SUPPLEMENT TO PROSPECTUS
SMITH HAYES TRUST, INC.
INSTITUTIONAL MONEY MARKET PORTFOLIO
Dated June 22, 1995
Minimum Initial Aggregate Investment
- ------------------------------------
Effective June 22, 1995, the minimum initial aggregate investment has been
reduced from $500,000 to $1,000.
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PROSPECTUS
SMITH HAYES Trust, Inc.
Institutional Money Market Portfolio
500 Centre Terrace
1225 "L" Street
Lincoln, Nebraska 68508
(402) 476-3000
1-800-279-7437
SMITH HAYES Trust, Inc. (the "Trust"), is a Minnesota corporation offering
shares in series, each series operated as a separate open-end management
investment Company. This Prospectus relates to the diversified series designated
Institutional Money Market Portfolio (the "Portfolio").
The investment objective of the Portfolio is to provide maximum current
income consistent with the preservation of capital and maintenance of liquidity.
The Portfolio requires a minimum initial investment of $500,000 and is intended
for use by banks and other financial institutions needing a convenient and
liquid investment. The Portfolio will attempt to achieve this objective by
solely investing in debt obligations with maturities of less than one year,
including United States government and Federal agency obligations, and federally
insured student loans, subject to unconditional obligations from banks to
purchase such loans on five days notice purchased through a trust established to
purchase and hold such student loans. THE SHARES OF THE PORTFOLIO ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY, ANY BANK AND ARE
NEITHER INSURED BY THE FDIC NOR GUARANTEED BY THE U.S. GOVERNMENT OR ANY FEDERAL
OR STATE AGENCY, AND WHILE THE PORTFOLIO INTENDS TO MAINTAIN A NET ASSET VALUE
OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT THIS WILL OCCUR.
This Prospectus concisely describes information about the Portfolio 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 Portfolio dated as of the date of this Prospectus is
available free of charge by writing to SMITH HAYES Financial Services
Corporation, 500 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508, or
telephone (402) 476-3000 or (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 October 28, 1994.
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INTRODUCTION
SMITH HAYES Trust, Inc. (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
Portfolio and each is operated as a separate open-end management investment
company. This Prospectus only relates to the series designated Institutional
Money Market Portfolio (the "Portfolio"). For information regarding the Trust's
other Portfolios, call or write to the Trust at the address and telephone number
on the cover page of this Prospectus.
The Investment Adviser and Administrator
The Trust is managed by SMITH HAYES Portfolio Management, Inc., a wholly
owned subsidiary of Consolidated Investment Corporation. SMITH HAYES Portfolio
Management, Inc. acts as the investment adviser for the Portfolio ("Adviser")
and as the Trust's administrator ("Administrator"). The Trust pays the Adviser a
monthly fee for advisory services and administrative services rendered. See
"Management-Investment Adviser and Administrator" and "Management-Portfolio
Brokerage".
The Distributor
SMITH HAYES Financial Services Corporation ("SMITH HAYES"), also a wholly
owned subsidiary of Consolidated Investment Corporation, 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 .20% annually of the Portfolio's average net assets. See "Distribution of
Portfolio Shares".
Purchase of Shares
Shares of the Portfolio are offered to the public at $1.00 per share,
except in extraordinary circumstances. See "Valuation of Shares". The minimum
aggregate initial investment in the Portfolio is $500,000 unless waived by the
Trust. Subsequent investments can be made in any amount.
Certain Risk Factors to Consider
An investment in the Portfolio is subject to certain risks, as set forth in
detail under "Investment Objectives and Policies". As with other mutual funds,
there can be no assurance that the Portfolio will achieve its objective.
Redemptions
Shares of the Portfolio may be redeemed at any time at their net asset
value next determined after receipt of a redemption request by the Distributor.
The redemption price will be $1.00 per share, except in extraordinary
circumstances. The Trust reserves the right, upon 30 days written notice, to
redeem a shareholder's investment in the Portfolio if the net asset value of the
shares held by such shareholder falls below $250,000 as a result of redemptions
or transfers. See "Redemption of Shares-Involuntary Redemption".
Dividends
Dividends are declared and accrued once daily and either automatically
reinvested or paid monthly (see "Dividends and Taxes").
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Shareholder Inquiries
Any questions or communications regarding a shareholder account should be
directed to your SMITH HAYES investment executive or other broker-dealer.
General inquiries regarding the Portfolio should be directed to the Trust at one
of the telephone numbers set forth on the cover page of this Prospectus.
Expenses
The Trust offers shares of the Portfolio without any sales load or
contingent sales loads on purchases, reinvestments of dividends or redemptions
of Portfolio shares and does not charge any exchange or account maintenance
fees. The table below is provided to assist the investor in understanding the
various expenses that an investor in the Portfolio will bear, whether directly
or indirectly, through an investment in the Portfolio. 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 Portfolio
expressed as annual percentages of average net assets.
Management Fees .22%
12b-1 Fees .20%
Other Expenses .19%
---
Total Portfolio Operating Expenses .61%
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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
$6 $20 $34 $76
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.
FINANCIAL HIGHLIGHTS
The following financial information, which provides selected data for a
share of the Portfolio outstanding throughout the period indicated has been
audited by KPMG Peat Marwick, LLP, independent certified public accountants, to
the extent of their report appearing in the Annual Financial Report contained in
the Statement of Additional Information, which is available upon request without
charge as set forth on the cover page of this Prospectus.
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Financial Highlights
Year Ended June 30, 1994 and the Period from November 12, 1992
(commencement of operations) to June 30, 1993
une 30, 1994 June 30, 1993
Net asset value, beginning of period: $1.00 $1.00
Income from investment operations,
Net investment income 0.040 0.009
Less distributions,
Dividends from net investment income (0.040) (0.009)
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End of period $1.00 $1.00
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Current yield * * 4.52% * 4.28% *
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Effective yield * * 4.62% * 4.37% *
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Ratios/Supplemental data:
Net assets, end of period $28,008,803 $14,855,439
Ratio of expenses to average net assets 0.61% 0.68% *
Ratio of net income to average net assets 4.05% * 4.40% *
* Annualized for those periods less than twelve months in duration.
** Current yield refers to the income by an investment over a seven-day
period ending June 30, 1994. Effective yield assumes compounding. Yields
are computed in accordance with a standardized formula described in the
Statement of Additional Information.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Portfolio is to provide maximum current
income consistent with preservation of capital and maintenance of liquidity.
The investment objective of the Portfolio cannot be changed without
shareholder approval in the manner described on page 5. In view of the risks
inherent in all investments in securities, there is no assurance that this
objective will be achieved. The investment policies and techniques employed in
pursuit of the Portfolio's objectives may be changed without shareholder
approval, unless otherwise noted.
Investment Policies
Pursuant to Rule 2a-7 adopted under the Investment Company Act, the
Portfolio may invest only in "eligible securities" as defined in that Rule.
Generally, an eligible security is a security that (i) is denominated in U.S.
Dollars and has a remaining maturity of 397 days or less; (ii) is rated, or is
issued by an issuer with short-term debt outstanding that is rated, in one of
the two highest rating categories by two nationally recognized statistical
rating organizations ("NRSROs") or, if only one NRSRO has issued a rating, by
that NRSRO; and (iii) has been determined by the Adviser to present minimal
credit risk pursuant to procedures approved by the Board of Directors. A
security that originally had a maturity of greater than 397 days is an eligible
security if the issuer has outstanding short-term debt that would be an eligible
security. Unrated securities may also be eligible securities if the Adviser
determines that they
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are of comparable quality to a rated eligible security pursuant to guidelines
approved by the Board of Directors.
Under Rule 2a-7, a fund may not invest more than five percent of its assets
in the securities of any one issuer other than the United States Government, its
agencies and instrumentalities. In addition, a fund may not invest in a security
that has received, or is deemed comparable in quality to a security that has
received, the second highest rating by the requisite number of NRSROs (a "second
tier security") if immediately after the acquisition thereof the fund would have
invested more than (A) the greater of one percent of its total assets or one
million dollars in securities issued by that issuer which are second tier
securities, or (B) five percent of its total assets in second tier securities.
In order to accomplish this objective, assets of the Portfolio will be
invested in the following types of money market instruments maturing in 364 days
or less from the time of investment, as defined herein:
(1) Securities issued or guaranteed by the United States Government. These
include, for example, Treasury Bills, Bonds and Notes which are direct
obligations of the United States Government.
(2) Obligations issued or guaranteed by agencies or instrumentalities of
the United States Government. Such agencies and instrumentalities
include, for example, Federal Intermediate Credit Banks, Federal Home
Loan Banks, Federal National Mortgage Association and Farmers Home
Administration. Such securities will include those supported by the
full faith and credit of the United States Treasury or the right of the
agency or instrumentality to borrow from the Treasury as well as those
supported only by the credit of the issuing agency or instrumentality.
(3) Federally insured student loans held in trust by the Mid-America
Student Finance Trust, (the "MASFT"), for which Union Bank and Trust
Company, Lincoln, Nebraska, is trustee, created for the purpose of
facilitating the funding and purchase of federally insured student
loans. Insured student loans are made by various banks to students
attending trade schools, colleges and universities under the Federal
Guaranteed Student Loan Program ("GSL Program"). The loans are insured
by guarantee and interest subsidy agreements made by the Secretary of
Education with various agencies pursuant to the Higher Education Act.
Under the GSL Program, banks making the loans and/or the holders of the
loans are reimbursed for defaults and subsidized on the interest paid
on the loans. The Trust will purchase GSL Program loans for the
Portfolio from various institutions, trusts and banks through MASFT,
which will, as part of their agreement to sell loans to MASFT, also
agree to purchase on not less than five days' written notice, the
lesser of 5% of the GSL Program loans held by MASFT or the amount of
GSL Program loans sold by them to MASFT. MASFT will evidence the
Portfolio's purchase of student loans by issuing redeemable Trust
Certificates, which will be issuable only to the Portfolio (except in
extraordinary circumstances) and will represent equitable ownership in
a group of individual student loans. All interest accruing on the
student loans attributable to the Trust Certificates is payable to the
Portfolio net of fees and expenses. The Certificates will have original
maturities of 364 days but will be redeemable by the Portfolio at their
face amount upon not more than five days' written notice. The Trust's
decision to purchase student loans through MASFT for the Portfolio will
be based upon the amount of Portfolios available for investment, the
investment yield of the GSL Program loans compared with yields
available on the other short-term liquid investments and upon the
aggregate amount of student loans owned by the Trust, which may not
exceed 90% of the Trust's assets. The yield to the Portfolio on the
Trust Certificates will be
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commensurate with current net yields on GSL Program loans. Presently,
such loans gross yield approximately the 91-day U.S. Treasury Bill rate,
plus 3.10%. The yield from the student loans owned by the Portfolio
through MASFT is anticipated to be approximately 2.5% less, in the
aggregate, than the student loans purchased as a result of various
fees, which are deducted for origination take-out, servicing and
trustee fees. Further details concerning the Trust and the Portfolio's
investment in Trust Certificates are found in the Statement of
Additional Information.
Assets of the Portfolio will consist of securities with maturities of 364
days or less at date of purchase. The dollar-weighted average maturity of the
Portfolio's investments will be 90 days or less.
As a general policy, it is the Portfolio's intention to hold investments
until they mature. However, in an effort to increase portfolio yields, the
Portfolio may periodically trade securities to take advantage of perceived
disparities between markets for various short-term money market instruments. It
is also possible that redemptions of Portfolio shares could necessitate the sale
of portfolio investments prior to maturity and at times when such sale would be
undesirable because of unfavorable market conditions.
While investments by the Portfolio will be confined to such high-quality
government instruments and insured student loans, the complete elimination of
risk is not possible. Under certain circumstances described in more detail in
the Statement of Additional Information, the net asset value of Portfolio shares
could decrease as a result of events which affect the value of securities. With
respect to the Portfolio's student loans, it is also possible, although
unlikely, that banks who are obligated to repurchase student loans from the
Trust to meet redemption requests of the Portfolio could default on such
commitments, which could also cause the net asset value per share to decrease.
In light of these various contingencies, there can be no assurance the Portfolio
will achieve its investment objectives.
The Portfolio has adopted a number of investment policies and restrictions,
some of which can be changed by the Board of Directors. Others may be changed
only by holders of a majority of the outstanding shares and include the
following.
Without shareholder approval the Portfolio may not: (1) purchase any
securities other than those described under "Investment Policies"; and (2)
invest in securities with legal or contractual restrictions on resale (except
for Trust Certificates) or for which no ready market exists.
The foregoing investment restrictions, which are considered fundamental
policies, cannot be changed without the approval of a "majority" of the
Portfolio's outstanding voting securities, that is, by (a) 67% or more of the
securities voting at a special or annual meeting if more than 50% of the
outstanding shares are represented at such meeting in person or by proxy; or (b)
more than 50% of the outstanding shares, whichever is less. The Statement of
Additional Information includes discussion of certain other investment policies
and restrictions, some of which are also considered fundamental and may not be
changed without shareholder approval.
MANAGEMENT
Board of Directors
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 Portfolio and the Adviser and
to consider policy matters relating to the Portfolio and the Trust.
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Investment Adviser and Administrator
SMITH HAYES Portfolio Management, Inc. has been retained under an
Investment Advisory Agreement with the Trust to act as the Portfolio's Adviser
subject to the authority of the Board of Directors. SMITH HAYES Portfolio
Management, Inc. was incorporated in October, 1987, and advises and manages the
Trust. SMITH HAYES Portfolio Management, Inc., 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 and the
estate of Thomas D. Hayes are the controlling persons of Consolidated Investment
Corporation and Mr. Smith is an officer and director of the Trust. The address
of the Adviser is 500 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508.
The Adviser furnishes the Portfolio 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
Portfolio, and investment advisory facilities and executive and supervisory
personnel for managing the investments and effecting the securities transactions
of the Portfolio. In addition, the Adviser pays the salaries and fees of all
officers and directors of the Trust who are affiliated persons of the Adviser.
Under the Investment Advisory Agreement, the Adviser receives a monthly fee
computed separately for the Portfolio at an annual rate of .10% of the daily
average net asset value of the Portfolio.
SMITH HAYES Portfolio Management, Inc., has also 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 record-keeping services and share
transfer services. The Administrator receives an administration fee, computed
and paid monthly, at an annual rate of .12% of the Portfolio's daily average net
assets.
Expenses
The expenses paid by the Portfolio 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 Rule
12b-1 Plan, custodial charges, registration and blue sky fees incurred in
registering and qualifying the Portfolio under state and federal securities
laws, association fees, directors 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 Portfolio will be allocated among the
Portfolios on a pro rata basis at the time such expenses are accrued. The
Portfolio pays its own brokerage commission and related transaction costs.
Portfolio Brokerage
The primary consideration in effecting transactions for the Portfolio 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 Portfolio'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. Portfolio
transactions for the Portfolio may be effected through SMITH HAYES, which also
acts as the Distributor of the Trust's shares (see "Distribution of Portfolio
Shares" below) if the commissions, fees or other remuneration received by SMITH
HAYES are reasonable and fair compared
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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 Portfolio 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
Portfolio intends to comply with Section 17 (e)(1) of the Investment Trust Act
of 1940 (the "1940 Act"), as amended.
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 is computed separately for each of the Trust's Portfolios and, in
the case of this Portfolio, may not exceed .20% per annum of the average daily
net assets of the Portfolio. 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 who provide services to the Trust
for the Portfolio. 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 Portfolio. 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 Portfolio. In the event distribution expenses for a
Portfolio in any one year exceed the maximum reimbursable under the Plan, such
expenses may not be carried forward to the following year. Further information
regarding the Plan is contained in the Statement of Additional Information.
PURCHASE OF SHARES
General
The Portfolio'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 Portfolio are offered to the public without a sales charge at the
net asset value per share (which usually will be $1.00 per share) next
determined following receipt of an order by SMITH HAYES. See "Valuation of
Shares."
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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.
500 Centre Terrace
1225 "L" Street
Lincoln, Nebraska 68508
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 Portfolios directly to
the Custodian as indicated below.
Federal funds transmitted by wire transfer and received before 11:00 a.m.
will be invested at the net asset value computed at the close of business that
day, funds received after 11:00 a.m. will be invested the following day.
1. Telephone the Trust at (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 TRUST
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 a wire transfer
of funds.
Minimum Investments
A minimum initial aggregate investment of $500,000 is required, unless
waived by the Trust. All investments must be made through your SMITH HAYES
investment executive or other broker-dealer.
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Redemption Procedure
Shares of the Portfolio, 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. Because of the nature of the Portfolio, the redemption
price will usually be $1.00 per share. To redeem shares of the Portfolio, 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, trust, guardianships, custodianships, corporations
and pension and profit-sharing plans.
Payment of Redemption Proceeds
Normally, the Portfolio 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.
A shareholder may request that the Trust transmit redemption proceeds by
Federal bank wire to a bank account designated on the shareholder's account
application form provided all requisite account information is provided to the
Trust.
Involuntary Redemption
The Portfolio reserves the right to redeem a shareholder's account at any
time the net asset value of the account falls below $250,000 as the result of a
redemption or transfer request. Shareholders will be notified in writing that
the value of their account is less than $250,000 and will be allowed 30 days to
make additional investments before the redemption is processed.
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VALUATION OF SHARES
The Portfolio determines its net asset value once each day, as the close of
the New York Stock Exchange (currently 3:00 p.m., Lincoln, Nebraska time) on
each day the New York Stock Exchange is open for business. The calculation is
made after the Portfolio has declared any applicable dividends.
The net asset value per share for the Portfolio is determined by dividing
the value of the securities owned by the Portfolio plus any cash and other
assets (including interest accrued) less all liabilities by the number of
Portfolio shares outstanding. The Portfolio will value its assets pursuant to
the amortized cost method of valuation as permitted by Rule 2a-7 under the 1940
Act. Under this method of valuation, a security is initially valued at cost on
the date of purchase and, thereafter, any discount or premium is amortized on a
straight-line basis to maturity, regardless of the extent of fluctuating
interest rates or the market value of the security. Utilization of the amortized
cost method of valuation under Rule 2a-7 results in the stabilization of the
Portfolio's net asset value at $1.00 per share. The procedures adopted by the
Board of Directors pursuant to Rule 2a-7 are described in more detail in the
Statement of Additional Information. 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 Portfolio may utilize a pricing service, bank, or broker-dealer
experienced in such matters to perform any of the above-described functions.
DIVIDENDS AND TAXES
Dividends
All net income with respect to the shares of the Portfolio is declared and
accrued as a dividend each business day to shareholders of record immediately
before 3:00 p.m., Lincoln, Nebraska time. Dividends are accrued and credited to
shareholders' accounts each business day and are automatically reinvested in
additional Portfolio shares on the last day of each month at the net asset value
of shares on such day, unless the shareholder notifies his or her SMITH HAYES
investment executive or other broker-dealer of an election to receive cash. Cash
payment, if requested, is also accrued through the last day of each month and
checks for such cash payment will be mailed within five days thereof. The
taxable status of income dividends and/or net capital gains distribution is not
affected by whether they are reinvested or paid in cash.
Taxes
The Portfolio will be treated as a separate entity for federal income tax
purposes. The Trust intends to qualify the Portfolio as a "regulated investment
Trust" as defined in the Internal Revenue Code (the "Code"). Provided certain
distribution requirements are met, the Portfolio 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.
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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 at a 31% rate, 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 request
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.
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 one hundred million shares in series
designated Institutional Money Market Portfolio shares. The Board of Directors
is empowered under the Trust's Articles of Incorporation to issue other series
but unissued shares for issuance by one or more existing Portfolios. The Trust
presently has authorized the issuance of share in eight other series. See the
Statement of Additional Information for information regarding the Trust's other
Portfolios.
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 shares 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 Portfolio 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 share voting
for the election of director 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 Portfolio, the shares of the Portfolio vote
as a separate series. Examples of such issues would be proposals to (i) change a
Portfolio's Investment Advisory Agreement, (ii) change a fundamental investment
restriction pertaining to only one Portfolio or (iii) change a Portfolio's
Distribution Plan. In voting on the Investment Advisory Agreement or proposals
affecting only one Portfolio, approval of such agreement or proposal by the
shareholders of one Portfolio would make that agreement effective as to that
Portfolio whether or not the agreement or proposal had been approved by the
Trust's other Portfolios.
Shareholders Meetings
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 share of the Trust
may demand a regular meeting of shareholders by written notice given to the
Chief Executive Officer or Chief Financial Officer
<PAGE>
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.
Allocation of Income and Expenses
The assets received by the Trust for the issue or sale of shares of the
Portfolio, and all income earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are allocated to the Portfolio, and constitute the
underlying assets of the Portfolio. 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 Portfolio 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 Portfolios.
Reports to Shareholders
The Trust will issue semi-annual reports which will include a list of
securities of the Portfolio 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 KPMG Peat Marwick, LLP, Omaha, Nebraska,
independent certified public accountants.
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TABLE OF CONTENTS
Introduction................................. 1
Financial Highlights......................... 2
Investment Objectives and Policies........... 3
Management................................... 5
Distribution of Portfolio Shares............. 6
Purchase of Shares........................... 7
Redemption of Shares......................... 8
Valuation of Shares.......................... 9
Dividend and Taxes........................... 9
General Information.......................... 10
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 INFORM- ATION REFERRED TO ON
THE COVER PAGE OF THIS PROSPECTUS), AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRE-SENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SMITH
HAYES TRUST, INC. OR SMITH HAYES FINANCIAL SERVICES CORPORATION. THIS
PROSPE-CTUS 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.
SMITH HAYES Trust, Inc.
INSTITUTIONAL MONEY MARKET PORTFOLIO
PROSPECTUS
INVESTMENT ADVISER,
ADMINISTRATOR,
TRANSFER AGENT AND
DIVIDEND PAYING AGENT
SMITH HAYES Portfolio
Management, Inc.
DISTRIBUTOR
SMITH HAYES Financial
Services Corporation
CUSTODIAN
Union Bank and Trust Company
Lincoln, Nebraska
October 28, 1994
