidated Realty Corporation, Lincoln, Nebraska
Thomas D. Potter, Director; 1800 Memorial Drive, President and Chief Executive Officer, Lincoln Mutual
Lincoln, Nebraska 68502 Life Insurance Company, Lincoln, Nebraska;
December, 1987 - Current
Dale C. Tinstman, Director; Suite 200, Financial and Investment Consultant; Chairman of
1201 "O" Street, Lincoln, Nebraska 68508 University of Nebraska Foundation; Director and
Consultant of IBP, Inc. (meat packing and
agribusiness), Lincoln, Nebraska
Thomas R. Larsen, C.P.A., Director; 6211 "O" Certified Public Accountant, Chairman, and President
Street, Lincoln, Nebraska 68510 Larsen Bryant & Porter CPA's, P.C., Lincoln,
Nebraska
Jean B. Norris, Vice President and Secretary; Vice President and Secretary, CONLEY- SMITH,
200 Centre Terrace, 1225 L Street, Lincoln, Inc., Omaha, Nebraska; Vice President and Secretary
Nebraska 68508 .of Lancaster Administrative Services, Inc., Lincoln,
Nebraska; Operations Manager of SMITH HAYES
Trust, Inc., Lincoln, Nebraska
</TABLE>
<PAGE>
The addresses of the directors and officers of the Fund are that of the Fund
unless otherwise indicated.
*Interested director of the Fund by virtue of his affiliation with CONLEY-SMITH,
Inc., as defined under the Investment Company Act of 1940.
The following table represents the compensation amounts received for
services as a director of the Fund:
<TABLE>
<CAPTION>
Compensation Table
Pension or
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as Part From the Fund
Name and Position From Fund of the Fund Expenses Paid to Directors
- ----------------- ------------- -------------------- -----------------
<S> <C> <C> <C>
Thomas D. Potter, Director $1,200 $0 $1,200
Dale C. Tinstman, Director $1,200 $0 $1,200
Thomas R. Larsen, Director $1,200 $0 $1,200
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
General
The investment adviser for the Fund is CONLEY-SMITH, Inc. ("CSI")
(formerly SMITH HAYES Portfolio Management, Inc. the "Adviser"). Lancaster
Administrative Services, Inc. ("LAS") acts as the administrator
("Administrator") and SMITH HAYES Financial Services Corporation acts as the
Fund's distributor ("Distributor"). The adviser, administrator and distributor
act as such pursuant to written agreements which are periodically reviewed and
approved by the directors or the shareholders of the Fund. The Adviser's address
is 444 Regency Parkway, Suite 202, Omaha, Nebraska, 68114 and the address of the
LAS is 200 Centre Terrace, 1225 L Street, Lincoln, Nebraska, 68508.
Control of the Adviser, Administrator and the Distributor
The adviser, administrator and distributor are wholly owned
subsidiaries of Consolidated Investment Corporation, ("Consolidated") a Nebraska
corporation, which is engaged through its subsidiaries in various aspects of the
financial services industry. As a result of his ownership of 77%, Thomas C.
Smith has a controlling interest of the outstanding stock of Consolidated
Investment Corporation. John H. Conley, President of the adviser, as a result of
his ownership of 5% also has a controlling interest in Consolidated.
Investment Advisory Agreement and Administration Agreement
CSI acts as the investment adviser to the Fund under an Investment
Advisory Agreement ("Advisory Agreement"). LAS successor to the transfer agent
and administrative services functions of the adviser will act as the Fund's
Administrator under the Transfer Agent and Administrative Services Agreement
(the "Administration Agreement"). The Advisory Agreement, and Administration
Agreement were approved by the Board of Directors (including a majority of the
directors who are not parties to the Advisory and Administration Agreements, or
interested persons of any such party, other than as directors of the Fund) on
April 18, 1995.
<PAGE>
The Advisory Agreement and Administration Agreement terminate
automatically in the event of their assignment. In addition, the Advisory
Agreement and the Administration Agreement are terminable at any time, without
penalty, by the Board of Directors of the Fund or by vote of a majority of the
Fund's outstanding voting securities on not more than 60 days' written notice to
the Adviser and the Administrator, as the case may be, and by the Adviser and
Administrator, as the case may be, on 60 days' written notice to the Fund.
Unless sooner terminated, the Advisory Agreement and Administration Agreement
shall continue in effect only so long as such continuance is specifically
approved at least annually by either the Board of Directors or by vote of a
majority of the outstanding voting securities of the Fund, provided that in
either event such continuance is also approved by a vote of a majority of the
directors who are not parties to such agreement, or interested person of such
parties, cast in person at a meeting called for the purpose of voting on such
approval.
Pursuant to the Advisory Agreement, the Fund pays the Adviser a monthly
advisory fee equal on an annual basis to .75% of the Fund's average daily net
assets. Under the Advisory Agreement, the Adviser provides the Fund with advice
and assistance in the selection and disposition of the Fund's investments. All
investment decisions are subject to review by the Board of Directors of the
Fund. The Adviser is obligated to pay the salaries and fees of any affiliates of
the Adviser serving as officers or directors of the Fund.
Pursuant to the Administration Agreement, the Administrator acts as
transfer agent and provides, or contracts with others to provide, the Fund all
necessary bookkeeping and shareholder recordkeeping services, share transfer
services, and custodial services. Under the Administration Agreement, the
Administrator receives an administration fee, computed separately for the Fund
and paid monthly, at an annual rate of .25% of the daily average net assets of
the Fund.
The laws of certain states require that if a mutual fund's expenses
(including advisory fees but excluding interest, taxes, brokerage commissions
and extraordinary expenses) exceed certain percentages of average net assets,
the fund must be reimbursed for such excess expenses. The Fund should not ever
exceed such limits.
Custodian
The Custodian for the Fund is Union Bank and Trust Company ("Union"),
3643 South 48th, Lincoln, Nebraska 68506. Union, as Custodian, holds all of
securities and cash owned by the Fund.
DISTRIBUTION PLAN
Rule 12b-1(b) under the Investment Company Act of 1940 provides that
any payments made by the Fund in connection with financing the distribution of
their shares may only be made pursuant to a written plan describing all aspects
of the proposed financing of distribution, and also requires that all agreements
with any person relating to the implementation of the plan must be in writing.
Because some of the payments described below to be made by the Fund are
distribution expenses within the meaning of Rule 12b-1, the Fund has entered
into an Underwriting and Distribution Agreement with the Distributor pursuant to
a Distribution Plan adopted in accordance with such Rule. Under the Underwriting
and Distribution Agreement, the Distributor, on a best efforts basis,
continuously distributes the Fund's shares.
In addition, Rule 12b-1(b)(1) requires that such plan be approved by a
majority of a Fund's outstanding shares, and Rule 12b-1(b)(2) requires that such
plan, together with any related agreements, be approved by a vote of the Board
of Directors who are not interested persons of the Fund and who have no direct
or indirect
<PAGE>
interest in the operation of the plan, cast in person at a meeting for the
purpose of voting on such plan or agreement. Rule 12(b)-1(b)(3) requires that
the plan or agreement provide, in substance:
(a) that it shall continue in effect for a period of more than
one year from the date of its execution or adoption only so long as
such continuance is specifically approved at least annually in the
manner described in paragraph (b)(2) of Rule 12b-1;
(b) that any person authorized to direct the disposition of
moneys paid or payable by the Fund pursuant to the plan or any related
agreement shall provide to the Fund's Board of Directors, and the
directors shall review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were
made; and
(c) in the case of a plan, that it may be terminated at any
time by a vote of a majority of the members of the Board of Directors
of the Fund who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the plan or
in any agreements related to the plan or by a vote of a majority of the
outstanding voting securities of the Fund.
Rule 12b-1(b)(4) requires that such a plan may not be amended to
increase materially the amount to be spent for distribution without shareholder
approval and that all material amendments to the plan must be approved in the
manner described in paragraph (b)(2) of Rule 12b-1.
Rule 12b-1(c) provides that the Fund may rely upon Rule 12b-1(b) only
if the selection and nomination of the Fund's disinterested directors are
committed to the discretion of such disinterested directors. Rule 12b-1(e)
provides that the Fund may implement or continue a plan pursuant to Rule
12b-1(b) only if the directors who vote to approve such implementation or
continuation conclude, in the exercise of reasonable business judgment and in
light of their fiduciary duties under state law, and under Sections 36(a) and
(b) of the Investment Company Act of 1940, that there is a reasonable likelihood
that the plan will benefit the Fund and its shareholders. The Board of Directors
has concluded that there is a reasonable likelihood that the Distribution Plan
will benefit the Fund and its shareholders.
Pursuant to the provisions of the Distribution Plan, as amended, the
Fund pays a fee to the Distributor computed and paid monthly at an annual rate
of up to .50% of the Fund's average daily net assets in order to reimburse the
Distributor for its actual expenses incurred in the distribution and promotion
of the Fund's shares.
Expenses for which the Distributor will be reimbursed under the
Distribution Plan include, but are not limited to, compensation paid to
registered representatives of the Distributor and to broker-dealers which have
entered into sales agreements with the Distributor; expenses incurred in the
printing of prospectuses, statements of additional information and reports used
for sales purposes; expenses of preparation and printing of sales literature;
advertisement, promotion, marketing and sales expenses; and other
distribution-related expenses. Compensation will be paid out of such amounts to
investment executives of the Distributor and to broker-dealers which have
entered into sales agreements with the Distributor as follows. If shares of the
Fund are sold by a representative of a broker-dealer other than the Distributor,
that portion of the reimbursement which is attributable to shares sold by such
representative is paid to such broker-dealer. If shares of the Fund are sold by
an investment executive of the Distributor, compensation will be paid to the
investment executive by the Distributor in an amount not to exceed that portion
of .50% of the average daily net assets of the Fund which is attributable to
shares sold by such investment executive. Thomas C. Smith, a director and
officer of the Trust, controls the Distributor and as a result has a financial
interrest in the Distribution Plan.
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATIONS
The Adviser is responsible for decisions to buy and sell securities for
the Fund, the selection of broker-dealers to effect the transactions and the
negotiation of brokerage commissions, if any. In placing orders for securities
transactions, the primary criterion for the selection of a broker-dealer is the
ability of the broker-dealer, in the opinion of the Adviser, to secure prompt
execution of the transactions at the most favorable prices. In selecting
broker-dealers the Adviser may consider a number of factors including but not
limited to the reasonableness of the commission (if any), quality of services,
research services and execution.
When consistent with these objectives, business may be placed with
broker-dealers who furnish investment research and/or services to the Adviser.
Such research or services include advice, both directly and in writing, as to
the value of securities; the advisability of investing in, purchasing or selling
securities; and the availability of securities, or purchasers or sellers of
securities, as well as analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts. This allows the Adviser to supplement its own investment research
activities and enable the Adviser to obtain the views and information of
individuals and research staffs of many different securities firms prior to
making investment decisions for the Fund. To the extent Fund transactions are
effected with broker-dealers who furnish research services to the Adviser, the
Adviser receives a benefit, not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to the Fund from these transactions. The
Adviser believes that most research services obtained by it generally benefit
several or all of the accounts which it manages, as opposed to solely benefiting
one specific managed fund or account. Normally, research services obtained
through managed funds or accounts investing in common stocks would primarily
benefit the managed funds or accounts which invest in common stock; similarly,
services obtained from transactions in fixed-income securities would normally be
of greater benefit to the managed funds or accounts which invest in debt
securities.
The Adviser has not entered into any formal or informal agreements with
any broker-dealers, nor does it maintain any "formula" which must be followed in
connection with the placement of the Fund's transactions in exchange for
research services provided the Adviser except as noted below. However, from time
to time, the Adviser may elect to use certain brokers to execute transactions in
order to encourage them to provide the Adviser with research services which the
Adviser anticipates will be useful to it. The Adviser will authorize the Fund to
pay an amount of commission for effecting a securities transaction in excess of
the amount of commission another broker-dealer would have charged only if the
Adviser determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the accounts as to which it
exercises investment discretion.
Securities transactions for the Fund may be effected through the
Distributor, as discussed in the Prospectus under "Management-Portfolio
Brokerage." In determining the commissions to be paid to the Distributor, it is
the policy of the Fund that such commissions will, in the judgment of the
Adviser, subject to review by the Board of Directors, be both (a) at least as
favorable as those which would be charged by other qualified brokers in
connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of time,
and (b) at least as favorable as commissions contemporaneously charged by the
Distributor on comparable transactions for its most favored comparable
unaffiliated customers. While the Fund does not deem it practicable and in its
best interest to solicit competitive bids for commission rates on each
transaction, consideration will regularly be given to posted commission rates as
well as to other information concerning the level of commissions charged on
comparable transactions by other qualified brokers.
<PAGE>
In certain instances, there may be securities which are suitable
investments for the Fund as well as for one or more of the advisory clients of
the Adviser. Investment decisions for the Fund and for such advisory clients are
made by the Adviser with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for only
one client of the Adviser even though it might be held by, or bought or sold
for, other clients. Likewise, a particular security may be bought for one or
more clients of the Adviser when one or more other clients are selling that same
security. Some simultaneous transactions are inevitable when several clients
receive investment advice from the same investment adviser, particularly when
the same security is suitable for the investment objectives of more than one
client. When two or more clients of the Adviser are simultaneously engaged n the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed by the Adviser to be equitable to each (and may
result, in the case of purchases, in allocation of that security only to some of
those clients and the purchase of another security for other clients regarded by
the Adviser, as a satisfactory substitute). It is recognized that in some cases
this system could have a detrimental effect on the price or volume of the
security as far as the Fund is concerned. At the same time, however, it is
believed that the ability of the Fund to participate in volume transactions will
sometime produce better execution prices.
Option Trading Limits
The writing by the Fund of options on securities is subject to
limitations established by each of the registered securities exchanges on which
such options are traded. Such limitations govern the maximum number of options
in each class which may be written by a single investor or group of investors
acting in concert, regardless of whether the options are written on the same or
different securities exchanges or are held or written in one or more accounts or
through one or more brokers. Thus, the number of options which the Fund may
write may be affected by options written by the other Funds and by other
investment advisory clients of the Adviser. An exchange may order the
liquidations of positions found to be in excess of these limits, and it may
impose certain other sanctions. The Adviser believes it is unlikely that the
level of option trading by the Fund will exceed applicable limitations.
CAPITAL STOCK AND CONTROL
A complete description of the rights and characteristics of the Fund's
capital stock is included in the Prospectus.
NET ASSET VALUE AND PUBLIC OFFERING PRICE
The method for determining the public offering price of Fund shares is
summarized in the Prospectus in the text following the heading "Purchase of
Shares"--"Valuation of Shares." The net asset value of each Fund's shares is
determined on each day on which the New York Stock Exchange is open, provided
that the net asset value need not be determined on days when no Fund shares are
tendered for redemption and no order for Fund's shares is received. The New York
Stock Exchange is not open for business on the following holidays (or on the
nearest Monday or Friday if the holiday falls on a weekend): New Year's Day,
President's Day, Good Friday, Memorial Day, July 4th, Labor Day, Thanksgiving
and Christmas.
<PAGE>
The portfolio securities in which the Fund invests fluctuate in value,
and hence the net asset value per share of the Fund also fluctuates. An example
of how the net asset value per share for the Fund is calculated is as follows:
Net Assets ($100,000 = Net Asset Value
Shares Outstanding (10,000) per Share ($10)
REDEMPTION
Redemption of shares, or payment, may be suspended at times (a) when
the New York Stock Exchange is closed for other than customary weekend or
holiday closings, (b) when trading on said exchange is restricted, (c) when an
emergency exists, as a result of which disposal by the Fund of securities owned
is not reasonably practicable, or it is not reasonably practicable for the Fund
fairly to determine the value of its net assets, or (d) during any other period
when the Securities and Exchange Commission, by order, so permits, provided that
applicable rules and regulations of the Securities and Exchange Commission shall
govern as to whether the conditions prescribed in (b) or (c) exist.
TAX STATUS
The Fund has qualified and intends to continue as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended so as to be relieved of federal income tax on its capital gains and net
investment income distributed to shareholders. To qualify as a regulated
investment company, the Fund must, among other things, receive at least 90% of
its gross income each year from dividends, interest, gains from the sale or
other disposition of securities and certain other types of income including,
with certain exceptions, income from options and futures contracts. However,
gains from the sale or other disposition of stock or securities held for less
than three months must constitute less than 30% of the Fund's gross income. This
restriction may limit the extent to which the Fund may effect sales of
securities held for less than three months or transactions in futures contracts
and options even when the Adviser otherwise would deem such transaction to be in
the best interest of the Fund. The Code also requires a regulated investment
company to diversify its holdings. The Internal Revenue Service has not made its
position clear regarding the treatment of options for purposes of the
diversification test, and the extent to which the Fund could buy or sell options
may be limited by this requirement.
The Code requires that all regulated investment companies pay a
nondeductible 4% excise tax to the extent the regulated investment company does
not distribute 98% of its ordinary income, determined on a calendar year basis,
and 98% of its capital gains, determined, in general, on an October 31 year end.
The required distributions are based only on the taxable income of a regulated
investment company.
Ordinarily, distributions and redemption proceeds earned by the Fund
shareholder are not subject to withholding of federal income tax. However, if a
shareholder fails to furnish a tax identification number or social security
number, or certify under penalties of perjury that such number is correct, the
Fund may be required to withhold federal income tax ("backup withholding") from
all dividend, capital gain and/or redemption payments to such shareholder.
Dividends and capital gain distributions may also be subject to backup
withholding if a shareholder fails to certify under penalties of perjury that
such shareholder is not subject to backup withholding due to the under reporting
of certain income. These certifications are contained in the purchase
application enclosed with the Prospectus.
<PAGE>
CALCULATIONS OF PERFORMANCE DATA
From time to time the Fund may quote the yield for the Fund in
advertisements or in reports and other communications to shareholders. For this
purpose, yield is calculated by dividing the Fund's net investment income per
share for the base period which is 30 days or one month, by the Fund's maximum
offering purchase price on the last day of the period and annualizing the
result. The Fund's net investment income changes in response to fluctuations in
interest rates and in the expenses of the Fund. Consequently, any given
quotation should not be considered as a representative of what the Fund's yield
may be for any specified period in the future.
Yield information may be useful in reviewing the Fund's performance and
for providing a basis for comparison with investment alternatives. However, the
Fund's yield will fluctuate, unlike other investments which pay a fixed yield
for a stated period of time. Current yield should be considered together with
fluctuations in the Fund's net asset value over the period for which yield has
been calculated, which, when combined, will indicate the Fund's total return to
shareholders for that period. Other investment companies may calculate yields on
a different basis. In addition, investors should give consideration to the
quality and maturity of the fund securities of the respective investment
companies when comparing investment alternatives.
In connection with the quotations of yields in advertisements described
above, the Fund may also provide average annual total returns from the date of
inception for one, five and ten-year periods if applicable. Total return is a
calculation which equates an initial amount invested to the ending redeemable
value at a specified time. It assumes the reinvestment of all dividends and
capital gains distributions. Average total return will be the average of the
total returns for each year in the period. The Fund may also provide a total
return figure for the most recent calendar quarter prior to the publication of
the advertisement.
AUDITORS
On April 18, 1995, the Board of Directors, including all disinterested
directors, unanimously approved the appointment of Deloitte & Touche LLP, 1040
NBC Center, Lincoln, Nebraska 68508-1469 as the Fund's accountants.
APPENDIX A
RATINGS OF CORPORATE OBLIGATIONS,
COMMERCIAL PAPER, AND PREFERRED STOCK
Ratings of Corporate Obligations
Moody's Investors Services, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa: Bonds rated Caa are of poor standing. Such bonds may be in
default or there may be present elements of danger with respect to principal
and interest.
Ca: Bonds rated Ca represent obligations which are speculative in
a high degree. Such bonds are often in default or have other marked
shortcomings.
A-1
<PAGE>
Those securities in the A and Baa groups which Moody's believes possess the
strongest investment attributes are designed by the symbols A-a and Baa-1. Other
A and Baa securities comprise the balance of their respective groups. These
rankings (1) designate the securities which offer the maximum in security within
their quality groups, (2) designate securities which can be bought for possible
upgrading in quality, and (3) additionally afford the investor an opportunity to
gauge more precisely the relative attractiveness of offerings in the
marketplace.
Standard & Poor's Corporation
AAA: Bonds rated AAA have the highest rating assigned by Standard and
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest
and repay principal and differ from the highest rated issues only in a small
degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Although they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rate categories.
Bonds rated BBB are regarded as having speculation characteristics.
BB--B--CCC-CC: Bonds rated BB, B, CCC, and CC are regarded, on balance,
as predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation among such bonds and CC the highest
degree of speculation. Although such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
Commercial Paper Ratings
Standard & Poor's Corporation
Commercial paper ratings are graded into four categories, ranging from
"A" for the highest quality obligations to "D" for the lowest. Issues assigned
the A rating are regarded as having the greatest capacity for timely payments.
Issues in this category are further refined with the designation 1, 2 and 3 to
indicate the relative degree of safety. The "A-1" designation indicates that the
degree of safety regarding timely payment is very strong. Those issues
determined to possess overwhelming safety characteristics will be denoted with a
plus sign designation.
A-2
<PAGE>
Moody's Investors Services, Inc.
Moody's commercial paper ratings are opinions of the ability of the
issuers to repay punctually promissory obligations not having an original
maturity in excess of nine months. Moody's makes no representation that such
obligations are exempt from registration under the Securities Act of 1933, nor
does it represent that any specific note is a valid obligation of a rated issuer
or issued in conformity with any applicable law. Moody's employs the following
three designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers:
Prime-1 Superior capacity for repayment
Prime-2 Strong capacity for repayment
Prime-3 Acceptable capacity for repayment
Ratings of Preferred Stock
Standard & Poor's Corporation
Standard & Poor's preferred stock rating is an assessment of the
capacity and willingness of an issuer to pay preferred stock dividends and any
applicable sinking fund obligations. A preferred stock rating differs from a
bond rating inasmuch as it is assigned to an equity issue, which issue is
intrinsically different from, and subordinated, a debt issue. Therefore, to
reflect this difference, the preferred stock rating symbol will normally not be
higher than the bond rating symbol assigned to, or that would be assigned to the
senior debt of the same issuer.
The preferred stock ratings are based on the following considerations:
1. Likelihood of payment--capacity and willingness of the issuer
to meet the timely payment of preferred stock dividends and
any applicable sinking fund requirements in accordance with
the terms of the obligation.
2. Nature of an provisions of the issue.
3. Relative position of the issue in the event of
bankruptcy, reorganization, or other arrangements affecting
creditors' rights.
AAA: This is the highest rating that may be assigned by Standard
and Poor's to a preferred stock issue and indicates an
extremely strong capacity to pay the preferred stock
obligations.
AA: A preferred stock issue rated AA also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock obligations
is very strong, although not as overwhelming as for issues rated AAA.
A: An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions.
A-3
<PAGE>
BBB: An issue rated BBB is regarded as backed by an adequate capacity
to pay the preferred stock obligations. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make
payments for a preferred stock in this category than for issues in the
A category.
CC: The rating CC is reserved for a preferred stock issue in
arrears on dividends or sinking fund payments but that is currently
paying.
C: A preferred stock rated C is a nonpaying issue.
D: A preferred stock rated D is a nonpaying issue with the issuer in
default on debt instruments.
NR indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does
not rate a particular type of obligation as a matter of policy.
Plus (+) or Minus (-): To provide more detailed indications of
preferred stock quality, the ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
Moody's Investors Services, Inc.
aaa: An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred
stocks.
aa: An issue which is rated aa is considered a high-grade preferred
stock. This rating indicates that there is reasonable assurance that
earnings and asset protection will remain relatively well maintained in
the foreseeable future.
a: An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in
the aaa and aa classifications, earnings and asset protection are,
nevertheless, expected to be maintained at adequate levels.
baa: An issue which is rated baa is considered to be medium grade,
neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any
great length of time.
ba: An issue which is rated ba is considered to have speculative
elements and its future cannot be considered well assured. Earnings and
asset protection may be very moderate and not well safeguarded during
adverse periods. Uncertainty of position characterizes preferred stocks
in this class.
b: An issue which is rated b generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of
other terms of the issue over any long period of time may be small.
A-4
<PAGE>
caa: An issue which is rated caa is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future status
of payments.
ca: An issue which is rated ca is speculative in a high degree and
is likely to be in arrears on dividends with little likelihood of eventual
payment.
c: This is the lowest rated class of preferred or preference stock.
Issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
A-5
<PAGE>
PART C
OTHER INFORMATION
Item 15. Indemnification
---------------
Section 302A.521 of the Minnesota Business Corporation Act requires
indemnification of officers and directors of the Registrant under circumstances
set forth therein. Reference is made to Article 8.d. of the Articles of
Incorporation (Exhibit 1 hereto), Article XIII of the Bylaws of Registrant
(Exhibit 2 hereto) and to Section 10 of the Underwriting Agreement (Exhibit 7
hereto) for additional indemnification provisions. In addition to the
indemnification provisions contained in the Company's Articles and Bylaws, there
are also indemnification and hold harmless provisions contained in the
Investment Advisory Agreement, Distribution Agreement, Administration Agreement
and Custodian Agreement.
The general effect of such provisions is to require indemnification of
persons who are made or threatened to be made a party to a proceeding by reason
of the former or present official capacity of the person with the corporation
against judgments, penalties, fines and reasonable expenses including attorneys'
fees incurred by said person if: (1) the person has not been indemnified by
another organization for the same judgments, penalties, fines and expenses for
the same acts or omissions; (2) the person acted in good faith; (3) the person
received no improper personal benefit; (4) in the case of a criminal proceeding,
the person had no reasonable cause to believe the conduct was unlawful; and (5)
in the case of directors and officers and employees of the corporation, such
persons reasonably believed that the conduct was in the best interests of the
corporation, or in the case of directors, officers, or employees serving at the
request of the corporation for another organization, such person reasonably
believed that the conduct was not opposed to the best interests of the
corporation. A corporation is permitted to maintain insurance on behalf of any
officer, director, employee or agent of the corporation, or any person serving
as such at the request of the corporation, against any liability of such person.
Nevertheless, Article 8(d) of the Articles of Incorporation prohibits any
indemnification which would be in violation of Section 17(h) of the Investment
Company Act of 1940, as now enacted or hereafter amended and Article XIII of the
Fund's Bylaws prohibit any indemnification inconsistent with the guidelines set
forth in Investment Company Act Releases No. 7221 (June 9, 1972) and No. 11330
(September 2, 1980). Such Releases prohibit indemnification in cases involving
willful misfeasance, bad faith, gross negligence and reckless disregard of duty
and establish procedures for the determination of entitlement to indemnification
and expense advances.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification by the Registrant is against public policy as expressed in
the Act and, therefore, may be unenforceable. In the event that a claim for such
indemnification (except insofar as it provides for the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any
<PAGE>
action, suit or proceeding) is asserted against the Registrant by such director,
officer or controlling person and the Securities and Exchange Commission is
still of the same opinion, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether or not such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
Item 16. Exhibits
--------
* 1 Articles of Incorporation
* 2 Bylaws of Company
4 Form of Agreement and Plan of Exchange (included as Exhibit "A"
to Prospectus/Information Statement)
* 6 Management and Investment Advisory Agreement--
Capital Builder Fund
* 7 Form of Distribution Agreement
* 9 Custodian Agreement
* 10 Rule 12b-1 Distribution Plan
11 Opinion and Consent of Messrs. Cline, Williams, Wright, Johnson &
Oldfather
12 Tax opinion of Cline, Williams, Wright, Johnson & Oldfather
(included as Exhibit "C" to Prospectus/Information Statement)
** 13 Administration Agreement
14 Consent of KPMG Peat Marwick LLP
16 Power of Attorney (included in signature page)
* 17 Rule 24f-2 declaration (included in facing page)
- ------------------
* Incorporated herein by reference to the Company's Registration
Statement on Form N-1A, File No. 33-19844. Copies of these documents
are submitted supplementally to facilitate staff review.
** To be filed by amendment.
<PAGE>
Item 17. Undertakings
------------
(1) The undersigned Company agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Act, the reoffering
prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned Company agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
[This Space Left Blank Intentionally]
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and directors of SMITH HAYES Trust, Inc.,
hereby severally constitute Thomas C. Smith and Jean M. Becker, and each of them
as true and lawful attorneys with full power to sign for us and in our names, in
the capacities indicated below any and all amendments to the Form N-14
Registration Statement of SMITH HAYES Trust, Inc. to be filed with the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or either of them, to
any and all amendments to said Registration Statement.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant in the City of Lincoln, State of
Nebraska, on the ----- day of May, 1995.
SMITH HAYES Trust, Inc.
By:Thomas C. Smith----------
Thomas C. Smith, Chairman
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities indicated on May _____,
1995.
Signature Title
- --------- -----
Chairman, President, Principal
Executive Officer, Principal
Financial and Accounting Officer
/s/Thomas C. Smith---------------------- and Treasurer
Thomas C. Smith
/s/Thomas D. Potter--------------------- Director
Thomas D. Potter
/s/Thomas R. Larsen--------------------- Director
Thomas R. Larsen
/s/Dale C. Tinstman--------------------- Director
Dale C. Tinstman
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and directors of SMITH HAYES Trust, Inc.,
hereby severally constitute Thomas C. Smith and Jean M. Becker, and each of them
as true and lawful attorneys with full power to sign for us and in our names, in
the capacities indicated below any and all amendments to the Form N-14
Registration Statement of SMITH HAYES Trust, Inc. to be filed with the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or either of them, to
any and all amendments to said Registration Statement.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant in the City of Lincoln, State of
Nebraska, on the 4th day of May, 1995.
SMITH HAYES Trust, Inc.
By:/s/ Thomas C. Smith
Thomas C. Smith, Chairman
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities indicated on May 4, 1995.
Signature Title
- --------- ------
Chairman, President, Principal
Executive Officer, Principal
/s/ Thomas C. Smith Financial and Accounting Officer
Thomas C. Smith and Treasurer
/s/ Thomas D. Potter Director
Thomas D. Potter
/s/ Thomas R. Larsen Director
Thomas R. Larsen
/s/ Dale C. Tinstman Director
Dale C. Tinstman
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
------------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ___ |_|
Post-Effective Amendment No. ___ |_|
------------------------------
SMITH HAYES Trust, Inc.
-------------------------------
(Exact Name of Registrant as Specified in Charter)
EXHIBIT VOLUME
<PAGE>
INDEX TO EXHIBITS
Page Number
in Sequential
Exhibit No. Description Numbering System
- --------- ------------- ------------------
* 1 Articles of Incorporation
* 2 Bylaws of Company
4 Form of Agreement and Plan of Exchange
(included as Exhibit "A" to Prospectus/
Information Statement)
* 6 Management and Investment Advisory Agreement--
Capital Builder Fund
* 7 Form of Distribution Agreement
* 9 Custodian Agreement
* 10 Rule 12b-1 Distribution Plan
11 Opinion and Consent of Messrs. Cline, Williams,
Wright, Johnson & Oldfather
12 Tax opinion of Cline, Williams, Wright, Johnson
& Oldfather (included as Exhibit "C" to Prospectus/
Information Statement)
** 13 Administration Agreement
14 Consent of KPMG Peat Marwick LLP
16 Power of Attorney (included in signature page)
* 17 Rule 24f-2 declaration (included in facing page)
* Incorporated herein by reference to the Company's Registration Statement
on Form N-1A, File No. 33-19844. Copies of these documents are
submitted supplementally to facilitate staff review.
** To be filed by amendment.
<PAGE>
May 4, 1995
Board of Directors
SMITH HAYES Trust, Inc.
500 Centre Terrace
1225 L Street
Lincoln, NE 68508
RE: FORM N-14 REGISTRATION STATEMENT -- ACQUISITION OF ASSETS
OF CONLEY PARTNERS LIMITED PARTNERSHIP
Gentlemen:
Our opinion has been requested with respect to the shares of common
stock designed Capital Builder Fund shares, $.001 par value per share (the
"shares"), of the SMITH HAYES Trust, Inc. (the "Fund"), which are being
registered with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, by Form N-14 Registration Statement in connection with the
acquisition of the assets of Conley Partners Limited Partnership.
We have examined the Fund's Articles of Incorporation and Bylaws,
reviewed certain minutes of corporate proceeding, and have made such additional
factual and legal inquiry as we deemed necessary under the circumstances. Based
upon the foregoing, it is our opinion that:
1. The Fund is a duly and validly organized corporation presently existing
in good standing under the laws of the State of Minnesota.
2. The issuance and sale of the shares have been duly and validly
authorized by the necessary corporate action; and said shares will, upon
delivery in the manner contemplated in the Agreement and Plan of Exchange, by
duly authorized, validly issued and outstanding, fully paid, and nonassessable
shares of common stock of the Fund.
We consent to the use of this opinion as an exhibit to the Fund's Form N-14
Registration Statement and further consent to the reference of our firm under
the heading "Legal Matters" in the Prospectus/Information Statement forming a
part thereof.
Very truly yours,
Donald F. Burt
Cline, Williams, Wright,
Johnson & Oldfather Law Firm
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Partners
Conley Partners Limited Partnership:
We consent to the use of our report dated January 11, 1995 included
herein and to the reference to our firm under the caption "Financial Statements
and Experts" in this Form N-14 Registration Statement of SMITH HAYES Trust, Inc.
KPMG PEAT MARWICK LLP
Omaha, Nebraska
May 8, 1995
