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PROSPECTUS
AMERICAN PERFORMANCE GROWTH EQUITY FUND
A VARIABLE NET ASSET VALUE INVESTMENT PORTFOLIO OF
AMERICAN PERFORMANCE FUNDS
3435 Stelzer Road
Columbus, Ohio 43219
For performance, purchase, and redemption information,
call (800) 762-7085
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The American Performance Growth Equity Fund (the "Growth Equity Fund")
is a variable net asset value portfolio of the AMERICAN PERFORMANCE FUNDS
(the "Funds"), a diversified, open-end management investment company which
currently consists of ten separately managed portfolios. The net asset
value per unit of beneficial interest ("Share") of the Fund may be expected
to fluctuate in accordance with the value of each Fund's portfolio
investments.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, BANK OF OKLAHOMA, N.A. OR ANY OF ITS AFFILIATES. THE FUNDS'
SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR BY ANY OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
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 September 8, 1997.
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AMERICAN PERFORMANCE GROWTH EQUITY FUND (the "Growth Equity
Fund") seeks long-term capital appreciation by investing primarily in a
diversified portfolio of common stocks and securities convertible into
common stocks.
Bank of Oklahoma, N.A., Tulsa, Oklahoma ("BOK") serves as the
investment adviser ("Investment Adviser") to the Growth Equity Fund. BISYS
Fund Services, Columbus, Ohio, ("BISYS") acts as the Growth Equity Fund's
Administrator and Distributor.
This Prospectus relates only to the Growth Equity Fund. The Funds also
include two money market portfolios to which BOK serves as Investment
Adviser: the American Performance Cash Management Fund (for which AMR
Investment Services, Inc. ("AMR") serves as Investment Sub-Adviser) and the
American Performance U.S. Treasury Fund, each of which seeks current income
with liquidity and stability of principal (collectively, the "American
Performance Money Market Funds"). The Funds also include four bond
portfolios to which BOK serves as Investment Adviser: the American
Performance Bond Fund, the American Performance Intermediate Bond Fund, and
the American Performance Short-Term Income Fund, each of which seeks
current income, and the American Performance Intermediate Tax-Free Bond
Fund, which seeks current income exempt from Federal taxation, through
investing in diversified portfolios of bonds and other fixed-income
securities (collectively, the "American Performance Bond Investment
Funds"). The Funds also include three additional equity funds to which BOK
serves as Investment Adviser: the American Performance Equity Fund, the
American Performance Aggressive Growth Fund, and the American Performance
Balanced Fund, each of which seeks capital appreciation and income by
investing in equity securities (and in the case of the Balanced Fund, a set
minimum amount of fixed income securities) (collectively, with the Growth
Equity Fund the "American Performance Equity Investment Funds"). Persons
who wish to obtain a copy of the Prospectus for the American Performance
Money Market Funds, the American Performance Equity Investment Funds, or
the American Performance Bond Investment Funds may contact the Funds at the
telephone number shown on the previous page.
ADDITIONAL INFORMATION ABOUT THE FUNDS, CONTAINED IN A STATEMENT OF
ADDITIONAL INFORMATION DATED DECEMBER 16, 1996, AS AMENDED SEPTEMBER 8,
1997, HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS
INCORPORATED BY REFERENCE IN ITS ENTIRETY INTO THIS PROSPECTUS. THIS
STATEMENT OF ADDITIONAL INFORMATION CAN BE OBTAINED WITHOUT CHARGE BY
WRITING TO THE FUNDS OR BY CALLING THE FUNDS AT THE ADDRESS AND TELEPHONE
NUMBER SHOWN ON THE PREVIOUS PAGE.
Please read this Prospectus before investing. It sets forth the
information about the Growth Equity Fund that a prospective investor ought
to know before investing. Investors should retain this Prospectus for
future reference.
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FEE TABLE
---------
<TABLE>
<CAPTION>
Shareholder Transaction Expenses(1) Growth Equity Fund
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<S> <C>
Maximum Sales Load
Imposed on Purchases(2) 4.00%
(as a percentage of offering price)
Maximum Sales Load Imposed
on Reinvested Dividends 0%
(as a percentage of offering price)
Deferred Sales Load 0%
(as a percentage of original
purchase price or redemption
proceeds, if applicable)
Redemption Fees(3) 0%
(as a percentage of amount
redeemed, if applicable)
Exchange Fees $0
</TABLE>
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(1) Participating Organizations (as defined in "DISTRIBUTION") may charge a
Customer's (as defined in "DISTRIBUTION") account fees for automatic investment
and other investment and trust services provided in connection with investment
in the Funds. (See "HOW TO PURCHASE SHARES.")
(2) There may be no sales load imposed upon purchases of shares of the
Funds by (1) investors who purchase through the Investment Adviser and who have
an existing trust relationship with the Investment Adviser; (2) employees of the
Investment Adviser, or its affiliates; (3) each Trustee of the Funds and any
employee of a company that constitutes the principal business activity of a
Trustee; (4) employees of the Distributor and its affiliates; (5) orders placed
on behalf of other investment companies distributed by The BISYS Group, Inc. or
its affiliated companies; (6) existing Shareholders who own Shares in the Fund
within their trust accounts and purchase additional Shares outside of their
trust relationship; and (7) investors within wrap accounts.
(3) A wire redemption charge may be deducted from the amount of a wire
redemption payment made at the request of a holder of Shares. The current
charge, which is subject to change upon notice to Shareholders, is $15.00. (See
"HOW TO REDEEM SHARES --By Telephone.")
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<TABLE>
<CAPTION>
Annual Operating Expenses Growth Equity Fund
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(as a percentage of average net assets)
<S> <C>
Management Fees(4) .50%
(after voluntary fee reductions)
12b-1 Fees .25%
Other Expenses .35%
Total Fund Operating Expenses(5) 1.10%
(after voluntary fee reductions)
</TABLE>
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(4) In order to reduce operating expenses, the Investment Adviser has
currently established the investment advisory fees at the above amount,
pursuant to an agreement with the Funds. The maximum amount of the investment
advisory fees, if charged, would be .69% of the average daily net assets of the
Growth Equity Fund.
(5) This figure is based on estimates and reflects anticipated voluntary
reduction of fees. Absent voluntary reduction of fees, the Total Fund Operating
Expenses for the Growth Equity Fund are estimated to be 1.29% of the Fund's
average daily net assets.
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Example: You would pay the following expenses on a $1,000 investment in each of
the Funds, assuming (1) 5% annual return and (2) redemption at the end of each
time period:
<TABLE>
<CAPTION>
Growth Equity Fund
------------------
<S> <C>
1 Year $51
3 Years $74
5 Years N/A
10 Years N/A
</TABLE>
The purpose of the above table is to assist a potential purchaser of
Shares of the Growth Equity Fund in understanding the various costs and
expenses that an investor in the Growth Equity Fund will bear directly or
indirectly. The examples reflect voluntary reductions of fees, as applicable,
pursuant to the arrangement described in note 4. The subject fee reductions may
cease, which would have the effect of increasing the projected expenses set
forth above in the examples. Such expenses do not include any fees charged by
BOK or any of its affiliates to its customers' accounts which may have invested
in shares of the Fund. See "MANAGEMENT OF THE GROWTH EQUITY FUND," "SALES
CHARGES," and "DISTRIBUTION" for a more complete discussion of the transaction
expenses and annual operating expenses of a holder of Shares ("Shareholder") of
the Growth Equity Fund. NASD rules generally limit the amount that the Fund may
pay under a Distribution Plan. The Fund would stop accruing payments under the
Distribution Plan if, to the extent, and for as long as, such limit would
otherwise be exceeded. Long-term shareholders may pay more than the equivalent
of the maximum front-end sales charges otherwise permitted by the Rules of the
National Association of Securities Dealers, Inc.
THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
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INVESTMENT OBJECTIVE
The investment objective of the Growth Equity Fund is to seek long-term
capital appreciation by investing primarily in a diversified portfolio of
common stocks and securities convertible into common stocks. To achieve its
objective, the Fund under normal market conditions will invest substantially
all, but not less than 70%, of the value of its total assets in equity
securities consisting of common stocks or securities convertible into common
stocks. The Fund will seek to invest in companies with growth characteristics
from a universe of equities above a given market capitalization, currently $500
million. Growth companies will generally be above average in such
characteristics as past earnings per share growth, future estimated earnings
per share growth, sales per share growth, and return on equity. The Fund may
exhibit slightly more volatility than the Standard & Poor's 500 Index.
The investment objectives with respect to the Growth Equity Fund may not
be changed without a vote of the holders of a majority of the outstanding
Shares of the Fund (as defined in the Statement of Additional Information).
There can be no assurance that the investment objectives of the Fund will be
achieved.
Additionally, the Growth Equity Fund may engage in certain investment
techniques which may subject the Fund to certain risks (see "INVESTMENT
POLICIES AND SPECIAL CONSIDERATIONS").
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS
Under normal market conditions, the Growth Equity Fund will invest at
least 70% of the value of its total assets in common stocks and securities
convertible into common stocks of companies believed by the Investment Adviser
to be characterized by sound management and the ability to finance expected
growth. The Growth Equity Fund may also invest up to 30% of the value of its
total assets in preferred stocks, corporate bonds, notes, warrants, and cash
equivalents. Corporate bonds will be rated at the time of purchase within the
three highest ratings categories assigned by a nationally recognized
statistical ratings organization (an "NRSRO") (e.g., at least "A" by Moody's
Investors Services ("Moody's") or Standard & Poor's Corporation ("S&P")) or, if
not rated, found by the Investment Adviser under guidelines established by the
Funds' Board of Trustees to be of comparable quality.
"Cash equivalents" are deposits or high quality, interest-bearing
instruments with a remaining maturity of one year or less. The purpose of cash
equivalents is to provide liquidity and income at money market rates while
minimizing the risk of decline in value to the maximum extent possible. The
instruments may include, but are not limited to, commercial paper, domestic and
Eurodollar certificates of deposit, repurchase agreements, bankers'
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acceptances, United States Treasury Bills, master demand notes, agency discount
notes, bank money market deposit accounts and money market mutual funds. The
Growth Equity Fund will only purchase commercial paper rated at the time of
purchase within the three highest ratings categories assigned by an NRSRO
(e.g., A-1 by S&P, P-1 by Moody's or F-1 by Fitch Investors Service) or, if not
rated, found by the Investment Adviser under guidelines established by the
Funds' Board of Trustees to be of comparable quality. See "Appendix" to the
Statement of Additional Information for an explanation of these ratings. During
temporary defensive periods as determined by the Investment Adviser, the Fund
may hold up to 100% of its total assets in cash equivalents.
INVESTMENT COMPANY SECURITIES. The Growth Equity Fund may invest in shares of
other investment companies, including other American Performance Funds.
However, the Growth Equity Fund may not invest more than 5% of its total assets
in the securities of any one investment company, nor may the Fund own more than
3% of the outstanding securities of any investment company or invest more than
10% of its total assets in the securities of other investment companies. These
investment companies typically pay an investment advisory fee out of their
assets. Therefore, investments may be subject to duplicate management, advisory
and distribution fees. The Investment Adviser will consider this fee in its
investment analysis when determining whether to purchase shares of these
companies for the Growth Equity Fund. This fee is in addition to the fees
received by Growth Equity Fund's Investment Adviser and Administrator. In order
to avoid the imposition of additional fees as a result of investments by the
Growth Equity Fund in shares of other American Performance Funds, the
Investment Adviser and Administrator have agreed to promptly forward to the
Growth Equity Fund any portion of their usual asset-based service fees from an
American Performance Fund which is attributable to investment by the Growth
Equity Fund in shares of such other American Performance Fund.
OPTIONS AND FUTURES CONTRACTS. The Growth Equity Fund may acquire put or call
options and futures contracts and may write covered call options. See the
Statement of Additional Information for more information on these investment
activities.
Futures transactions involve brokerage costs and require the Growth
Equity Fund to segregate assets to cover contracts that would require it to
purchase securities. The Growth Equity Fund may lose the expected benefit of
futures transactions if interest rates or securities prices move in an
unanticipated manner. Such unanticipated changes may also result in poorer
overall performance than if the Growth Equity Fund had not entered into any
futures transactions. In addition, the value of the Growth Equity Fund's
futures positions may not prove to be perfectly or even highly correlated with
the value of its portfolio securities, limiting the Growth Equity Fund's
ability to hedge effectively against interest rate and/or market risk and
giving rise to additional risks. There is no assurance of liquidity in the
secondary market for purposes of closing out futures positions.
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FOREIGN SECURITIES. The Growth Equity Fund may invest in foreign securities
through the purchase of sponsored and unsponsored American Depository Receipts
and may also invest in securities issued by foreign branches of U.S. banks and
foreign banks, in Canadian commercial paper, and in Europaper (U.S. dollar
denominated commercial paper of a foreign issuer). Investment in foreign
securities is subject to special risks, such as future adverse political and
economic developments, possible seizure, nationalization, or expropriation of
foreign investments, less stringent disclosure requirements, the possible
establishment of exchange controls or taxation at the source, or the adoption
of other foreign governmental restrictions.
SECURITIES LENDING. In order to generate additional income, the Growth Equity
Fund may, from time to time, lend its portfolio securities to broker-dealers,
banks, or institutional borrowers of securities. The Fund will enter into loan
agreements only with broker-dealers, banks, or other institutions that the
Investment Adviser has determined are creditworthy under guidelines established
by the Funds' Board of Trustees. See the Statement of Additional Information
for more information on these investment activities.
REPURCHASE AGREEMENTS. Securities held by the Growth Equity Fund may be subject
to repurchase agreements. Under the terms of a repurchase agreement, the Fund
would acquire securities from financial institutions such as member banks of
the Federal Deposit Insurance Corporation or registered broker-dealers which
the Investment Adviser deems creditworthy under guidelines approved by the
Funds' Board of Trustees, subject to the seller's agreement to repurchase such
securities at a mutually agreed upon date and price. The repurchase price would
generally equal the price paid by the Fund plus interest negotiated on the
basis of current short-term rates, which may be more or less than the rate on
the underlying portfolio securities. The seller under a repurchase agreement
will be required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued interest)
and the Investment Adviser will monitor the collateral's value to ensure that
it equals or exceeds the repurchase price. Repurchase agreements are considered
to be loans by an investment company under the Investment Company Act of 1940
(the "1940 Act"). See the Statement of Additional Information for more
information regarding this investment practice.
REVERSE REPURCHASE AGREEMENTS. The Growth Equity Fund may borrow funds for
temporary purposes by entering into reverse repurchase agreements in accordance
with the investment restrictions described below. Pursuant to such agreements,
the Fund would sell portfolio securities to financial institutions such as
banks and broker-dealers and agree to repurchase them at a mutually agreed upon
date and price. At the time the Fund enters into a reverse repurchase
agreement, it will place in a segregated custodial account assets, such as
liquid high quality debt securities, consistent with the Fund's investment
objective having a value not less than 100% of the repurchase price (including
accrued interest), and the Investment Adviser will subsequently monitor the
account to ensure that such required value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund
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<PAGE> 9
may decline below the price at which such Fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered to be borrowings by an
investment company under the 1940 Act.
WHEN-ISSUED SECURITIES. The Growth Equity Fund may purchase securities on a
when-issued basis. When-issued securities are securities purchased for delivery
beyond the normal settlement date at a stated price and yield and thereby
involve a risk that the yield obtained in the transaction will be less than
those available in the market when delivery takes place. The Fund will
generally not pay for such securities or start earning interest on them until
they are received. When the Fund agrees to purchase such securities, its
Custodian will set aside cash or liquid high grade securities equal to the
amount of the commitment in a separate account with the Custodian or a
Sub-Custodian of the Fund. Securities purchased on a when-issued basis are
recorded as an asset and are subject to changes in value based upon changes in
the general level of interest rates. The Fund expects that commitments to
purchase when-issued securities will not exceed 25% of the value of its total
assets absent unusual market conditions. In the event that its commitments to
purchase when-issued securities ever exceeded 25% of the value of its assets,
the Fund's liquidity and the ability of the Investment Adviser to manage it
might be severely affected. The Fund does not intend to purchase when-issued
securities for speculative purposes but only in furtherance of its investment
objective.
PRIVATE PLACEMENT INVESTMENTS. The Growth Equity Fund may invest in commercial
paper issued in reliance on the so-called "private placement" exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, and resold
to qualified institutional buyers under Securities Act Rule 144A ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Funds who agree that they are purchasing the paper for investment and not with
a view to public distribution. Any resale by the purchaser must be in an exempt
transaction and may be accomplished in accordance with Rule 144A. Section 4(2)
paper normally is resold to other institutional investors like the Funds
through or with the assistance of the issuer or investment dealers who make a
market in the Section 4(2) paper, thus providing liquidity. The Fund will not
invest more than 10% of its net assets in Section 4(2) paper and illiquid
securities unless the Investment Adviser determines, by continuous reference to
the appropriate trading markets and pursuant to guidelines approved by the
Board of Trustees, that any Section 4(2) paper held by the Fund in excess of
this level is at all times liquid.
Because it is not possible to predict with assurance exactly how this
market for Section 4(2) paper sold and offered under Rule 144A will develop,
the Board of Trustees and the Investment Adviser, pursuant to the guidelines
approved by the Board of Trustees, will carefully monitor the Fund's
investments in these securities, focusing on such important factors, among
others, as valuation, liquidity, and availability of information. Investments
in Section
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4(2) paper could have the effect of reducing the Fund's liquidity to the extent
that qualified institutional buyers become for a time not interested in
purchasing these restricted securities.
PORTFOLIO TURNOVER. Portfolio turnover may vary greatly from year to year as
well as within a particular year. High turnover rates will generally result in
higher transaction costs to the Growth Equity Fund and may result in additional
tax consequences to the Fund's Shareholders. The portfolio turnover rate for
the Fund is not expected to exceed 100% per year. For further information
regarding portfolio turnover, see the Statement of Additional Information.
INVESTMENT RESTRICTIONS
The Growth Equity Fund is subject to a number of investment restrictions
that may be changed only by a vote of a majority of the outstanding Shares of
the Fund (as defined in "GENERAL INFORMATION-Miscellaneous").
Pursuant to these investment restrictions:
1. The Growth Equity Fund will not purchase a security if, as a result,
with respect to 75% of its portfolio (i) more than 5% of the value of its total
assets would be invested in any one issuer, or (ii) it would hold more than 10%
of any class of securities of such issuer or more than 10% of the outstanding
voting securities of the issuer. There is no limit on the percentage of assets
that may be invested in U.S. Treasury bills, notes, or other obligations issued
or guaranteed by the U.S. Government or its agencies and instrumentalities. For
purposes of this and the immediately following limitation, a security is
considered to be issued by the government entity (or entities) whose assets and
revenues back the security, or, with respect to a private activity bond that is
backed only by the assets and revenues of a non-governmental user, such
non-governmental user.
2. The Growth Equity Fund will not purchase a security if, as a result,
more than 25% of the value of its total assets would be invested in securities
of one or more issuers conducting their principal business activities in the
same industry, provided that (a) this limitation shall not apply to obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities; (b) wholly owned finance companies will be considered to be
in the industries of their parents if their activities are primarily related to
financing the activities of their parents; and (c) utilities will be divided
according to their services. For example, gas, gas transmission, electric and
gas, electric, and telephone will each be considered a separate industry.
3. The Growth Equity Fund may not borrow money or issue senior
securities, except that the Fund may borrow from banks or enter into reverse
repurchase agreements for temporary purposes in amounts up to 10% of the value
of its total assets at the time of such borrowing; or
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mortgage, pledge, or hypothecate any assets, except in connection with any such
borrowing and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of the Fund's total assets at the time of its
borrowing. The Fund will not purchase securities while its borrowings
(including reverse repurchase agreements) exceed 5% of its total assets.
4. The Growth Equity Fund may not make loans, except that the Fund may,
in accordance with its investment objectives and policies, purchase or hold
debt instruments, lend portfolio securities, and enter into repurchase
agreements.
5. The Growth Equity Fund will not enter into a repurchase agreement with
a maturity in excess of seven days if such investment, together with other
instruments in the Fund which are not readily marketable, exceeds 10% of the
Fund's net assets.
VALUATION OF SHARES
The net asset value of the Growth Equity Fund is determined and its
Shares are priced as of the close of regular trading of the New York Stock
Exchange ("NYSE") (generally 4:00 p.m. Eastern Time) on each Business Day
("Valuation Time"). As used herein, a "Business Day" constitutes any day on
which the NYSE is open for trading, and the Federal Reserve Bank of Kansas City
is open, except days on which there are not sufficient changes in the value of
the Fund's portfolio securities that the Fund's net asset value might be
materially affected, or days during which no Shares are tendered for redemption
and no orders to purchase Shares are received. Currently, the NYSE or the
Federal Reserve Bank of Kansas City is closed on the following holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day
and Christmas Day. Net asset value per Share for purposes of pricing sales and
redemptions is calculated by dividing the value of all securities and other
assets belonging to the Fund, less the liabilities charged to the Fund, by the
number of its outstanding Shares.
The securities in the Growth Equity Fund will be valued at market value.
If market quotations are not readily available, the securities will be valued
by a method which the Funds' Board of Trustees believes accurately reflects
fair value. Debt securities with remaining maturities of 60 days or less will
be valued in accordance with the amortized cost method where the Funds'
Trustees determine that amortized cost is fair value. For further information
about valuation of investments, see the Statement of Additional Information.
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HOW TO PURCHASE SHARES
Shares of the Growth Equity Fund are sold on a continuous basis and may
be purchased directly from the Funds' Distributor, BISYS, either by mail, by
telephone, or by electronic transfer. Shares may also be purchased through a
bank or broker-dealer who has established a dealer agreement with the
Distributor. Except as described in "Auto Invest Plan" below, the minimum
initial purchase is $1,000, and the minimum for subsequent purchases is only
$100. These minimums may be waived if purchases are made in connection with
Individual Retirement Accounts ("IRAs"), Keoghs, qualified pension plans,
similar plans, or other employer plans. For information on IRAs, Keoghs or
similar plans, contact BOK at (918) 588-6586.
BY MAIL
Investors may purchase Shares of the Growth Equity Fund by completing and
signing an Account Registration form and mailing it, along with a check (or
other negotiable bank instrument or money order) for at least $1,000, payable
to the appropriate Fund, in care of the Funds' Custodian at Bank of Oklahoma,
N.A., Attention: American Performance Funds, Department 12, Tulsa, Oklahoma
74182. Subsequent purchases of Shares may be made at any time by mailing a
check (or other negotiable bank draft or money order) for at least $100,
payable to the Fund, to the above address.
Account Registration forms can be obtained by calling the Funds at (800)
762-7085.
BY TELEPHONE OR ELECTRONIC TRANSFER
If an investor's Account Registration form has been previously received
by the Distributor, investors may also purchase Shares of the Growth Equity
Fund by telephone or by electronic transfer to the Funds' Custodian. To place
an order by telephone, call the Funds toll-free at (800) 762-7085. Payment for
Shares ordered by telephone may be made by check and must be received by the
Funds' Custodian within the settlement requirements defined under the
Securities Exchange Act of 1934. Shares of the Growth Equity Fund ordered by
telephone will be purchased for the Shareholder's account when the order has
been received. Any questions regarding current settlement requirements or
electronic payment instructions should be directed to the Funds at (800)
762-7085.
If payment for the Shares is not received within the prescribed time
periods, or if a check timely received does not clear, the purchase will be
cancelled and the investor could be liable for any losses or fees incurred.
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AUTO INVEST PLAN
The Funds offer an Auto Invest Plan which enables Shareholders of the
Growth Equity Fund to make regular monthly or quarterly purchases of Shares
through automatic deductions from their bank accounts. With Shareholder
authorization, the Transfer Agent deducts the amount specified from the
Shareholder's bank account which is then automatically invested in Shares at
net asset value. The required minimum initial investment when opening an
account using the Auto Invest Plan is $100; the minimum amount for subsequent
investments in the Fund is $50. To participate in the Auto Invest Plan,
Shareholders should complete the appropriate section of the Account
Registration form which can be acquired by calling (800) 762-7085. To change
the Auto Invest instructions, a Shareholder must submit a written request to
the Funds. A Shareholder may discontinue the feature by submitting a written
request to or by calling the Funds.
FUND DIRECT INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS")
A Fund Direct IRA enables individuals, even if they participate in an
employer-sponsored retirement plan, to establish their own retirement program.
IRA contributions may be tax-deductible and earnings are tax-deferred. Under
the Tax Reform Act of 1986, the tax deductibility of IRA contributions is
restricted or eliminated for individuals who participate in certain employer
pension plans and whose annual income exceeds certain limits. Existing IRAs and
future contributions up to the IRA maximums, whether deductible or not, still
earn income on a tax-deferred basis.
All IRA distribution requests must be made in writing to the Funds. Any
additional deposits to an IRA must distinguish the type and year of the
contribution. For more information on an IRA call the Funds at (800) 762-7085.
Shareholders are advised to consult a tax adviser on IRA contribution and
withdrawal requirements and restrictions.
OTHER INFORMATION REGARDING PURCHASES
Shares may also be purchased through procedures established by the
Distributor in connection with the requirements of qualified accounts
maintained by or on behalf of certain persons ("Customers") by Participating
Organizations under the Funds' Distribution Plan (See "DISTRIBUTION"). Shares
of the Growth Equity Fund sold to a Participating Organization on behalf of
Customers will normally be held of record by the Participating Organization and
it is the responsibility of the Participating Organization to transmit purchase
or redemption orders to the Distributor and to deliver funds for the purchase
thereof on a timely basis.
Depending upon the terms of a particular Customer account, a
Participating Organization may charge a Customer account fees for services
provided in connection with
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<PAGE> 14
investment in the Growth Equity Fund. Information concerning these services and
any charges can be obtained from the Participating Organization or one of its
affiliates. This Prospectus should be read in conjunction with any such
information so received.
Shares of the Growth Equity Fund are purchased at the net asset value per
share (see "VALUATION OF SHARES") next determined after receipt by the
Distributor of an order to purchase Shares in good form, plus any applicable
sales charge as described below. Purchases of Shares in the Fund will be
effected only on a Business Day (as defined in "VALUATION OF SHARES") of the
Fund. An order received prior to the Valuation Time on any Business Day will be
executed at the net asset value determined as of the Valuation Time on the day
of receipt. An order received after the Valuation Time on any Business Day will
be executed at the net asset value determined as of the Valuation Time on the
next Business Day.
In the case of orders for the purchase of Shares placed through a
broker-dealer, the applicable public offering price will be the net asset value
as so determined, but only if the broker-dealer receives the order prior to the
Valuation Time for that day and transmits it to the Distributor prior to the
Valuation Time for that day. The broker-dealer is responsible for transmitting
such orders promptly. If the broker-dealer fails to do so, the investor's right
to that day's closing price must be settled between the investor and the
broker-dealer. If the broker-dealer receives the order after the Valuation Time
for that day, the price will be based on the net asset value determined as of
the Valuation Time for the next day.
The Growth Equity Fund reserves the right to reject any order for the
purchase of its Shares in whole or in part, including purchases made with
foreign and third party checks.
Every Shareholder will receive a confirmation of each new transaction in
the Shareholder's account, which will show the total number of Shares of the
Growth Equity Fund owned by the Shareholder and the number of Shares being held
in safekeeping by the Transfer Agent for the account of the Shareholder.
Confirmation of purchases and redemptions of Shares of the Fund by a
Participating Organization on behalf of a Customer will be sent by the
Participating Organization. Shareholders may rely on these statements in lieu
of certificates. No certificates representing Shares of the Fund will be
issued.
SALES CHARGES
The public offering price of a Share of each of the Growth Equity Fund
equals its net asset value plus a sales charge. BISYS receives this sales
charge as Distributor and reallows a portion of it as dealer discounts and
brokerage commissions. However, the Distributor, at its sole discretion, may
pay certain dealers all or part of the portion of the sales charge it receives.
-14-
<PAGE> 15
A broker or dealer who receives a reallowance in excess of 90% of the sales
charge may be deemed to be an "underwriter" for purposes of the Securities Act
of 1933.
The following table sets forth information pertaining to the Sales
Charges for the Growth Equity Fund.
<TABLE>
<CAPTION>
Sales Sales Dealer Discounts
Charge as Charge as and Brokerage
a Percent- a Percent- Commissions as
age of Net age of Net % of Public
Amount Offering Offering
Amount of Purchase Invested Price Price
- ------------------ ---------- ---------- ---------------
<S> <C> <C> <C>
Less than $50,000......................... 4.17% 4.00% 3.50%
$50,000 but less than $250,000............ 3.63% 3.50% 3.00%
$250,000 but less than $500,000........... 3.09% 3.00% 2.50%
$500,000 but less than $1,000,000......... 2.56% 2.50% 2.25%
$1,000,000 or more........................ 2.04% 2.00% 2.00%
</TABLE>
From time to time dealers who receive dealer discounts and brokerage
commissions from the Distributor may reallow all or a portion of such dealer
discounts and brokerage commissions to other dealers or brokers.
The Distributor, at its expense, will also provide additional
compensation to dealers in connection with sales of Shares of the Fund. Such
compensation will include financial assistance to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns regarding one or more Funds of the Funds, and/or
other dealer-sponsored special events. In some instances, this compensation
will be made available only to certain dealers whose representatives have sold
a significant amount of such Shares. Compensation will include payment for
travel expenses, including lodging, incurred in connection with trips taken by
invited registered representatives and members of their families to locations
within or outside of the United States for meetings or seminars of a business
nature. Compensation will also include the following types of non-cash
compensation offered through sales contests: (1) vacation trips, including the
provision of travel arrangements and lodging at luxury resorts at exotic
locations, (2) tickets for entertainment events (such as concerts, cruises and
sporting events) and (3) merchandise (such as clothing, trophies, clocks and
pens). Dealers may not use sales of a Fund's Shares to qualify for this
compensation to the extent such may be prohibited by the laws of any state or
any self-regulatory agency, such as the National Association of Securities
Dealers, Inc. None of the aforementioned compensation is paid for by any Fund
or its Shareholders.
-15-
<PAGE> 16
SALES CHARGE WAIVERS
The Distributor may periodically waive the sales charges for all
customers with respect to the Funds. In addition, the Distributor may waive the
sales charge for the purchase of a Fund's shares with the proceeds from the
recent redemption of shares of another non-money market mutual fund that
imposes a sales charge.
The sales charges may also be waived for (1) investors who purchase
through accounts with the Investment Adviser and through their existing trust
relationship with the Investment Adviser; (2) employees of the Investment
Adviser or its affiliates; (3) each Trustee of the Funds and any employee of a
company that constitutes the principal business activity of a Trustee; (4)
employees of the Distributor and its affiliates; (5) orders placed on behalf of
other investment companies distributed by The BISYS Group, Inc. or its
affiliated companies; (6) existing Shareholders who own Shares in any of the
Funds within their trust accounts and purchase additional Shares outside of
these trust relationships; and (7) investors within wrap accounts.
Each investor described in paragraphs (2), (3), (4), and (6) above must
identify himself or herself at the time of purchase. When an investor who has
previously redeemed Shares of any American Performance Fund re-enters the
American Performance Funds, the sales charge on the newly purchased shares will
be waived on a one-time basis in an amount up to the total of any sales charge
paid on the Shares previously redeemed. If the Shareholder exercising this
re-entry privilege paid a sales charge on the redeemed shares and held them for
less than 91 days, such Shareholder must reduce his or her cost basis of the
redeemed shares for purposes of determining any capital gain or loss on the
redemption by the lesser of (1) the sales charge paid for those shares, or (2)
the sales charge waived in connection with the purchase of the new shares. The
Funds reserve the right to alter the terms of their sales charge waiver
practices upon sixty days' notice to Shareholders.
CONCURRENT PURCHASES AND RIGHT OF ACCUMULATION
For purposes of qualifying for a reduced sales charge, investors have the
privilege of combining concurrent purchases of, and holdings in, shares of any
Funds of the Funds sold with a sales charge ("Eligible Shares"). Investors are
permitted to purchase Eligible Shares at the public offering price applicable
to the total of (a) the dollar amount of the Eligible Shares then being
purchased plus (b) an amount equal to the then-current net asset value of the
purchaser's combined holdings of Eligible Shares.
To receive the applicable public offering price pursuant to concurrent
purchases and the right of accumulation, Shareholders must, at the time of
purchase, give the Distributor sufficient
-16-
<PAGE> 17
information to permit confirmation of qualification. Investors may combine
purchases of Eligible Shares that are made in their individual capacity with
(1) purchases that are made by members of their immediate household and (2)
purchases made by businesses that they own as sole proprietorships, for
purposes of obtaining reduced sales charges pursuant to concurrent purchases
and the right of accumulation. In order to accomplish this, however, investors
must designate on the Account Registration form the accounts that are to be
combined for this purpose. Investors can only designate accounts that are open
at the time of the concurrent purchases and when the right of accumulation is
exercised.
LETTER OF INTENT
You may obtain a reduced sales charge by means of a written Letter of
Intent which expresses your intention to invest, within a period of 13 months,
a certain amount in Shares of any of the American Performance Funds which
charge a sales load. Each purchase of Shares under a Letter of Intent will be
made at the public offering price plus the sales charge applicable at the time
of such purchase to a single transaction of the total dollar amount indicated
in the Letter of Intent. A Letter of Intent may include purchases of Shares
made not more than 90 days prior to the date the investor signs a Letter of
Intent; however, the 13-month period during which the Letter of Intent is in
effect will begin on the date of the earliest purchase to be included.
A Letter of Intent is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Letter of Intent is 5% of such amount. Shares purchased with the first 5% of
such amount will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
Shares actually purchased if the full amount indicated is not purchased. Such
escrowed Shares will be involuntarily redeemed to pay the additional sales
charge, if necessary. Dividends on escrowed Shares, whether paid in cash or
reinvested in additional Shares are not subject to escrow. The escrowed Shares
will not be available for disposal by the investor until all purchases pursuant
to the Letter of Intent have been made or the higher sales charge has been
paid. When the full amount indicated has been purchased, the escrow will be
released.
Additionally, if the total purchases within the 13-month period exceed
the amount specified, an adjustment will be made to reflect further reduced
sales charges applicable to such purchases. Adjustments for these purchases and
purchases made during the 90-day period prior to submission of the Letter of
Intent will be made at the conclusion of the 13-month period and in the form of
additional shares credited to the shareholder's account at the then current
Public Offering Price applicable to a single purchase of the total amount of
the total purchase.
-17-
<PAGE> 18
For further information, interested investors should contact the
Distributor. Letter of Intent privileges may be amended or terminated without
notice at any time by the Distributor.
EXCHANGE PRIVILEGE
Shares of the Growth Equity Fund may be exchanged without payment of a
sales charge for Shares of any American Performance Fund having a sales charge
equal to or less than that of the Fund Shares sought to be exchanged. If the
Shareholder exercising the exchange privilege paid a sales charge on the
exchanged Shares that is less than the sales charge applicable to the Shares
sought to be acquired through the exchange, such Shareholder must pay a sales
charge on the exchange equal to the difference between the sales charge paid
for the exchanged Shares and the sales charge applicable to the Shares sought
to be acquired through the exchange. The exchange will be made on the basis of
the relative net asset values of the Shares exchanged. An exchange is
considered a sale of Shares and may result in a capital gain or loss for
federal income tax purposes. If the Shareholder exercising the exchange
privilege paid a sales charge on the exchanged Shares and held them for less
than 91 days, for purposes of determining the amount of the capital gain or
loss, such Shareholder must reduce his or her cost basis of the exchanged
Shares by the lesser of (1) the sales charge paid for those Shares, or (2) the
sales charge waived on the exchange. The sales charge is treated as incurred in
connection with the acquisition of the newly exchanged-for Shares. The exchange
privilege may only be exercised in states where the exchange may legally be
made. The Funds reserve the right to eliminate or to alter the terms of this
exchange offer upon sixty days' notice to Shareholders.
A Shareholder wishing to exchange his or her Shares may do so by
contacting the Funds at (800) 762-7085 or by providing written instructions to
the Distributor. Any Shareholder who wishes to make an exchange must have
received a current Prospectus of the Fund in which he or she wishes to invest
before the exchange will be effected.
HOW TO REDEEM SHARES
Shares may ordinarily be redeemed by mail or by telephone. Shareholders
may redeem their Shares without charge on any day that the net asset value is
calculated (see "VALUATION OF SHARES"). However, all or part of a Customer's
Shares may be redeemed in accordance with instructions and limitations
pertaining to his or her account held at a Participating Organization.
-18-
<PAGE> 19
BY MAIL
Shares may be redeemed by mail by sending a written request to the
Distributor in care of the Funds' Custodian at Bank of Oklahoma, N.A.,
Attention: American Performance Funds, Department 12, Tulsa, Oklahoma 74182.
The Distributor may require a signature guarantee by an eligible guarantor
institution. For purposes of this policy, the term "eligible guarantor
institution" shall include banks, brokers, dealers, credit unions, securities
exchanges and associations, clearing agencies and savings associations as those
terms are defined in Rule 17Ad-15 under the Securities Exchange Act of 1934.
The Distributor reserves the right to reject any signature guarantee if (i) it
has reason to believe that the signature is not genuine, (ii) it has reason to
believe that the transaction would otherwise be improper, or (iii) the
guarantor institution is a broker or dealer that is neither a member of a
clearing corporation nor maintains net capital of at least $100,000. The
signature guarantee requirements will be waived if all of the following
conditions apply: (1) the redemption check is payable to the Shareholder(s) of
record, and (2) the redemption check is mailed to the Shareholder(s) at the
address of record. The Shareholder may also have the proceeds mailed or sent
electronically to a commercial bank account previously designated on the
Account Registration form or by written instruction to the Distributor. There
is no charge for having redemption requests mailed to a designated bank
account.
BY TELEPHONE
Shares may be redeemed by telephone if the Account Registration form
reflects that the Shareholder has that capability. The Shareholder may have the
proceeds mailed to his or her address or mailed or sent electronically to a
commercial bank account previously designated on the Account Registration form.
Under most circumstances, payments will be transmitted on the next Business Day
following receipt of a valid request for redemption. Electronic payment
requests may be made by the Shareholder by calling the Funds at (800) 762-7085.
The Transfer Agent may reduce the amount of a wire redemption payment by the
Custodian's then-current wire redemption charge (presently $15.00). Neither the
Distributor, the Transfer Agent, the Investment Adviser, nor the Funds will be
liable for any losses, damages, expenses or costs arising out of any telephone
transaction (including exchanges and redemptions) effected in accordance with
the Funds' telephone transaction procedures, upon instructions reasonably
believed to be genuine. The Funds will employ procedures designed to provide
reasonable assurance that the instructions communicated by telephone are
genuine; if these procedures are not followed, the Funds may be liable for any
losses due to unauthorized or fraudulent instructions. These procedures include
recording all phone conversations, sending confirmations to Shareholders within
72 hours of the telephone transaction, verifying the account name and a
Shareholder's account number or tax identification number and sending
redemption proceeds only to the address of record or to a previously authorized
account. If, due to temporary adverse conditions, investors are unable to
effect telephone transactions,
-19-
<PAGE> 20
Shareholders may also mail the redemption request to the Distributor at the
address listed above under "HOW TO REDEEM SHARES -- By Mail." The telephone
redemption option will be suspended for a period of 10 days following a
telephonic address change.
SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan enables Shareholders of the Funds to make
regular monthly or quarterly redemptions of Shares if their account has at
least $10,000. With Shareholder authorization, the Transfer Agent will
automatically redeem Shares at the net asset value on the dates of the
withdrawal and have a check in the amount specified mailed to the Shareholder.
The required minimum withdrawal is $100. To participate in the Systematic
Withdrawal Plan, Shareholders should call (800) 762-7085 for more information.
Purchases of additional Shares concurrent with withdrawals may be
disadvantageous to certain Shareholders because of tax liabilities. To change
the Systematic Withdrawal instructions, a Shareholder must submit a written
request to the Distributor. A Shareholder may discontinue the feature by
submitting a written request to or by calling the Funds.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per Share next
determined after receipt of a valid request for redemption, as described above.
Payment to Shareholders for Shares redeemed will be made within the settlement
requirements defined in the Securities Exchange Act of 1934, after receipt by
the Distributor of the request for redemption. However, to the greatest extent
possible, the Funds will attempt to honor requests from Shareholders for next
Business Day payments upon redemption of Shares if the request for redemption
is received by the Transfer Agent before the last Valuation Time on a Business
Day or, if the request for redemption is received after the last Valuation
Time, to honor requests for payment within two Business Days, unless it would
be disadvantageous to the Funds or the Shareholders of the particular Fund to
sell or liquidate portfolio securities in an amount sufficient to satisfy
requests for payments in that manner.
At various times, the Growth Equity Fund may be requested to redeem
Shares for which it has not yet received good payment. In such circumstances,
the forwarding of proceeds may be delayed for up to 15 days until payment has
been collected for the purchase of such Shares. The Growth Equity Fund intends
to pay cash for all Shares redeemed, but under abnormal conditions which make
payment in cash unwise, payment may be made wholly or partly in readily
marketable portfolio securities with a market value equal to the redemption
price. In such cases, an investor may incur brokerage costs in converting such
securities to cash.
Due to the relatively high cost of handling small investments, the Growth
Equity Fund reserves the right to redeem, at net asset value, the Shares of any
Shareholder if, because of
-20-
<PAGE> 21
redemptions of Shares by or on behalf of the Shareholder, the account of such
Shareholder in the Fund has a value of less than $500. Accordingly, an investor
purchasing Shares of the Fund in only the minimum investment amount may be
subject to such involuntary redemption if he or she thereafter redeems some of
his or her Shares. Before the Fund exercises its right to redeem such Shares
and to send the proceeds to the Shareholder, the Shareholder will be given
notice that the value of the Shares in his or her account is less than the
minimum amount and will be allowed 60 days to make an additional investment in
such Fund in an amount which will increase the value of the account to at least
$500.
See the Funds' Statement of Additional Information -- "ADDITIONAL
PURCHASE AND REDEMPTION INFORMATION" -- for examples of when the right of
redemption may be suspended.
DIVIDENDS
Net investment income of the Growth Equity Fund is declared and paid
quarterly as a dividend to persons who are Shareholders at the close of
business on the day of declaration. Net capital gain income is distributed at
least once a year. A Shareholder will automatically receive all income
dividends and capital gains distributions in additional full and fractional
Shares at net asset value as of the ex-dividend date, unless the Shareholder
elects to receive dividends or distributions in cash. Reinvested dividends
receive the same tax treatment as dividends paid in cash. Such election, or any
revocation thereof, must be made in writing to the Distributor at: BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio 43219 and will become effective
with respect to dividends and distributions having record dates after its
receipt by the Distributor.
Shareholders may elect to have all income, dividends, and capital gains
distributions paid by check or reinvested in the Fund. If you elect to receive
distributions paid by check and the check (1) is returned and marked as
"undeliverable" or (2) remains uncashed for six months, your payment election
will be changed automatically and your future dividend and capital gains
distribution will be reinvested in the Fund at the per share net asset value
determined as of the date of payment of the distribution. In addition, any
undeliverable check that remains uncashed for six months will be canceled and
reinvested in the Fund at the per share net asset value determined as of the
date of cancellation.
FEDERAL INCOME TAXES
The Growth Equity Fund is treated as a separate entity for federal income
tax purposes, each intends to qualify as a "regulated investment company" under
the Internal Revenue Code
-21-
<PAGE> 22
of 1986, as amended, (the "Code") and each intends to distribute all of its net
investment income and capital gains so that it is not required to pay federal
income taxes on amounts so distributed to Shareholders. Shareholders will be
advised at least annually as to the federal income tax consequences of
distributions made during the year.
Receipt by a Shareholder of a distribution of ordinary income and/or an
excess of net short-term capital gain over net long-term loss is treated as a
receipt of ordinary income, whether such distribution is paid in cash or
additional shares. The "70 percent dividends-received deduction" for
corporations generally will apply to these distributions to corporate
shareholders to the extent the distribution represents amounts that would
qualify for the "dividends-received" deduction if the Fund making the
distribution were a regular corporation, and to the extent designated by such
Fund as so qualifying.
Distribution by the Growth Equity Fund of the excess of net long-term
capital gain over net short-term capital loss is generally taxable to
Shareholders as long-term capital gain in the year in which it is received,
regardless of how long the Shareholder has held shares in the Fund. Such
distributions are not eligible for the dividends-received deduction. If a
Shareholder disposes of Shares in the Fund at a loss before holding such Shares
for longer than six months, such loss will be treated as a long-term capital
loss to the extent the Shareholder has received a capital gain dividend on the
Shares.
Prior to purchasing Shares, the impact of dividends or capital gains
distributions which are expected to be declared or have been declared, but have
not been paid, should be carefully considered. Dividends or capital gains
distributions paid after a purchase of Shares are subject to federal income
taxes, although in some circumstances the dividends or distributions may be, as
an economic matter, a return of capital.
Additional information regarding federal income taxes is contained in the
Statement of Additional Information under "INVESTMENT OBJECTIVE AND POLICIES -
Additional Tax Information Concerning All The Funds." However, the foregoing
and the material in the Statement of Additional Information are only brief
summaries of some of the important tax considerations generally affecting the
Growth Equity Fund and its Shareholders. In addition, the foregoing discussion
and the federal tax information in the Statement of Additional Information are
based on tax laws and regulations which are in effect as of the date of this
Prospectus; these laws and regulations may subsequently change. Prospective
investors in the Growth Equity Fund are advised to consult their tax adviser
with special reference to their own tax situations, including the potential
application of state and local taxes.
-22-
<PAGE> 23
DISTRIBUTION
Shares of the Growth Equity Fund are sold on a continuous basis by the
Distributor for the Funds, BISYS Fund Services (the "Distributor"). Under the
Funds' Distribution and Shareholder Services Plan (the "Distribution Plan"),
the Growth Equity Fund will pay a monthly distribution fee (also referred to as
a 12b-1 fee) to the Distributor as compensation for its services in connection
with the Distribution Plan at an annual rate equal to the lesser of (1) such
fee as may from time to time be agreed upon in writing by the Funds and the
Distributor, or (2) twenty-five one-hundredths of one percent (.25%) of the
average daily net assets of the Growth Equity Fund. The Distributor may use the
distribution fee to provide distribution assistance with respect to the Fund's
Shares or to provide Shareholder services to the holders of the Fund's Shares
("Customers") purchased through financial institutions and intermediaries,
broker-dealers, or similar entities, including affiliates or subsidiaries of
the Distributor ("Participating Organizations") pursuant to contractual
arrangements with the Distributor under the Distribution Plan.
The distribution fee will be payable without regard to whether the amount
of the fee is more or less than the actual expenses incurred in a particular
year by the Distributor in connection with distribution assistance or
Shareholder services rendered by the Distributor itself or incurred by the
Distributor pursuant to contractual agreement entered into under the
Distribution Plan.
The Glass-Steagall Act and other applicable laws generally prohibit banks
from engaging in the business of underwriting securities, but in general do not
prohibit banks from purchasing securities as agent for and upon the order of
customers. Accordingly, banks acting as Participating Organizations may provide
only those services which, in the banks' opinion, are consistent with the then
current legal requirements. It is possible, however, that future legislative,
judicial or administrative action affecting the securities activities of banks
will cause the Funds to alter or discontinue their arrangements with banks that
act as Participating Organizations, or change their method of operations. It is
not anticipated, however, that any change in the Funds' method of operations
would affect their net asset value per share or result in financial loss to any
customer. See the Statement of Additional Information for further information
regarding the Distribution Plan and "MANAGEMENT OF THE GROWTH EQUITY FUND -
Banking Laws" for information concerning the applicability of the
Glass-Steagall Act to the Investment Adviser's investment advisory services to
the Funds.
-23-
<PAGE> 24
MANAGEMENT OF THE GROWTH EQUITY FUND
TRUSTEES OF THE FUNDS
Overall responsibility for management of the Funds rests with the Board
of Trustees of the Funds, who are elected by the Shareholders of the Funds. The
Funds will be managed by the Trustees in accordance with the laws of the
Commonwealth of Massachusetts governing business trusts. There are currently
four Trustees, of whom three are not "interested persons" of the Funds within
the meaning of that term under the 1940 Act. The Trustees, in turn, elect the
officers of the Funds to supervise actively the Funds' day-to-day operations.
The Trustees of the Funds, their addresses, and their principal
occupations during the past five years, are as follows:
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With the Funds During Past Five Years
- ---------------- -------------- ----------------------
<S> <C> <C>
Walter B. Grimm* Chairman From June, 1992 to present,
3435 Stelzer Road and Trustee employee of BISYS Fund
Columbus, Ohio 43219 Services; from 1987 to
June 1992, President of Leigh
Consulting/Investments
(investment firm).
Michael J. Hall Trustee From December, 1995 to
7130 South Lewis, Suite 850 present, Vice President and
Tulsa, Oklahoma 74136 Chief Financial Officer,
Worldwide Sports &
Recreation, Inc.; from
January, 1994 to present,
Vice President and Chief
Financial Officer, Pexco
Holdings, Inc.; from 1991
to December, 1993, Senior
Vice President, Finance
Administration, Chief
Financial Officer,
Treasurer and Director of
Operations, Europe/Africa/
Middle East Region of T.D.
Williamson, Inc. (a heavy
equipment manufacturer).
</TABLE>
-24-
<PAGE> 25
<TABLE>
<S> <C> <C>
Perry A. Wimpey Trustee From January, 1992 to
4843 S. 69th East Avenue present, Local Financial
Tulsa, Oklahoma 74145 and Regulatory Consultant;
from June, 1985 to January,
1992, Senior Vice President and
Chief Financial Officer,
ONEOK Inc. (an energy
company).
I. Edgar Hendrix Trustee From June, 1983 to present,
8 East 3rd Street Vice President and Treasurer,
Tulsa, Oklahoma 74103 Parker Drilling Co.
</TABLE>
- --------
*Indicates an "interested person" of the Funds as defined in the 1940 Act.
The Trustees receive fees and are reimbursed for their expenses in
connection with each meeting of the Board of Trustees they attend. However, no
officer or employee of an Investment Adviser, Sub-Adviser, or the Administrator
of the Funds receives any compensation from the Funds for acting as a Trustee.
The officers of the Funds receive no compensation directly from the Funds for
performing the duties of their offices. BISYS receives fees from each Fund of
the Funds for acting as Administrator and may receive additional income under
the Distribution Plan of the Funds.
INVESTMENT ADVISER
BOK serves as investment adviser to the Growth Equity Fund. BOK is a
subsidiary of BOK Financial Corporation ("BOK Financial"). BOK Financial is
controlled by its principal shareholder, George B. Kaiser. Through its
subsidiaries, BOK Financial provides a full array of trust, commercial banking
and retail banking services. Its non-bank subsidiaries engage in various
bank-related services, including mortgage banking and providing credit life,
accident, and health insurance on certain loans originated by its subsidiaries.
BOK maintains offices in Tulsa and Oklahoma City and offers a variety
of services for both corporate and individual customers. Individual financial
trust services include personal trust management, administration of estates,
and management of individual investments and custodial accounts. For corporate
clients, the array of services includes management, administration and
recordkeeping of pension plans, thrift plans, 401(k) plans and master trust
plans. BOK has experience in providing investment advisory services to the
Funds, and experience in managing collective investment funds with investment
portfolios and objectives
-25-
<PAGE> 26
comparable to those of the Funds. BOK also serves as transfer agent and
registrar for corporate securities, paying agent for dividends and interest,
and indenture trustee of bond issues. At December 31, 1996, BOK was responsible
for approximately $8.1 billion in assets including approximately $4.2 billion
in assets under management and possessed average equity capital of $322
million.
Subject to the general supervision of the Funds' Board of Trustees and
in accordance with the investment objective and restrictions of the Growth
Equity Fund, BOK manages the Fund, makes decisions with respect to and places
orders for all purchases and sales of their portfolio securities, and maintains
the Fund's records relating to such purchases.
The person primarily responsible for the day-to-day management of the
Growth Equity Fund is Grafton M. Potter. Mr. Potter has been manager of the
American Performance Equity Fund since its inception in 1990. Since 1988, Mr.
Potter has served as Director of Equity Research for the Investment Adviser.
For the services provided and expenses assumed pursuant to its
investment advisory agreement with the Funds, BOK receives a fee from the
Growth Equity Fund, computed daily and paid monthly, equaling the lesser of (1)
such fee as may from time to time be agreed upon by the Funds and BOK, or (2)
sixty-nine one-hundredths of one percent (.69%) of the Growth Equity Fund's
average daily net assets. BOK also receives fee income from the Funds from
several other sources. (See "SALES CHARGES," "DISTRIBUTION," and "MANAGEMENT OF
THE GROWTH EQUITY FUND -- Custodian and Transfer Agent"). BOK may periodically
waive all or a portion of its advisory fee with respect to the Fund to increase
the net income of the Fund available for distribution as dividends. In order to
reduce operating expenses, BOK has currently established the investment
advisory fees pertaining to the Fund at 50% of the Fund's average daily net
assets.
ADMINISTRATOR AND DISTRIBUTOR
BISYS is the Administrator for the Growth Equity Fund, and also acts
as the Fund's principal underwriter and Distributor (the "Administrator" or the
"Distributor," as the context indicates). BISYS is a subsidiary of The BISYS
Group, Inc., 150 Clove Road, Little Falls, New Jersey 07424, a publicly owned
company engaged in information processing, loan servicing and 401(k)
administration and recordkeeping services to and through banking and other
financial organizations. The Administrator generally assists in all aspects of
the Growth Equity Fund's administration and operation.
For expenses assumed and services provided as Administrator pursuant
to its management and administration agreement with the Funds, BISYS receives a
fee from the Growth Equity Fund, computed daily and paid periodically, at the
lesser of (1) such fee as may
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<PAGE> 27
from time to time be agreed upon in writing by the Funds and the Administrator,
or (2) twenty one-hundredths of one percent (.20%) of the Fund's average daily
net assets. The Administrator may periodically waive all or a portion of its
administrative fee with respect to the Fund to increase the net income of the
Fund available for distribution as dividends.
SUB-ADMINISTRATOR
BOK serves as the Sub-Administrator to the Growth Equity Fund pursuant
to an agreement between the Administrator and BOK. Pursuant to this agreement,
BOK has assumed many of the Administrator's duties, for which BOK receives a
fee, paid by the Administrator, calculated at an annual rate of five
one-hundredths of one percent (.05%) of the Growth Equity Fund's average net
assets.
EXPENSES
The Investment Adviser and the Administrator each bear all expenses in
connection with the performance of their services as investment adviser and
general manager and administrator, respectively, other than the cost of
securities (including brokerage commissions) purchased for the Growth Equity
Fund. The Fund bears the following expenses relating to its respective
operations: taxes, interest, brokerage fees and commissions, fees and travel
expenses of the Trustees of the Funds, Securities and Exchange Commission fees,
state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to current
Shareholders, outside auditing and legal expenses, advisory and administration
fees, fees and reasonable out-of-pocket expenses of the custodian and transfer
agent, expenses incurred for pricing securities owned by the Fund, certain
insurance premiums, costs of maintenance of the Fund's existence, costs of
Shareholders' and Trustees' reports and meetings, and any extraordinary
expenses incurred in each Fund's operation.
BANKING LAWS
The Investment Adviser believes that it may perform the investment
advisory services for the Growth Equity Fund contemplated by its agreements
with the Funds and by this Prospectus without violating the Glass-Steagall Act.
Future changes in federal or state statutes and regulations relating to
permissible activities of banks or bank holding companies and their
subsidiaries and affiliates as well as further judicial or administrative
decisions or interpretations of present and future statutes and regulations
could change the manner in which the Investment Adviser could continue to
perform such services for the Funds. See the Statement of Additional
Information under the heading "MANAGEMENT OF THE FUNDS--Glass-Steagall Act" for
further discussion of applicable banking laws and regulations.
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<PAGE> 28
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
GENERAL INFORMATION
DESCRIPTION OF THE FUNDS AND THEIR SHARES
The Growth Equity Fund represents a separate series of units of
beneficial interest ("Shares") of American Performance Funds, a Massachusetts
business trust which was organized in October of 1987 and began active
operations in August of 1990. The organizational expenses of the Growth Equity
Fund were capitalized and will be amortized during the Fund's first two years
of operations. Such amortization will reduce amounts available for distribution
as dividends to Shareholders. Each Share represents an equal proportionate
interest in a Fund with other Shares of the same series, and is entitled to
such dividends and distributions out of the income earned on the assets
belonging to that Fund as are declared at the discretion of the Trustees.
Shareholders are entitled to one vote for each Share, and a
proportionate fractional vote for any fraction of a Share, and will vote in the
aggregate and not by series except as otherwise expressly required by law.
Although the Funds are not required to hold annual meetings of
Shareholders, Shareholders have the right (1) to call a meeting to elect or
remove one or more of the Trustees of the Funds and (2) to be assisted by the
Trustees in communicating with other Shareholders of the Funds. Shareholder
inquiries should be directed to the Secretary of the Funds, at 3435 Stelzer
Road, Columbus, Ohio 43219.
Overall responsibility for the management of the Funds is vested in
the Board of Trustees. See "MANAGEMENT OF THE GROWTH EQUITY FUND - Trustees of
the Funds." Individual Trustees are elected by the Shareholders and may be
removed by the Board of Trustees or Shareholders in accordance with the
provisions of the Declaration of Trust and By-laws of the Funds and
Massachusetts law. See "ADDITIONAL INFORMATION Miscellaneous" in the Statement
of Additional Information for further information.
CUSTODIAN AND TRANSFER AGENT
Bank of Oklahoma, N.A. serves as custodian for the Funds
("Custodian"). BISYS Fund Services Ohio, Inc., an affiliate of BISYS, serves
as the transfer agent for the Funds ("Transfer Agent") and performs fund
accounting.
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<PAGE> 29
PERFORMANCE INFORMATION
The Growth Equity Fund will commence operations immediately subsequent
to the transfer of assets by the Equity Growth Trust B to the Growth Equity
Fund in exchange for shares of the Growth Equity Fund. The Fund's portfolio of
investments upon commencement of operations will be the same as the portfolio
of the Equity Growth Trust B immediately prior to the transfer.
The Equity Growth Trust B is not a registered investment company as it
is exempt from registration under the 1940 Act. Since, in a practical sense,
the common trust fund constitutes a "predecessor" of the Growth Equity Fund,
the Growth Equity Fund calculates its performance for periods commencing prior
to the transfer of the Equity Growth Trust B's assets to the Growth Equity Fund
by including the Equity Growth Trust B's total return adjusted to reflect the
deduction of anticipated fees and expenses, absent any waivers, applicable to
the Growth Equity Fund as stated in the Fee Table in this prospectus. These
fees and expenses include applicable sales charges and Rule 12b-1 fees.
The Growth Equity Fund from time to time may advertise certain
investment performance figures, as discussed below. The performance figures
shown immediately below are based on historical earnings of the Equity Growth
Trust B, but past performance data is not necessarily indicative of future
performance of the Fund.
COMPARATIVE PERFORMANCE INFORMATION REGARDING THE EQUITY
GROWTH TRUST B AND THE GROWTH EQUITY FUND
NO LOAD AVERAGE ANNUAL TOTAL RETURN+
Fund 1 year 3 years Since inception
- ---- ------ ------- ---------------
Equity Growth 58.39% 32.23% 30.79%
Trust B
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<PAGE> 30
AVERAGE ANNUAL TOTAL RETURN
SUBJECT TO SALES LOAD+*
Fund 1 year 3 years Since inception
---- ------ ------- ---------------
Equity Growth 52.06% 30.44% 29.10%
Trust B
+Figures were calculated pursuant to a methodology established by the SEC.
The inception date of the Equity Growth Trust B was June 30, 1994. The one
year and three year total return figures are for the one year or three
years ending on July 31, 1997.
*The maximum sales load is 4.00% for the American Performance Growth
Equity Fund.
The aggregate annual return for the Equity Growth Trust B from June
30, 1994 through July 31, 1997, absent any sales load, was 132.63%. The
aggregate annual return for the Equity Growth Trust B from June 30, 1994
through July 31, 1997, taking into account a sales load, was 123.32%.
The above-quoted performance data is the performance of the Equity
Growth Trust B for the period before the Growth Equity Fund commenced
operations adjusted to reflect the deduction of anticipated fees and
expenses, absent any waivers, applicable to the American Performance Growth
Equity Fund as stated in this prospectus in the Fee Table. The Equity Growth
Trust B was not registered under the 1940 Act and therefore was not subject
to certain investment restrictions, limitations and diversification
requirements imposed by the Act and the Code. If the Equity Growth Trust B
had been registered under the 1940 Act, its performance may have been
adversely affected. The investment objective, restrictions and guidelines of
the Growth Equity Fund are substantially similar to the Equity Growth Trust
B and both are managed by the same personnel.
From time to time performance information for the Growth Equity Fund
showing its average annual total return and aggregate total return may be
presented in advertisements, sales literature and shareholder reports. Such
performance figures are based on historical earnings and are not intended
to indicate future performance. Total return will be calculated for the
period since the establishment of the Growth Equity Fund and will, unless
otherwise noted, reflect the imposition of the maximum sales charge. For
the information of Shareholders not subject to a sales charge, the Growth
Equity Fund may also publish total return figures which include no sales
charge. Average annual total return is measured by comparing the value of
an investment in the Growth Equity Fund at the beginning of the relevant
period to the redemption value of the investment at the end of the period
(assuming immediate reinvestment of any dividends or capital gains
distributions) and annualizing the result. Aggregate total return is
measured similarly to average annual total return, however the resulting
difference is not annualized. The yield of the Growth Equity Fund is
determined by annualizing the Fund's net investment income per share during
a recent specified thirty-day period ending on the last day
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<PAGE> 31
of the most recent calendar quarter, and dividing that amount by the Fund's
per share net asset value on the last day of the period.
In addition, from time to time the Funds may present their respective
distribution rates in supplemental sales literature which is accompanied or
preceded by a prospectus and in Shareholder reports. Distribution rates
will be computed by dividing the distribution per share made by a Fund over
a twelve-month period by the maximum offering price per share. The
calculation of income in the distribution rate includes both income and
capital gain dividends and does not reflect unrealized gains or losses,
although a Fund may also present a distribution rate excluding the effect
of capital gains. The distribution rate differs from the yield, because it
includes capital items which are often non-recurring in nature, whereas
yield does not include such items. Distribution rates may also be presented
excluding the effect of a sales charge, if any.
Investors may also judge the performance of the Growth Equity Fund by
comparing it to the performance of other mutual funds or mutual fund
portfolios with comparable investment objectives and policies through
various mutual fund or market indices such as those prepared by Dow Jones &
Co., Inc., Standard & Poor's Corporation, The Russell 2000 Index, and
Morningstar, Inc. and to data prepared by Lipper Analytical Services, Inc.
Comparisons may also be made to indices or data published in Money
Magazine, Forbes, Barron's, The Wall Street Journal, The New York Times,
Business Week, Pensions and Investments, Fortune, Ibbotson Associates,
Inc., U.S.A. Today, CDA/Wiesenberger, American Banker, Institutional
Investor and local newspapers. In addition to performance information,
general information about the Fund that appears in a publication such as
those mentioned above may be included in advertisements and in reports to
Shareholders.
Total return and yield are functions of the type and quality of
instruments held in the portfolio, operating expenses, and market
conditions. Consequently, total return and yield will fluctuate and are not
necessarily representative of future results. Any fees charged by a
Participating Organization with respect to Customer accounts for investing
in shares of the Growth Equity Fund will not be included in performance
calculations; such fees, if charged, will reduce the actual performance
from that quoted. Further information regarding performance comparisons may
be found in the Statement of Additional Information under "Performance
Comparisons."
Additional information about the performance of the Growth Equity Fund
is contained in the Funds' Annual Report to Shareholders, which is
available free of charge by calling the telephone number on the front page
of this Prospectus.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual
reports audited by independent public accountants.
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<PAGE> 32
As used in this Prospectus and in the Statement of Additional
Information, "assets belonging to" a Fund means the consideration received
by the Funds upon the issuance or sale of Shares in that Fund, together
with all income, earnings, profits, and proceeds derived from the
investment thereof including any proceeds from the sale, exchange, or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds, and any general assets of the Funds not
readily identified as belonging to a particular Fund that are allocated to
that Fund by the Funds' Board of Trustees. The Board of Trustees may
allocate such general assets in any manner it deems fair and equitable. It
is anticipated that the factor that will be used by the Board of Trustees
in making allocations of general assets to particular Funds will be the
relative net asset values of the respective Funds at the time of
allocation. Assets belonging to a particular Fund are charged with the
direct liabilities and expenses with respect to that Fund, and with a share
of the general liabilities and expenses of the Funds not readily identified
as belonging to a particular Fund that are allocated to that Fund in
proportion to the relative net asset values of the respective Funds at the
time of allocation. The timing of allocations of general assets and general
liabilities and expenses of the Funds to particular Funds will be
determined by the Board of Trustees of the Funds and will be in accordance
with generally accepted accounting principles. Determinations by the Board
of Trustees of the Funds as to the timing of the allocation of general
liabilities and expenses and as to the timing and allocable portion of any
general assets with respect to a particular Fund are conclusive.
As used in this Prospectus and in the Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of the Funds
or a particular Fund means the affirmative vote, at a meeting of
Shareholders duly called, of the lesser of (a) 67% or more of the
outstanding Shares of the Funds or such Fund present at a meeting at which
the holders of more than 50% of the outstanding Shares of the Funds or such
Fund are represented in person or by proxy, or (b) the holders of more than
50% of the outstanding shares of the Funds or such Fund.
Inquiries regarding the Growth Equity Fund may be directed in writing
to the Funds at 3435 Stelzer Road, Columbus, Ohio 43219, or by calling toll
free (800) 762-7085.
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<PAGE> 33
AMERICAN PERFORMANCE FUNDS
GROWTH EQUITY FUND
INVESTMENT ADVISER
Bank of Oklahoma, N.A.
Bank of Oklahoma Tower
One Williams Center
Tulsa, Oklahoma 74103
ADMINISTRATOR/DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
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<PAGE> 34
TABLE OF CONTENTS
Page
FEE TABLE.......................................................................
INVESTMENT OBJECTIVE............................................................
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS..................................
INVESTMENT RESTRICTIONS.........................................................
VALUATION OF SHARES.............................................................
HOW TO PURCHASE SHARES..........................................................
SALES CHARGES...................................................................
SALES CHARGE WAIVERS............................................................
CONCURRENT PURCHASES AND RIGHT OF ACCUMULATION..................................
LETTER OF INTENT................................................................
EXCHANGE PRIVILEGE..............................................................
HOW TO REDEEM SHARES............................................................
DIVIDENDS.......................................................................
FEDERAL INCOME TAXES............................................................
DISTRIBUTION....................................................................
MANAGEMENT OF THE GROWTH EQUITY FUND............................................
GENERAL INFORMATION.............................................................
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<PAGE> 35
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the
offering made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Growth Equity Fund or the Distributor. This Prospectus does not constitute
an offering by the Growth Equity Fund or by the Distributor in any
jurisdiction in which such offering may not lawfully be made.
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<PAGE> 36
STATEMENT OF ADDITIONAL INFORMATION
AMERICAN PERFORMANCE FUNDS
AMERICAN PERFORMANCE MONEY MARKET FUNDS
AMERICAN PERFORMANCE BOND INVESTMENT FUNDS
AMERICAN PERFORMANCE EQUITY INVESTMENT FUNDS
December 16, 1996
as amended September 8, 1997
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectuses for the American Performance Money
Market Funds, the American Performance Bond Investment Funds, and the American
Performance Equity Investment Funds, each of which bears the same date as this
Statement of Additional Information. This Statement of Additional Information
is incorporated in its entirety into those Prospectuses. A copy of each of the
Prospectuses for the American Performance Funds (the "Funds") may be obtained
by writing the Funds at 3435 Stelzer Road, Columbus, Ohio 43219, or by
telephoning toll free (800) 762-7085.
<PAGE> 37
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE FUNDS..................................................................................................1
INVESTMENT OBJECTIVE AND POLICIES..........................................................................1
ADDITIONAL INFORMATION ON FUND INSTRUMENTS...........................................................1
Bank Obligations............................................................................1
U.S. Government Obligations.................................................................3
Purchases of Options........................................................................4
Covered Calls...............................................................................4
Puts .......................................................................................6
Futures Contracts...........................................................................7
Mortgage-Related Securities.................................................................8
Loan Participation..........................................................................9
Foreign Investments........................................................................10
When-Issued Securities.....................................................................10
Securities Lending.........................................................................11
Repurchase Agreements......................................................................11
Municipal Securities.......................................................................12
INVESTMENT RESTRICTIONS.............................................................................13
PORTFOLIO TURNOVER..................................................................................14
ADDITIONAL TAX INFORMATION CONCERNING ALL THE FUNDS ................................................15
ADDITIONAL TAX INFORMATION CONCERNING THE INTERMEDIATE
TAX-FREE BOND FUND.........................................................................17
VALUATION.................................................................................................19
THE MONEY MARKET FUNDS..............................................................................19
THE BOND AND EQUITY INVESTMENT FUNDS................................................................20
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................................................20
MANAGEMENT OF THE FUNDS...................................................................................21
TRUSTEES AND OFFICERS...............................................................................21
INVESTMENT ADVISER AND SUB-ADVISER..................................................................22
DISTRIBUTION........................................................................................25
GLASS-STEAGALL ACT..................................................................................28
PORTFOLIO TRANSACTIONS..............................................................................29
ADMINISTRATOR.......................................................................................31
SUB-ADMINISTRATOR...................................................................................33
EXPENSES ...........................................................................................33
</TABLE>
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<PAGE> 38
<TABLE>
<S> <C>
DISTRIBUTOR.........................................................................................34
CUSTODIAN, TRANSFER AGENT, AND FUND ACCOUNTANT......................................................34
AUDITORS ...........................................................................................37
LEGAL COUNSEL.......................................................................................37
ADDITIONAL INFORMATION....................................................................................37
DESCRIPTION OF SHARES...............................................................................37
SHAREHOLDER AND TRUSTEE LIABILITY...................................................................38
CALCULATION OF PERFORMANCE DATA.....................................................................39
PERFORMANCE COMPARISONS.............................................................................41
MISCELLANEOUS.......................................................................................42
FINANCIAL STATEMENTS......................................................................................48
APPENDIX..................................................................................................49
</TABLE>
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<PAGE> 39
THE FUNDS
The American Performance Funds (the "Funds") consist of ten series of
units of beneficial interest ("Shares") each representing interests in one
of ten separate investment portfolios of a diversified open-end management
investment company: the American Performance U.S. Treasury Fund (the "U.S.
Treasury Fund"), the American Performance Cash Management Fund (the "Cash
Management Fund"), the American Performance Equity Fund (the "Equity
Fund"), the American Performance Aggressive Growth Fund (the "Aggressive
Growth Fund"), the American Performance Balanced Fund (the "Balanced
Fund"), the American Performance Bond Fund (the "Bond Fund"), the American
Performance Intermediate Bond Fund (the "Intermediate Bond Fund"), the
American Performance Intermediate Tax-Free Bond Fund (the "Intermediate
Tax-Free Bond Fund"), and the American Performance Short-Term Income Fund
(the "Short-Term Income Fund") and the American Performance Growth Equity
Fund (the "Growth Equity Fund"). The U.S. Treasury Fund and the Cash
Management Fund are sometimes referred to herein as the "Money Market
Funds"; the Equity Fund, the Aggressive Growth Fund, the Balanced Fund and
the Growth Equity Fund are sometimes referred to herein as the "Equity
Investment Funds"; and the Bond Fund, the Intermediate Bond Fund, the
Intermediate Tax-Free Bond Fund, and the Short-Term Income Fund are
sometimes referred to herein as the "Bond Investment Funds." Much of the
information contained herein expands upon subjects discussed in the
Prospectuses for the respective Funds. No investment in Shares of a Fund
should be made without first reading that Fund's Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement each Fund's investment objective and
policies as set forth in the respective Prospectus for that Fund.
ADDITIONAL INFORMATION ON FUND INSTRUMENTS
BANK OBLIGATIONS
The Cash Management Fund, the Bond Investment Funds, and the Equity
Investment Funds may invest in obligations of the banking industry such as
bankers' acceptances, commercial paper, loan participations, bearer deposit
notes, promissory notes, floating or variable rate obligations,
certificates of deposit, and demand and time deposits. The Cash Management
Fund will normally invest more than 25% of its assets in such investments.
Bankers' acceptances: Bankers' acceptances are negotiable drafts or
bills of exchange typically drawn by an importer or exporter to pay for
specific merchandise, which are "accepted" by a bank, meaning, in effect,
that the bank unconditionally agrees to pay the face value of the
instrument on maturity. The Funds will invest in only those bankers'
acceptances guaranteed by domestic and foreign banks having, at the time of
investment, total assets in excess of $1 billion (as of the date of their
most recently published financial statements).
B-1
<PAGE> 40
Certificates of deposit: Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank for a
definite period of time and earning a specified return. Certificates of
deposit will be those of domestic and foreign branches of U.S. commercial
banks which, at the time of purchase, have total assets in excess of $1
billion (as of the date of their most recently published financial
statements). Certificates of deposit may also include those issued by
foreign banks outside the United States with total assets at the time of
purchase, in excess of the equivalent of $1 billion. The Funds may also
invest in Eurodollar certificates of deposit which are U.S. dollar
denominated certificates of deposit issued by branches of foreign and
domestic banks located outside the United States and Yankee certificates of
deposit which are certificates of deposit issued by a U.S. branch of a
foreign bank denominated in U.S. dollars and held in the United States.
In addition, the Funds may invest in bearer deposit notes, which are
negotiable time deposits with a specific maturity date issued by a bank,
and time deposits, which are interest bearing non-negotiable deposits at a
bank that have a specific maturity date.
Commercial Paper: Commercial paper consists of unsecured promissory
notes issued by corporations. Except as noted below with respect to
variable amount master demand notes, issues of commercial paper normally
have maturities of nine months or less and fixed rates of return.
The above Funds may also invest in Canadian Commercial Paper which is
commercial paper issued by a Canadian corporation or a Canadian counterpart
of a U.S. corporation and in Europaper which is U.S. dollar denominated
commercial paper of a foreign issuer.
Variable amount and floating rate notes: Commercial paper eligible for
investment by the Cash Management Fund, the Equity Investment Funds, and
the Bond Investment Funds may include variable amount and floating rate
notes. A variable rate note is one whose terms provide for the readjustment
of its interest rate on set dates and which, upon such readjustment, can
reasonably be expected to have a fair market value that approximates its
par value. A floating rate note is one whose terms provide for the
readjustment of its interest rate whenever a specified interest rate
changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value. Such notes are frequently not rated
by credit rating agencies; however, unrated variable and floating rate
notes purchased by a Fund will be determined by the Investment Adviser or
Sub-Adviser under guidelines established by the Funds' Board of Trustees to
be of comparable quality, at the time of purchase, to rated instruments
which are eligible for purchase under the Fund's investment policies. In
making such determinations, the Investment Adviser or Sub-Adviser will
consider the earning power, cash flow and other liquidity ratios of the
issuers of such notes (such issuers include financial, merchandising, bank
holding and other companies) and will monitor their financial condition.
Although there may be no active secondary market with respect to a
particular variable or floating rate note purchased by a Fund, the Fund may
re-sell the note at any time to a third party. The absence of such an
active secondary market, however, could make it difficult for the Fund to
dispose of the variable or
B-2
<PAGE> 41
floating rate note involved in the event the issuer of the note defaulted
on its payment obligations, and the Fund could, for this or other reasons,
suffer a loss to the extent of the default. Variable or floating rate notes
may be secured by bank letters of credit or drafts.
Variable or floating rate notes with stated maturities of more than
one year may, under the Securities and Exchange Commission's amortized cost
rule, 17 C.F.R. Section 270.2a-7, be deemed to have shorter maturities as
follows:
(1) A note that is issued or guaranteed by the United States
Government or any agency thereof which has a variable rate of interest
readjusted no less frequently than every 762 days will be deemed by a Fund
to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
(2) A variable rate note, the principal amount of which is
scheduled on the face of the instrument to be paid in 397 days or less,
will be deemed by a Fund to have a maturity equal to the period remaining
until the next readjustment of the interest rate.
(3) A variable rate note that is subject to a demand feature will
be deemed by a Fund to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand.
(4) A floating rate note that is subject to a demand feature will
be deemed by a Fund to have a maturity equal to the period remaining until
the principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the
Fund is entitled to receive the principal amount of the note either at any
time on no more than 30 days' notice or at specified intervals not
exceeding one year and upon no more than 30 days' notice.
U.S. GOVERNMENT OBLIGATIONS
The U.S. Treasury Fund invests exclusively in obligations issued
or guaranteed by the U.S. Government, some of which may be subject to
repurchase agreements. All of the other Funds may invest in obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, some of which may be subject to repurchase agreements.
(Obligations of certain agencies and instrumentalities of the U.S.
Government are supported by the full faith and credit of the U.S.
Government; others are supported by the right of the issuer to borrow from
the Government; others are supported by the discretionary authority of the
U.S. Government to purchase the agency's obligations; and still others 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. A Fund (excluding however, the U.S. Treasury Fund) will
invest in the obligations of
B-3
<PAGE> 42
such agencies or instrumentalities only when the Investment Adviser or
Sub-Adviser believes that the credit risk with respect thereto is minimal.
For information on mortgage-related securities issued by certain agencies
or instrumentalities of the U.S. Government, see "Investment Objective and
Policies-Mortgage-related Securities" in this Statement of Additional
Information.
PURCHASES OF OPTIONS
The Equity Investment Funds and Bond Investment Funds may purchase
call options. A call option gives the purchaser of the option the right to
buy, and a writer has the obligation to sell, the underlying security at
the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to
the writer is consideration for undertaking the obligations under the
option contract. Call options purchased by the foregoing Funds will be
valued at the last sale price, or in the absence of such a price, at the
mean between bid and asked price.
The Equity Investment Funds and Bond Investment Funds may also
purchase index options. Index options (or options on securities indices)
are similar in many respects to options on securities, except that an index
option gives the holder the right to receive, upon exercise, cash instead
of securities, if the closing level of the securities index upon which the
option is based is greater than the exercise price of the option.
Purchasing options is a specialized investment technique that
entails a substantial risk of a complete loss of the amounts paid as
premiums to writers of options. Each of the Equity Investment and Bond
Investment Funds will purchase call options and index options only when its
total investment in such options immediately after such purchase, will not
exceed 5% of its total assets.
COVERED CALLS
The Equity Investment Funds and the Bond Investment Funds may
write (sell) "covered" call options and purchase options to close out
options previously written by the Fund. Such options must be listed on a
national securities exchange. The purpose of each Fund in writing covered
call options is to generate additional premium income. This premium income
will serve to enhance the Fund's total return and will reduce the effect of
any price decline of the security involved in the option.
A call option gives the holder (buyer) the "right to purchase" a
security at a specified price (the exercise price) at any time until a
certain date (the expiration date). So long as the obligation of the writer
of a call option continues, the writer may be assigned an exercise notice
by the broker-dealer through whom such option was sold, requiring the
writer to deliver the underlying security against payment of the exercise
price. This obligation terminates upon the expiration of the call option,
or such earlier time at which the writer effects a closing purchase
B-4
<PAGE> 43
transaction by purchasing an option identical to that previously sold. To
secure the writer's obligation to deliver the underlying security in the
case of a call option, subject to the rules of the Options Clearing
Corporation, a writer is required to deposit in escrow the underlying
security or other assets in accordance with such rules. The Equity
Investment Funds and the Bond Investment Funds will write only covered call
options. This means that a Fund will only write a call option on a security
which a Fund already owns. In order to comply with the requirements of the
securities laws in several states, a Fund will not write a covered call
option if, as a result, the aggregate market value of all portfolio
securities covering call options or currencies subject to put options
exceeds 25% of the market value of the Fund's net assets.
Portfolio securities on which call options may be written will be
purchased solely on the basis of investment considerations consistent with
each Fund's investment objectives. The writing of covered call options is a
conservative investment technique believed to involve relatively little
risk (in contrast to the writing of naked or uncovered options, which a
Fund will not do), but capable of enhancing the Fund's total return. When
writing a covered call option, a Fund, in return for the premium, gives up
the opportunity for profit from a price increase in the underlying security
above the exercise price, but conversely retains the risk of loss should
the price of the security decline. Unlike one who owns securities not
subject to an option, a Fund has no control over when it may be required to
sell the underlying securities, since it may be assigned an exercise notice
at any time prior to the expiration of its obligation as a writer. If a
call option which a Fund has written expires, a Fund will realize a gain in
the amount of the premium; however, such gain may be offset by a decline in
the market value of the underlying security during the option period. If
the call option is exercised, a Fund will realize a gain or loss from the
sale of the underlying security. The security covering the call will be
maintained in a segregated account of the Fund's custodian. The Equity
Investment Funds and Bond Investment Funds do not consider a security
covered by a call to be "pledged" as that term is used in each Fund's
policy which limits the pledging or mortgaging of its net assets.
The premium received is the fair market value of an option. The
premium each Fund will receive from writing a call option will reflect,
among other things, the current market price of the underlying security,
the relationship of the exercise price to such market price, the historical
price volatility of the underlying security, and the length of the option
period. Once the decision to write a call option has been made, the
Investment Adviser in determining whether a particular call option should
be written on a particular security, will consider the reasonableness of
the anticipated premium and the likelihood that a liquid secondary market
will exist for those options. The premium received by a Fund for writing
covered call options will be recorded as a liability in the Fund's
statement of assets and liabilities. This liability will be adjusted daily
to the option's current market value, which will be the latest sale price
at the time at which the net asset value per Share of the Fund is computed
(close of the New York Stock Exchange), or, in the absence of such sale,
the latest asked price. The liability will be extinguished upon expiration
of the option, the purchase of an identical option in the closing
transaction, or delivery of the underlying security upon the exercise of
the option.
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Closing transactions will be effected in order to realize a profit
on an outstanding call option, to prevent an underlying security from being
called, or to permit the sale of the underlying security. Furthermore,
effecting a closing transaction will permit a Fund to write another call
option on the underlying security with either a different exercise price or
expiration date or both. If a Fund desires to sell a particular security
from its portfolio on which it has written a call option, it will seek to
effect a closing transaction prior to, or concurrently with, the sale of
the security. There is, of course, no assurance that a Fund will be able to
effect such closing transactions at a favorable price. If a Fund cannot
enter into such a transaction, it may be required to hold a security that
it might otherwise have sold, in which case it would continue to be at
market risk on the security. This could result in higher transaction costs.
A Fund will pay transaction costs in connection with the writing of options
to close out previously written options. Such transaction costs are
normally higher than those applicable to purchases and sales of portfolio
securities.
Call options written by a Fund will normally have expiration dates
of less than nine months from the date written. The exercise price of the
options may be below, equal to, or above the current market values of the
underlying securities at the time the options are written. From time to
time, a Fund may purchase an underlying security for delivery in accordance
with an exercise notice of a call option assigned to it, rather than
delivering such security from its portfolio. In such cases, additional
costs will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market
price of a call option will generally reflect increases in the market price
of the underlying security, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of
the underlying security owned by the Fund.
PUTS
The Equity Investment Funds, Bond Investment Funds, and the Cash
Management Fund may acquire "puts" with respect to securities held in their
portfolios. A put is a right to sell a specified security (or securities)
within a specified period of time at a specified exercise price. The Cash
Management Fund may sell, transfer, or assign a put only in conjunction
with the sale, transfer, or assignment of the underlying security or
securities.
The amount payable to a Fund upon its exercise of a "put" on debt
securities is normally (i) the Fund's acquisition cost of the securities
(excluding any accrued interest which the portfolio paid on their
acquisition), less any amortized market premium or plus any amortized
market or original issue discount during the period the Fund owned the
securities, plus (ii) all interest accrued on the securities since the last
interest payment date during that period.
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Puts may be acquired by a Fund to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of a
Fund's assets at a rate of return more favorable than that of the
underlying security or to limit the potential losses involved in a decline
in an equity security's market value.
Each Fund intends to enter into puts only with dealers, banks, and
broker-dealers which, in the Investment Adviser's or Sub-Adviser's opinion,
present minimal credit risks.
FUTURES CONTRACTS
The Equity Investment Funds and the Bond Investment Funds may
enter into contracts for the future delivery of securities and futures
contracts based on a specific security, class of securities or an index,
purchase or sell options on any such futures contracts, and engage in
related closing transactions. A futures contract on a securities index is
an agreement obligating either party to pay, and entitling the other party
to receive, while the contract is outstanding, cash payments based on the
level of a specified securities index.
When interest rates are expected to rise or market values of
portfolio securities are expected to fall, a Fund can seek through the sale
of futures contracts to offset a decline in the value of its portfolio
securities. When interest rates are expected to fall or market values are
expected to rise, a Fund, through the purchase of such contracts, can
attempt to secure better rates or prices for the Fund than might later be
available in the market when it effects anticipated purchases.
The acquisition of put and call options on futures contracts will,
respectively, give a Fund the right (but not the obligation), for a
specified price, to sell or to purchase the underlying futures contract,
upon exercise of the option, at any time during the option period.
Futures transactions involve brokerage costs and require a Fund to
segregate assets to cover contracts that would require it to purchase
securities. A Fund may lose the expected benefit of futures transactions if
interest rates or securities prices move in an unanticipated manner. Such
unanticipated changes may also result in poorer overall performance than if
the Fund had not entered into any futures transactions. In addition, the
value of a Fund's futures positions may not prove to be perfectly or even
highly correlated with the value of its portfolio securities, limiting the
Fund's ability to hedge effectively against interest rate and/or market
risk and giving rise to additional risks. There is no assurance of
liquidity in the secondary market for purposes of closing out futures
positions.
Aggregate initial margin deposits for futures contracts, and
premiums paid for related options, may not exceed 5% of an Equity
Investment or Bond Investment Fund's total assets, and the value of
securities that are the subject of such futures and options (both for
receipt and delivery) may not exceed one-third of the market value of an
Equity Investment or Bond Investment Fund's total assets. Futures
transactions will be limited to the extent necessary to
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maintain each Equity Investment or Bond Investment Fund's qualification as
a regulated investment company ("RIC").
MORTGAGE-RELATED SECURITIES
Each of the Funds may, consistent with its investment objective,
restrictions and policies, invest in mortgage-related securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. Each
of the Equity Fund, the Aggressive Growth Fund, the Growth Equity Fund and
the Intermediate Tax-Free Bond Fund will limit its total investment in such
securities to 5% or less of net assets.
Mortgage-related securities, for purposes of the Funds'
Prospectuses and this Statement of Additional Information, represent pools
of mortgage loans assembled for sale to investors by various governmental
agencies such as the Government National Mortgage Association and
government-related organizations such as the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation, as well as by
nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies.
Although certain mortgage-related securities are guaranteed by a third
party or otherwise similarly secured, the market value of the security,
which may fluctuate, is not so secured. If a Fund purchases a
mortgage-related security at a premium, that portion may be lost if there
is a decline in the market value of the security whether resulting from
changes in interest rates or prepayments in the underlying mortgage
collateral. As with other interest-bearing securities, the prices of such
securities are inversely affected by changes in interest rates. However,
though the value of a mortgage-related security may decline when interest
rates rise, the converse is not necessarily true since in periods of
declining interest rates the mortgages underlying the securities are prone
to prepayment. For this and other reasons, a mortgage-related security's
stated maturity may be shortened by unscheduled prepayments on the
underlying mortgages and, therefore, it is not possible to predict
accurately the security's return to a Fund. In addition, regular payments
received in respect of mortgage-related securities include both interest
and principal. No assurance can be given as to the return a Fund will
receive when these amounts are reinvested.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related
securities and among the securities that they issue. Mortgage-related
securities issued by the Government National Mortgage Association ("GNMA")
include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and
interest by GNMA and such guarantee is backed by the full faith and credit
of the United States. GNMA is a wholly-owned U.S. Government corporation
within the Department of Housing and Urban Development. GNMA certificates
also are supported by the authority of GNMA to borrow funds from the U.S.
Government to make payments under its guarantee. Mortgage-related
securities issued by the Federal National Mortgage Association ("FNMA")
include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") which are solely the obligations of the
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FNMA and are not backed by or entitled to the full faith and credit of the
United States. The FNMA is a government-sponsored organization owned
entirely by private stock-holders. Fannie Maes are guaranteed as to timely
payment of principal and interest by FNMA. Mortgage-related securities
issued by the Federal Home Loan Mortgage Corporation ("FHLMC") include
FHLMC Mortgage Participation Certificates (also known as "Freddie Macs" or
"PCs"). The FHLMC is a corporate instrumentality of the United States,
created pursuant to an Act of Congress, which is owned entirely by Federal
Home Loan Banks. Freddie Macs are not guaranteed by the United States or by
any Federal Home Loan Banks and do not constitute a debt or obligation of
the United States or of any Federal Home Loan Bank. Freddie Macs entitle
the holder to timely payment of interest, which is guaranteed by the FHLMC.
The FHLMC guarantees either ultimate collection or timely payment of all
principal payments on the underlying mortgage loans. When the FHLMC does
not guarantee timely payment of principal, FHLMC may remit the amount due
on account of its guarantee of ultimate payment of principal at any time
after default on an underlying mortgage, but in no event later than one
year after it becomes payable.
LOAN PARTICIPATION
As noted in its Prospectus, the Cash Management Fund may purchase
certain loan participation interests. Loan participation interests
represent interests in bank loans made to corporations. The contractual
arrangement with the bank transfers the cash stream of the underlying bank
loan to the participating investor. Because the issuing bank does not
guarantee the participations, they are subject to the credit risks
generally associated with the underlying corporate borrower. The secondary
market, if any, for these loan participations is extremely limited and any
such participations purchased by the investor are regarded as illiquid. In
addition, because it may be necessary under the terms of the loan
participation for the investor to assert through the issuing bank such
rights as may exist against the underlying corporate borrower, in the event
the underlying corporate borrower fails to pay principal, and interest when
due, the investor may be subject to delays, expenses and risks that are
greater than those that would have been involved if the investor had
purchased a direct obligation (such as commercial paper) of such borrower.
Moreover, under the terms of the loan participation the investor may be
regarded as a creditor of the issuing bank (rather than of the underlying
corporate borrower), so that the issuer may also be subject to the risk
that the issuing bank may become insolvent. Further, in the event of the
bankruptcy or insolvency of the corporate borrower, the loan participation
may be subject to certain defenses that can be asserted by such borrower as
a result of improper conduct by the issuing bank.
FOREIGN INVESTMENTS
The Cash Management Fund, the Equity Investment Funds, the Bond
Fund, the Intermediate Bond Fund, and the Short-Term Income Fund may,
subject to their investment objectives, restrictions and policies, invest
in certain obligations or securities of foreign issuers. Permissible
investments may consist of obligations of foreign branches, agencies or
subsidiaries of U.S. banks and of foreign banks, including European
Certificates of Deposit, European Time
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Deposits, Canadian Time Deposits and Yankee Certificates of Deposit, and
investments in Canadian Commercial Paper, foreign securities and Europaper.
These instruments may subject a Fund to investment risks that differ in
some respects from those related to investments in obligations of U.S.
domestic issuers. Such risks include future adverse political and economic
developments, the possible imposition of withholding taxes on interest or
other income, possible seizure, nationalization, or expropriation of
foreign deposits, the possible establishment of exchange controls or
taxation at the source, greater fluctuations in value due to changes in
exchange rates, or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on such
obligations. Such investments may also entail higher custodial fees and
sales commissions than domestic investments. Foreign issuers of securities
or obligations are often subject to accounting treatment and engage in
business practices different from those respecting domestic issuers of
similar securities or obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than
those applicable to domestic branches of U.S. banks.
WHEN-ISSUED SECURITIES
As discussed in the Prospectuses, each of the Funds may purchase
securities on a "when-issued" basis. When a Fund engages in "when-issued"
transactions, it relies on the seller to consummate the trade. Failure of
the seller to do so may result in the Fund's incurring a loss or missing
the opportunity to obtain a price considered to be advantageous.
SECURITIES LENDING
Each of the Funds may lend its portfolio securities to
broker-dealers, banks or institutional borrowers of securities. A Fund must
receive 100% collateral in the form of cash or U.S. Government securities.
This collateral must be valued daily by the Fund's Investment Adviser or
Sub-Adviser and should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the
time portfolio securities are on loan, the borrower will pay the Fund any
dividends or interest paid on such securities. Loans will be subject to
termination by a Fund or the borrower at any time. While a Fund will not
have the right to vote securities in loan, it intends to terminate the loan
and regain the right to vote if that is considered important with respect
to the investment. A Fund will only enter into loan arrangements with
broker-dealers, banks or other institutions which the Investment Adviser or
Sub-Adviser has determined are creditworthy under guidelines established by
the Funds' Board of Trustees. Each Fund will limit securities loans to 5%
of its net assets.
REPURCHASE AGREEMENTS
Securities held by each of the Funds may be subject to repurchase
agreements. Under the terms of a repurchase agreement, a Fund would acquire
securities from a financial institution such as a member bank of the
Federal Deposit Insurance Corporation or a registered broker-dealer, which
the Investment Adviser or Sub-Adviser deems creditworthy under guidelines
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approved by the Board of Trustees, subject to the seller's agreement to
repurchase such securities at a mutually agreed-upon date and price. The
repurchase price would generally equal the price paid by the Fund plus
interest negotiated on the basis of current short-term rates, which may be
more or less than the rate on the underlying portfolio securities. The
seller under a repurchase agreement will be required to maintain the value
of collateral held pursuant to the agreement at not less than the
repurchase price (including accrued interest). If the seller were to
default on its repurchase obligation or become insolvent, a Fund would
suffer a loss to the extent that the proceeds from a sale of the underlying
portfolio securities were less than the repurchase price under the
agreement, or to the extent that the disposition of such securities by the
Fund were delayed pending court action. Additionally, there is no
controlling legal precedent confirming that a Fund would be entitled, as
against a claim by such seller or its receiver or trustee in bankruptcy, to
retain the underlying securities, although the Board of Trustees of the
Funds believes that, under the regular procedures normally in effect for
custody of each Fund's securities subject to repurchase agreements and
under applicable federal laws, a court of competent jurisdiction would rule
in favor of a Fund if presented with the question. Securities subject to
repurchase agreements will be held by each Fund's Custodian, Sub-Custodian,
or in the Federal Reserve/Treasury book-entry system. Repurchase agreements
are considered to be loans by an investment company under the Investment
Company Act of 1940 (the "1940 Act").
MUNICIPAL SECURITIES
As a matter of fundamental policy, under normal market conditions,
at least 80% of the net assets of the Intermediate Tax-Free Bond Fund will
be invested in Municipal Securities. The Bond, Intermediate Bond and
Short-Term Income Funds, under normal market conditions, may invest in
municipal securities which are not exempt from federal income taxes.
Municipal Securities include debt obligations issued to obtain funds for
various public purposes, such as the construction of a wide range of public
facilities, the refunding of outstanding obligations, the payment of
general operating expenses, and the extension of loans to other public
institutions and facilities. The Intermediate Tax-Free Bond Fund may
purchase short-term tax-exempt General Obligations Notes, Tax Anticipation
Notes, Bond Anticipation Notes, Revenue Anticipation Notes, Project Notes,
and other forms of short-term tax exempt loans. Such notes are issued with
a short-term maturity in anticipation of the receipt of tax funds, the
proceeds of bond placements, or other revenues. In addition, the
Intermediate Tax-Free Bond Fund may invest in other types of tax-exempt
investments, such as municipal bonds, private activity bonds, and pollution
control bonds. The Intermediate Tax-Free Bond Fund may also purchase
tax-exempt commercial paper. While the issuing state or local housing
agency has the primary obligation with respect to its Project Notes, they
are also secured by the full faith and credit of the United States through
agreements with the issuing authority which provide that, if required, the
federal government will lend the issuer an amount equal to the principal of
and interest on the Project Notes.
There are, of course, variations in the quality of Municipal
Securities, both within a particular classification and between
classifications, and the yields on Municipal Securities depend upon a
variety of factors, including general money market conditions, the
financial
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condition of the issuer, general conditions of the municipal bond market,
the size of a particular offering, the maturity of the obligations, and the
rating of the issue. The ratings of nationally recognized statistical
ratings organizations ("NRSROs") represent their opinions as to the quality
of Municipal Securities. It should be emphasized, however, that ratings are
general and are not absolute standards of quality, and Municipal Securities
with the same maturity, interest rate and rating may have different yields
while Municipal Securities of the same maturity and interest rate with
different ratings may have the same yield. Subsequent to its purchase by
the Intermediate Tax-Free Bond Fund, an issue of Municipal Securities may
cease to be rated or its rating may be reduced below the minimum rating
required for purchase by the Fund. The Fund's Investment Adviser will
consider such an event in determining whether the Fund should continue to
hold the obligations.
Information about the financial condition of issuers of Municipal
Securities may be less available than about corporations a class of whose
securities is registered under the Securities Exchange Act of 1934.
An issuer's obligations under its Municipal Securities are subject
to the provisions of bankruptcy, insolvency, and other laws affecting the
rights and remedies of creditors, such as the federal bankruptcy code, and
laws, if any, which may be enacted by Congress or state legislatures
extending the time for payment of principal or interest, or both, or
imposing other constraints upon the enforcement of such obligations. The
power or ability of an issuer to meet its obligations for the payment of
interest on and principal of its Municipal Securities may be materially
adversely affected by litigation or other conditions.
INVESTMENT RESTRICTIONS
Unless otherwise specifically noted, the following investment
restrictions may be changed with respect to a particular Fund only by a
vote of a majority of the outstanding Shares of that Fund (as defined under
"GENERAL INFORMATION--Miscellaneous" in the Funds' Prospectuses).
None of the Funds may:
1. Purchase securities on margin, sell securities short, or
participate on a joint or joint and several basis in any securities trading
account, except, in the case of the Intermediate Tax-Free Bond Fund, for
use of short-term credit necessary for clearance of purchases of portfolio
securities.
2. Underwrite the securities of other issuers except to the extent
that a Fund may be deemed to be an underwriter under certain securities
laws in the disposition of "restricted securities."
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3. Purchase or sell commodities or commodity contracts, except
that each of the Equity Investment Funds and Bond Investment Funds may
invest in futures contracts if, immediately thereafter, the aggregate
initial margin deposits for futures contracts, and premium paid for related
options, does not exceed 5% of the Fund's total assets and the value of
securities that are the subject of such futures and options (both for
receipt and delivery) does not exceed one-third of the value of the Fund's
total assets.
4. Purchase participation or other direct interests in oil, gas or
mineral exploration or development programs or leases (although investments
by the Cash Management Fund, the Equity Investment Funds, and the Bond
Investment Funds in marketable securities of companies engaged in such
activities are not hereby precluded).
5. Invest in any issuer for purposes of exercising control or
management.
6. Purchase or retain securities of any issuer if the officers or
Trustees of the Funds or the officers or directors of its Investment
Adviser owning beneficially more than one-half of 1% of the securities of
such issuer together own beneficially more than 5% of such securities.
7. Invest more than 5% of a Fund's total assets in the securities
of issuers which together with any predecessors have a record of less than
three years of continuous operation.
8. Purchase or sell real estate, including limited partnership
interests, (however, each Fund except a Money Market Fund may, to the
extent appropriate to its investment objective, purchase securities secured
by real estate or interests therein or securities issued by companies
investing in real estate or interests therein).
9. Except with respect to the Growth Equity Fund, for as long as
shares of a Fund are registered in Arkansas and for so long as the State of
Arkansas so requires, invest more than 10% of a Fund's total assets in the
securities of issuers which are restricted as to disposition, other than
restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933.
In addition, the Money Market Funds may not:
1. Buy common stocks or voting securities, or state, municipal, or
private activity bonds.
In addition, the Intermediate Tax-Free Bond Fund may not:
1. Invest in private activity bonds where the payment of principal
and interest are the responsibility of a company (including its
predecessors) with less than three years of continuous operation.
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If a percentage restriction is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from
a change in asset value will not constitute a violation of such
restriction.
PORTFOLIO TURNOVER
The portfolio turnover rate for each Fund is calculated by
dividing the lesser of purchases or sales of portfolio securities for the
year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose maturities, at the time of
acquisition, were one year or less. Thus, for regulatory purposes, the
portfolio turnovers with respect to the Money Market Funds will be zero.
Fund turnover may vary greatly from year to year as well as within a
particular year, and may also be affected by cash requirements for
redemptions of shares and by requirements which enable the Funds to receive
certain favorable tax treatments. Fund turnover will not be a limiting
factor in making portfolio decisions.
For the fiscal year ended August 31, 1996, the portfolio turnover
rates for the Funds were as follows: 61.02% for the Bond Fund; 129.97% for
the Intermediate Bond Fund; 67.46% for the Equity Fund; 19.53% for the
Intermediate Tax-Free Bond Fund; 32.89% for the Aggressive Growth Fund; and
80.98% for the Short-Term Income Fund. The portfolio turnover rate for the
Balanced Fund for the fiscal year ended August 31, 1996, was 71.63% with
respect to the common stock portion of its portfolio and 72.29% with
respect to the fixed income portion of its portfolio.
For the fiscal year ended August 31, 1995, the portfolio turnover
rates for the Funds were as follows: 185.48% for the Bond Fund; 154.43% for
the Intermediate Bond Fund; 100.44% for the Equity Fund; 8.35% for the
Intermediate Tax-Free Bond Fund; and 27.16% for the Aggressive Growth Fund.
The portfolio turnover rate for the Short-Term Income Fund for the period
from commencement of operations, October 19, 1994, to August 31, 1995 was
212.35%. The portfolio turnover rate for the Balanced Fund for the period
from commencement of operations, June 1, 1995, to August 31, 1995 was .09%
with respect to the common stock portion of its portfolio and 47.63% with
respect to the fixed income portion of its portfolio.
ADDITIONAL TAX INFORMATION CONCERNING ALL THE FUNDS
It is the policy of each of the Funds to meet the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
By following such policy, each Fund expects to eliminate or reduce to a
nominal amount the federal income taxes to which it may be subject.
In order to qualify as a RIC each Fund must, among other things,
(1) derive at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of stock or securities, foreign currencies or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in stock, securities or currencies,
(2) derive less than 30% of its gross income from
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the sale or other disposition of stock, securities, options, futures,
forward contracts, and certain foreign currencies (or options, futures, or
forward contracts on foreign currencies) held for less than three months,
and (3) diversify its holdings so that at the end of each quarter of its
taxable year (i) at least 50% of the market value of the Fund's assets is
represented by cash or cash items, U.S. Government securities, securities
of other RICs and other securities limited, in respect of any one issuer,
to an amount not greater than 5% of the value of the Fund's assets and 10%
of the outstanding voting securities of such issuer, and (ii) not more than
25% of the value of its assets is invested in the securities of any one
issuer (other than U.S. Government securities) or of two or more issuers
that the Fund controls and that are engaged in the same, similar or related
trades or businesses. These requirements may restrict the degree to which
the Fund may engage in short-term trading and limit the range of the Fund's
investments. If a Fund qualifies as a RIC, it will not be subject to
federal income tax on the part of its net investment income and net
realized capital gains, if any, that it distributes to shareholders,
provided the Fund distributes during its taxable year at least (a) 90% of
its "investment company taxable income" (as that term is defined in the
Code), and (b) 90% of the excess of (i) its tax-exempt interest income over
(ii) certain deductions attributable to that income. Each Fund intends to
make sufficient distributions to Shareholders to meet this requirement.
The Code imposes a non-deductible excise tax on RICs that do not
distribute in each calendar year (regardless of whether they otherwise have
a non-calendar taxable year) an amount equal to 98% of their "ordinary
income" (as defined) for the calendar year plus 98% of their capital gain
net income for the 1-year period ending on October 31 of such calendar year
plus any undistributed amounts from the prior year. For the foregoing
purposes, a Fund is treated as having distributed any amount on which it is
subject to income tax for any taxable year ending in such calendar year. If
distributions during a calendar year were less than the required amount, a
particular Fund would be subject to a non-deductible excise tax equal to 4%
of the deficiency.
A Fund's transactions in futures contracts, options, and foreign
currency denominated securities, and certain other investment and hedging
activities of the Fund, will be subject to special tax rules. In a given
case, these rules may accelerate income to the Fund, defer losses to the
Fund, cause adjustments in the holding periods of the Fund's assets,
convert short-term capital losses into long-term capital losses, or
otherwise affect the character of the Fund's income. These rules could
therefore affect the amount, timing, and character of distributions to
Shareholders. Income earned as a result of these transactions would, in
general, not be eligible for the Dividends Received Deduction or for
treatment as exempt-interest dividends when distributed to Shareholders.
Each Fund will endeavor to make any available elections pertaining to these
transactions in a manner believed to be in the best interest of the Fund.
The Funds will be required in certain cases to withhold and remit
to the U.S. Treasury 31% of taxable dividends and other distributions paid
to any Shareholder who has provided either an incorrect tax identification
number or no number at all, or who is subject to withholding by the
Internal Revenue Service for failure properly to include on his tax return
payments of
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interest or dividends. This withholding, known as back-up withholding, is
not an additional tax, and any amounts withheld may be credited against the
Shareholder's ultimate U.S. tax liability.
The foregoing is only a summary of some of the important federal
tax considerations generally affecting purchasers of Shares of a Fund of
the Funds. Further tax information regarding the Intermediate Tax-Free Bond
Fund is included in the immediately following section of this Statement of
Additional Information. No attempt is made to present a detailed
explanation of the federal income tax treatment of each Fund or its
Shareholders, and this discussion is not intended as a substitute for
careful tax planning. Accordingly, potential purchasers of shares of a
Fund are urged to consult their tax advisers with specific reference to
their own tax situation.
The foregoing discussion and the discussion below regarding the
Intermediate Tax-Free Bond Fund are based on tax laws and regulations which
are in effect on the date of this Statement of Additional Information; such
laws and regulations may be changed by legislative or administrative
action, and such changes may be retroactive.
ADDITIONAL TAX INFORMATION CONCERNING THE INTERMEDIATE TAX-FREE BOND FUND
The Code permits a RIC which invests at least 50% of its assets in
tax-free Municipal Securities and other securities exempt from the regular
federal income tax to pass through to its investors, tax-free, net interest
income from such securities.
The policy of the Intermediate Tax-Free Bond Fund is to pay each
year as dividends substantially all the Fund's interest income net of
certain deductions. An exempt-interest dividend is any dividend or part
thereof (other than a capital gain dividend) paid by the Intermediate
Tax-Free Bond Fund and designated as an exempt-interest dividend in a
written notice mailed to Shareholders after the close of the Fund's taxable
year, but not to exceed in the aggregate the net interest from Municipal
Securities and other securities exempt from the regular federal income tax
received by the Fund during the taxable year. The percentage of the total
dividends paid for any taxable year which qualifies as federal
exempt-interest dividends will be the same for all Shareholders receiving
dividends from the Intermediate Tax-Free Bond Fund during such year,
regardless of the period for which the Shares were held.
Exempt-interest dividends may be treated by the Intermediate
Tax-Free Bond Fund's Shareholders as items of interest excludable from
their gross income under Section 103(a)(1) of the Code. However, each
Shareholder of an Intermediate Tax-Free Bond Fund is advised to consult his
tax adviser with respect to whether exempt-interest dividends would retain
the exclusion under Section 103(a)(1) if such Shareholder were treated as a
"substantial user" or a "related person" to such user under Section 147(a)
with respect to facilities financed through any of the tax-exempt
obligations held by the Fund. "Substantial user" is defined under U.S.
Treasury Regulations to include a non-exempt person who regularly uses a
part of such facilities
B-16
<PAGE> 55
in his trade or business and (a)(i) whose gross revenues derived with
respect to the facilities financed by the issuance of bonds are more than
5% of the total revenues derived by all users of such facilities or (ii)
who occupies more than 5% of the usable area of the facility or (b) for
whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired. "Related persons" includes certain related
natural persons, affiliated corporations, partners and partnerships.
Dividends attributable to interest on certain private activity
bonds issued after August 7, 1986 must be included in alternative minimum
taxable income for purposes of determining liability (if any) for the
alternative minimum tax for individuals and corporations. In the case of
corporations all tax-exempt interest dividends will be taken into account
in determining adjusted current earnings for the purpose of computing the
alternative minimum tax imposed on corporations (as defined for federal
income tax purposes).
The Intermediate Tax-Free Bond Fund may acquire rights regarding
specified portfolio securities under puts. See "Puts." The policy of the
Intermediate Tax-Free Bond Fund is to limit its acquisition of puts to
those under which the Fund will be treated for federal income tax purposes
as the owner of the Municipal Securities acquired subject to the put and
the interest on the Municipal Securities will be tax-exempt to the Fund.
Although the Internal Revenue Service has issued a published ruling that
provides some guidance regarding the tax consequences of the purchase of
puts, there is currently no guidance available from the Internal Revenue
Service that definitively establishes the tax consequences of many of the
types of puts that the Funds could acquire under the 1940 Act. Therefore,
although the Intermediate Tax-Free Bond Fund will only acquire a put after
concluding that it will have the tax consequences described above, the
Internal Revenue Service could reach a different conclusion from that of
the Fund.
The Intermediate Tax-Free Bond Fund will distribute at least 90%
of any investment company taxable income for each taxable year. In general,
the Fund's investment company taxable income will be its taxable income
subject to certain adjustments and excluding the excess of any net
long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year. The Intermediate Tax-Free Bond Fund will be
taxed on any undistributed investment company taxable income. To the extent
such income is distributed by the Intermediate Tax-Free Bond Fund (whether
in cash or additional Shares), it will be taxable to Shareholders as
ordinary income. The dividends-received deduction for corporations will
not apply to such distributions.
If for any taxable year the Intermediate Tax-Free Bond Fund does
not qualify for the special tax treatment afforded RICs, all of its taxable
income would be subject to tax at regular corporate rates (without any
deduction for distributions to shareholders), and Municipal Securities
interest income, although not taxable to the Fund, would be taxable to
Shareholders when distributed as dividends.
B-17
<PAGE> 56
Income exempt from federal income taxation must be considered when
determining whether Social Security payments or railroad retirement
benefits received by a Shareholder are subject to federal income taxation.
The foregoing is only a summary of some of the important federal
tax considerations generally affecting purchasers of Shares of the
Intermediate Tax-Free Bond Fund. Additional tax information concerning all
Funds of the Funds is contained in the immediately preceding section of
this Statement of Additional Information. No attempt is made to present a
detailed explanation of the income tax treatment of the Intermediate
Tax-Free Bond Fund or its Shareholders, and this discussion is not intended
as a substitute for careful tax planning. Accordingly, potential purchasers
of shares of the Intermediate Tax-Free Bond Fund are urged to consult their
tax advisers with specific reference to their own tax situation.
VALUATION
THE MONEY MARKET FUNDS
The Money Market Funds have elected to use the amortized cost
method of valuation pursuant to Rule 2a-7 under the 1940 Act. This involves
valuing an instrument at its cost initially and thereafter assuming a
constant amortization to maturity of any discounts or premiums, regardless
of the impact of fluctuating interest rates on the market value of the
instrument. This method may result in periods during which value, as
determined by amortized cost, is higher or lower than the price each Fund
would receive if it sold the instrument. The value of securities in the
Funds can be expected to vary inversely with changes in prevailing interest
rates.
Pursuant to Rule 2a-7, the Money Market Funds will maintain a
dollar-weighted average portfolio maturity appropriate to their objective
of maintaining a stable net asset value per Share, provided that no Fund
will purchase any security with a remaining maturity of more than 397 days
(securities subject to repurchase agreements and certain variable or
floating rate instruments may bear longer maturities) nor maintain a
dollar-weighted average portfolio maturity which exceeds 90 days. The
Funds' Board of Trustees has also undertaken to establish procedures
reasonably designed, taking into account current market conditions and a
Fund's investment objective, to stabilize the net asset value per Share of
the Money Market Funds for purposes of sales and redemptions at $1.00.
These procedures include review by the Trustees, at such intervals as they
deem appropriate, to determine the extent, if any, to which the net asset
value per Share of each Fund calculated by using available market
quotations deviates from $1.00 per Share. In the event such deviation
exceeds one half of one percent, the Rule requires that the Board promptly
consider what action, if any, should be initiated. If the Trustees believe
that the extent of any deviation from a Fund's $1.00 amortized cost price
per Share may result in material dilution or other unfair results to new or
existing investors, they will take such steps as they consider appropriate
to eliminate or reduce to the extent reasonably practicable any such
B-18
<PAGE> 57
dilution or unfair results. These steps may include selling portfolio
instruments prior to maturity, shortening the dollar-weighted average
portfolio maturity, withholding or reducing dividends, reducing the number
of a Fund's outstanding Shares without monetary consideration, or utilizing
a net asset value per Share determined by using available market
quotations.
THE BOND AND EQUITY INVESTMENT FUNDS
Except as noted below, investments of the Bond Investment Funds and
the Equity Investment Funds in securities the principal fair market for
which is a securities exchange are valued at their fair market values based
upon the latest available sales price or, absent such a price, by reference
to the latest available bid prices in the principal market in which such
securities are normally traded. With regard to each of the above-mentioned
Funds, securities, the principal market for which is not a securities
exchange, are valued based on bid quotations in such principal market.
Securities and other assets for which quotations are not readily available
are valued at their fair market value as determined in good faith under
consistently applied procedures established by and under the general
supervision of the Trustees of the Funds. Short-term securities are valued
at amortized cost, which approximates current value.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares in each Fund are sold on a continuous basis by BISYS Fund
Services (the "Distributor"), and the Distributor has agreed to use
appropriate efforts to solicit all purchase orders. As described in the
Prospectuses, in addition to purchasing Shares directly from the
Distributor, Shares may be purchased through procedures established by the
Distributor in connection with the requirements of Participating
Organizations under the Funds' Distribution and Shareholder Services Plan.
Customers purchasing Shares of the Funds may include officers, directors,
or employees of the Investment Adviser and its affiliates.
The Funds may suspend the right of redemption or postpone the date
of payment for Shares during any period when (a) trading on the New York
Stock Exchange (the "Exchange") is restricted by applicable rules and
regulations of the Securities and Exchange Commission, (b) the Exchange is
closed for other than customary weekend and holiday closings, (c) the
Securities and Exchange Commission has by order permitted such suspension,
or (d) an emergency exists as determined by the Securities and Exchange
Commission.
The Money Market Funds may redeem Shares involuntarily if
redemption appears appropriate in light of the Funds' responsibilities
under the 1940 Act. (See "VALUATION - The Money Market Funds" above for
further information.)
B-19
<PAGE> 58
MANAGEMENT OF THE FUNDS
TRUSTEES AND OFFICERS
The names of the trustees of the Funds, their addresses, and
principal occupations during the past five years are set forth in each of
the Funds' Prospectuses. The officers of the Funds, their addresses, and
principal occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With the Funds During Past 5 Years
---------------- -------------- -------------------
<S> <C> <C>
Walter B. Grimm* Chairman, From June, 1992 to present,
3435 Stelzer Road President, and employee of BISYS Fund Services;
Columbus, OH 43219 Trustee from 1987 to June, 1992, President
of Leigh Consulting/Investments
(investment firm).
D'Ray Moore* Vice President and From February, 1990 to present,
3435 Stelzer Road Secretary employee of BISYS Fund Services.
Columbus, OH 43219
Alaina J. Metz* Assistant Secretary From June 1995 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, OH 43219 from May 1989 to June 1995,
Supervisor, Mutual Fund Legal
Department, Alliance Capital
Management.
William J. Tomko* Vice President From April, 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, OH 43219
Thomas E. Line* Treasurer From December, 1996 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, OH 43219 from September, 1989 to
November, 1996, Audit Senior
Manager at KPMG Peat Marwick
LLP.
</TABLE>
B-20
<PAGE> 59
<TABLE>
<S> <C> <C>
George O. Martinez* Vice President From April 1995 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, OH 43219 from June 1989 - March 1995, Vice
President and Associate General
Counsel, Alliance Capital
Management.
Dana Gentile* Vice President From December 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, OH 43219
</TABLE>
----------------
* Messrs. Grimm, Tomko, Line and Martinez and Ms. Moore, Ms. Metz and Ms.
Gentile are each considered to be an "interested person" of the Funds as
defined in the 1940 Act.
COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
Total
Aggregate Pension or Compensation
Compensation Retirement from The
from The Benefits Estimated American
American Accrued As Annual Performance
Name of Person, Performance Part of Fund Benefits Upon Funds Paid to
Position Funds Expenses Retirement Trustee
--------------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Walter B. Grimm None None None None
J. David Huber None None None None
Michael J. Hall $5,000 None None $5,000
Perry A. Wimpey $6,000 None None $6,000
I. Edgar Hendrix $6,000 None None $6,000
</TABLE>
(1) Figures are for the Funds' fiscal year ended August 31, 1996.
INVESTMENT ADVISER AND SUB-ADVISER
Investment advisory services are provided to each of the Funds by Bank
of Oklahoma, N.A. ("BOK") ("Investment Adviser"), pursuant to an Investment
Advisory Agreement dated October 1, 1994 (hereinafter referred to as the
"Advisory Agreement").
B-21
<PAGE> 60
Under the Advisory Agreement, the Investment Adviser has agreed to
provide to the respective Funds the respective investment advisory services
described in the Funds' Prospectuses. For the services provided and
expenses assumed pursuant to the Advisory Agreement, the Investment Adviser
is entitled to receive a fee from each of the Funds, computed daily and
paid monthly, based on the lower of (1) such fee as may, from time to time,
be agreed upon in writing by the Funds and the Investment Adviser or (2)
the average daily net assets of each such Fund as follows: the U.S.
Treasury Fund and the Cash Management Fund - forty one-hundredths of one
percent (.40%) annually; the Equity Fund and the Aggressive Growth Fund and
the Growth Equity Fund - sixty-nine one-hundredths of one percent (.69%)
annually; the Balanced Fund - seventy-four one-hundredths of one percent
(.74%) annually; the Bond Fund, the Intermediate Bond Fund, the
Intermediate Tax-Free Bond Fund and the Short-Term Income Fund - fifty-five
one-hundredths of one percent (.55%) annually.
Sub-investment advisory services are provided to the Cash Management
Fund by AMR Investment Services, Inc. ("Sub-Advisor" or "AMR") pursuant to
a Sub-Investment Advisory Agreement between BOK and AMR dated June 16, 1997
(hereinafter referred to as the "Sub-Advisory Agreement"). For the services
provided and the expenses assumed pursuant to the Sub-Advisory Agreement,
AMR is entitled to receive a fee from BOK, computed daily and paid monthly,
at the annual rate of not less than fifteen one-hundredths of one percent
(.15%) nor more than forty one-hundredths of one percent (.40%) of the
average daily net assets of the Cash Management Fund.
For its investment advisory services during the fiscal year ending
August 31, 1996, BancOklahoma Trust Company ("BOTC") (the wholly-owned
subsidiary of BOK) received from the Funds $801,240 with respect to the
U.S. Treasury Fund; $1,238,786 with respect to the Cash Management Fund;
$129,467, which is $73,915 less than the maximum amount of advisory fees,
if charged, with respect to the Bond Fund; $227,937, which is $130,084 less
than the maximum amount of such fees, if charged, with respect to the
Intermediate Bond Fund; $407,341, which is $154,982 less than the maximum
amount of such fees, if charged, with respect to the Equity Fund; $101,273,
which is $57,916 less than the maximum amount of advisory fees, if charged,
with respect to the Intermediate Tax-Free Bond Fund; $202,594, which is
$77,088 less than the maximum amount of advisory fees, if charged, with
respect to the Aggressive Growth Fund; $0, which is $65,313 less than the
maximum amount of advisory fees, if charged with respect to the Short-Term
Income Fund; and $0 which is $149,330 less than the maximum amount of
advisory fees, if charged with respect to the Balanced Fund.
For its investment advisory services during the fiscal year ended
August 31, 1995, BOTC received from the Funds $732,975, which is $27,001
less than the maximum amount of advisory fees, if charged, with respect to
the U.S. Treasury Fund; $119,282 which is $66,995 less than the maximum
amount of advisory fees, if charged, with respect to the Bond Fund;
$271,212 which is $152,206 less than the maximum amount of advisory fees,
if charged, with respect to the Intermediate Bond Fund; $360,139 which is
$134,698 less than the maximum amount of advisory fees, if charged, with
respect to the Equity Fund; $56,984, which is $96,109 less than
B-22
<PAGE> 61
the maximum amount of advisory fees, if charged, with respect to the
Intermediate Tax-Free Bond Fund; $130,408 which is $49,067 less than the
maximum amount of advisory fees, if charged, with respect to the Aggressive
Growth Fund. For investment advisory services during the period from
October 1, 1994 to August 31, 1995, BOTC received from the Funds $799,677
which is $30,520 less than the maximum amount of advisory fees, if charged,
with respect to the Cash Management Fund. For the period from commencement
of operations, October 19, 1994, to August 31, 1995, BOTC received from the
Funds $17,642 which is $39,100 less than the maximum amount of advisory
fees, if charged, with respect to the Short-Term Income Fund; and for the
period from commencement of operations, June 1, 1995, to August 31, 1995,
BOTC received from the Funds $0 which is $21,992 less than the maximum
amount of advisory fees, if charged, with respect to the Balanced Fund.
For its investment advisory services during the fiscal year ending
August 31, 1994, BOTC received from the Funds $153,213, which is $153,213
less than the maximum amount of advisory fees, if charged, with respect to
the U.S. Treasury Fund; $91,725, which is $52,636 less than the maximum
amount of advisory fees, if charged, with respect to the Bond Fund;
$224,116, which is $128,475 less than the maximum amount of advisory fees,
if charged, with respect to the Intermediate Bond Fund; $304,010, which is
$116,027 less than the maximum amount of advisory fees, if charged, with
respect to the Equity Fund; $0, which is $120,948 less than the maximum
amount of advisory fees, if charged, with respect to the Intermediate
Tax-Free Bond Fund; $80,387, which is $32,285 less than the maximum amount
of advisory fees, if charged, with respect to the Aggressive Growth Fund.
The Short-Term Income Fund and the Balanced Fund were not in operation
during the fiscal year ended August 31, 1994. BOTC did not serve as
investment adviser to the Cash Management Fund for the fiscal year ended
August 31, 1994.
Investment advisory services formerly were provided by AMR, jointly
with BOTC, to the U.S. Treasury Fund and by AMR solely to the Cash
Management Fund pursuant to an Investment Advisory Agreement dated
September 5, 1990. AMR ceased providing investment advisory services to the
U.S. Treasury Fund and the Cash Management Fund on September 30, 1994. For
services provided and expenses assumed under the AMR Investment Advisory
Agreement, the U.S. Treasury Fund and the Cash Management Fund paid AMR a
fee, computed daily and paid monthly, based on the lower of (1) such fee as
was, from time to time, agreed upon in writing by the Funds and AMR or (2)
the average daily net assets of the respective Funds, as follows: the Cash
Management Fund - forty one-hundredths of one percent (.40%) annually and
the U.S. Treasury Fund - twenty one-hundredths of one percent (.20%)
annually.
For investment advisory services during the period from September 1,
1994 to September 30, 1994, at which time the Investment Advisory Agreement
terminated, AMR received from the Funds $13,468 with respect to the U.S.
Treasury Fund; and $29,578 with respect to the Cash Management Fund. For
Sub-Advisory services during the period from October 1, 1994 to August 31,
1995, AMR received from BOTC $281,081 with respect to the Cash Management
Fund.
B-23
<PAGE> 62
For investment advisory services during the fiscal year ending August
31, 1994, AMR received from the Funds $153,212, which is $153,212 less than
the maximum amount of advisory fees, if charged, with respect to the U.S.
Treasury Fund; and $358,644, which is $358,644 less than the maximum amount
of such fees, if charged, with respect to the Cash Management Fund.
The Investment Adviser may periodically set its fees at less than the
maximum allowable amount with respect to any Fund it serves in order to
increase the net income of that Fund available for distribution as
dividends. For information on such voluntary reductions undertaken for the
period ended August 31, 1996, concerning a particular Fund, see "MANAGEMENT
OF THE FUND - Investment Adviser" in the Prospectus pertaining to such
Fund.
Unless sooner terminated, the Advisory Agreement will continue in
effect until August 1, 1997. The Advisory Agreement will continue in effect
as to a particular Fund for successive one-year terms after the
aforementioned date, if such continuance is approved at least annually by
the Funds' Board of Trustees or by vote of a majority of the outstanding
voting Shares of such Fund (as defined under "GENERAL
INFORMATION--Miscellaneous" in the Funds' Prospectuses), and a majority of
the Trustees who are not parties to the Advisory Agreement, or interested
persons (as defined in 1940 Act) of any party to the Advisory Agreement by
votes cast in person at a meeting called for such purpose.
The Sub-Advisory Agreement between BOK and AMR provides that unless
sooner terminated, it will continue in effect until August 1, 1998 and for
successive one-year terms thereafter, provided that such continuance is
approved annually in the manner set forth above. The Advisory and
Sub-Advisory Agreements are terminable as to a particular Fund at any time
on 60 days' written notice without penalty by the Trustees, by vote of a
majority of the outstanding voting Shares of that Fund, or by the
Investment Adviser or the Sub-Adviser, as the case may be. The Advisory and
Sub-Advisory Agreements also terminate automatically in the event of any
assignment, as defined in the 1940 Act.
The Advisory and Sub-Advisory Agreements provide that the Investment
Adviser or the Sub-Adviser, as the case may be, shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Funds
in connection with the performance of the respective Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt
of compensation for services or a loss resulting from willful misfeasance,
bad faith, or gross negligence on the part of the respective provider of
services to the Funds in the performance of its duties, or from reckless
disregard by it of its duties and obligations thereunder.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Funds
may include descriptions of the Investment Adviser or Sub-Adviser
including, but not limited to, (i) descriptions of the adviser's
operations; (ii) descriptions of certain personnel and their functions; and
(iii) statistics and rankings related to the adviser's operations.
B-24
<PAGE> 63
DISTRIBUTION
Shares of the Funds are sold on a continuous basis by the Distributor
for the Funds. Under the Funds' Amended and Restated Distribution and
Shareholder Services Plan (the "Distribution Plan"), each of the Funds will
pay a monthly distribution fee to the Distributor as compensation for its
services in connection with the Distribution Plan at an annual rate equal
to twenty-five one hundredths of one percent (.25%) of its average daily
net assets. The Distributor may use the distribution fee to provide
distribution assistance with respect to the Funds' Shares or to provide
Shareholder services to the holders of the Funds' Shares. The Distributor
may also use the distribution fee (i) to pay financial institutions and
intermediaries (such as insurance companies, and investment counselors, but
not including banks), broker-dealers, and the Distributor's affiliates and
subsidiaries compensation for services or reimbursement of expenses
incurred in connection with distribution assistance or (ii) to pay banks,
other financial institutions and intermediaries, broker-dealers, and the
Distributor's affiliates and subsidiaries compensation for services or
reimbursement of expenses incurred in connection with the provision of
Shareholder services. All payments by the Distributor for distribution
assistance or Shareholder services under the Distribution Plan will be made
pursuant to an agreement between the Distributor and such bank, other
financial institution or intermediary, broker-dealer, or affiliate or
subsidiary of the Distributor (a "Servicing Agreement"; banks, other
financial institutions and intermediaries, broker-dealers, and the
Distributor's affiliates and subsidiaries which may enter into a Servicing
Agreement are hereinafter referred to individually as a "Participating
Organization"). A Servicing Agreement will relate to the provision of
distribution assistance in connection with the distribution of the Funds'
Shares to the Participating Organization's customers on whose behalf the
investment in such Shares is made and/or to the provision of Shareholder
services rendered to the Participating Organization's customers owning the
Funds' Shares. Under the Distribution Plan, a Participating Organization
may include the Funds' Advisers or their affiliates. A Servicing Agreement
entered into with a bank (or any of its subsidiaries or affiliates) will
contain a representation that the bank (or subsidiary or affiliate)
believes that it possesses the legal authority to perform the services
contemplated by the Servicing Agreement without violation of applicable
banking laws (including the Glass-Steagall Act).
The distribution fee will be payable without regard to whether the
amount of the fee is more or less than the actual expenses incurred in a
particular year by the Distributor in connection with distribution
assistance or Shareholder services rendered by the Distributor itself or
incurred by the Distributor pursuant to the Servicing Agreements entered
into under the Distribution Plan. If the amount of the distribution fee is
greater than the Distributor's actual expenses incurred in a particular
year (and the Distributor does not waive that portion of the distribution
fee), the Distributor will realize a profit in that year from the
distribution fee. If the amount of the distribution fee is less than the
Distributor's actual expenses incurred in a particular year, the
Distributor will realize a loss in that year under the Distribution Plan
and will not recover from the Funds the excess of expenses for the year
over the distribution fee, unless
B-25
<PAGE> 64
actual expenses incurred in a later year in which the Distribution Plan
remains in effect were less than the distribution fee paid in that later
year. The Distributor may periodically waive all or a portion of the
distribution fee to increase the net income attributable to a Fund
available for distribution as dividends to the Fund's Shareholders. To
reduce operating expenses, the Distributor has by agreement with the Funds,
limited its fees under the Distribution Plan to twenty-five one hundredths
of one percent (.25%) of each Fund's average daily net assets. For
information on such voluntary reductions concerning a particular fund, see
"DISTRIBUTION" in the Prospectus pertaining to such Fund.
Under the Distribution Plan during the fiscal year ended August 31,
1996, the Distributor received the maximum amount receivable under the Plan
with respect to the following Funds and in the following amounts: $92,476,
with respect to the Bond Fund; $162,813, with respect to the Intermediate
Bond Fund; $203,670 with respect to the Equity Fund and $101,297 with
respect to the Aggressive Growth Fund. Under the Distribution Plan during
the fiscal year ended August 31, 1996, the Distributor received $0 which is
$500,780 less than the maximum amount receivable under the Plan with
respect to the U.S. Treasury Fund; $0 which is $830,500 less than the
maximum amount receivable under the Plan with respect to the Cash
Management Fund; $0 which is $72,358 less than the maximum amount
receivable under the Plan with respect to the Intermediate Tax-Free Bond
Fund; $0 which is $50,449 less than the maximum amount receivable under the
Plan with respect to the Balanced Fund; and $0 which is $29,688 less than
the maximum amount receivable under the Plan with respect to the Short-Term
Income Fund.
Under the Distribution Plan during the fiscal year ended August 31,
1995, the Distributor received the maximum amount receivable under the Plan
with respect to the following Funds and in the following amounts: $84,678
with respect to the Bond Fund; $192,530 with respect to the Intermediate
Bond Fund; $179,345 with respect to the Equity Fund and $64,937 with
respect to the Aggressive Growth Fund. Under the Distribution Plan during
the fiscal year ended August 31, 1995, the Distributor received $0, which
is $69,588 less than the maximum amount receivable under the Plan with
respect to the Intermediate Tax-Free Bond Fund; $33,751 which is $441,234
less than the maximum amount receivable with respect to the U.S. Treasury
Fund; and $38,082 which is $480,791 less than the maximum amount receivable
with respect to the Cash Management Fund. Under the Distribution Plan
during the period from commencement of operations, October 19, 1994, to
August 31, 1995, the Distributor received $2,911 which is $22,881 less than
the maximum amount receivable under the Plan with respect to the Short-Term
Income Fund; and during the period from commencement of operations, June 1,
1995 to August 31, 1995, the Distributor received $0 which is $7,430 less
than the maximum amount receivable under the Plan with respect to the
Balanced Fund.
Under the Distribution Plan during the fiscal year ended August 31,
1994, the Distributor received the maximum amount receivable under the Plan
with respect to the following Funds and in the following amounts: $383,031
with respect to the U.S. Treasury Fund; $448,305 with respect to the Cash
Management Fund; $65,518 with respect to the Bond Fund; $160,083 with
respect to the Intermediate Bond Fund; $152,005 with respect to the Equity
Fund and $40,194
B-26
<PAGE> 65
with respect to the Aggressive Growth Fund. Under the Distribution Plan
during the fiscal year ended August 31, 1994, the Distributor received $0,
which is $54,977 less than the maximum amount receivable under the Plan
with respect to the Intermediate Tax-Free Bond Fund. The Short-Term Income
Fund and the Balanced Fund were not in operation during the fiscal year
ended August 31, 1994.
Substantially all of the amount received by the Distributor under the
Distribution Plan during the last fiscal year, the period from September 1,
1995 to August 31, 1996, was spent on compensation to dealers. 2.09% was
retained by BISYS and spent on printing and mailing of prospectuses. The
total amount spent on compensation to dealers during the last fiscal year
was $560,018. The total amount retained by BISYS during the last fiscal
year was $11,721.
The Securities and Exchange Commission has proposed amendments to Rule
12b-1 under the 1940 Act, which regulates the Distribution Plan and similar
arrangements of other investment companies which make payments in
connection with the distribution of their securities. One concern of the
Securities and Exchange Commission is the desirability of so-called
"compensation plans" which pay distributors of investment companies fees
that are not tied directly to distribution expenses actually incurred by
them. Because the Distribution Plan does not limit payments made to the
Distributor and to Participating Organizations to the reimbursement of
expenses incurred pursuant to the Plan, the Distribution Plan is a
compensation plan. In the event the amendments to Rule 12b-1 are adopted,
new procedural and substantive requirements may be imposed on 12b-1
distribution plans, and may necessitate certain modifications to the
Distribution Plan.
GLASS-STEAGALL ACT
In 1971 the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a fund for the
collective investment of managing agency accounts. Subsequently, the Board
of Governors of the Federal Reserve System (the "Board") issued a
regulation and interpretation to the effect that the Glass-Steagall Act and
such decision: (a) forbid a bank holding company registered under the
Federal Bank Holding Company Act of 1956 (the "Holding Company Act") or any
non-bank affiliate thereof from sponsoring, organizing, or exerting control
of a registered, open-end investment company continuously engaged in the
issuance of its shares, but (b) do not prohibit such a holding company or
affiliate from acting as Investment Adviser, transfer agent, and custodian
to such an investment company. In 1981, the United States Supreme Court
held in Board of Governors of the Federal Reserve System v. Investment
Company Institute that the Board did not exceed its authority under the
Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the
Board of Governors case, the Supreme Court also stated that if a national
bank complied with the restrictions imposed by the Board in its regulation
and interpretation authorizing bank holding companies and their non-bank
affiliates to act as
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investment advisers to investment companies, a national bank performing
investment advisory services for an investment company would not violate
the Glass-Steagall Act.
BOK believes that it possesses the legal authority to perform the
investment advisory services that are contemplated by its Investment
Advisory Agreement with the Funds and described in the Prospectuses and
this Statement of Additional Information without violation of the
Glass-Steagall Act. Future changes in either federal or state statutes and
regulations relating to the permissible activities of banks or bank holding
companies and the subsidiaries or affiliates of those entities, as well as
further judicial or administrative decisions or interpretations of present
and future statutes and regulations, could prevent or restrict BOK, from
continuing to perform such services for the Funds. Depending upon the
nature of any changes in the services which could be provided by BOK, the
Board of Trustees of the Funds would review the Funds' relationship with
BOK, and consider taking all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of BOK, or other banks serving as
Participating Organizations under the Funds' Distribution and Shareholder
Services Plan, in connection with Customer purchases of Shares of the
Funds, such banks may be required to alter materially or discontinue the
services offered by them to Customers under the Distribution and
Shareholder Services Plan. It is not anticipated, however, that any change
in the Funds' Distribution and Shareholder Services Plan would affect its
net asset value per Share or result in financial losses to any Customer.
PORTFOLIO TRANSACTIONS
Pursuant to the Advisory and Sub-Advisory Agreements, subject to the
general supervision of the Board of Trustees of the Funds and in accordance
with each Fund's investment objective, policies and restrictions, which
securities are to be purchased and sold by each such Fund and which brokers
are to be eligible to execute its portfolio transactions. Purchases and
sales of portfolio securities with respect to the Money Market Funds and
the Bond Investment Funds usually are principal transactions in which
portfolio securities are purchased directly from the issuer or from an
underwriter or market maker for the securities. Purchases from underwriters
of portfolio securities include a commission or concession paid by the
issuer to the underwriter and purchases from dealers serving as market
makers may include the spread between the bid and asked price. Transactions
with respect to the Equity Investment Funds on stock exchanges (other than
certain foreign stock exchanges) involve the payment of negotiated
brokerage commissions. Transactions in the over-the-counter market are
generally principal transactions with dealers. With respect to the
over-the-counter market, the Funds, where possible, will deal directly with
the dealers who make a market in the securities involved except in those
circumstances where better price and execution are available elsewhere.
While the Investment Adviser and Sub-Adviser generally seek competitive
spreads or commissions, the Funds may not necessarily pay the lowest spread
or commission available on each transaction, for reasons discussed below.
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<PAGE> 67
During the fiscal year ended August 31, 1996, the Equity Fund paid
aggregate brokerage commissions in the amount of $106,593. During the
fiscal year ended August 31, 1996, BOTC directed brokerage transactions for
the Equity Fund to brokers because of research services provided in the
following amounts: aggregate transactions -- $90,918; aggregate commissions
-- $48,969. During the fiscal year ended August 31, 1996, the Aggressive
Growth Fund paid aggregate brokerage commissions in the amount of $20,047.
During the fiscal year ended August 31, 1996, BOTC directed brokerage
transactions for the Aggressive Growth Fund to brokers because of research
services provided in the following amounts: aggregate transactions --
$20,047; aggregate commissions -- $0. During the fiscal year ended August
31, 1996 the Balanced Fund paid aggregate brokerage commissions in the
amount of $25,340. BOTC directed brokerage transactions for the Balanced
Fund to brokers because of research services provided in the following
amounts: aggregate transactions -- $19,722 and aggregate commissions --
$5,618.
During the fiscal year ended August 31, 1995, the Equity Fund paid
aggregate brokerage commissions in the amount of $159,829. During the
fiscal year ended August 31, 1995, BOTC directed brokerage transactions for
the Equity Fund to brokers because of research services provided in the
following amounts: aggregate transactions -- $158,700,000; aggregate
commissions -- $159,069. During the fiscal year ended August 31, 1995, the
Aggressive Growth Fund paid aggregate brokerage commissions in the amount
of $10,768. During the fiscal year ended August 31, 1995, BOTC directed
brokerage transactions for the Aggressive Growth Fund to brokers because of
research services provided in the following amounts: aggregate transactions
-- $14,600,000; aggregate commissions -- $10,648. For the period June 1,
1995 to August 31, 1995, the Balanced Fund paid aggregate brokerage
commissions in the amount of $9,818.
Allocation of transactions, including their frequency, to various
dealers is determined by the Investment Adviser and/or Sub-Adviser with
respect to the Funds it serves based on its best judgment and in a manner
deemed fair and reasonable to Shareholders. The primary consideration is
prompt execution of orders in an effective manner at the most favorable
price. Subject to this consideration, dealers who provide supplemental
investment research to the Investment Adviser and Sub-Adviser may receive
orders for transactions by the Funds. Information so received is in
addition to and not in lieu of services required to be performed by the
Investment Adviser and Sub-Adviser and does not reduce the advisory fees
payable to the Investment Adviser and Sub-Adviser. Such information may be
useful to the Investment Adviser and Sub-Adviser in serving both the Funds
and other clients and, conversely, supplemental information obtained by the
placement of business of other clients may be useful to such adviser in
carrying out its obligations to the Funds.
The Funds will not execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with the Investment Adviser or
Sub-Adviser, its Distributor, or their affiliates except as may be
permitted under the 1940 Act, and will not give preference to
correspondents of an Investment
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<PAGE> 68
Adviser with respect to such transactions, securities, savings deposits,
repurchase agreements, and reverse repurchase agreements.
Investment decisions for each Fund are made independently from those
for the other Funds or any other investment company or account managed by
the Investment Adviser and Sub-Adviser. Any such other investment company
or account may also invest in the same securities as the Funds. When a
purchase or sale of the same security is made at substantially the same
time on behalf of a given Fund and another Fund, investment company or
account, the transaction will be averaged as to price, and available
investments allocated as to amount, in a manner which the Investment
Adviser or Sub-Adviser believes to be equitable to the Fund(s) and such
other investment company or account. In some instances, this investment
procedure may adversely affect the price paid or received by a Fund or the
size of the position obtained by a Fund. To the extent permitted by law,
the Investment Adviser or Sub-Adviser may aggregate the securities to be
sold or purchased by it for a Fund with those to be sold or purchased by it
for other Funds or for other investment companies or accounts in order to
obtain best execution. As provided by Investment Advisory and Sub-Advisory
Agreements, in making investment recommendations for the Funds, the
Investment Adviser or Sub-Adviser will not inquire or take into
consideration whether an issuer of securities proposed for purchase or sale
by the Funds is a customer of the Investment Adviser or Sub-Adviser or
their respective parents or subsidiaries or affiliates unless legally
required to do so and, in dealing with its commercial customers, the
Investment Adviser or Sub-Adviser and their respective parents,
subsidiaries, and affiliates will not inquire or take into consideration
whether securities of such customers are held by the Funds.
ADMINISTRATOR
BISYS Fund Services ("BISYS") serves as general manager and
administrator (the "Administrator") to each Fund pursuant to the Management
and Administration Agreement with the Funds dated September 5, 1990, as
amended and restated on August 30, 1994 (hereinafter referred to as the
"Administration Agreement"). The Administrator assists in supervising all
operations of each Fund (other than those performed under the Investment
Advisory, Sub-Advisory, Custodian, Fund Accounting, and Transfer Agency
Agreements for that Fund). The Administrator is a broker-dealer registered
with the Securities and Exchange Commission and is a member of the National
Association of Securities Dealers, Inc.
On October 1, 1993, BISYS and its affiliated companies, including
BISYS Fund Services Ohio, Inc., were acquired by the BISYS Group, Inc., a
publicly held company which is a provider of information processing, loan
servicing and 401(k) administration and record-keeping services to and
through banking and other financial organizations.
Under the Administration Agreement, the Administrator has agreed to
price the portfolio securities of each Fund and to compute the net asset
value and net income of those Funds on a daily basis, to maintain office
facilities for the Funds, to maintain the Funds' financial accounts and
records, and to furnish the Funds statistical and research data, data
processing, clerical,
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<PAGE> 69
accounting, and bookkeeping services, and certain other services required
by the Funds with respect to the Funds. The Administrator prepares annual
and semi-annual reports to the Securities and Exchange Commission, prepares
federal and state tax returns, prepares filings with state securities
commissions, and generally assists in all aspects of the Funds' operations
other than those performed under the Investment Advisory, Sub-Advisory,
Custodian, Fund Accounting, and Transfer Agency Agreements. Under the
Administration Agreement, the Administrator may delegate all or any part of
its responsibilities thereunder.
The Administrator receives a fee from each Fund for its services
provided and expenses assumed pursuant to the Administration Agreement,
calculated daily and paid monthly, at the annual rate of twenty one
hundredths of one percent (.20%) of each Fund's average daily net assets.
The Administrator may periodically set its fees at less than the maximum
allowable amount with respect to any Fund in order to increase the net
income of one or more of the Funds available for distribution as dividends.
For information on such voluntary reductions undertaken concerning a
particular fund, see "MANAGEMENT OF THE FUND - Administrator, and
Distributor" in the Prospectus pertaining to such Fund.
For management and administration services during the fiscal year
ended August 31, 1996, BISYS received from the Funds $400,620 with respect
to the U.S. Treasury Fund; $664,393 with respect to the Cash Management
Fund; $73,981 with respect to the Bond Fund; $130,250 with respect to the
Intermediate Bond Fund; $57,869 with respect to the Intermediate Tax-Free
Bond Fund; $162,936 with respect to the Equity Fund; $81,038 with respect
to the Aggressive Growth Fund; $23,727 with respect to the Short-Term
Income Fund; and $40,306 with respect to the Balanced Fund.
For management and administration services during the fiscal year
ended August 31, 1995, BISYS received from the Funds $379,988 with respect
to the U.S. Treasury Fund; $415,071 with respect to the Cash Management
Fund; $67,742 with respect to the Bond Fund; $154,024 with respect to the
Intermediate Bond Fund; $17,180 with respect to the Intermediate Tax-Free
Bond Fund, which represents a waiver of $38,490; $143,476 with respect to
the Equity Fund; and $51,949 with respect to the Aggressive Growth Fund.
For the period from commencement of operations, October 19, 1994, to August
31, 1995, BISYS received from the Funds $10,031 which represents a waiver
of $10,603 with respect to the Short-Term Income Fund, and for the period
from commencement of operations, June 1, 1995, to August 31, 1995, BISYS
received from the Funds $5,873 with respect to the Balanced Fund.
For management and administration services during the fiscal year
ended August 31, 1994, BISYS received from the Funds $306,425 with respect
to the U.S. Treasury Fund; $358,644 with respect to the Cash Management
Fund; $52,414 with respect to the Bond Fund; $127,744 with respect to the
Intermediate Bond Fund; $0 with respect to the Intermediate Tax-Free Bond
Fund, which represents a waiver of $43,981; $121,604 with respect to the
Equity Fund; and $32,583 with respect to the Aggressive Growth Fund. The
Short-Term Income Fund and the Balanced Fund were not in operation during
the fiscal year ended August 31, 1994.
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Unless sooner terminated, the Administration Agreement will continue
in effect until December 31, 1998 and thereafter will automatically
continue in effect for successive three-year periods unless written notice
not to renew is given by the non-renewing party at least sixty days prior
to the expiration of the then-current term. Otherwise, the Administration
Agreement is terminable, with respect to a particular Fund only upon mutual
agreement or for "cause" in either case on not less than sixty days' notice
by the Funds' Board of Trustees or by the Administrator. For purposes of
the Administration Agreement, "cause" means (i) willful misfeasance, bad
faith, gross negligence, abandonment, or reckless disregard on the part of
either party with respect to its obligations and duties set forth herein;
(ii) regulatory, administrative, or judicial action initiated against
either party with regard to the violation of any rule, regulation, order,
or law; (iii) the dissolution or liquidation of either party or other
cessation of business other than a reorganization or recapitalization of
such party as an ongoing business; (iv) financial difficulties on the part
of either party which is evidenced by the authorization or commencement of,
or involvement by way of pleading, answer, consent, or acquiescence in, a
voluntary or involuntary case under Title 11 of the United States Code, as,
from time to time, in effect, or any applicable law, other than said Title
11, of any jurisdiction relating to the liquidation or reorganization of
debtors or to the modification or alteration of the rights of creditors; or
(v) any circumstance which substantially impairs the performance of either
party's obligations and duties as contemplated herein.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered
by the Funds in connection with the matters to which the Agreement relates,
except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard
by it of its obligations and duties thereunder.
SUB-ADMINISTRATOR
Effective May 12, 1995, BancOklahoma Trust Company became the
Sub-Administrator to the Funds pursuant to an agreement between the
Administrator and BancOklahoma Trust Company. Pursuant to this agreement,
BancOklahoma Trust Company assumed many of the Administrator's duties, for
which BancOklahoma Trust Company receives a fee, paid by the Administrator,
calculated at an annual rate of five one-hundredths of one percent (.05%)
of each Fund's average net assets.
For Sub-Administration services during the fiscal year ended August
31, 1996, BancOklahoma Trust Company received fees in the following amounts
from the Administrator: $100,155 with respect to the U.S. Treasury Fund;
$166,098 with respect to the Cash Management Fund; $18,495 with respect to
the Bond Fund; $32,563 with respect to the Intermediate Bond Fund; $14,468
with respect to the Intermediate Tax-Free Bond Fund; $5,932 with respect to
the Short-Term Income Fund; $9,970 with respect to the Balanced Fund;
$40,734 with respect to the Equity Fund; and $20,259 with respect to the
Aggressive Growth Fund.
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For Sub-Administration services during the period from May 12, 1995 to
August 31, 1995 BancOklahoma Trust Company received fees in the following
amounts from the Administrator: $33,272 with respect to the U.S. Treasury
Fund; $33,645 with respect to the Cash Management Fund; $4,429 with respect
to the Bond Fund; $9,680 with respect to the Intermediate Bond Fund; $3,594
with respect to the Intermediate Tax-Free Bond Fund; $9,488 with respect to
the Equity Fund; $4,200 with respect to the Aggressive Growth Fund; and
$1,589 with respect to the Short-Term Income Fund. For the period from
commencement of operations, June 1, 1995 to August 31, 1995, BancOklahoma
Trust Company received $1,241 with respect to the Balanced Fund.
DISTRIBUTOR
BISYS serves as distributor to each of the Funds pursuant to its
Distribution Agreement with the Funds dated October 1, 1993 (the
"Distribution Agreement"). Unless otherwise terminated, the Distribution
Agreement will continue in effect until August 1, 1997 and thereafter will
continue for successive one-year periods if approved at least annually (i)
by the Funds' Board of Trustees or by the vote of a majority of the
outstanding voting Shares of the Funds (as defined in "GENERAL
INFORMATION-Miscellaneous" in the Funds' Prospectuses) that are parties to
the Distribution Agreement, and (ii) by the vote of a majority of the
Trustees of the Funds who are not parties to the Distribution Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval. The
Agreement may be terminated in the event of its assignment, as defined in
the 1940 Act.
The Distribution Agreement is the successor to the previous
distribution agreement, which terminated automatically by its terms upon
consummation of the acquisition of BISYS by The BISYS Group, Inc. The
Distribution Agreement was unanimously approved by the Board of Trustees of
the Funds and is materially identical to the terminated distribution
agreement.
CUSTODIAN, TRANSFER AGENT, AND FUND ACCOUNTANT
Cash and securities owned by each of the Funds are held by Bank of
Oklahoma, N.A. ("BOK") as custodian. Under its September 5, 1990 Custodian
Agreement, with the Funds, BOK (i) maintains a separate account or accounts
in the name of each Fund; (ii) makes receipts and disbursements of money on
behalf of each Fund; (iii) collects and receives all income and other
payments and distributions on account of the Funds' portfolio securities;
(iv) responds to correspondence from security brokers and others relating
to its duties; and (v) makes periodic reports to the Funds' Board of
Trustees concerning the Funds' operations. BOK may, at its own expense,
open and maintain a sub-custody account or accounts on behalf of the Funds,
provided that it shall remain liable for the performance of all of its
duties under the Custodian Agreement.
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<PAGE> 72
Under the Custodian Agreement, the Funds have agreed to pay BOK a
custodian fee with respect to each Fund at an annual rate of three one
hundredths of one percent (.03%) of such Fund's average daily net assets.
BOK is also entitled to be reimbursed by the Funds for its reasonable
out-of-pocket expenses incurred in the performance of its duties under the
Custodian Agreement. BOK may periodically set its custodian fees at less
than the maximum allowable amount with respect to a Fund to increase the
Fund's net income available for distribution as dividends. No such
voluntary reductions were undertaken for the period ended August 31, 1996
concerning any of the Funds except for the Balanced Fund and the Short-Term
Income Fund.
For custodian services during the fiscal year ended August 31, 1996,
the Funds paid BOK $60,093 for the U.S. Treasury Fund; $99,659 for the Cash
Management Fund; $11,097 for the Bond Fund; $19,538 for the Intermediate
Bond Fund; $24,441 for the Equity Fund; $8,681 for the Intermediate
Tax-Free Bond Fund; $12,156 for the Aggressive Growth Fund; no fees for the
Short-Term Income Fund which reflects a fee reduction of $3,562; and no
fees for the Balanced Fund which reflects a fee reduction of $6,054.
For custodian services during the fiscal year ended August 31, 1995,
the Funds paid BOK $56,998 for the U.S. Treasury Fund; $62,260 for the Cash
Management Fund; $10,161 for the Bond Fund; $23,103 for the Intermediate
Bond Fund; $21,521 for the Equity Fund; $8,352 for the Intermediate
Tax-Free Bond Fund; and $7,792 for the Aggressive Growth Fund. For the
period from commencement of operations, October 19, 1994, to August 31,
1995, the Funds paid BOK $349 for the Short-Term Income Fund, and for the
period from commencement of operations, June 1, 1995, to August 31,1995,
the Funds paid BOK no fees for the Balanced Fund.
For custodian services during the fiscal year ended August 31, 1994,
the Funds paid BOK $45,964 for the U.S. Treasury Fund; $53,797 for the Cash
Management Fund; $7,862 for the Bond Fund; $19,210 for the Intermediate
Bond Fund; $18,241 for the Equity Fund; $6,014 for the Intermediate
Tax-Free Bond Fund; and $4,823 for the Aggressive Growth Fund. The
Short-Term Income Fund and the Balanced Fund were not in operation during
the fiscal year ended August 31, 1994.
BISYS Fund Services Ohio, Inc. serves as transfer agent to each of the
Funds pursuant to a Transfer Agency Agreement with the Funds dated
September 5, 1990. While BISYS Fund Services Ohio, Inc. is a distinct legal
entity from BISYS Fund Services (each Fund's Administrator and
Distributor), BISYS Fund Services Ohio, Inc. is considered to be an
affiliated person of BISYS Fund Services under the 1940 Act due to, among
other things, the fact that BISYS Fund Services Ohio, Inc. is owned by
substantially the same persons that directly or indirectly own BISYS Fund
Services. Under the Transfer Agency Agreement, BISYS Fund Services Ohio,
Inc. has agreed: (i) to issue and redeem Shares of the Funds; (ii) to
address and mail all communications by the Funds to its Shareholders,
including reports to Shareholders, dividend and distribution notices, and
proxy material for its meetings of Shareholders; (iii) to respond to
correspondence or inquiries by Shareholders and others relating to its
duties; (iv) to
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<PAGE> 73
maintain Shareholder accounts and certain sub-accounts; and (v) to make
periodic reports to the Funds' Board of Trustees concerning the Funds'
operations.
Under the Transfer Agency Agreement, the Funds have agreed to pay
BISYS Fund Services Ohio, Inc. with respect to each Fund an annual minimum
fee of $10,000 for less than 100 Shareholder accounts invested in a Fund,
$18,000 for 100 to 499 Shareholder accounts invested in a Fund, $24,000 for
500 or more Shareholder accounts invested in a Fund, $16 for each
additional Shareholder account invested in a Money Market Fund, and $14 for
each additional Shareholder account invested in a non-daily dividend based
fund. (The number of Shareholder accounts for purposes of determining the
base fee is calculated on a monthly basis.) BISYS Fund Services Ohio, Inc.
is also entitled to be reimbursed by the Funds for postage, handling fees,
and reasonable costs of supplies used by BISYS Fund Services Ohio, Inc. in
the performance of its services under the Transfer Agency Agreement. BISYS
Fund Services Ohio, Inc. may periodically set its transfer agency fees at
less than the maximum allowable amount with respect to a Fund to increase
the Fund's net income available for distribution as dividends.
BISYS Fund Services Ohio, Inc. serves as fund accountant for each Fund
pursuant to a fund accounting agreement with the Funds dated September 5,
1990 (the "Fund Accounting Agreement"). As fund accountant for the Funds,
BISYS Fund Services Ohio, Inc. prices the Funds' Shares, calculates the
Funds' net asset value, and maintains the general ledger accounting records
for each Fund. Under its Fund Accounting Agreement with the Funds, BISYS
Fund Services Ohio, Inc. is entitled to receive a fee (1) from each Fund
(other than the Intermediate Tax-Free Bond Fund) at an annual rate of three
one-hundredths of one percent (.03%) of the Fund's average daily net assets
plus out-of-pocket expenses, with a minimum monthly fee of $2,500 per Fund
and (2) from the Intermediate Tax-Free Bond Fund at an annual rate of four
one-hundredths of one percent (.04%) of the Fund's average daily net
assets, plus out-of-pocket expenses, with a minimum monthly fee of $3,500.
BISYS Fund Services Ohio, Inc. may periodically set its fund accounting
fees at less than the maximum allowable amount with respect to a Fund in
order to increase the Fund's net income available for distribution as
dividends.
For transfer agency and Fund accounting services during the fiscal
year ended August 31, 1996, the Funds paid BISYS Fund Services Ohio, Inc.
$99,549 for the U.S. Treasury Fund; $153,313 for the Cash Management Fund;
$27,287 for the Bond Fund; $47,236 for the Intermediate Bond Fund; $50,607
for the Equity Fund; $36,462 for the Intermediate Tax-Free Bond Fund;
$32,127 for the Aggressive Growth Fund; $4,798 for the Short-Term Income
Fund; and $14,931 for the Balanced Fund.
For transfer agency and Fund accounting services during the fiscal
year ended August 31, 1995, the Funds paid BISYS Fund Services Ohio, Inc.
$74,920 for the U.S. Treasury Fund, $81,737 for the Cash Management Fund,
$38,030 for the Bond Fund, $49,535 for the Intermediate Bond Fund, $43,976
for the Equity Fund, $30,706 for the Intermediate Tax-Free Bond Fund, and
$46,075 for the Aggressive Growth Fund. For the period from commencement of
operations October 19, 1994, to August 31, 1995, the Funds paid BISYS Fund
Services Ohio,
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Inc. $17,725 for the Short-Term Income Fund, and for the period from
commencement of operations, June 1, 1995, to August 31, 1995, the Funds
paid BISYS Fund Services Ohio, Inc. $2,756 for the Balanced Fund.
For transfer agency and Fund accounting services during the fiscal
year ended August 31, 1994, the Funds paid BISYS Fund Services Ohio, Inc.
$56,358 for the U.S. Treasury Fund, $64,974 for the Cash Management Fund,
$44,139 for the Bond Fund, $50,394 for the Intermediate Bond Fund, $44,158
for the Equity Fund, $29,487 which reflects a waiver of $42,000 for the
Intermediate Tax-Free Bond Fund, and $49,740 for the Aggressive Growth
Fund. The Short-Term Income Fund and the Balanced Fund were not in
operation during the fiscal year ended August 31, 1994.
AUDITORS
The financial statements of the Funds as of August 31, 1996 appearing
in this Statement of Additional Information have been audited by KPMG Peat
Marwick LLP, independent public accountants, as set forth in their report
appearing elsewhere herein, and is included in reliance upon such report
and on the authority of such firm as experts in auditing and accounting.
LEGAL COUNSEL
Ropes & Gray, Suite 800 East, One Franklin Square, 1301 K Street,
N.W., Washington, D.C. 20005 are counsel to the Funds.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES
The Funds are separate series of a single Massachusetts business trust
which was organized on October 1, 1987 and began active operations in
August of 1990. The Funds' Declaration of Trust was filed with the
Secretary of State of the Commonwealth of Massachusetts on October 2, 1987
and authorizes the Board of Trustees to issue an unlimited number of
Shares, which are units of beneficial interest, with par value of $0.00001.
The Funds currently comprise ten series of Shares which represent interests
in the U.S. Treasury Fund, the Cash Management Fund, the Bond Fund, the
Intermediate Bond Fund, the Intermediate Tax-Free Bond Fund, the Equity
Fund, the Aggressive Growth Fund, the Short-Term Income Fund, the Balanced
Fund and the Growth Equity Fund. The Funds' Declaration of Trust authorizes
the Board of Trustees to divide or redivide any unissued Shares of the
Funds into one or more additional series by setting or changing in any one
or more respects their respective preferences, conversion or other rights,
voting power, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption.
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Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board may grant in its discretion.
When issued for payment as described in the Prospectuses and this Statement
of Additional Information, the Funds' Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Funds,
Shares of a Fund are entitled to receive the assets available for
distribution belonging to the Fund, and a proportionate distribution, based
upon the relative asset values of the respective Funds, of any general
assets not belonging to any particular Fund which are available for
distribution.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an
investment company such as the Funds shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding Shares of each Fund affected by the matter. For purposes of
determining whether the approval of a majority of the outstanding Shares of
a Fund will be required in connection with a matter, a Fund will be deemed
to be affected by a matter unless it is clear that the interests of each
Fund in the matter are identical (in which case the Shareholders of the
Funds will vote in the aggregate), or that the matter does not affect any
interest of the Fund (in which case no vote by the Shareholders of the Fund
in question will be required). Under Rule 18f-2, the approval of an
investment advisory agreement or any change in investment policy would be
effectively acted upon with respect to a Fund only if approved by a
majority of the outstanding Shares of such Fund. However, Rule 18f-2 also
provides that the ratification of independent public accountants, the
approval of principal underwriting contracts, and the election of Trustees
may be effectively acted upon by Shareholders of the Funds voting without
regard to series.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, holders of units of beneficial interest in a
business trust may, under certain circumstances, be held personally liable
as partners for the obligations of the trust. However, the Funds'
Declaration of Trust provides that Shareholders shall not be subject to any
personal liability for the obligations of the Funds, and that every written
agreement, obligation, instrument, or undertaking made by the Funds shall
contain a provision to the effect that the Shareholders are not personally
liable thereunder. The Declaration of Trust provides for indemnification
out of the trust property of any Shareholder held personally liable solely
by reason of his being or having been a Shareholder. The Declaration of
Trust also provides that the Funds shall, upon request, assume the defense
of any claim made against any Shareholder for any act or obligation of the
Funds, and shall satisfy any judgment thereon. Thus, the risk of a
Shareholder incurring financial loss on account of Shareholder liability is
limited to circumstances in which the Funds themselves would be unable to
meet their obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Funds shall be personally liable in connection with the
administration or preservation of the assets of the trust or the conduct of
the Funds' business; nor shall any Trustee, officer, or agent be personally
liable to any person for any action or failure to act except for his own
bad faith, willful misfeasance, gross negligence, or reckless disregard of
his duties. The Declaration of Trust also provides that
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all persons having any claim against the Trustees or the Funds shall look
solely to the assets of the trust for payment.
CALCULATION OF PERFORMANCE DATA
Based on the seven-day period ended August 31, 1996 (the "base
period"), the yield of the Cash Management Fund was 4.92% and the Fund's
effective yield was 5.04%. Based on the same base period, the yield of the
U.S. Treasury Fund was 4.55% and the Fund's effective yield was 4.66%. Each
Money Market Fund's seven-day yield is computed by determining the
percentage net change, excluding capital changes, in the value of an
investment in one share of the Fund over the base period, and multiplying
the net change by 365/7 (or approximately 52 weeks). Each Money Market
Fund's effective yield represents a compounding of the yield by adding 1 to
the number representing the percentage change in value of the investment
during the base period, raising that sum to a power equal to 365/7, and
subtracting 1 from the result.
Based on the thirty-day period ended August 31, 1996 ("30-day base
period"), the 30-day yields of the Bond Investment Funds were as follows:
the Bond Fund, 6.29% (without load) and 6.04% (with load); the Intermediate
Bond Fund, 5.84% (without load) and 5.66% (with load); and the Intermediate
Tax-Free Bond Fund, 4.36% (without load) and 4.23% (with load); the
Short-Term Income Fund, 5.97% (without load) and 5.85% (with load). The
30-day yield of each Bond Investment Fund is calculated by dividing the net
investment income per-share earned during the 30-day base period by the
maximum offering price per share on the last day of the period, according
to the following formula:
30-Day Yield = 2[( a-b +1)6-1]
---
cd
In the above formula, "a" represents dividends and interest earned
during the 30-day base period; "b" represents expenses accrued for the
30-day base period (net of reimbursements); "c" represents the average
daily number of shares outstanding during the 30-day base period that were
entitled to receive dividends; and "d" represents the maximum offering
price per share on the last day of the 30-day base period.
The tax equivalent yield for the Intermediate Tax-Free Bond Fund is
computed by dividing that portion of the Intermediate Tax Free Bond Fund's
yield which is tax-exempt by one minus a stated income tax rate and adding
the product to that portion, if any, of the yield of the Fund that is not
tax-exempt. The tax-equivalent yield for the Intermediate Tax-Free Bond
Fund will generally be computed based on an assumed effective Federal
income tax rate of 39.6%.
The average annual total returns for the one-year period ended August
31, 1996 for the Bond Investment Funds, assuming the imposition of a sales
load, were as follows: the Bond Fund, (1.30%); the Intermediate Bond Fund,
0.29%; the Intermediate Tax-Free Bond Fund, 0.58%; and the Short-Term
Income Fund, 2.58%. The average annual total returns for the one-
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