<PAGE> 1
Registration Nos. 33-35190 and 811-6114
As filed with the Securities and Exchange Commission on October 30, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 18 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
Amendment No. 16
--------------
AMERICAN PERFORMANCE FUNDS
--------------------------
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219
---------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
800-762-7085
------------
Joel Engle, Treasurer
American Performance Funds
3435 Stelzer Road, Columbus, Ohio 43219
---------------------------------------
(Name and Address of Agent for Service)
COPIES OF COMMUNICATIONS TO:
Martin E. Lybecker, Esquire
Ropes & Gray
1301 K Street, N.W., Washington, D.C. 20005
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: CONTINUOUS
- ---------------------------------------------------------
It is proposed that this filing become effective (check appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On [Date] pursuant to paragraph (b)
[ X ] 60 days after filing pursuant to paragraph (a)(i)
[ ] On (date) pursuant to paragraph (a) (i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment
- -----------------------------------------------------------------------------
TITLE OF SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST
- ---------------------------------------------------------------------
<PAGE> 2
CROSS REFERENCE SHEET
---------------------
PROSPECTUS FOR THE AMERICAN PERFORMANCE
---------------------------------------
BOND INVESTMENT FUNDS
---------------------
<TABLE>
<CAPTION>
Form N-1A Part A Item Prospectus Caption
--------------------- ------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fee Table
3. Condensed Financial Information Financial Highlights;
General Information - Performance
Information
4. General Description Cover Page;
of Registrant Investment Objectives; Investment
Policies; Other Investment Techniques
of the Bond Investment Funds;
Investment Restrictions; General
Information - Description of the Funds
and their Shares
5. Management of the Fund Management of the Bond Investment
Funds
5A. Management's Discussion of Fund See Registrant's current Annual
Performance Report
6. Capital Stock and Other Cover Page; How to Purchase Shares;
Securities How to Redeem Shares; Sales Charges;
Dividends; Federal Income Taxes;
General Information - Description of the
Funds and their Shares; General
Information - Miscellaneous
7. Purchase of Securities Valuation of Shares;
Being Offered How to Purchase Shares
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Inapplicable
</TABLE>
<PAGE> 3
PROSPECTUS
AMERICAN PERFORMANCE BOND INVESTMENT FUNDS
FOUR VARIABLE NET ASSET VALUE INVESTMENT PORTFOLIOS OF
AMERICAN PERFORMANCE FUNDS
3435 Stelzer Road
Columbus, Ohio 43219
For performance, purchase, and redemption information,
call (800) 762-7085
The American Performance Bond Investment Funds (the "Bond Investment
Funds") are four variable net asset value portfolios of the AMERICAN
PERFORMANCE FUNDS (the "Funds"), a diversified open-end management investment
company which currently consists of ten separately managed portfolios. Each of
the Bond Investment Funds has a different investment objective, and the net
asset value per unit of beneficial interest ("Share") of each Bond Investment
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, NOR HAS THE SECURITIES AND EXCHANGE
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 December 29, 1998.
<PAGE> 4
AMERICAN PERFORMANCE BOND FUND (the "Bond Fund") seeks to maximize
total return by investing primarily in an actively managed, diversified
portfolio of short, intermediate, and long-term bonds and other fixed income
securities. The total return on a portfolio of such fixed income securities
consists of a combination of interest income and capital appreciation.
AMERICAN PERFORMANCE INTERMEDIATE BOND FUND (the "Intermediate Bond
Fund") seeks current income consistent with preservation of capital by
investing primarily in a diversified portfolio of intermediate term bonds and
other fixed income securities.
AMERICAN PERFORMANCE INTERMEDIATE TAX-FREE BOND FUND (the
"Intermediate Tax-Free Bond Fund") seeks current income consistent with
preservation of capital that is exempt from federal income taxes by investing
primarily in a diversified portfolio of intermediate term tax-free bonds and
other tax-free fixed income securities.
AMERICAN PERFORMANCE SHORT-TERM INCOME FUND (the "Short-Term Income
Fund") seeks current income consistent with preservation of capital by
investing primarily in a diversified portfolio of short-term bonds and other
fixed income securities.
Bank of Oklahoma, N.A., Tulsa, Oklahoma ("BOK") serves as the
investment adviser ("Investment Adviser") to each Bond Investment Fund. BISYS
Fund Services Limited Partnership, D/B/A Bisys Fund Services, Columbus, Ohio,
("BISYS" or the "Distributor") acts as the Bond Investment Funds'
Administrator and Distributor.
This Prospectus relates only to the Bond Investment Funds. 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 equity
portfolios to which BOK serves as Investment Adviser: the American Performance
Equity Fund, and the American Performance Aggressive Growth Fund, each of
which seeks growth of capital and, secondarily, income through investing
primarily in common stocks and securities convertible into common stocks, the
American Performance Balanced Fund, which seeks current income and,
secondarily, long-term capital growth by investing primarily in a broadly
diversified portfolio of securities, including common stocks, preferred stocks
and bonds and the American Performance Growth Equity Fund, which seeks
long-term capital appreciation income by investing primarily in a diversified
portfolio of common stocks and securities convertible into common stocks
(collectively, the "American Performance Equity Investment Funds"). Persons
who wish to obtain a copy of the Prospectus for the American Performance Money
Market Funds or the American Performance Equity Investment Funds may contact
the Funds at the telephone number shown above.
-2-
<PAGE> 5
A Statement of Additional Information bearing the same date as this
Prospectus, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Statement of Additional Information can
be obtained without charge by writing to or calling the Funds at the address
or telephone number shown above.
This Prospectus sets forth concisely the information about the Bond
Investment Funds that a prospective investor ought to know before investing.
Investors should read this Prospectus and retain it for future reference.
-3-
<PAGE> 6
<TABLE>
<CAPTION>
FEE TABLE
SHORT-
INTERMEDIATE TERM
INTERMEDIATE TAX-FREE INCOME
BOND FUND BOND FUND BOND FUND FUND
--------- --------- --------- ----
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses(1)
- -----------------------------------
Maximum Sales Load
Imposed on Purchases(2) 4.00% 3.00% 3.00% 2.00%
(as a percentage of offering price)
Maximum Sales Load Imposed
on Reinvested Dividends 0% 0% 0% 0%
(as a percentage of offering price)
Deferred Sales Load 0% 0% 0% 0%
(as a percentage of original purchase
price or redemption proceeds, if applicable)
Redemption Fees(3) 0% 0% 0% 0%
(as a percentage of amount redeemed,
if applicable)
Exchange Fees $0 $0 $0 $0
<FN>
- ------------
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
any of the Bond Investment Funds within their trust accounts and purchase
additional Shares outside of their trust relationships; (7) investors within
wrap accounts; (8) investors who purchase in connection with 401(k) plans,
403(b) plans, and other employer-sponsored, qualified retirement plans; and
(9) investors who purchase in connection with non-transactional fee fund
programs and programs offered by fee-based financial planners and other types
of financial institutions.
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.")
</TABLE>
-4-
<PAGE> 7
<TABLE>
<CAPTION>
SHORT-
INTERMEDIATE TERM
INTERMEDIATE TAX-FREE INCOME
BOND FUND BOND FUND BOND FUND FUND
--------- --------- --------- ----
<S> <C> <C> <C> <C>
Annual Operating Expenses
- -------------------------
(as a percentage of average net assets)
- ---------------------------------------
Management Fees(4) 0.35% 0.35% 0.35% 0%
(after voluntary fee reductions)
12b-1 Fees(5) 0.25% 0.25% 0% 0%
(after voluntary fee reductions
in the case of the Intermediate
Tax-Free Bond Fund and the
Short-Term Income Fund)
Other Expenses 0.35% 0.35% 0.39% 0.41%
------- ----- ----- ------
(after voluntary fee reductions in the
case of the Short-Term Income Fund)
Total Fund Operating Expenses(6) 0.95% 0.95% 0.74% 0.41%
======= ===== ===== =======
(after voluntary fee reductions)
- ------------
4 In order to reduce operating expenses, the Investment Adviser has
voluntarily agreed to reduce the investment advisory fees. Absent voluntary
fee reductions, the investment advisory fees would be 0.55% of the average
daily net assets for the Bond Fund, Intermediate Bond Fund, Intermediate
Tax-Free Bond Fund and Short-Term Income Fund.
5 In order to reduce operating expenses, the Distributor has voluntarily
agreed to reduce the investment 12b-1 Fees. Absent voluntary fee reductions,
12b-1 Fees would be 0.25% of the average daily net assets of the Intermediate
Tax-Free Bond Fund and the Short-Term Income Fund.
6 Absent voluntary fee reductions, the Total Fund Operating Expenses for
the Bond Fund, Intermediate Bond Fund, Intermediate Tax-Free Bond Fund and
Short-Term Income Fund would be 1.15%, 1.15%, 1.19% and 1.21% of each Fund's
average daily net assets, respectively.
</TABLE>
-5-
<PAGE> 8
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>
Intermediate
Intermediate Tax-Free Short-Term
Bond Fund Bond Fund Bond Fund Income Fund
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
1 Year $49 $39 $37 $24
3 Years $69 $59 $53 $33
5 Years $90 $81 $70 $43
10 Years $152 $143 $119 $71
</TABLE>
The purpose of the above table is to assist a potential purchaser of
Shares of any of the Bond Investment Funds in understanding the various costs
and expenses that an investor in any of the Bond Investment Funds will bear
directly or indirectly. The examples reflect voluntary reductions of
investment advisory and 12b-1 Fees. Although the Investment Adviser and the
Distributor have currently agreed to these voluntary reductions, they may
cease to provide these reductions, 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 a Fund. See "MANAGEMENT OF THE
BOND INVESTMENT FUNDS," "SALES CHARGES," and "DISTRIBUTION" for a more
complete discussion of the transaction expenses and annual operating expenses
of each Bond Investment Fund. NASD rules generally limit the amount that a
Bond Investment Fund may pay under a Distribution Plan. A Bond Investment 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.
-6-
<PAGE> 9
FINANCIAL HIGHLIGHTS
The American Performance Funds (the "Funds") were organized as a
Massachusetts business trust and began active operations in August of 1990.
The Funds currently consist of ten series of units of beneficial interests
("Shares"). Four such series represent interests in the Bond Fund,
Intermediate Bond Fund, Intermediate Tax-Free Bond Fund, and Short-Term Income
Fund.
The Tables below set forth certain financial highlights for the Bond
Fund, the Intermediate Bond Fund, the Intermediate Tax-Free Bond Fund and the
Short-Term Income Fund for the periods indicated. The most recent five years
of each Table are part of the Funds' financial statements which are included
in the Funds' Annual Report and are incorporated by reference into the
Statement of Additional Information, which a Shareholder may obtain by calling
the Funds. The financial statements have been audited by KPMG Peat Marwick
LLP, independent accountants for the Funds, whose report thereon, is included
in the Funds' Annual Report.
<TABLE>
<CAPTION>
BOND FUND
YEAR ENDED AUGUST 31,
---------------------
1998 1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.29 $ 8.99 $ 9.29 $ 9.36 $ 11.05 $ 10.99 $ 10.57
---------- ---------- ---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income 0.57 0.58 0.57 0.56 0.58 0.70 0.76
Net realized and unrealized gains
(losses) on investments 0.47 0.30 (0.30) 0.15 (0.77) 0.50 0.54
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Activities 1.04 0.88 0.27 0.71 (0.19) 1.20 1.30
---------- ---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS
Net investment income (0.57) (0.58) (0.57) (0.56) (0.58) (0.70) (0.76)
Net realized gains -- -- -- -- (0.43) (0.44) (0.12)
In excess of net realized gains -- -- -- (0.22) (0.49) -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Distributions (0.57) (0.58) (0.57) (0.78) (1.50) (1.14) (0.88)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.76 $ 9.29 $ 8.99 $ 9.29 $ 9.36 $ 11.05 $ 10.99
========== ========== ========== ========== ========== ========== ==========
Total Return (excludes sales charge) 11.54% 10.03% 2.84% 8.21% (1.92)% 11.76% 12.71%
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $ 52,706 $ 35,454 $ 32,807 $ 37,293 $ 38,257 $ 23,554 $ 42,396
Ratio of expenses to average net assets 0.96% 0.94% 0.96% 1.03% 1.05% 1.12% 1.06%
Ratio of net investment income to
average net assets 6.02% 6.29% 6.08% 6.18% 5.72% 6.49% 6.96%
Ratio of expenses to average net assets* 1.16% 1.14% 1.16% 1.23% 1.25% 1.33% 1.30%
Ratio of net investment income to
average net assets* 5.82% 6.09% 5.88% 5.98% 5.52% 6.28% 6.72%
Portfolio turnover 47.80% 83.65% 61.02% 185.48% 122.14% 26.27% 60.84%
<CAPTION>
SEPTEMBER 28,
1990 TO
AUGUST 31,
1991(a)
-------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
----------
INVESTMENT ACTIVITIES
Net investment income 0.71
Net realized and unrealized gains
(losses) on investments 0.57
----------
Total from Investment Activities 1.28
----------
DISTRIBUTIONS
Net investment income (0.71)
Net realized gains --
In excess of net realized gains --
----------
Total Distributions (0.71)
----------
NET ASSET VALUE, END OF PERIOD $ 10.57
==========
Total Return (excludes sales charge) 13.12%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $ 45,911
Ratio of expenses to average net assets 1.07%(b)
Ratio of net investment income to
average net assets 7.35%(b)
Ratio of expenses to average net assets* 1.32%(b)
Ratio of net investment income to
average net assets* 7.10%(b)
Portfolio turnover 37.99%
- ---------
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not
occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
</TABLE>
-7-
<PAGE> 10
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
----------------------
YEAR ENDED AUGUST 31,
---------------------
1998 1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 10.01 $ 10.26 $ 10.23 $ 11.06 $ 10.89 $ 10.45
---------- ---------- ---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income 0.61 0.60 0.60 0.61 0.61 0.64 0.71
Net realized and unrealized gains
(losses) on investments 0.27 0.22 (0.25) 0.06 (0.73) 0.30 0.54
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Activities 0.88 0.82 0.35 0.67 (0.12) 0.94 1.25
---------- ---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS
Net investment income (0.61) (0.60) (0.60) (0.61) (0.61) (0.64) (0.71)
Net realized gains -- -- -- -- (0.06) (0.13) (0.10)
In excess of net realized gains -- -- -- (0.03) (0.04) -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Distributions (0.61) (0.60) (0.60) (0.64) (0.71) (0.77) (0.81)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 10.50 $ 10.23 $ 10.01 $ 10.26 $ 10.23 $ 11.06 $ 10.89
========== ========== ========== ========== ========== ========== ==========
Total Return (excludes sales charge) 8.80% 8.38% 3.41% 6.81% (1.14%) 9.04% 12.41%
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $ 85,382 $ 77,319 $ 63,088 $ 74,395 $ 84,144 $ 57,085 $ 47,523
Ratio of expenses to average net assets 0.95% 0.93% 0.95% 0.98% 0.98% 1.02% 1.07%
Ratio of net investment income to
average net assets 5.86% 5.89% 5.84% 6.00% 5.72% 5.95% 6.62%
Ratio of expenses to average net assets* 1.15% 1.13% 1.15% 1.18% 1.18% 1.24% 1.31%
Ratio of net investment income to
average net assets* 5.66% 5.69% 5.64% 5.80% 5.52% 5.74% 6.39%
Portfolio turnover 31.98% 40.77% 129.97% 154.43% 76.30% 47.79% 60.53%
<CAPTION>
SEPTEMBER 28,
1990 TO
AUGUST 31,
1991(a)
------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
----------
INVESTMENT ACTIVITIES
Net investment income 0.66
Net realized and unrealized gains
(losses) on investments 0.45
----------
Total from Investment Activities 1.11
----------
DISTRIBUTIONS
Net investment income (0.66)
Net realized gains --
In excess of net realized gains --
----------
Total Distributions (0.66)
----------
NET ASSET VALUE, END OF PERIOD $ 10.45
==========
Total Return (excludes sales charge) 11.42%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $ 41,894
Ratio of expenses to average net assets 1.10%(b)
Ratio of net investment income to
average net assets 6.98%(b)
Ratio of expenses to average net assets* 1.33%(b)
Ratio of net investment income to
average net assets* 6.75%(b)
Portfolio turnover 22.18%
- ---------
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
</TABLE>
-8-
<PAGE> 11
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
-------------------------------
MAY 29,
YEAR ENDED AUGUST 31, 1992 TO
---------------------------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994 1993 1992(a)
---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.78 $ 10.57 $ 10.67 $ 10.42 $ 10.77 $ 10.18 $ 10.00
---------- ---------- ---------- ---------- ---------- ---------- ---------
INVESTMENT ACTIVITIES
Net investment income 0.48 0.49 0.49 0.51 0.54 0.55 0.13
Net realized and unrealized gains
(losses) on investments 0.28 0.21 (0.10) 0.25 (0.35) 0.59 0.18
---------- ---------- ---------- ---------- ---------- ---------- ---------
Total from Investment Activities 0.76 0.70 0.39 0.76 0.19 1.14 0.31
---------- ---------- ---------- ---------- ---------- ---------- ---------
DISTRIBUTIONS
Net investment income (0.48) (0.49) (0.49) (0.51) (0.54) (0.55) (0.13)
========== ---------- ---------- ---------- ---------- ---------- ---------
NET REALIZED GAINS (0.07) -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- --------- ---------
Total Distributions (0.55) (0.49) (0.49) (0.51) (0.54) (0.55) (0.13)
---------- ---------- ---------- ---------- ---------- ---------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.99 $ 10.78 $ 10.57 $ 10.67 $ 10.42 $ 10.77 $ 10.18
============= ========== ========== ========== ========== ========== =========
Total Return (excludes sales charge) 7.28% 6.79% 3.68% 7.62% 1.76% 11.56% 3.14%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $ 30,454 $ 26,544 $ 1,036 $ 28,114 $ 30,097 $ 17,415 $ 7,560
Ratio of expenses to average
net assets 0.74% 0.74% 0.75% 0.51% 0.25% 0.25% 0.35%(b)
Ratio of net investment income to
average net assets 4.44% 4.61% 4.58% 4.99% 5.06% 5.34% 5.28%(b)
Ratio of expenses to average net assets* 1.19% 1.19% 1.20% 1.24% 1.44% 1.63% 2.03%(b)
Ratio of net investment income to
average net assets* 3.99% 4.16% 4.13% 4.25% 3.87% 3.96% 3.60%(b)
Portfolio turnover 19.10% 11.38% 19.53% 8.35% 14.33% 13.19% 19.33%
- ---------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions and/or
reimbursements had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operation.
(b) Annualized.
(c) Unannualized.
</TABLE>
-9-
<PAGE> 12
<TABLE>
<CAPTION>
SHORT-TERM INCOME FUND
----------------------
YEAR ENDED AUGUST 31, OCTOBER 19, 1994
----------------------------------- TO AUGUST 31,
1998 1997 1996 1995(a)
---- ---- ---- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.92 $9.79 $9.95 $10.00
----- ----- ----- ------
INVESTMENT ACTIVITIES
Net investment income 0.62 0.61 0.59 0.52
Net realized and unrealized gains (losses)
on investments 0.20 0.14 (0.14) (0.05)
---- ---- ------ ------
Total from Investment Activities 0.82 0.75 0.45 0.47
---- ---- ------ ------
DISTRIBUTIONS
Net investment income (0.62) (0.61) (0.59) (0.52)
In excess of net investment income -- (0.01) -- --
Net realized gains -- -- (0.01) --
In excess of net realized gains -- -- (0.01) --
------ ----- ------ ------
Total Distributions (0.62) (0.62) (0.61) (0.52)
------ ----- ------ ------
NET ASSET VALUE, END OF PERIOD $10.12 $9.92 $ 9.79 $ 9.95
====== ===== ====== ======
Total Return (excludes sales charge) 8.47% 7.85% 4.64% 4.81%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $32,390 $15,658 $14,399 $10,228
Ratio of expenses to average net assets 0.40% 0.33% 0.41% 0.57%(b)
Ratio of net investment income to average net assets 6.15% 6.14% 5.95% 5.96%(b)
Ratio of expenses to average net assets* 1.22% 1.16% 1.24% 1.47%(b)
Ratio of net investment income to average net assets* 5.34% 5.31% 5.12% 5.06%(b)
Portfolio turnover 60.02% 37.55% 80.98% 212.35%(b)
- ---------
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
(a) Period from commencement of operation.
(b) Annualized.
(c) Unannualized.
</TABLE>
-10-
<PAGE> 13
INVESTMENT OBJECTIVES
---------------------
BOND FUND. The investment objective of the Bond Fund is to maximize total
return by investing primarily in an actively managed, diversified portfolio of
short, intermediate and long-term bonds and other fixed income securities.
(See "INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS" for discussion of such
other fixed income securities.) Total return on a portfolio of fixed income
securities consists of a combination of interest income and capital
appreciation. The Bond Fund will seek to maximize total return through active
adjustment, when appropriate, of portfolio composition and maturity in
response to actual or anticipated changes or trends in interest rates, the
financial markets, or the economy.
INTERMEDIATE BOND FUND. The investment objective of the Intermediate Bond Fund
is to seek current income, consistent with the preservation of capital, by
investing primarily in a diversified portfolio of intermediate bonds and other
fixed income securities. (See "INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS"
for discussion of such other fixed income securities.)
INTERMEDIATE TAX-FREE BOND FUND. The investment objective of the Intermediate
Tax-Free Bond Fund is to seek current income, consistent with the preservation
of capital, that is exempt from federal income taxes by investing primarily in
a diversified portfolio of intermediate term bonds and other fixed income
securities. Investments in the Intermediate Tax-Free Bond Fund, therefore,
would not be appropriate for tax deferred plans, such as IRA and Keogh Plans.
SHORT-TERM INCOME FUND. The investment objective of the Short-Term Income Fund
is to seek current income, consistent with preservation of capital, by
investing primarily in a diversified portfolio of short-term bonds and other
fixed income securities. (See "INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS"
for discussion of such other fixed income securities.)
ALL BOND INVESTMENT FUNDS. The Bond Fund, Intermediate Bond Fund, Intermediate
Tax-Free Bond Fund and Short-Term Income Fund are collectively referred to
herein as Bond Investment Funds. The investment objectives with respect to
each of the Bond Investment Funds may not be changed without a vote of the
holders of a majority of the outstanding Shares of that Bond Investment Fund
(as defined in "GENERAL INFORMATION - Miscellaneous"). There can be no
assurance that the investment objective of a Bond Investment Fund will be
achieved. Depending upon the performance of a Bond Investment Fund's
investment portfolio, the net asset value per share of the Bond Investment
Fund may decrease instead of increase.
Additionally, the Bond Investment Funds may engage in certain
investment techniques which may subject the Bond Investment Funds to certain
risks (see "OTHER INVESTMENT TECHNIQUES OF THE BOND INVESTMENT FUNDS").
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<PAGE> 14
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS
----------------------------------------------
BOND FUND, INTERMEDIATE BOND FUND AND SHORT-TERM INCOME FUND
The investments of the Bond Fund, the Intermediate Bond Fund and the
Short-Term Income Fund will primarily consist of, but will not be limited to,
debt obligations such as bonds, notes and debentures, bills which are issued
by United States corporations or issued or guaranteed by the U.S. government
or its agencies or instrumentalities and municipal securities which possess
all the characteristics detailed under "Intermediate Tax-Free Bond Fund"
below, other than exemption from federal income taxes. As described in greater
detail below, the Bond Fund, the Intermediate Bond Fund and the Short-Term
Income Fund may also invest in certain foreign securities, asset-backed
securities, mortgage-related securities and zero coupon obligations. The Bond
Fund, the Intermediate Bond Fund and the Short-Term Income Fund will invest in
debt securities only if they carry a rating within the three highest ratings
categories assigned by a nationally recognized statistical ratings
organization (an "NRSRO") (e.g., at least "A" from Moody's Investors Services
("Moody's"), or Standard & Poor's Corporation ("S&P") (including all
sub-classifications indicated by modifiers of such "A" ratings)) or, if
unrated, are deemed by the Investment Adviser under guidelines established by
the Funds' Board of Trustees to present attractive opportunities and to be of
comparable quality to the securities so rated. See "Appendix" to the Statement
of Additional Information for an explanation of these ratings.
The Bond, Intermediate Bond, and Short-Term Income Funds, under
normal market conditions, will each invest at least 65% of the value of their
total assets in bonds, except that, when market conditions indicate a
temporary defensive investment strategy as determined by the Funds' Investment
Adviser, more than 35% of the Bond, Intermediate Bond, or Short-Term Income
Funds' assets may be held in cash equivalents. For purposes of the
above-stated policies, "bonds" includes any debt instrument with a remaining
maturity of one year or more.
Certain debt securities such as, but not limited to, mortgage backed
securities, CMOs and asset-backed securities, as well as securities subject to
prepayment of principal prior to the stated maturity date, are expected to be
repaid prior to their stated maturity dates. As a result, the effective
maturity of these securities is expected to be shorter than the stated
maturity. For purposes of calculating a Bond Investment Fund's weighted
average portfolio maturity, the effective maturity of such securities, as
determined by the Advisers, will be used.
"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'
acceptances, U.S. Treasury bills, master demand notes, agency discount notes,
bank money market deposit
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<PAGE> 15
accounts and money market mutual funds. The Bond, Intermediate Bond, and
Short-Term Income Funds will only purchase commercial paper rated at the time
of purchase within the highest ratings categories assigned by an NRSRO (e.g.,
A-1 by S&P, Prime-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 Bond Fund, the Intermediate Bond Fund, or the Short-Term Income Fund may
hold up to 100% of its total assets in cash equivalents.
The Intermediate Bond Fund intends that, under normal market
conditions, its portfolio will maintain an average dollar-weighted maturity of
approximately three to ten years. The Bond Fund intends that, under normal
market conditions, its portfolio will maintain an average dollar-weighted
maturity of seven years or more. The Short-Term Income Fund intends that,
under normal market conditions, its portfolio will maintain an average
dollar-weighted maturity of three years or less. However, for temporary
defensive purposes the Intermediate Bond Fund, the Bond Fund, and the
Short-Term Income Fund may shorten the average dollar-weighted maturity of its
portfolio depending upon anticipated changes in interest rates or other
relevant market factors.
The Bond Fund will attempt to maximize total return by allocating
portfolio assets among various fixed income markets, securities, and
maturities. Securities and maturities selected will be those that offer the
greatest potential for maximizing total return without assuming undue risk.
The Investment Adviser will monitor the Fund's portfolio performance on an
ongoing basis and reallocate assets in response to actual and anticipated
market and economic changes. This approach may result in significant
variations in the Bond Fund's average weighted maturity.
FOREIGN SECURITIES. The Bond, Intermediate Bond, and Short-Term Income Funds
may invest in Canadian, Supra-national, and World Bank Bonds, Eurodollars, and
similar instruments. 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.
ASSET-BACKED SECURITIES. The Bond, Intermediate Bond, and Short-Term Income
Funds may invest in securities backed by automobile receivables and
credit-card receivables and other securities backed by other types of
receivables or other assets. Credit support for asset-backed securities may be
based on the underlying assets and/or provided through credit enhancements by
a third party. Credit enhancement techniques include letters of credit,
insurance bonds, limited guarantees (which are generally provided by the
issuer), senior-subordinated structures and over-collateralization. The Bond,
Intermediate Bond, and Short-Term Income Funds will only
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<PAGE> 16
purchase an asset-backed security if it is rated within the three highest
ratings categories assigned by an NRSRO (e.g., at least "A" by S&P or
Moody's). Asset-backed securities are generally considered to be illiquid.
MORTGAGE-RELATED SECURITIES. The Bond, Intermediate Bond, and Short-Term
Income Funds may purchase mortgage-related securities representing 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
private 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 the Bond Fund, the Intermediate Bond Fund, or the
Short-Term Income 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 the Bond Investment Fund holding the security. 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 the Bond Investment Fund holding a mortgage related security will
receive when these amounts are reinvested. The Bond, the Intermediate Bond,
and the Short-Term Income Funds also may invest in collateralized mortgage
obligations structured on pools of mortgage pass-through certificates or
mortgage loans. Collateralized mortgage obligations will be purchased only if
rated in one of the three highest rating categories by an NRSRO. For further
discussion concerning the investment considerations involved, see "INVESTMENT
OBJECTIVE AND POLICIES -- Additional Information on Fund Instruments --
Mortgage-Related Securities" in the Statement of Additional Information.
ZERO COUPON OBLIGATIONS. The Bond, the Intermediate Bond, and the Short-Term
Income Funds may hold zero-coupon obligations issued by the U.S. Treasury and
U.S. agencies. Such zero-coupon obligations pay no current interest and are
typically sold at prices greatly discounted from par value, with par value to
be paid to the holder at maturity. The return on a zero-coupon obligation,
when held to maturity, equals the difference between the par value and the
original purchase price. Zero-coupon obligations have greater price volatility
than coupon obligations and such obligations will be purchased only if, at the
time of purchase, the yield spread, considered in light of the obligation's
duration, is considered advantageous.
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<PAGE> 17
Even though such bonds do not pay current interest in cash, a Fund
nonetheless is required to accrue interest income on these investments and to
distribute the interest income on a current basis. thus, a fund could be
required at times to liquidate other investments in order to satisfy its
distribution requirements.
INTERMEDIATE TAX-FREE BOND FUND
Under normal market conditions at least 80% of the net assets of the
Intermediate Tax- Free Bond Fund will be invested in a diversified portfolio
of obligations (such as bonds, notes, and debentures) issued by or on behalf
of states, territories and possessions of the United States, the District of
Columbia and other political subdivisions, agencies, instrumentalities and
authorities, the interest on which is both exempt from federal income taxes
and not treated as a preference item for individuals for purposes of the
federal alternative minimum tax ("Municipal Securities"). This is a
fundamental policy and may only be changed by the vote of a majority of the
outstanding Shares of the Intermediate Tax-Free Bond Fund (as defined in
"GENERAL INFORMATION - Miscellaneous"). The Intermediate Tax-Free Bond Fund
will maintain a dollar-weighted average portfolio maturity between three and
ten years. Under normal market conditions, at least 65% of the Intermediate
Tax-Free Bond Fund's total assets will be invested in Municipal Securities
which are bonds and debentures.
The two principal classifications of Municipal Securities which may
be held by the Intermediate Tax-Free Bond Fund are "general obligation"
securities and "revenue" securities. General obligation securities are secured
by the issuer's pledge of its full faith, credit and taxing power for the
payment of principal and interest. Revenue securities are payable only from
the revenues derived from a particular facility or class of facilities or, in
some cases, from proceeds of a special excise tax or other specific revenue
source such as the user of the facility being financed. Private activity bonds
held by the Intermediate Tax-Free Bond Fund are in most cases revenue
securities and are not payable from the unrestricted revenues of the issuer.
Consequently, the credit quality of private activity bonds is usually directly
related to the credit standing of the corporate user of the facility involved.
The Intermediate Tax-Free Bond Fund may also invest in "moral
obligation" securities, which are normally issued by special purpose public
authorities. If the issuer of moral obligation securities is unable to meet
its debt service obligations from current revenues, it may draw on a reserve
fund, the restoration of which is a moral commitment, but not a legal
obligation of the state or municipality which created the issuer.
The Intermediate Tax-Free Bond Fund invests in Municipal Securities
which are rated at the time of purchase within the three highest rating groups
assigned by an NRSRO, in the case of bonds (E.G. at least A by Moody's or
S&P); rated within the highest ratings category assigned by an NRSRO, in the
case of notes (E.G., "SP-1" by S&P or "MIG-1" by Moody's); rated in the
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<PAGE> 18
highest ratings category assigned by an NRSRO, in the case of tax-exempt
commercial paper (E.G., "A-1" or higher by S&P or "Prime-1" by Moody's); or
rated in the highest ratings category assigned by an NRSRO, in the case of
variable rate demand obligations, (E.G., "VMIG-1" by Moody's). The
Intermediate Tax-Free Bond Fund may also purchase Municipal Securities which
are unrated at the time of purchase but are determined to be of comparable
quality by the Investment Adviser pursuant to guidelines approved by the
Funds' Board of Trustees. The applicable Municipal Securities ratings are
described in the Appendix to the Statement of Additional Information.
Interest income from certain types of municipal securities may
constitute a preference item for individuals for purposes of the federal
alternative minimum tax. The Intermediate Tax- Free Bond Fund will not treat
these securities as "Municipal Securities" for purposes of measuring
compliance with the 80% test described above. To the extent the Intermediate
Tax- Free Bond Fund invests in these securities, individual shareholders,
depending on their own tax status, may be subject to alternative minimum tax
on that part of the Intermediate Tax-Free Bond Fund's distributions derived
from these securities. More generally, corporate Shareholders may be subject
to the federal alternative minimum tax on distributions derived by the
Intermediate Tax-Free Bond Fund from Municipal Securities. See "FEDERAL INCOME
TAXES" for more information on the impact of the federal alternative minimum
tax on investors in the Intermediate Tax-Free Bond Fund.
Opinions relating to the validity of Municipal Securities and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the
Intermediate Tax-Free Bond Fund nor its Investment Adviser will review the
proceedings relating to the issuance of Municipal Securities or the basis for
such opinions.
Although the Intermediate Tax-Free Bond Fund may invest more than 25%
of its net assets in (i) Municipal Securities whose issuers are in the same
state (ii) Municipal Securities the interest on which is paid solely from
revenues of similar projects, and (iii) private activity bonds, it does not
presently intend to do so on a regular basis. To the extent the Intermediate
Tax-Free Bond Fund's assets are concentrated in Municipal Securities that are
payable from the revenues of similar projects or are issued by issuers located
in the same state, or are concentrated in private activity bonds, the
Intermediate Tax-Free Bond Fund will be subject to the peculiar risks
presented by the laws and economic conditions relating to such states,
projects and bonds to a greater extent than it would be if its assets were not
so concentrated.
The Intermediate Tax-Free Bond Fund may invest in short-term
Municipal Securities up to 100% of its assets during temporary defensive
periods.
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<PAGE> 19
TAXABLE OBLIGATIONS. Under normal market conditions, at least 80% of the net
assets of the Intermediate Tax-Free Bond Fund will be invested in Municipal
Securities. However, investments of the Intermediate Tax-Free Bond Fund may be
made in taxable obligations if, for example, suitable tax-exempt obligations
are unavailable or if acquisition of U.S. government or other taxable
securities is deemed appropriate for temporary defensive purposes. Such
taxable obligations, which are further described in the Statement of
Additional Information may include obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities (some of which may be
subject to repurchase agreements), certificates of deposit and bankers'
acceptances of selected banks and commercial paper meeting the Intermediate
Tax-Free Bond Fund's quality standards (as described above) for tax-exempt
commercial paper. Under such circumstances and during the period of such
investment, the Intermediate Tax-Free Bond Fund may not achieve its stated
investment objective.
VARIABLE AND FLOATING RATE NOTES. Municipal Securities purchased by the
Intermediate Tax-Free Bond Fund may include rated and unrated variable and
floating rate tax-exempt notes. There may be no active secondary market with
respect to a particular variable or floating rate note. Nevertheless, the
periodic readjustments of their interest rates tend to assure that their value
to the Intermediate Tax-Free Bond Fund will approximate their par value.
Variable and floating rate notes for which no readily available market exists
will be purchased in an amount which, together with other securities described
in Investment Restriction Number 5 below (see "INVESTMENT RESTRICTIONS"),
exceeds 10% of the Intermediate Tax-Free Bond Fund's net assets only if such
notes are subject to a demand feature that will permit the Intermediate
Tax-Free Bond Fund to receive payment of the principal within seven days after
demand by the Intermediate Tax-Free Bond Fund.
THE BOND INVESTMENT FUNDS
Bonds, notes, and debentures in which the Bond Investment Funds may
invest may differ in interest rates, maturities and times of issuance. The
market value of the Bond Investment Funds' debt securities will change in
response to interest rate changes and other factors. During periods of falling
interest rates, the value of outstanding debt securities generally rise.
Conversely, during periods of rising interest rates, the value of such
securities generally decline. Moreover, while securities with longer
maturities tend to produce higher yields, the price of longer maturity
securities is also subject to greater fluctuations as a result of changes in
interest rates. Conversely, securities with shorter maturities generally have
less price movement than securities of comparable quality with longer
maturities. Changes by recognized agencies in the rating of any debt security
and in the ability of an issuer to make payments of interest and principal
also affect the value of these investments. Except under conditions of
default, changes in the value of a Bond Investment Fund's portfolio securities
will not affect cash income derived from these securities but will affect a
Bond Investment Fund's net asset value.
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<PAGE> 20
OTHER INVESTMENT TECHNIQUES OF THE BOND INVESTMENT FUNDS
--------------------------------------------------------
INVESTMENT COMPANY SECURITIES. Each Bond Investment Fund may invest in shares
of other investment companies, including other American Performance Funds.
However, none of the Bond Investment Funds may invest more than 5% of its
total assets in the securities of any one investment company, nor may any Bond
Investment Fund own more than 3% of the 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 a Bond Investment Fund. This fee is in
addition to the fees received by a Bond Investment Fund's Investment Adviser
and Administrator. In order to avoid the imposition of additional fees as a
result of investments by a Bond Investment Fund in shares of other American
Performance Funds, the Investment Adviser and Administrator have agreed to
promptly forward to the Bond Investment Fund any portion of their usual
asset-based service fees from an American Performance Fund which is
attributable to investment by the Bond Investment Fund in Shares of such other
American Performance Fund.
OPTIONS AND FUTURES CONTRACTS. Each Bond Investment 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 a Bond
Investment Fund to segregate assets to cover contracts that would require it
to purchase securities. A Bond Investment 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 Bond Investment Fund had not entered into any
futures transactions. In addition, the value of a Bond Investment Fund's
futures positions may not prove to be perfectly or even highly correlated with
the value of its portfolio securities, limiting the Bond Investment 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.
WHEN-ISSUED SECURITIES. Each Bond Investment 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. A Bond
Investment Fund will generally not pay for such securities or start earning
interest on them until they are received. When a Bond Investment 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 Bond
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<PAGE> 21
Investment 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. Each Bond Investment 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 exceed 25% of the value of its assets, a
Bond Investment Fund's liquidity and the ability of the Investment Adviser to
manage it might be severely affected. No Bond Investment Fund intends to
purchase when-issued securities for speculative purposes but only in
furtherance of its investment objective.
SECURITIES LENDING. In order to generate additional income, each Bond
Investment Fund may, from time to time, lend its portfolio securities to
broker-dealers, banks, or institutional borrowers of securities. The Funds
will enter into loan agreements with broker-dealers, banks, or other
institutions that BOK has determined are creditworthy under guidelines
established by the Funds' Board of Trustees. See the Statement of Additional
Information for more information regarding these investment activities.
REPURCHASE AGREEMENTS. Securities held by a Bond Investment Fund may be
subject to repurchase agreements. Under the terms of a repurchase agreement, a
Bond Investment 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 Bond Investment 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. In addition, securities subject to repurchase
agreements will be held in a segregated account. 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. Each Bond Investment 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, a Bond Investment 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 a Bond
Investment 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 Bond Investment Fund's investment objective
having a value not less than 100% of the repurchase price (including
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<PAGE> 22
accrued interest), and 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 a Bond Investment Fund
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.
PRIVATE PLACEMENT INVESTMENTS. Each Bond Investment 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. None of the Bond Investment
Funds will 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
Bond Investment 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 Bond Investment
Funds' investments in these securities, focusing on such important factors,
among others, as valuation, liquidity, and availability of information.
Investments in Section 4(2) paper could have the effect of reducing a Bond
Investment Fund's liquidity to the extent that qualified institutional buyers
become for a time not interested in purchasing these restricted securities.
INVESTMENT RESTRICTIONS
-----------------------
Each Bond Investment 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 Bond Investment Fund (as defined in "GENERAL
INFORMATION - Miscellaneous").
Pursuant to these investment restrictions:
1. Each of the Bond Investment Funds 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
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<PAGE> 23
be invested in any one issuer, or (ii) it would hold more than 10%
of any class of securities of such 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. Each of the Bond Investment Funds 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; (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); and (d) this
limitation shall not apply to Municipal Securities or governmental
guarantees of Municipal Securities; and further, that for the purpose
of this limitation only, private activity bonds that are backed only
by the assets and revenues of a non-governmental user shall not be
deemed to be Municipal Securities.
3. The Bond Investment Funds may not borrow money or issue
senior securities, except that each Bond Investment 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 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 each Bond Investment Fund's total assets at the time of
its borrowing. No Bond Investment Fund will purchase securities while
its borrowings (including reverse repurchase agreements) exceed 5% of
its total assets.
4. No Bond Investment Fund may make loans, except that each
Bond Investment Fund may, in accordance with its investment
objectives and policies, purchase or hold debt instruments, lend
portfolio securities, and enter into repurchase agreements.
5. No Bond Investment Fund will 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 such Fund's net assets.
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<PAGE> 24
In addition, the Intermediate Tax-Free Bond Fund is subject to the
following additional investment restrictions pursuant to which it will not:
1. Acquire a put, if, immediately after such acquisition, over
5% of the total value of the Intermediate Tax-Free Bond Fund's
assets would be subject to puts from such issuer (except that the 5%
limitation is inapplicable to puts that, by their terms, would be
readily exercisable in the event of a default in payment of
principal or interest on the underlying securities). For the purpose
of this investment restriction and Investment Restriction Number 2
below, a put will be considered to be from the party to whom the
Intermediate Tax-Free Bond Fund will look for payment of the
exercise price.
2. Acquire a put that, by its terms, would be readily
exercisable in the event of a default in payment of principal and
interest on the underlying security or securities if immediately
after that acquisition the value of the security or securities
underlying that put, when aggregated with the value of any other
securities issued or guaranteed by the issuer of the put, would
exceed 10% of the total value of the Intermediate Tax-Free Bond
Fund's assets.
VALUATION OF SHARES
-------------------
The net asset value of the Funds are determined and their 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 a 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 each Bond Investment Fund, less the liabilities charged to
each Bond Investment Fund, by the number of its outstanding Shares.
The securities in each Bond Investment 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.
-22-
<PAGE> 25
HOW TO PURCHASE SHARES
----------------------
Shares of the Bond Investment Funds 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 under "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 any Bond Investment 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, 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 any of the
Bond Investment Funds 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 Bond
Investment Funds 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
canceled and the investor could be liable for any losses or fees incurred.
-23-
<PAGE> 26
AUTO INVEST PLAN
The Funds offer an Auto Invest Plan which enables Shareholders of the
Bond Investment Funds 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 a Bond Investment 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.
Investment in Shares of the Intermediate Tax-Free Bond Fund would not be
appropriate for any IRA. 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 any Bond Investment 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.
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<PAGE> 27
Depending upon the terms of a particular Customer account, a
Participating Organization may charge a Customer account fees for services
provided in connection with investment in any Bond Investment 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 each Bond Investment 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 a Bond
Investment Fund will be effected only on a Business Day (as defined in
"Valuation of Shares") of that Bond Investment 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.
Each Bond Investment 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
such 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 Bond Investment
Funds 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 any Bond
Investment Fund will be issued.
SALES CHARGES
-------------
The public offering price of a Share of each of the Bond Investment
Funds equals its net asset value plus a sales charge. BISYS receives this
sales charge as Distributor and reallows a
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<PAGE> 28
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. 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 Bond Fund.
<TABLE>
<CAPTION>
Dealer
Sales Sales Discounts
Charge as Charge as and Brokerage
a Percent- a Percent- Commissions as
age of Net age of Net Percentage of
Offering Offering Public Offering
Amount of Purchase Price Price Price
- ------------------ ----- ----- -----
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%
The following table sets forth information pertaining to sales charges
for the Intermediate Bond Fund and the Intermediate Tax-Free Bond Fund.
<CAPTION>
Dealer
Sales Sales Discounts
Charge as Charge as and Brokerage
a Percent- a Percent- Commissions as
age of Net age of Net Percentage of
Offering Offering Public Offering
Amount of Purchase Price Price Price
- ------------------ ----- ----- -----
<S> <C> <C> <C>
Less than $50,000................... 3.09% 3.00% 2.50%
$50,000 but less than $250,000...... 2.56% 2.50% 2.00%
$250,000 but less than $500,000..... 2.04% 2.00% 1.50%
$500,000 but less than $1,000,000... 1.52% 1.50% 1.25%
$1,000,000 or more.................. 1.01% 1.00% 1.00%
</TABLE>
-26-
<PAGE> 29
The following table sets forth information pertaining to sales charges
for the Short-Term Income Fund.
<TABLE>
<CAPTION>
Dealer
Sales Sales Discounts
Charge as Charge as and Brokerage
a Percent- a Percent- Commissions as
age of Net age of Net Percentage of
Amount Offering Public Offering
Amount of Purchase Invested Price Price
- ------------------ -------- ----- -----
<S> <C> <C> <C>
Less than $50,000.................... 2.04% 2.00% 1.80%
$50,000 but less than $250,000....... 1.52% 1.50% 1.35%
$250,000 but less than $500,000...... 1.01% 1.00% 0.90%
$500,000 but less than $1,000,000.... 0.50% 0.50% 0.45%
$1,000,000 or more................... 0.00% 0.00% 0.00%
</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 any of the
Funds. 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.
-27-
<PAGE> 30
SALES CHARGE WAIVERS
--------------------
The Distributor may periodically waive the sales charges for all
customers with respect to any of the Bond Investment 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
Bond Investment Funds within their trust accounts and purchase additional
Shares outside of these trust relationships; (7) investors within wrap
accounts; (8) investors who purchase in connection with 401(k) plans, 403(b)
plans, and other employer-sponsored, qualified retirement plans; and (9)
investors who purchase in connection with non-transactional fee fund programs
and programs offered by fee-based financial planners and other types of
financial institutions.
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.
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<PAGE> 31
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 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.
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<PAGE> 32
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 any Bond Investment Fund may be exchanged without payment of a
sales charge for Shares of any other American Performance Fund having a sales
charge equal to or less than that of the Bond Investment 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 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.
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
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<PAGE> 33
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.
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,
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.
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<PAGE> 34
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 Trust 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 Trust 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, a Bond Investment 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 Bond Investment Funds
intend 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, each Bond
Investment Fund reserves the right to redeem, at net asset value, the Shares
of any Shareholder if, because of redemptions of Shares by or on behalf of the
Shareholder, the account of such Shareholder in any Bond Investment Fund has a
value of less than $500. Accordingly, an investor purchasing Shares of any
Bond Investment 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
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<PAGE> 35
any Bond Investment 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 each Bond Investment Fund is declared daily as
a dividend and paid monthly 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
--------------------
Each of the Funds is treated as a separate entity for federal income tax
purposes. Each Fund intends to qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"), and 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.
-33-
<PAGE> 36
A Shareholder's receipt of a distribution of ordinary income and/or an
excess of net short-term capital gain over net long-term capital loss is treated
as a receipt of ordinary income, whether such distribution is paid in cash or in
additional shares. It is not expected that the dividends-received deduction for
corporations will apply to these distributions.
Distributions designated by each Bond Investment Fund as deriving from
net gains on securities held for more than one year are generally taxable to
Shareholders as such in the year in which they are received, regardless of how
long the Shareholder has held Shares in the Bond Investment Fund. Such capital
gain dividends are not eligible for the dividends-received deduction.
A Shareholder will generally recognize capital gain or loss on the sale
or exchange of Shares in a Bond Investment Fund. If a Shareholder disposes of
Shares in the Bond Investment Fund at a loss before holding such Shares for
longer than 6 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.
Distributions are taxable to a shareholder of a Fund even if they are
paid from income or gains earned by the Fund prior to the shareholder's
investment (and thus were included in the price paid by the shareholder).
Dividends designated as exempt-interest dividends by the Intermediate
Tax-Free Bond Fund may be treated by such Fund's Shareholders as items of
interest excludable from their gross income for federal income tax purposes.
However, such dividends may be taxable to Shareholders under state or local law
as ordinary income even though all or a portion of the amounts may be derived
from interest on tax-exempt obligations which, if realized directly, would be
exempt from such taxes. In determining net exempt-interest income, expenses of
the Intermediate Tax-Free Bond Fund are allocated to gross tax-exempt interest
income in the proportion that the gross amount of such interest income bears to
the Intermediate Tax-Free Bond Fund's total gross income, excluding net capital
gains. Shareholders are advised to consult a tax adviser with respect to whether
exempt-interest dividends retain the exclusion if such Shareholder would be
treated as a "substantial user" of a facility financed through certain private
activity bonds or a "related person" to such user as defined in the Code.
Interest on indebtedness incurred by a Shareholder to purchase or carry shares
is not deductible for federal income tax purposes to the extent the Intermediate
Tax-Free Bond Fund distributes exempt-interest dividends during the
Shareholder's taxable year.
To the extent the Intermediate Tax-Free Bond Fund invests in securities
the interest on which is subject to the federal alternative minimum tax,
Shareholders, depending on their tax status, may be subject to the federal
alternative minimum tax on that part of the Fund's distributions derived from
those securities. Under normal market conditions, not more than 20%
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<PAGE> 37
of the Intermediate Tax-Free Bond Fund's total assets will be invested in
securities, the interest on which is treated as a preference item for purposes
of the federal alternative minimum tax for individuals. Interest income on all
Municipal Securities is included in "adjusted current earnings" for purposes of
computing the alternative minimum tax applicable to corporate shareholders of
the Intermediate Tax-Free Bond Fund.
Under the Code, if a Shareholder receives an exempt-interest dividend
with respect to any Share and such Share is held for six months or less, any
loss on the sale or exchange of such Share will be disallowed to the extent of
the amount of such exempt-interest dividend.
The Intermediate Tax-Free Bond Fund may at times purchase Municipal
Securities at a discount from the price at which they were originally issued.
For federal income tax purposes, some or all of this market discount will be
included in the Intermediate Tax-Free Bond Fund's ordinary income and will be
taxable to shareholders as such when it is distributed to them.
To the extent dividends paid to Shareholders of the Intermediate
Tax-Free Bond Fund are derived from taxable income (for example, from interest
on certificates of deposit, market discount or repurchase agreements), or from
long-term or short-term capital gains, such dividends will be subject to federal
income tax, whether such dividends are paid in the form of cash or additional
shares.
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" and "Additional Tax
Information Concerning the Intermediate Tax-Free Bond Fund." 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 Bond Investment Funds and their 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 a Bond Investment Fund are advised to consult their tax
adviser with special reference to their own tax situations, including the
potential application of foreign, state and local taxes.
DISTRIBUTION
Shares of the Bond Investment Funds 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 Bond Investment Funds 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)
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<PAGE> 38
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 (0.25%) of the
average daily net assets of each of the Bond Investment Funds. The Distributor
may use the distribution fee to provide distribution assistance with respect to
the Bond Investment Funds' Shares or to provide Shareholder services to the
holders of the Bond Investment Funds' 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 the 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 BOND INVESTMENT FUNDS - Banking Laws" for information
concerning the applicability of the Glass-Steagall Act to the Investment
Adviser's investment advisory services to the Funds.
MANAGEMENT OF THE BOND INVESTMENT FUNDS
TRUSTEES OF THE FUNDS
Overall responsibility for management of the Bond Investment 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.
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<PAGE> 39
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, Address and Age With the Funds During Past Five Years
- --------------------- -------------- ----------------------
<S> <C> <C>
Walter B. Grimm*, 53 Chairman and From June, 1992 to present,
3435 Stelzer Road Trustee employee of BISYS Fund
Columbus, Ohio 43219 Services.
Michael J. Hall, ___ Trustee From December, 1997 to
7130 South Lewis, Suite 850 present, Vice President and
Tulsa, Oklahoma 74136 Chief Executive Officer, Matrix
Service Company; from December,
1995 to November, 1997, Vice
President and Chief Financial Officer,
Worldwide Sports & Recreation, Inc.;
from January, 1994 to December,
1995, Vice President and Chief
Financial Officer, Pexco Holdings, Inc.
Perry A. Wimpey, ___ Trustee From January, 1992 to present,
4843 S. 69th East Avenue Local Financial and Regulatory
Tulsa, Oklahoma 74145 Consultant.
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 for the Funds.
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<PAGE> 40
INVESTMENT ADVISER
Bank of Oklahoma, N.A. serves as investment adviser to the Bond
Investment Funds. BOK, the largest trust company in the State of Oklahoma, 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 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 July 31, 1998
BOK was responsible for approximately $12.3 billion in assets including
approximately $5.7 billion in assets under management and possessed average
equity capital at $429 million.
Subject to the general supervision of the Funds' Board of Trustees and
in accordance with the investment objective and restrictions of each Bond
Investment Fund, BOK manages the Bond Investment Funds, makes decisions with
respect to and places orders for all purchases and sales of their portfolio
securities, and maintains each Bond Investment Fund's records relating to such
purchases. The persons primarily responsible for the day-to-day management of
each Bond Investment Fund, as well as their previous business experience, are as
follows:
<TABLE>
<CAPTION>
Portfolio Manager Business Experience
----------------- -------------------
<S> <C> <C>
William Bequette Manager of the Intermediate Tax-Free Bond Fund since its
inception. Since 1963, Mr. Bequette has been a portfolio
manager for BOK.
J. Brian Henderson Manager of the Bond Fund and the Intermediate Bond Fund
since January, 1993 and the Short-Term Income Fund since
its inception. In 1993, Mr. Henderson became a Portfolio
Manager. In 1991, Mr. Henderson joined BOK as a
Government Securities Trader and was named Investment
Officer of the Capital Market Division in 1992. Prior to
</TABLE>
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<PAGE> 41
<TABLE>
<S> <C> <C>
joining BOK, Mr. Henderson was a Financial Consultant
and Equity Analyst with Southwest Securities in Dallas,
Texas.
</TABLE>
For the services provided and expenses assumed pursuant to its
investment advisory agreement with the Funds, BOK receives a fee from each Bond
Investment 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)
fifty-five one-hundredths of one percent (0.55%) of each of the Bond,
Intermediate Bond, Intermediate Tax-Free Bond and Short-Term Income Fund's
average daily net assets. BOK also receives fee income from the Funds from
several other sources. (See "SALES CHARGES," "DISTRIBUTION," and "GENERAL
INFORMATION -- Custodian and Transfer Agent.") BOK may periodically waive all or
a portion of its advisory fee with respect to any Fund to increase the net
income of such Bond Investment Fund available for distribution as dividends. In
order to reduce operating expenses, BOK has currently established the investment
advisory fees at thirty-five one-hundredths of one percent (0.35%) of the
Intermediate Bond, Bond and Intermediate Tax-Free Bond Funds' average daily net
assets. BOK currently waives the investment advisory fees with respect to the
Short-Term Income Fund.
For investment advisory services for the fiscal year ended August 31,
1998, the Bond Fund, the Intermediate Bond Fund and the Intermediate Tax-Free
Bond Fund, each paid BOK, after voluntary fee reductions, 0.35% of their average
daily net assets. For investment advisory services for the fiscal year ended
August 31, 1998, the Short-Term Income Fund, after voluntary fee reductions, did
not pay any investment advisory fees to BOK.
ADMINISTRATOR AND DISTRIBUTOR
BISYS is the Administrator for the Funds, and also acts as the Funds'
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 each 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 each Bond Investment Fund, computed daily and paid periodically, at the
lesser of (1) such fee as may from time to time be agreed upon in writing by the
Funds and the Administrator, and (2) an annual rate of twenty one-hundredths of
one percent (0.20%) of each Bond Investment Fund's average daily net assets. The
Administrator may periodically waive all or a portion of its administrative fee
with respect to a Fund to increase the net income of the Fund available for
distribution as dividends.
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<PAGE> 42
For administration services for the fiscal year ended August 31, 1998,
the Funds paid BISYS 0.20% of the average daily net assets of each of the Bond
Investment Funds.
SUB-ADMINISTRATOR
BOK serves as the Sub-Administrator to the Funds pursuant to an
agreement between the Administrator and BOK. Pursuant to this agreement, BOK
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 (0.05%) of each Fund's average daily 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 Funds. Each Bond
Investment 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 particular Fund,
certain insurance premiums, costs of maintenance of the Funds' 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 Bond Investment Funds 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.
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.
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<PAGE> 43
GENERAL INFORMATION
DESCRIPTION OF THE FUNDS AND THEIR SHARES
The Bond Fund, Intermediate Bond Fund, Intermediate Tax-Free Bond Fund,
and Short-Term Income Fund represent four separate series of units of beneficial
interest ("Shares") of The 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 Short-Term Income Fund will
be capitalized and 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.
As of October 15, 1998, Bank of Oklahoma, N.A. (Bank of Oklahoma Tower,
One Williams Center, Tulsa, Oklahoma 74103) and its bank affiliates were the
Shareholders of record of 99% of the Bond Fund's Shares, 97.44% of the
Intermediate Bond Fund's Shares, 97.27% of the Intermediate Tax-Free Bond Fund's
Shares and 100% of the Short-Term Income Fund's Shares. As of October __, 1998,
Bank of Oklahoma, N.A. and its bank affiliates possessed, on behalf of its
underlying accounts voting and investment power with respect to [____%] of the
Bond Fund's Shares, [____%] of the Intermediate Bond Fund's Shares, [____%] of
the Intermediate Tax-Free Bond Fund's Shares and [____%] of the Short-Term
Income Fund's Shares, and as a consequence, Bank of Oklahoma, N.A. and its bank
affiliates may be deemed to be a controlling person of each of these Bond
Investment Funds under the 1940 Act.
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 BOND INVESTMENT FUNDS - 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-
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<PAGE> 44
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 services.
PERFORMANCE INFORMATION
From time to time performance information for the Bond Investment Funds
showing their 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 Bond Investment Funds 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 Bond Investment Funds 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 a Bond
Investment 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 a Bond
Investment 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 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.
The Intermediate Tax-Free Bond Fund may also present its tax equivalent
yield which reflects the amount of income subject to federal income taxation
that a taxpayer would have to earn in order to obtain the same after-tax income
as that derived from the yield of the
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<PAGE> 45
Intermediate Tax-Free Bond Fund. The tax equivalent yield will be significantly
higher than the yield of the Intermediate Tax-Free Bond Fund.
Investors may also judge the performance of any Bond Investment 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 these Funds 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 Bond
Investment Funds 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 each Bond Investment
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.
YEAR 2000
The investment services industry is evaluating the capability of
existing application software programs and operating industry systems to
accommodate the date value for the year 2000. Many existing application software
products in the marketplace were designed only to accommodate a two-digit date
position, which represents the year (e.g., "95" is stored on the system and
represents the year 1995). If the year 1999 is the maximum date value these
systems are able to accurately process, the improper identification of the year
2000 could result in a computer system failure or miscalculations causing a
disruption of operations. The Funds' principal services providers are taking
steps the Funds believe are reasonably designed to address the year 2000 issues
with respect to the computer systems those providers operate. However, this is
an ongoing process and testing and other steps are scheduled to be completed in
1999. Nevertheless, the inability of service providers to
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<PAGE> 46
successfully address year 2000 issues could result in interruptions in the
Funds' business and have material adverse impact on the Funds' operations.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual
reports audited by independent public accountants.
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 Fund 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 each Bond Investment 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> 47
AMERICAN PERFORMANCE FUNDS
BOND INVESTMENT FUNDS
BOND FUND
INTERMEDIATE BOND FUND
INTERMEDIATE TAX-FREE BOND FUND
SHORT-TERM INCOME FUND
INVESTMENT ADVISER
Bank of Oklahoma, N.A.
Bank of Oklahoma Tower
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> 48
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
FEE TABLE..........................................................................................................
FINANCIAL HIGHLIGHTS...............................................................................................
INVESTMENT OBJECTIVES..............................................................................................
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS.....................................................................
OTHER INVESTMENT TECHNIQUES OF THE BOND INVESTMENT FUNDS...........................................................
INVESTMENT RESTRICTIONS............................................................................................
VALUATION OF SHARES................................................................................................
HOW TO PURCHASE SHARES.............................................................................................
SALES CHARGES......................................................................................................
SALES CHARGE WAIVERS...............................................................................................
CONCURRENT PURCHASES AND RIGHT OF ACCUMULATION.....................................................................
EXCHANGE PRIVILEGE.................................................................................................
HOW TO REDEEM SHARES...............................................................................................
DIVIDENDS..........................................................................................................
FEDERAL INCOME TAXES...............................................................................................
DISTRIBUTION.......................................................................................................
MANAGEMENT OF THE BOND INVESTMENT FUNDS............................................................................
GENERAL INFORMATION................................................................................................
</TABLE>
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<PAGE> 49
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 Bond
Investment Funds or the Distributor. This Prospectus does not constitute an
offering by the Bond Investment Funds or by the Distributor in any jurisdiction
in which such offering may not lawfully be made.
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<PAGE> 50
CROSS REFERENCE SHEET
PROSPECTUS FOR AMERICAN PERFORMANCE MONEY MARKET FUNDS
<TABLE>
<CAPTION>
FORM N-1A PART A ITEM PROSPECTUS CAPTION
<S> <C>
1. Cover Page Cover Page
2. Synopsis Fee Table
3. Condensed Financial Information Financial Highlights;
General Information - Performance
Information
4. General Description Cover Page;
of Registrant Investment Objectives; Investment
Policies; Investment Restrictions; General
Information - Description of the Funds and
their Shares
5. Management of the Fund Management of the Money Market Funds
5A. Management's Discussion of Fund See Registrant's current Annual
Performance Report
6. Capital Stock and How to Purchase
Other Securities Shares; How to Redeem Shares; Sales
Charges; Dividends; Federal Income Taxes;
General Information - Description of the
Funds and their Shares; General
Information - Miscellaneous
7. Purchase of Securities Valuation of Shares; How
Being Offered to Purchase Shares
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Inapplicable
</TABLE>
<PAGE> 51
PROSPECTUS
AMERICAN PERFORMANCE MONEY MARKET FUNDS
TWO STABLE NET ASSET VALUE INVESTMENT PORTFOLIOS OF
AMERICAN PERFORMANCE FUNDS
3435 Stelzer Road
Columbus, Ohio 43219
For performance, purchase, and redemption information,
call (800) 762-7085
- --------------------------------------------------------------------------------
The American Performance Money Market Funds (the "Money Market Funds")
are two stable net asset value portfolios of the AMERICAN PERFORMANCE FUNDS (the
"Funds"), a diversified open-end management investment company which currently
consists of ten separately managed portfolios. All securities or instruments in
which the Money Market Funds invest have remaining maturities of 397 days or
less, although obligations subject to repurchase agreements and certain variable
and floating rate instruments may bear longer maturities. Each Money Market Fund
seeks current income with liquidity and stability of principal.
---------------------
AN INVESTMENT IN THE MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
-------------------
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, NOR HAS THE SECURITIES AND EXCHANGE 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 December 29, 1998.
<PAGE> 52
AMERICAN PERFORMANCE U.S. TREASURY FUND (the "U.S. Treasury Fund")
invests exclusively in U.S. Treasury bills, notes, and other obligations backed
by the full faith and credit of the U.S. government, some of which may be
subject to repurchase agreements.
AMERICAN PERFORMANCE CASH MANAGEMENT FUND (the "Cash Management Fund")
invests in U.S. dollar-denominated, high quality, short-term debt and other
short-term obligations of high quality.
Bank of Oklahoma, N.A., Tulsa, Oklahoma ("BOK") serves as investment
adviser ("Investment Adviser") to the Money Market Funds. AMR Investment
Services, Inc. ("AMR") serves as investment sub-adviser ("Sub-Adviser") to the
Cash Management Fund. BISYS Fund Services Limited Partnership, d/b/a BISYS Fund
SERVICES, Columbus, Ohio ("BISYS" or the "Distributor") acts as the
Administrator and Distributor to the Money Market Funds.
This Prospectus relates only to the 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 four
equity portfolios to which BOK serves as Investment Adviser: the American
Performance Equity Fund and the American Performance Aggressive Growth Fund,
each of which seeks growth of capital and, secondarily, income through investing
primarily in common stocks and securities convertible into common stocks, the
American Performance Balanced Fund, which seeks current income and, secondarily,
long-term capital growth by investing primarily in a broadly diversified
portfolio of securities, including common stocks, preferred stocks and bonds and
the American Performance Growth Equity Fund, which seeks long-term capital
appreciation income by investing primarily in a diversified portfolio of common
stocks and securities convertible into common stocks (collectively, the
"American Performance Equity Investment Funds"). Persons who wish to obtain a
copy of the Prospectus for the American Performance Bond Investment Funds or the
American Performance Equity Investment Funds may contact the Funds at the
telephone number shown above.
A Statement of Additional Information bearing the same date as this
Prospectus, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Statement of Additional Information can be
obtained without charge by writing to or calling the Funds at the address or
telephone number shown above.
This Prospectus sets forth concisely the information about the Money
Market Funds that a prospective investor should know before investing. Investors
should read this Prospectus and retain it for future reference.
-2-
<PAGE> 53
FEE TABLE
<TABLE>
<CAPTION>
Cash Management
U.S. Treasury Fund Fund
------------------ ----------------
Shareholder Transaction Expenses(1)
- -----------------------------------
<S> <C> <C>
Maximum Sales Load
Imposed on Purchases 0% 0%
(as a percentage of offering price)
Maximum Sales Load Imposed
on Reinvested Dividends 0% 0%
(as a percentage of offering price)
Deferred Sales Load 0% 0%
(as a percentage of original
purchase price or redemption
proceeds, if applicable)
Redemption Fees(2) 0% 0%
(as a percentage of amount
redeemed, if applicable)
Exchange Fees $0 $0
</TABLE>
- -----------
(1) Participating Organizations (as defined in "DISTRIBUTION") may charge
a Customer (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) A wire redemption charge may be deducted from the amount of a wire
redemption payment made at the request of a Shareholder. The current charge,
which is subject to change upon notice to Shareholders, is $15.00. (See "HOW TO
REDEEM SHARES - By Telephone.")
-3-
<PAGE> 54
<TABLE>
<CAPTION>
Cash Management
U.S. Treasury Fund Fund
------------------ ----------------
Annual Operating Expenses
- -------------------------
(as a percentage of average net assets)
<S> <C> <C>
Management Fees 0.40% 0.40%
12b-1 Fees(3) 0.00% 0.00%
(after voluntary fee reductions)
Other Expenses 0.32% 0.31%
----- -----
Total Fund Operating Expenses(4) 0.72% 0.71%
(after voluntary fee reduction) ----- -----
</TABLE>
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>
Cash Management
U.S. Treasury Fund Fund
------------------ ---------------
<S> <C> <C>
1 Year $ 7 $ 7
3 Years $23 $23
5 Years $40 $40
10 Years $89 $88
</TABLE>
- ------------
(3) In order to reduce operating expenses, the Distributor has voluntarily
agreed to reduce the 12b-1 Fees. Absent a voluntary fee reduction, the 12b-1
Fees would be 0.25% of the average daily net assets for the U.S.
Treasury Fund and the Cash Management Fund, respectively.
(4) Absent a voluntary fee reduction, the Total Fund Operating Expenses
would be 0.97% and 0.96% of the average daily net assets of the U.S. Treasury
Fund and the Cash Management Fund, respectively.
-4-
<PAGE> 55
The purpose of the above table is to assist a potential purchaser of
Shares of the U.S. Treasury Fund and the Cash Management Fund in understanding
the various costs and expenses that an investor in each Fund will bear directly
or indirectly. The examples reflect voluntary reductions of 12b-1 Fees. Although
the Distributor currently has agreed to these voluntary reductions, it may cease
to provide these reductions, which would have the effect of increasing the
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' account which may have
invested in Shares of a Fund. See "MANAGEMENT OF THE MONEY MARKET FUNDS" and
"DISTRIBUTION" for a more complete discussion of the transaction expenses and
annual operating expenses of each Fund.
THE FOREGOING EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
-5-
<PAGE> 56
FINANCIAL HIGHLIGHTS
The American Performance Funds were organized as a Massachusetts
business trust and began active operations in August of 1990. The Funds
currently consist of ten series of units of beneficial interest ("Shares"). Two
such series represent interests in the U.S. Treasury Fund and the Cash
Management Fund.
The Tables below set forth certain financial highlights for the U.S.
Treasury Fund and the Cash Management Fund for the periods indicated. The most
recent five years of each Table are part of the Fund's financial statements
which are included in the Fund's Annual Report and are incorporated by reference
into the Statement of Additional Information, which a Shareholder may obtain by
calling the Funds. The financial statements have been audited by KPMG Peat
Marwick LLP, independent public accountants for the Funds, whose report thereon,
is included in the Fund's Annual Report.
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1998 1997 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income 0.050 0.049 0.050 0.052
Net realized loss on investments -- (0.10) -- --
-------- -------- -------- --------
Total from investment activities 0.050 0.039 0.050 0.052
DISTRIBUTIONS
Net investment income (0.050) (0.049) (0.050) (0.052)
Total Distributions (0.050) (0.049) (0.050) (0.052)
Capital Transaction -- 0.010 -- --
======== ======== ======== ========
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ========
Total Return 5.14% 5.05%(d) 5.14% 5.30%
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $466,571 $331,095 $375,797 $194,807
Ratio of expenses to average net
assets 0.71% 0.72% 0.71% 0.74%
Ratio of net investment income to
average net assets 5.02% 4.93% 5.01% 5.18%
Ratio of expenses to average net
assets* 0.96% 0.97% 0.96% 0.99%
Ratio of net investment income to
average net assets* 4.77% 4.68% 4.76% 4.94%
<CAPTION>
SEPTEMBER 21,
1990 TO
YEAR ENDED AUGUST 31, AUGUST 31,
1994 1993 1992 1991(a)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income 0.030 0.028 0.042 0.063
Net realized loss on investments -- -- -- --
-------- -------- -------- --------
Total from investment activities 0.030 0.028 0.042 0.063
DISTRIBUTIONS
Net investment income (0.030) (0.028) (0.042) (0.063)
Total Distributions (0.030) (0.028) (0.042) (0.063)
Capital Transaction -- -- -- --
======== ======== ======== ========
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ========
Total Return 3.08% 2.87% 4.38% 6.55%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $195,490 $167,269 $152,652 $ 95,962
Ratio of expenses to average net
assets 0.78% 0.78% 0.79% 0.76%(b)
Ratio of net investment income to
average net assets 3.05% 2.80% 4.14% 6.75%(b)
Ratio of expenses to average net
assets* 0.98% 0.98% 1.03% 1.01%(b)
Ratio of net investment income to
average net assets* 2.85% 2.60% 3.91% 6.50%(b)
</TABLE>
- ---------
* During the period, certain fees were voluntarily reduced.
If such voluntary fee reductions had not occurred, the ratios would have
been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
(d) The total return includes the effect of a capital contribution of $0.010 per
share. The return without capital contribution would have been 4.05%.
-6-
<PAGE> 57
U.S. TREASURY FUND
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1998 1997 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income 0.048 0.046 0.047 0.048
-------- -------- -------- --------
DISTRIBUTIONS
Net investment income (0.048) (0.046) (0.047) (0.048)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ========
Total Return 4.94% 4.74% 4.85% 4.95%
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $388,319 $298,424 $217,406 $187,007
Ratio of expenses to average net
assets 0.72% 0.72% 0.74% 0.75%
Ratio of net investment income to
average net assets 4.83% 4.65% 4.74% 4.88%
Ratio of expenses to average net
assets* 0.97% 0.97% 0.99% 1.00%
Ratio of net investment income to
average net assets* 4.58% 4.40% 4.49% 4.63%
<CAPTION>
SEPTEMBER 5,
1990 TO
YEAR ENDED AUGUST 31, AUGUST 31,
1994 1993 1992 1991(a)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income 0.028 0.025 0.038 0.061
-------- -------- -------- --------
DISTRIBUTIONS
Net investment income (0.028) (0.025) (0.038) (0.061)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ========
Total Return 2.87% 2.57% 3.91% 6.28%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $165,353 $169,428 $136,637 $ 95,585
Ratio of expenses to average net
assets 0.81% 0.81% 0.81% 0.78%(b)
Ratio of net investment income to
average net assets 2.81% 2.51% 3.65% 6.10%(b)
Ratio of expenses to average net
assets* 1.01% 1.01% 1.04% 1.03%(b)
Ratio of net investment income to
average net assets* 2.61% 2.31% 3.41% 5.85%(b)
</TABLE>
- ---------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
-7-
<PAGE> 58
INVESTMENT OBJECTIVE
U.S. TREASURY FUND The investment objective of the U.S. Treasury Fund is to seek
current income with liquidity and stability of principal by investing
exclusively in short-term obligations backed by the full faith and credit of the
U.S. government, some of which may be subject to repurchase agreements.
CASH MANAGEMENT FUND The investment objective of the Cash Management Fund is to
seek current income with liquidity and stability of principal by investing in
money market instruments which are considered by the Board of Trustees to
present minimal credit risks.
BOTH MONEY MARKET FUNDS All securities or instruments in which either of the
Money Market Funds invests are valued based on the amortized cost valuation
technique pursuant to Rule 2a-7 under the Investment Company Act of 1940, as
amended (the "1940 Act"). All instruments in which either of the Money Market
Funds invests will have remaining maturities of 397 days or less, although
instruments subject to repurchase agreements and certain variable or floating
rate obligations may bear longer maturities. The average dollar-weighted
maturity of the securities in each of the Money Market Funds will not exceed 90
days. Obligations purchased by the Money Market Funds are limited to U.S.
dollar-denominated obligations which the Board of Trustees has determined
present minimal credit risks. See the Statement of Additional Information for an
explanation of the amortized cost valuation method.
Although the U.S. Treasury Fund and the Cash Management Fund have
similar investment objectives, their particular portfolio securities and yields
will differ due to differences in the types of permitted investments, cash flow,
and the availability of particular portfolio investments. The investment
objective with respect to each of the Money Market Funds is fundamental and may
not be changed without a vote of the holders of a majority of the outstanding
Shares (as defined in "GENERAL INFORMATION--Miscellaneous") of the respective
Fund. There can be, of course, no assurance that either of the Money Market
Funds will achieve its investment objective.
Additionally, the Money Market Funds may engage in certain investment
techniques which may subject the Funds to certain risks (see "OTHER INVESTMENT
TECHNIQUES OF THE MONEY MARKET FUNDS").
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS
U.S. TREASURY FUND
The U.S. Treasury Fund will invest exclusively in obligations backed by
the full faith and credit of the U.S. government and at least 65% of the Fund's
total assets will be invested in direct U.S. Treasury obligations, some of which
may be subject to repurchase agreements.
<PAGE> 59
Such obligations may include "stripped" U.S. Treasury obligations such as
Treasury Receipts issued by the U.S. Treasury representing either future
interest or principal payments. Stripped securities are issued at a discount to
their "face value," and may exhibit greater price volatility than ordinary debt
securities because of the manner in which their principal and interest are
returned to investors. Obligations purchased by the U.S. Treasury Fund may be
subject to repurchase agreements.
CASH MANAGEMENT FUND
The Fund may invest in (1) obligations of the U.S. government or its
agencies or instrumentalities; (2) commercial paper, loan participation
interests, medium-term notes, asset-backed securities and other promissory
notes, including floating or variable rate obligations; and (3) domestic,
Yankeedollar and Eurodollar certificates of deposit, time deposits, bankers'
acceptances, bearer deposit notes and promissory notes including floating or
variable rate obligations issued by U.S. or foreign bank holding companies and
their bank subsidiaries, branches and agencies. The Fund will invest only in
issuers or instruments that at the time of purchase (1) have received the
highest short-term rating by at least two nationally recognized statistical
ratings organizations ("NRSROs") (e.g., "A-1" by Standard & Poor's Corporation
and "Prime-1" by Moody's Investors Services, Inc.); or (2) are single rated and
have received the highest short-term rating by a NRSRO; or (3) are unrated, but
are determined to be of comparable quality by the Investment Adviser pursuant to
guidelines approved by the Board of Trustees and subject to the ratification of
the Board of Trustees. See the Statement of Additional Information for
definitions of the foregoing instruments and rating systems.
The Fund will concentrate its investments in obligations issued by the
banking industry. Concentration in this context means the investment of more
than 25% of the Fund's assets in such investments. However, for temporary
defensive purposes during periods when the Investment Adviser believes that
maintaining this concentration may be inconsistent with the best interest of
Shareholders, the Fund will not maintain this concentration. Concentration in
obligations issued by commercial banks and bank holding companies will involve a
greater exposure to economic, business, political, or regulatory changes that
are generally adverse to banks and bank holding companies. Such changes could
include significant changes in interest rates, general declines in bank asset
quality, including real estate loans, and the imposition of costly or otherwise
burdensome government regulations or restrictions. The Fund will not purchase
securities issued by BOK or any of its affiliates.
Investments in Eurodollar and Yankeedollar obligations involve
additional risks not present with domestic securities. Most notably, there
generally is less publicly available information about foreign companies; there
may be less governmental regulation and supervision; they may use different
accounting and financial standards; and the adoption of foreign governmental
restrictions might adversely affect the payment of principal and interest on
foreign investments. In addition, not all foreign branches of U.S. banks are
supervised or
-9-
<PAGE> 60
examined by regulatory authorities as are U.S. banks, and such branches may not
be subject to reserve requirements.
Obligations issued or guaranteed by U.S. government agencies or
instrumentalities in which the Cash Management Fund may invest can vary
significantly in terms of the credit risk involved. Obligations of certain
agencies and instrumentalities of the U.S. government such as the Government
National Mortgage Association and the Export-Import Bank of the United States,
are supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal National Mortgage Association, are supported by the right
of the issuer to borrow from the U.S. Treasury; others, such as those of the
Student Loan Marketing Association, are supported by the discretionary authority
of the U.S. government to purchase the agency's obligations; still others, such
as those of the Federal Farm Credit Banks or the Federal Home Loan Mortgage
Corporation, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. government would provide financial support
to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. The Cash Management Fund will invest in the
obligations of such agencies or instrumentalities only when the Investment
Adviser deems the credit risk with respect thereto to be minimal.
Investments in loan participation interests are generally not traded in
a secondary market and are regarded by the Funds as illiquid; the Cash
Management Fund intends to limit investments in loan participation interests to
5% of its total assets.
Variable amount master demand notes in which the Cash Management Fund
may invest are unsecured demand notes that permit the indebtedness thereunder to
vary, and provide for periodic adjustments in the interest rate according to the
terms of the instrument. Because master demand notes are direct lending
arrangements between the Cash Management Fund and the issuer, they are not
normally traded. Although there is no secondary market for the notes, the Cash
Management Fund may demand payment of principal and accrued interest at any
time. The period of time remaining until the principal amount actually can be
recovered under a variable amount master demand note generally shall not exceed
seven days. To the extent such maximum period were exceeded, the note in
question would be considered illiquid. While the notes are not typically rated
by credit rating agencies, issuers of variable amount master demand notes (which
are normally manufacturing, retail, financial, and other business concerns) must
satisfy the same criteria as set forth above for commercial paper. The Cash
Management Fund will invest in variable amount master demand notes only where
such notes are determined by its Investment Adviser pursuant to guidelines
established by the Funds' Board of Trustees to be of comparable quality to rated
issuers or instruments eligible for investment by the Cash Management Fund. The
Investment Adviser will consider the earning power, cash flow, and other
liquidity ratios of the issuers of such notes and will continuously monitor
their financial status and ability to meet payment on demand. In determining
average weighted portfolio maturity, a variable amount master demand note will
be deemed to have a maturity equal to the longer of the period of time remaining
until the next readjustment of the
-10-
<PAGE> 61
interest rate or the period of time remaining until the principal amount can be
recovered from the issuer through demand.
The Cash Management Fund may acquire puts with respect to obligations
in its portfolio and sell those puts in conjunction with a sale of those
obligations. See the Statement of Additional Information for more information
regarding puts.
OTHER INVESTMENT TECHNIQUES OF THE MONEY MARKET FUNDS
MORTGAGE-RELATED SECURITIES The Money Market Funds may purchase mortgage-related
securities representing pools of mortgage loans assembled for sale to investors.
The U.S. Treasury Fund will invest only in mortgage-related securities backed by
the full faith and credit of the U.S. government. The Cash Management Fund may
also invest in such instruments and, in addition, may invest in mortgage-backed
securities issued and/or guaranteed only by U.S. government agencies or
instrumentalities, or by private 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 Money Market Fund purchases a mortgage-related
security at a premium, that premium 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 the Fund holding the security. 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
the Money Market Fund holding a mortgage-related security will receive when
these amounts are reinvested. The Cash Management Fund also may invest in
collateralized mortgage obligations structured on pools of mortgage pass-through
certificates or mortgage loans. For further discussion concerning the investment
considerations involved, see "INVESTMENT OBJECTIVE AND POLICIES--Additional
Information on Fund Instruments--Mortgage-Related Securities" in the Statement
of Additional Information.
REPURCHASE AGREEMENTS Securities held by a Money Market Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, a Money Market
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
-11-
<PAGE> 62
repurchase price would generally equal the price paid by the Money Market 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 possessing investment
authority will monitor the collateral's value to ensure that it equals or
exceeds the repurchase price. In addition, securities subject to repurchase
agreements will be held in a segregated account by the Custodian or a
Sub-Custodian of the Fund. Repurchase agreements are considered to be loans by
an investment company under the 1940 Act. See the Statement of Additional
Information for more information regarding this investment practice.
WHEN-ISSUED SECURITIES The Money Market Funds 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. A Money Market Fund
will generally not pay for such securities or start earning interest on them
until they are received. When a Money Market Fund agrees to purchase such
securities, its Custodian will set aside cash or liquid securities equal to the
amount of the commitment in a separate account. 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. Each Money Market
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, a Money Market Fund's liquidity and the ability of
the Investment Adviser to manage it might be severely affected. No Money Market
Fund intends to purchase when-issued securities for speculative purposes but
only in furtherance of its investment objective.
REVERSE REPURCHASE AGREEMENTS The Money Market Funds may borrow funds for
temporary purposes by entering into reverse repurchase agreements in accordance
with the investment restrictions described below. Pursuant to such agreements, a
Money Market 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 a Money Market Fund enters into a
reverse repurchase agreement, it will place in a segregated custodial account
assets such as liquid high quality securities, consistent with the Fund's
investment objective having a value not less than 100% of the repurchase price
(including accrued interest), and 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 a Money Market
Fund 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.
SECURITIES LENDING In order to generate additional income, a Money Market Fund
may, from time to time, lend its portfolio securities to broker-dealers, banks,
or institutional borrowers of
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<PAGE> 63
securities. The Funds will enter into loan agreements only with broker-dealers,
banks, or institutions that BOK has determined are creditworthy under guidelines
established by the Funds' Board of Trustees. The Money Market Funds intend to
limit their securities lending to 5% of their respective total assets. See the
Statement of Additional Information for more information on these investment
activities.
PRIVATE PLACEMENT INVESTMENTS The Cash Management 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 (the
"Securities Act"), 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 Fund 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 Fund 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 Cash Management Fund will not invest more than 10% of
its 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 Cash Management 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 Cash Management Fund's investments
in these securities, focusing on such important factors, among others, as
valuation, liquidity, and availability of information. Investments in Section
4(2) paper could have the effect of reducing the Cash Management Fund's
liquidity to the extent that qualified institutional buyers become for a time
not interested in purchasing these restricted securities.
ASSET-BACKED SECURITIES The Cash Management Fund may invest in securities backed
by automobile receivables and credit-card receivables and other securities
backed by other types of receivables or other assets. Credit support for
asset-backed securities may be based on the underlying assets and/or provided
through credit enhancements by a third party. Credit enhancement techniques
include letters of credit, insurance bonds, limited guarantees (which are
generally provided by the issuer), senior-subordinated structures and
over-collateralization. The Cash Management Fund will only purchase an
asset-backed security if it is rated within the three highest ratings categories
assigned by a NRSRO (e.g., at least "A" by S&P or Moody's). Asset-backed
securities are generally considered to be illiquid.
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<PAGE> 64
INVESTMENT RESTRICTIONS
The U.S. Treasury Fund and the Cash Management Fund are subject to a
number of fundamental investment restrictions that may be changed with respect
to a particular Money Market Fund only by a vote of a majority of the
outstanding Shares of such Money Market Fund (see "GENERAL INFORMATION --
Miscellaneous").
U.S. TREASURY FUND
The U.S. Treasury Fund may not purchase securities other than U.S.
Treasury bills, notes and other obligations backed by the full faith and credit
of the U.S. government, some of which may be subject to repurchase agreements.
BOTH MONEY MARKET FUNDS
The U.S. Treasury Fund and the Cash Management Fund may not:
1. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. government (and, with respect to the Cash Management
Fund, other than obligations issued or guaranteed by the U.S. government or its
agencies or instrumentalities) if, as a result, with respect to 75% of its
portfolio, more than 5% of the value of each Fund's total assets would be
invested in such issuer.*
2. Purchase any securities which would cause more than 25% of the value
of each Fund's total assets at the time of purchase to be invested in securities
of one or more issuers conducting their principal business activities in the
same industry, provided that (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, obligations issued by commercial banks and bank holding
companies, repurchase agreements secured by bank instruments or obligations of
the U.S. government or its agencies or instrumentalities and obligations issued
by commercial banks and bank holding companies primarily engaged in the banking
industry; (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.
- ----------
* In addition , although not a fundamental investment restriction (and therefore
subjects to change without a Shareholder vote), to the extent required by rules
of the Securities and Exchange Commission the U.S. Treasury Fund and the Cash
Management Fund each generally apply the above restriction with respect to 100%
of their portfolios.
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<PAGE> 65
3. Borrow money or issue senior securities, except that each Fund may
borrow from banks and 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 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 such Fund's total assets at
the time of its borrowing. Neither Fund will purchase securities while its
borrowings (including reverse repurchase agreements) exceed 5% of the total
assets of such Fund.
4. Make loans, except that each Fund may purchase or hold debt
instruments in accordance with its investment objective and policies, may lend
portfolio securities in accordance with its investment objective and policies,
and may enter into repurchase agreements.
5. Enter into repurchase agreements with maturities in excess of seven
days if such investment, together with other instruments in such Fund which are
not readily marketable, exceeds 10% of such Fund's net assets.
6. Invest in securities of other investment companies except as they
may be acquired as part of a merger, consolidation, reorganization, or
acquisition of assets.
CASH MANAGEMENT FUND
The Cash Management Fund may not write or sell puts, calls, straddles,
spreads or combinations thereof except that the Cash Management Fund may acquire
puts with respect to obligations in its portfolio and sell those puts in
conjunction with a sale of those obligations. The Cash Management Fund will not:
(1) Acquire a put, if, immediately after such acquisition,
over 5% of the total value of the Cash Management Fund's assets would
be subject to puts from such issuer (except that the 5% limitation is
inapplicable to puts that, by their terms, would be readily exercisable
in the event of a default in payment of principal or interest on the
underlying securities). For the purpose of this investment restriction
and the investment restriction immediately below, a put will be
considered to be from the party to whom the Cash Management Fund will
look for payment of the exercise price;
(2) Acquire a put that, by its terms, would be readily
exercisable in the event of a default in payment of principal and
interest on the underlying security or securities if immediately after
that acquisition the value of the security or securities underlying
that put, when aggregated with the value of any other securities issued
or guaranteed by the issuer of the put, would exceed 10% of the total
value of the Cash Management Fund's assets.
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<PAGE> 66
VALUATION OF SHARES
The net asset values of the Funds are determined and their Shares are
priced as of 12:00 (noon) Eastern time and 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 a 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 a Money Market Fund's assets,
less its liabilities, by the number of such Money Market Fund's outstanding
Shares.
The assets in each Money Market Fund are valued based upon the
amortized cost method. Pursuant to the rules and regulations of the Securities
and Exchange Commission regarding the use of the amortized cost method, each
Money Market Fund will maintain a dollar-weighted average portfolio maturity of
90 days or less and no security will have a remaining maturity in excess of 397
days, although obligations subject to repurchase agreements and certain variable
and floating rate instruments may bear longer maturities.
Although each of the Money Market Funds seeks to maintain the net asset
value per Share at $1.00, there can be no assurance that this net asset value
will be maintained.
HOW TO PURCHASE SHARES
Shares of the Money Market Funds ("Shares") 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 $100.
These minimums may be waived if purchases are made in connection with Individual
Retirement Accounts ("IRAs"), Keoghs, qualified pension plans or other employer
plans. For information on IRAs, Keoghs or similar plans, contact BOK at (918)
588-6586.
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<PAGE> 67
Shares of each Money Market Fund are purchased at the net asset value
per Share of each such Money Market Fund (see "VALUATION OF SHARES") next
determined after receipt by the Distributor of an order to purchase Shares in
good form. An order accepted after the last Valuation Time on any Business Day
will be executed at the net asset value determined as of the first Valuation
Time on the next Business Day. An order to purchase Shares will be deemed to
have been received and accepted by the Distributor only when federal funds with
respect thereto are available to the Funds' Custodian for investment. Federal
funds are monies credited to a bank's account with a Federal Reserve Bank.
Payment for an order to purchase Shares which is transmitted by federal funds
wire will be available the same day for investment by the Funds' Custodian, if
received prior to 12:00 (noon) Eastern time. Payments transmitted by other means
(such as by check drawn on a member of the Federal Reserve System) will normally
be converted into federal funds within two banking days after receipt. The Funds
strongly recommend that investors of substantial amounts use federal funds to
purchase Shares.
BY MAIL
Investors may make an initial purchase of Shares of the Money Market
Funds 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 Money Market 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 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 either of the Money
Market Funds 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 Funds ordered by telephone will be purchased
for the Shareholder's account when the order has been received and federal funds
with respect thereto are available to the Funds' Custodian for investment. Any
questions regarding current settlement requirements or electronic payment
instructions can be directed to the Funds at (800) 762-7085.
-17-
<PAGE> 68
AUTO INVEST PLAN
The Funds offer an Auto Invest Plan which enables Shareholders of the
Funds 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 investments 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 Distributor. 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 contributions 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 Funds
sold to a Participating Organization acting 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 to the Custodian on a timely basis. Beneficial ownership of Shares of
the Funds will be reflected in the account statements provided to customers by
Participating Organizations.
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<PAGE> 69
Depending upon the terms of a particular Customer account,
Participating Organizations may charge a Customer account fees for services
provided in connection with investment in any Money Market Fund. Information
concerning these services and any charges can be obtained from the Participating
Organization. This Prospectus should be read in conjunction with any such
information so received.
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.
Each Money Market 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 also show the total number of Shares of
such Fund owned by the Shareholder and the number of Shares being held in
safekeeping by the Transfer Agent for the account of the Shareholder.
Shareholders may rely on these confirmations in lieu of certificates. No
certificates representing Shares of any Fund will be issued.
SALES CHARGES
There is no sales charge imposed by the Funds in connection with the
purchase of Shares of the Money Market Funds. Sales charges apply to purchases
of the eight other Funds of the American Performance Funds.
EXCHANGE PRIVILEGE
Shareholders may exchange Shares of the Money Market Funds for Shares
of any other Funds of the American Performance Funds so long as they maintain
the respective minimum account balance in each such Fund in which they own
Shares. Exchanges made from the Money Market Funds to the American Performance
Bond Investment Funds and the American Performance Equity Investment Funds will
be subject to the applicable sales charge upon the exchange, up to a maximum of
5.00%. Exchanges made from either Money Market Fund into the other Money Market
Fund will be accomplished on the basis of current net asset value. An exchange
is considered to be a sale of Shares for federal income tax purposes on which a
Shareholder may realize a capital gain or loss. The exchange privilege may only
be exercised
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<PAGE> 70
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 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.
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
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<PAGE> 71
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
Investment Adviser, the Sub-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
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 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, 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 Fund 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, requests from Shareholders for payments upon
redemption of Shares received by the Distributor before 12:00 (noon) Eastern
time, will be honored on that Business Day or, if received after 12:00 (noon)
Eastern time, on the following Business Day, unless it would be disadvantageous
to the Fund or its Shareholders to sell or
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<PAGE> 72
liquidate portfolio securities in an amount sufficient to satisfy requests for
payments in that manner.
At various times a Money Market 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 Money Market Funds intend 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, each
Money Market Fund reserves the right to redeem, at net asset value, the Shares
of any Shareholder if, because of redemptions of Shares by or on behalf of the
Shareholder, the account of such Shareholder in any Money Market Fund has a
value of less than $500. Before any Money Market 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
---------
The net investment income of each Money Market Fund is declared daily
and paid monthly as a dividend to the respective Shareholders of each such Fund.
Net capital gain income (if any) is distributed at least once a year. Shares in
the Money Market Funds purchased before 12:00 (noon) Eastern time begin earning
dividends on the same Business Day. All Shares continue to earn dividends
through the day before their redemption. A Shareholder will automatically
receive all dividends from a Fund in additional full and fractional Shares of
such Fund at the net asset value as of the ex-dividend date, unless the
Shareholder elects to receive dividends in cash. Reinvested dividends receive
the same tax treatment as dividends paid in cash. Dividends are paid in cash not
later than seven Business Days after a Shareholder's complete redemption of his
Shares in a Money Market Fund. Such election, or any revocation thereof, must be
made in writing to the Distributor, BISYS Fund Services, 3435 Stelzer Road,
Columbus, Ohio 43219, and will become effective with respect to dividends paid
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
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<PAGE> 73
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
--------------------
Each of the Money Market Funds is treated as a separate entity for
federal income tax purposes. Each Fund intends to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"), and intends to distribute on a current basis all of its net investment
income and net capital gains, if any, so that it is not required to pay federal
income taxes on amounts so distributed to Shareholders. In general,
distributions, whether paid in cash or additional shares, are taxable to
Shareholders as ordinary income. Shareholders will be advised at least annually
as to the federal income tax consequences of distributions made during the year.
The Money Market Funds do not expect to realize any long-term capital
gains and, therefore, do not foresee paying any "capital gain dividends" as
described in the Code.
Dividends attributable to interest earned on obligations of the U.S.
government may not be exempt from state taxes even though the interest, if
earned directly by the Shareholders, would be exempt from such taxes.
Shareholders should consult their tax advisers for further information
concerning state and local taxes, which may differ from federal income tax
rules.
Additional information regarding federal taxes is contained in the
Statement of Additional Information under "INVESTMENT OBJECTIVES 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 Funds and
their 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. Potential investors in a Money Market
Fund are urged to consult their tax advisers with special reference to their own
tax situation.
DISTRIBUTION
------------
Shares of the Money Market Funds 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
Money Market Funds will pay a
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<PAGE> 74
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 (0.25%) of the average daily net assets of each of
the Money Market Funds. The Distributor may use the distribution fee to provide
distribution assistance with respect to the Money Market Funds' Shares or to
provide Shareholder services to the holders of the Money Market Funds' 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 the 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.
MANAGEMENT OF THE MONEY MARKET FUNDS
------------------------------------
TRUSTEES OF THE FUNDS
- ---------------------
Overall responsibility for management of the Money Market 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 Board of Trustees in accordance with
the laws of The Commonwealth of Massachusetts governing business trusts. There
are currently four Trustees, three of whom are not "interested persons" of the
Funds within the meaning of that term under the 1940 Act. The Board of Trustees,
in turn, elects the officers of the Funds to supervise actively the Funds'
day-to-day operations.
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<PAGE> 75
The Trustees of the Funds, their addresses, and principal occupations
during the past five years are as follows:
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name, Address and Age With the Funds During Past Five Years
--------------------- -------------- ----------------------
<S> <C> <C>
Walter B. Grimm*, 53 Chairman From June, 1992 to present,
3435 Stelzer Road and Trustee employee of BISYS Fund
Columbus, Ohio 43219 Services.
Michael J. Hall, Trustee From December, 1997 to
7130 South Lewis, Suite 850 present, Vice President and
Tulsa, Oklahoma 74136 Chief Executive Officer, Matrix
Service Company; from
December, 1995 to November,
1997, Vice President and Chief
Financial Officer, Worldwide
Sports & Recreation, Inc.; from
January, 1994 to December,
1995, Vice President and Chief
Financial Officer, Pexco Holdings,
Inc.
Perry A. Wimpey, Trustee From January, 1992 to
4843 S. 69th East Avenue present, Local Financial
Tulsa, Oklahoma 74145 and Regulatory Consultant.
I. Edgar Hendrix, Trustee From June 1983 to present,
8 East 3rd Street Vice President and
Tulsa, Oklahoma 74103 Treasurer, Parker Drilling Co.
</TABLE>
- -------------
*Indicates an "interested person" of the Funds as defined in the 1940 Act.
The Trustees of the Funds 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 the Investment Adviser, the
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 the Funds for acting as Administrator and
may receive additional income under the Distribution Plan of the Funds.
-25-
<PAGE> 76
INVESTMENT ADVISER
- ------------------
U.S. TREASURY FUND BOK serves as the Investment Adviser to the U.S. Treasury
Fund. BOK, the largest trust company in the State of Oklahoma, 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 service to the Funds
and experience in managing collective investment funds with investment
portfolios and objectives 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 July 31, 1998
BOK was responsible for approximately $12.3 billion in assets including
approximately $5.7 billion in assets under management and possessed average
equity capital of $429 million.
Subject to the general supervision of the Funds' Board of Trustees and
in accordance with the investment objective and restrictions of the U.S.
Treasury Fund, BOK reviews, supervises, and provides general investment advice
regarding the U.S. Treasury Fund's investment programs. Subject to the general
supervision of the Funds' Board of Trustees and in accordance with the
investment objective and restrictions of the U.S. Treasury Fund, BOK makes all
final decisions with respect to portfolio securities of the U.S. Treasury Fund,
places orders for all purchases and sales of the portfolio securities of the
U.S. Treasury Fund, and maintains the U.S. Treasury Fund's records directly
relating to such purchases and sales.
For the services provided and expenses assumed pursuant to the
Investment Advisory Agreement with the Funds regarding the U.S. Treasury Fund,
BOK receives a fee from the U.S. Treasury Fund, computed daily and paid monthly
equaling the lesser of (1) such fee as may from time to time be agreed upon in
writing by the Funds and BOK, or (2) forty one-hundredths of one percent (0.40%)
of the Fund's average daily net assets. BOK receives fee income from the Funds
from several other sources. (See "SALES CHARGES," "DISTRIBUTION," and "GENERAL
INFORMATION --Custodian and Transfer Agent.") BOK may periodically waive all or
a portion of its fee with respect to the U.S. Treasury Fund to increase the net
income of such Fund available for distribution as dividends. BOK has currently
established its investment advisory fee
-26-
<PAGE> 77
pertaining to the U.S. Treasury Fund at forty one-hundredths of one percent
(0.40%) of the U.S. Treasury Fund's average daily net assets pursuant to
agreements with the Funds.
For investment advisory services to the U.S. Treasury Fund, the Fund
paid BOK: 0.40% of its average daily net assets for the fiscal year ended August
31, 1998.
CASH MANAGEMENT FUND BOK serves as the Investment Adviser to the Cash Management
Fund and AMR serves as the Sub-Adviser, pursuant to a sub-investment advisory
agreement between BOK and AMR.
Subject to the general supervision of the Funds' Board of Trustees and
BOK, and in accordance with the investment objective and restrictions of the
Cash Management Fund, AMR performs the following services: management of the
Cash Management Fund, decisions with respect to portfolio securities, placement
of orders for all purchases and sales of the portfolio securities of the Cash
Management Fund, and maintenance of the Cash Management Fund's records directly
relating to such purchases and sales.
AMR is a wholly-owned subsidiary of AMR Corporation, the parent company
of American Airlines, Inc., organized in 1986 to provide business management,
advisory, administrative and asset management consulting services. As of August
31, 1998, AMR assets under management (including assets under fiduciary advisory
control) totaled approximately $19.3 billion including approximately $6.8
billion under active management and $12.5 billion as named fiduciary or
fiduciary adviser. Of the total, approximately $14.6 billion of assets are
related to AMR Corporation.
For the services provided and expenses assumed pursuant to its
Investment Advisory Agreement with the Funds regarding the Cash Management Fund,
BOK receives a fee from the Cash Management Fund, computed daily and paid
monthly of the lesser of (1) such fee as may from time to time be agreed upon in
writing by the Funds and BOK, or (2) forty one-hundredths of one percent (0.40%)
of the Fund's average daily net assets. Of this amount, BOK pays to AMR a fee,
computed daily and paid monthly, at an annual rate not less than fifteen
one-hundredths of one percent (0.15%) nor more than forty one-hundredths of one
percent (0.40%) of the Cash Management Fund's average daily net assets, pursuant
to a sub-investment advisory agreement between BOK and AMR. BOK may periodically
waive all or a portion of its fee with respect to the Cash Management Fund to
increase the net income of such Fund available for distribution as dividends.
For investment advisory services to the Cash Management Fund, the Fund
paid BOK: 0.40% of its average daily net assets for the fiscal year ended August
31, 1998. Of this amount, BOK paid AMR 0.15% of the Cash Management Fund's
average daily net assets for the fiscal year ended August 31, 1998.
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<PAGE> 78
ADMINISTRATOR AND DISTRIBUTOR
- -----------------------------
BISYS is the Administrator for each of the Funds and also acts as the
Funds' 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 administration and operation of the Money Market Funds.
For expenses assumed and services provided as Administrator pursuant to
its administration agreement with the Funds, BISYS is entitled to receive a fee
from each Money Market Fund, computed daily and paid periodically, at the lesser
of (1) such fee as may from time to time be agreed upon in writing by the Funds
and the Administrator, and (2) an annual rate of twenty one-hundredths of one
percent (0.20%) of each Money Market Fund's average daily net assets. The
Administrator may periodically waive all or a portion of its administrative fee
with respect to a Fund to increase the net income of the Fund available for
distribution as dividends.
For administration services to the U.S. Treasury Fund and the Cash
Management Fund for the fiscal year ended August 31, 1998, each Fund paid the
Administrator 0.20% of its average daily net assets.
SUB-ADMINISTRATOR
- -----------------
BOK serves as the Sub-Administrator to the Funds pursuant to an
agreement between the Administrator and BOK. Pursuant to this agreement, BOK
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 (0.05%) of each Fund's average daily net assets.
EXPENSES
- --------
The Investment Adviser, Sub-Adviser, and the Administrator each bear
all expenses in connection with the performance of their services, other than
the cost of securities (including brokerage commissions, if any) purchased for
the Funds. Each Money Market Fund bears the following expenses relating to its
respective operations: taxes, interest, any 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 particular Fund,
certain insurance premiums, costs of maintenance of the Funds'
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<PAGE> 79
existence, costs of Shareholders' and Trustees' reports and meetings, and any
extraordinary expenses incurred in each Fund's operation.
BANKING LAWS
- ------------
BOK believes that it may perform the investment advisory services
contemplated by its agreement with the Funds and 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 BOK could continue to perform such
services for the Funds. See "MANAGEMENT OF THE FUNDS -- Glass-Steagall Act" in
the Statement of Additional Information for further discussion of applicable
banking laws and regulations.
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 Money Market Funds represent two 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. 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.
As of October 15, 1998, Bank of Oklahoma, N.A. (Bank of Oklahoma Tower,
One Williams Center, Tulsa, Oklahoma 74103) and its bank affiliates were the
Shareholders of record of 99.61% of the U.S. Treasury Fund's Shares and 99.92%
of the Cash Management Fund's Shares. As of October [__], 1998, Bank of
Oklahoma, N.A. and its bank affiliates possessed, on behalf of its underlying
accounts, voting or investment power with respect to [_____%] of the U.S.
Treasury Fund's Shares and [_____%] of the Cash Management Fund's Shares, and as
a consequence, Bank of Oklahoma, N.A. and its bank affiliates may be deemed to
be a controlling person of the U.S. Treasury Fund and the Cash Management Fund
under the 1940 Act.
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.
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<PAGE> 80
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 MONEY MARKET FUNDS 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. BISYS Fund
Services Ohio, Inc., an affiliate of BISYS, serves as the transfer agent
("Transfer Agent") for the Funds and performs fund accounting services.
PERFORMANCE INFORMATION
- -----------------------
From time to time each Money Market Fund may present its "current
yield" and "effective yield." Both yield figures are based on historical
earnings and are not intended to indicate future performance. The "yield" of a
Money Market Fund refers to the income generated by an investment in the Money
Market Fund over a seven calendar-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a one-year period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment in a Money Market Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. Performance information for the
Money Market Funds showing their average annual total return and aggregate total
return may also 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 Money Market Funds.
Average annual total return is measured by comparing the value of an investment
in a Money Market Fund at the beginning of the relevant period and 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.
-30-
<PAGE> 81
Investors may also judge the performance of other mutual funds with similar
investment objectives and other relevant indices. For example, the performance
of the Money Market Funds may be compared to the Donoghue's "Money Fund
Average", which is an average compiled by IBC/Donoghue's MONEY FUND REPORT 7 of
Holliston, MA 01746, a widely recognized independent publication that monitors
the performance of money market funds, to the average yields reported by the
Bank Rate Monitor from money market deposit accounts offered by the 50 leading
banks and thrift institutions in the top five standard metropolitan statistical
areas, or to data prepared by Lipper Analytical Services, Inc., as well as to
performance data as reported in publications such as Money Magazine, Forbes,
Barron's, The Wall Street Journal, The New York Times, Business Week, Pensions
and Investments, U.S.A. Today, Ibbotson Associates, Inc., Morningstar, Inc.,
CDA/Wiesenberger, American Banker, Fortune, Institutional Investor and local
newspapers. In addition to yield information, general information about these
Funds that appears in a publication such as those mentioned above may also be
quoted or reproduced in advertisements or in reports to Shareholders. Additional
performance information is contained in the Funds' Annual Report, which is
available free of charge by calling the telephone number on the front page of
the prospectus.
Yields will fluctuate and any quotation of yield should not be
considered as representative of the future performance of any Money Market Fund.
Since yields fluctuate, yield data cannot necessarily be used to compare an
investment in these Money Market Funds' Shares with bank deposits, savings
accounts, and similar investment alternatives which often provide an agreed or
guaranteed fixed yield for a stated period of time. Shareholders should remember
that performance and yield are generally functions of kind and quality of the
investments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any fees charged by Participating Organizations to Customer
accounts investing in Shares of these Money Market Funds will not be included in
yield calculations; such fees, if charged, would reduce the actual yield from
that quoted. For further information on performance information, see
"PERFORMANCE COMPARISONS" in the Statement of Additional Information.
YEAR 2000
- ---------
The investment services industry is evaluating the capability of
existing application software programs and operating systems to accommodate the
date value for the year 2000. Many existing application software products in the
marketplace were designed only to accommodate a two-digit date position, which
represents the year (e.g., "95" is stored on the system and represents the year
1995). If the year 1999 is the maximum date value these systems are able to
accurately process, the improper identification of the year 2000 could result in
a computer system failure or miscalculations causing a disruption of operations.
The Funds' principal services providers are taking steps the Funds believe are
reasonably designed to address the year 2000 issues with respect to the computer
systems those providers operate. However, this is an ongoing process and testing
and other steps are scheduled to be
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<PAGE> 82
completed in 1999. Nevertheless, the inability of service providers to
successfully address year 2000 issues could result in interruptions in the
Funds' business and have material adverse impact on the Funds' operations.
MISCELLANEOUS
- -------------
Shareholders will receive unaudited mid-year reports describing the
investment operations of the Money Market Funds and annual financial statements
audited by independent public accountants.
As used in this Prospectus and in the Statement of Additional
Information, "assets belonging to" a Fund means the consideration received by
the Fund 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 total net assets 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 Fund not readily identified
as belonging to a particular Fund that are allocated to that Fund in proportion
to the relative total net assets of the respective Funds at the time of
allocation. The timing of allocations of general assets and general liabilities
and expenses of the Fund 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 Funds 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> 83
AMERICAN PERFORMANCE FUNDS
MONEY MARKET FUNDS
U.S. TREASURY FUND
CASH MANAGEMENT FUND
INVESTMENT ADVISER
------------------
Bank of Oklahoma, N.A.
Bank of Oklahoma Tower
Tulsa, Oklahoma 74103
INVESTMENT SUB-ADVISER
----------------------
(Cash Management Fund only)
AMR Investment Services, Inc.
P.O. Box 619003
Dallas/Ft. Worth Airport, Texas 75261-9003
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> 84
TABLE OF CONTENTS
-----------------
Page
----
FEE TABLE......................................................................
FINANCIAL HIGHLIGHTS...........................................................
INVESTMENT OBJECTIVE ..........................................................
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS.................................
OTHER INVESTMENT TECHNIQUES OF THE MONEY MARKET FUNDS..........................
INVESTMENT RESTRICTIONS........................................................
VALUATION OF SHARES............................................................
HOW TO PURCHASE SHARES.........................................................
SALES CHARGES..................................................................
EXCHANGE PRIVILEGE.............................................................
HOW TO REDEEM SHARES...........................................................
DIVIDENDS......................................................................
FEDERAL INCOME TAXES...........................................................
DISTRIBUTION...................................................................
MANAGEMENT OF THE MONEY MARKET FUNDS...........................................
GENERAL INFORMATION............................................................
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 Money
Market Funds or the Distributor. This Prospectus does not constitute an offering
by the Money Market Funds or by the Distributor in any jurisdiction in which
such offering may not lawfully be made.
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<PAGE> 85
CROSS REFERENCE SHEET
---------------------
PROSPECTUS FOR AMERICAN PERFORMANCE EQUITY INVESTMENT FUNDS
-----------------------------------------------------------
<TABLE>
<CAPTION>
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fee Table
3. Condensed Financial Information Financial Highlights;
General Information - Performance
Information
4. General Description Cover Page;
of Registrant Investment Objectives; Investment
Policies and Special Considerations;
Investment Restrictions; General
Information - Description of the
Funds and their Shares
5. Management of the Fund Management of the Equity
Investment Funds
5A. Management's Discussion of Fund Performance See the Registrant's Current
Annual Report
6. Capital Stock and How to Purchase
Other Securities Shares; How to Redeem Shares;
Sales Charges; Dividends; Federal
Income Taxes; General Information -
Description of the Funds and their
Shares; General Information
-Miscellaneous
7. Purchase of Securities Valuation of Shares; How
Being Offered to Purchase Shares
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Inapplicable
</TABLE>
<PAGE> 86
PROSPECTUS
AMERICAN PERFORMANCE EQUITY INVESTMENT FUNDS
FOUR VARIABLE NET ASSET VALUE INVESTMENT PORTFOLIOS OF
AMERICAN PERFORMANCE FUNDS
3435 Stelzer Road
Columbus, Ohio 43219
For performance, purchase, and redemption information,
call (800) 762-7085
- --------------------------------------------------------------------------------
The American Performance Equity Investment Funds (the "Equity
Investment Funds") are four variable net asset value portfolios of the AMERICAN
PERFORMANCE FUNDS (the "Funds"), a diversified, open-end management investment
company which currently consists of ten separately managed portfolios. Each of
the Equity Investment Funds has a different investment objective, and the net
asset value per unit of beneficial interest ("Share") of each Equity Investment
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 , NOR HAS THE SECURITIES AND EXCHANGE
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 December 29, 1998.
<PAGE> 87
AMERICAN PERFORMANCE EQUITY FUND (the "Equity Fund") seeks growth of
capital and, secondarily, income by investing primarily in a diversified
portfolio of common stocks and securities convertible into common stocks.
AMERICAN PERFORMANCE AGGRESSIVE GROWTH FUND (the "Aggressive Growth
Fund") seeks long-term capital appreciation and, secondarily, income by
investing primarily in a diversified portfolio of common stocks and securities
convertible into common stocks of small to medium-size companies.
AMERICAN PERFORMANCE BALANCED FUND (the "Balanced Fund") seeks current
income and, secondarily, long-term capital growth by investing primarily in a
broadly diversified portfolio of securities, including common stocks, preferred
stocks and bonds.
AMERICAN PERFORMANCE GROWTH EQUITY FUND (the "Growth Equity Fund")
seeks long-term capital appreciation and growth of income 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 each Equity Investment Fund. BISYS
Fund Services Limited Partnership, D/B/A BISYS Fund Services, Columbus, Ohio,
("BISYS") acts as the Equity Investment Funds' Administrator and Distributor.
This Prospectus relates only to the Equity Investment Funds. 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"). Persons who wish to obtain a copy of the Prospectus for the American
Performance Money Market Funds or the American Performance Bond Investment Funds
may contact the Funds at the telephone number shown above.
A Statement of Additional Information bearing the same date as this
Prospectus, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The
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<PAGE> 88
Statement of Additional Information can be obtained without charge by writing or
calling the Funds at the address or telephone number shown above.
This Prospectus sets forth the information about the Equity Investment
Funds that a prospective investor ought to know before investing. Investors
should read this Prospectus and retain it for future reference.
-3-
<PAGE> 89
<TABLE>
<CAPTION>
FEE TABLE
---------
Aggressive Growth
Equity Growth Balanced Equity
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses(1)
-----------------------------------
Maximum Sales Load
Imposed on Purchases(2) 5.00% 5.00% 5.00% 5.00%
(as a percentage of offering price)
Maximum Sales Load Imposed
on Reinvested Dividends 0% 0% 0% 0%
(as a percentage of offering price)
Deferred Sales Load 0% 0% 0% 0%
(as a percentage of original
purchase price or redemption
proceeds, if applicable)
Redemption Fees(3) 0% 0% 0% 0%
(as a percentage of amount
redeemed, if applicable)
Exchange Fees $0 $0 $0 $0
--
<FN>
- ----------
(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 any of the
Equity Investment Funds within their trust accounts and purchase additional
Shares outside of their trust relationship; (7) investors within wrap accounts;
(8) Investors who purchase in connection with 401(k) plans, 403(b) plans, and
other employer-sponsored, qualified retirement plans; and (9) investors who
purchase in connection with non-transactional fee fund programs and programs
offered by fee-based financial planners and other types of financial
institutions.
(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.")
</TABLE>
-4-
<PAGE> 90
<TABLE>
<CAPTION>
Aggressive Growth
Equity Growth Balanced Equity
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Annual Operating Expenses
- -------------------------
(as a percentage of average net assets)
Management Fees(4) 0.50% 0.50% 0.17% 0.50%
(after voluntary fee reductions)
12b-1 Fees 0.25% 0.25% 0.00%(5) 0.25%
(after voluntary fee reductions with
respect to the Balanced Fund)
Other Expenses 0.31% 0.33% 0.34% 0.35%
----- ----- ----- -----
Total Fund Operating Expenses(6) 1.06% 1.08% 0.51% 1.10%
(after voluntary fee reductions)
<FN>
- ------------
(4) In order to reduce operating expenses, the Investment Adviser has
voluntarily agreed to reduce the investment advisory fees. Absent a voluntary
fee reduction, the investment advisory fees would be 0.69% of the average daily
net assets of the Equity Fund, the Aggressive Growth Fund and the Growth Equity
Fund, and 0.74% of the average daily net assets of the Balanced Fund.
(5) In order to reduce operating expenses, the Distributor has
voluntarily agreed to reduce the 12b-1 Fees. Absent a voluntary fee reduction,
the 12b-1 Fee would be 0.25% of the average daily net assets of the Balanced
Fund.
(6) Absent voluntary fee reductions, the Total Fund Operating Expenses
would be 1.25%, 1.27%, 1.33% and 1.29%, respectively, of the average daily net
asset of the Equity Fund, Aggressive Growth Fund, Balanced Fund and the Growth
Equity Fund.
</TABLE>
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<PAGE> 91
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>
Aggressive Growth
Equity Growth Balanced Equity
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
1 Year $60 $60 $55 $61
3 Years $82 $83 $66 $83
5 Years $106 $107 $77 $108
10 Years $173 $175 $111 $177
</TABLE>
The purpose of the above table is to assist a potential purchaser of
Shares of any of the Equity Investment Funds in understanding the various costs
and expenses that an investor in each Fund will bear directly or indirectly. The
examples reflect voluntary reductions of investment advisory and/or 12b-1 Fees,
as applicable. Although the Investment Adviser and the Distributor currently
have agreed to these voluntary reductions, they may cease to provide these
reductions, 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 a Fund. See "MANAGEMENT OF THE EQUITY INVESTMENT FUNDS," "SALES
CHARGES," and "DISTRIBUTION" for a more complete discussion of the transaction
expenses and annual operating expenses of each Fund. NASD rules generally limit
the amount that an Equity Investment Fund may pay under a Distribution Plan. An
Equity Investment 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.
-6-
<PAGE> 92
FINANCIAL HIGHLIGHTS
--------------------
The American Performance Funds (the "Funds") were organized as a
Massachusetts business trust and began active operations in August of 1990. The
Funds currently consist of ten series of units of beneficial interests
("Shares"). Four such series represent interests in the Equity Fund, the
Aggressive Growth Fund, the Balanced Fund and the Growth Equity Fund.
The Tables below set forth certain financial highlights for the Equity
Fund, the Aggressive Growth Fund and the Balanced Fund for the periods
indicated. The most recent five years of each Table are part of the Funds'
financial statements which are included in the Funds' Annual Report and are
incorporated by reference into the Statement of Additional Information which a
Shareholder may obtain by calling the Funds. The financial statements have been
audited by KPMG Peat Marwick LLP, independent public accountants for the Funds,
whose report thereon, is included in the Funds' Annual Report.
<TABLE>
<CAPTION>
EQUITY FUND
-----------
YEAR ENDED AUGUST 31,
---------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $17.33 $13.73 $12.33 $11.85 $12.78
------ ------ ------ ------ ------
INVESTMENT ACTIVITIES
Net investment income 0.08 0.13 0.18 0.20 0.14
Net realized and unrealized gains
(losses) on investments 0.19 5.03 2.04 1.77 0.40
------ ------ ------ ------ ------
Total from Investment Activities 0.27 5.16 2.22 1.97 0.54
------ ------ ------ ------ ------
DISTRIBUTIONS
Net investment income (0.07) (0.13) (0.18) (0.19) (0.14)
Net realized gains (2.47) (1.42) (0.64) (0.39) (1.33)
In excess of net investment income -- (0.01) -- -- --
In excess of net realized gains -- -- -- (0.91) --
------ ------ ------ ------
Total Distributions (2.54) (1.56) (0.82) (1.49) (1.47)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.06 $17.33 $13.73 $12.33 $11.85
====== ====== ====== ====== ======
Total Return (excludes sales charge) 0.79% 40.23% 18.53% 19.74% 4.66%
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $166,965 $170,887 $86,352 $76,398 $84,618
Ratio of expenses to average net assets 1.07% 1.06% 1.08% 1.14% 1.12%
Ratio of net investment income to
average net assets 0.44% 0.88% 1.35% 1.73% 1.32%
Ratio of expenses to average net assets* 1.26% 1.25% 1.27% 1.33% 1.31%
Ratio of net investment income to
average net assets* 0.25% 0.69% 1.16% 1.54% 1.13%
Portfolio turnover 72.10% 93.82% 67.46% 100.44% 159.30%
<CAPTION>
AUGUST 31,
1993 1992 1991(a)
---- ----
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.31 $12.13 $10.00
INVESTMENT ACTIVITIES
Net investment income 0.14 0.17 0.30
Net realized and unrealized gains
(losses) on investments 1.56 (0.63) 2.13
Total from Investment Activities 1.70 (0.46) 2.43
DISTRIBUTIONS
Net investment income (0.14) (0.17) (0.30)
Net realized gains (0.09) (0.19) --
In excess of net investment income -- -- --
In excess of net realized gains -- -- --
Total Distributions (0.23) (0.36) (0.30)
NET ASSET VALUE, END OF PERIOD $12.78 $11.31 $12.13
Total Return (excludes sales charge) 15.12% (3.98%) 24.57%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $58,015 $90,890 $73,362
Ratio of expenses to average net assets 1.16% 1.16% 1.17%(b)
Ratio of net investment income to
average net assets 1.09% 1.46% 3.01%(b)
Ratio of expenses to average net assets* 1.36% 1.39% 1.42%(b)
Ratio of net investment income to
average net assets* 0.88% 1.23% 2.76%(b)
Portfolio turnover 66.54% 51.26% 69.94%
<FN>
- ----------------
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios would
have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
</TABLE>
-7-
<PAGE> 93
<TABLE>
<CAPTION>
------------------------------------------------------------------
AGGRESSIVE GROWTH FUND
FEBRUARY 3,
1992 TO
YEAR ENDED AUGUST 31, AUGUST 31,
------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992(a)
---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $18.88 $16.29 $16.31 $11.99 $11.96 $8.37 $10.00
------ ------ ------ ------ ------ ----- ------
INVESTMENT ACTIVITIES
Net investment income (loss) (0.06) (0.06) (0.04) (0.06) (0.04) (0.03) 0.03
Net realized and unrealized gains (losses)
on investments (5.18) 2.65 0.30 4.38 0.07 3.62 (1.63)
Total from Investment Activities (5.24) 2.59 0.26 4.32 0.03 3.59 (1.60)
DISTRIBUTIONS
Net investment income -- -- -- -- -- -- (0.03)
Net realized gains (2.59) -- (0.28) -- -- -- --
------ ------ ------
Total Distributions (2.59) -- (0.28) -- -- -- (0.03)
------ ------ ------ ------ ------ ------ -----
NET ASSET VALUE, END OF PERIOD $11.05 $18.88 $16.29 $16.31 $11.99 $11.96 $8.37
====== ====== ====== ====== ====== ====== =====
Total Return (excludes sales charge) (30.85)% 15.90% 1.77% 36.03% 0.25% 42.89% (16.02%)(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $22,998 $58,982 $43,278 $38,008 $24,775 $11,012 $11,716
Ratio of expenses to average net assets 1.10% 1.08% 1.11% 1.27% 1.35% 0.62% 0.28%(b)
Ratio of net investment income (loss)
to average net assets (0.27)% (0.56%) (0.35%) (0.62%) (0.69%) (0.24%) 0.58%(b)
Ratio of expenses to average net assets* 1.29% 1.27% 1.30% 1.45% 1.55% 1.64% 1.47%(b)
Ratio of net investment income (loss)
to average net assets* (0.46)% (0.75%) (0.54%) (0.81%) (0.89%) (1.26%) (0.61%)(b)
Portfolio turnover 138.15% 76.47% 32.89% 27.16% 18.76% 59.47% 14.53%
<FN>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios would
have been as indicated.
(a) Period from commencement of operation.
(b) Annualized.
(c) Unannualized.
</TABLE>
-8-
<PAGE> 94
<TABLE>
<CAPTION>
BALANCED FUND
-------------
YEAR ENDED AUGUST 31, JUNE 1, 1995
---------------------------------- TO AUGUST 31,
1998 1997 1996 1995(a)
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.38 $11.28 $10.62 $10.00
INVESTMENT ACTIVITIES
Net investment income 0.40 0.41 0.35 0.08
Net realized and unrealized gains (losses) on investments 0.21 2.46 0.79 0.62
Total from Investment Activities 0.61 2.87 1.14 0.70
DISTRIBUTIONS
Net investment income (0.34) (0.41) (0.35) (0.08)
Net realized gains (1.28) (0.36) (0.13) --
Total Distributions (1.62) (0.77) (0.48) (0.08)
NET ASSET VALUE, END OF PERIOD $12.37 $13.38 $11.28 $10.62
Total Return (excludes sales charge) 4.55% 26.33% 10.87% 6.98%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $40,656 $30,249 $22,592 $12,842
Ratio of expenses to average net assets 0.47% 0.36% 0.38% 0.90%(b)
Ratio of net investment income to average net assets 3.02% 3.34% 3.27% 3.17%(b)
Ratio of expenses to average net assets* 1.34% 1.38% 1.40% 1.92%(b)
Ratio of net investment income to average net assets* 2.15% 2.32% 2.25% 2.15%(b)
Portfolio turnover 78.07% 66.12% 71.89% 18.68%(b)
<FN>
---------
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios would
have been as indicated.
(a) Period from commencement of operation.
(b) Annualized.
(c) Unannualized.
</TABLE>
-9-
<PAGE> 95
<TABLE>
<CAPTION>
Growth Equity Fund
------------------
November 1, 1997
To August 31, 1998(a)
<S> <C>
Net Asset Value, Beginning Of Period $10.00
Investment Activities
Net investment income 0.02
Net realized and unrealized gains (losses) on investments 1.25
Total from investment activities 1.27
Distributions
Net investment income (0.02)
Net realized gains --
Total Distributions (0.02)
Net Asset Value, End Of Period $11.25
Total Return (Excludes Sales Charge) 12.69%(c)
Ratios/supplement Data:
Net assets at end of period (000) $78,677
Ratio of expenses to average net assets 1.12%(b)
Ratio of net investment income to average net assets 0.24%(b)
Ratio of expenses to average net assets* 1.31%(b)
Ratio of net investment income to average net assets* 0.05%(b)
Portfolio Turnover 36.08%(b)
<FN>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operation.
(b) Annualized.
(c) Unannualized.
</TABLE>
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<PAGE> 96
INVESTMENT OBJECTIVES
---------------------
EQUITY FUND. The investment objective of the Equity Fund is to seek
growth of capital and, secondarily, income by investing primarily in a
diversified portfolio of common stocks and securities convertible into common
stocks. The Equity Fund is managed using a "quantitative" investment approach.
Individual stocks in a universe are ranked according to their return
characteristics. The approach seeks to measure some or all of the following
quantitative factors which the Investment Adviser may supplement or modify from
time to time: relative strength, earning revision and acceleration, forecast
earnings to price, and normal earnings to price. An additional factor in stock
selection is an attempt to structure the Equity Fund's portfolio so as to be
relatively neutral to the stocks comprising Standard & Poor's 500 Composite
Stock Price Index ("S&P 500") regarding both industry exposure and factor
exposure (E.G., company size, yield, trading activity, labor intensity,
foreign-derived income, financial leverage, earnings variability, book to price,
earnings to price, growth, variability in markets and recent success). The
Equity Fund will not, however, seek to match or track the performance of the S&P
500, nor limit investments to stocks in that index.
Equity securities such as those in which the Equity Fund may invest are
more volatile and carry more risk than some other forms of investment, including
investments in short-term high-grade fixed income funds. The Equity Fund
portfolio of securities will be composed of securities believed by its
Investment Adviser to be generally less volatile and carry less risk than those
generally held by an aggressive growth fund. Depending upon the performance of
the Equity Fund's investments, the net asset value per share of such fund may
decrease instead of increase.
AGGRESSIVE GROWTH FUND. The investment objective of the Aggressive Growth Fund
is to seek long-term capital appreciation and, secondarily, income by investing
primarily in a diversified portfolio of common stocks and securities convertible
into common stocks of small to medium-size companies. The inherent risks of
small to medium-size companies are two-fold: business risk and market risk.
Business risk refers to the possibility that a company may do poorly due to
competitive or financial factors. Market risk refers mainly to the relatively
small number of shares publicly owned as compared to larger companies.
The Aggressive Growth Fund will employ a "quantitative" investment
approach. Under this approach, stocks will be ranked according to their return
characteristics and other quantitative factors. The portfolio will be
constructed to exhibit aggregate investment characteristics similar to those of
the Standard & Poor's Small Cap 600 Index ("S&P 600"). The Aggressive Growth
Fund will not, however, seek to match or track the performance of the S&P 600,
nor limit investments to stocks in that index.
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<PAGE> 97
The securities of smaller, less well-known companies may be more
volatile than those of larger companies. An investment in the Aggressive Growth
Fund may increase or decrease in value.
BALANCED FUND. The investment objective of the Balanced Fund is to seek current
income and, secondarily, long-term capital growth by investing primarily in a
broadly diversified portfolio of securities, including common stocks, preferred
stocks and bonds. The portion of the Balanced Fund's assets invested in equity
and debt securities will vary in accordance with economic conditions, the
general level of common stock prices, interest rates and other relevant
considerations, including the risks associated with each investment medium.
Although the Balanced Fund seeks to reduce the risks associated with any one
investment medium by utilizing a variety of investments, performance will depend
upon additional factors such as timing and mix and the ability of its Investment
Adviser to judge and react to changing market conditions. Because the Balanced
Fund will invest in both debt and equity securities, the Balanced Fund is
expected to produce a higher level of current income than the Equity Fund and
the Aggressive Growth Fund.
GROWTH EQUITY FUND. 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 S&P 500 .
ALL EQUITY INVESTMENT FUNDS. The investment objectives with respect to the
Equity Fund, the Aggressive Growth Fund, the Balanced Fund or the Growth Equity
Fund may not be changed without a vote of the holders of a majority of the
outstanding Shares of that Equity Investment Fund (as defined in the Statement
of Additional Information). There can be no assurance that the investment
objectives of the Equity Fund, the Aggressive Growth Fund, the Balanced Fund or
the Growth Equity Fund will be achieved.
Additionally, the Equity Fund, the Aggressive Growth Fund, the Balanced
Fund and the Growth Equity Fund may engage in certain investment techniques
which may subject the Funds to certain risks (see "INVESTMENT POLICIES AND
SPECIAL CONSIDERATIONS").
-12-
<PAGE> 98
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS
----------------------------------------------
Under normal market conditions, the Equity Fund, the Aggressive Growth
Fund and the Growth Equity Fund will invest at least 70% of the value of their
respective 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 Equity Fund,
the Aggressive Growth Fund and the Growth Equity Fund may also invest up to 30%
of their respective 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 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' acceptances,
U.S. Treasury bills, master demand notes, agency discount notes, bank money
market deposit accounts and money market mutual funds. Each Equity Investment
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,
Prime-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, an Equity Investment
Fund may hold up to 100% of its total assets in cash equivalents.
Under normal market conditions, the Balanced Fund will invest in equity
securities consisting of common stocks but may also invest in other equity-type
securities such as warrants, convertible preferred stocks and convertible debt
instruments. The Balanced Fund's equity investments will be in companies
believed by its Investment Adviser to be undervalued. The Balanced Fund's debt
securities will consist of securities such as bonds, notes, debentures and money
market instruments. The average dollar-weighted portfolio maturity of debt
securities held by the Balanced Fund will vary according to market conditions
and interest rate cycles and will range between 1 year and 30 years under normal
market conditions. While securities with longer maturities tend to produce
higher yields, the price of longer maturity securities is also subject to
greater market fluctuations as a result of changes in interest rates. The
Balanced Fund's debt securities will consist of high grade securities, which are
those securities rated within the three highest ratings categories assigned by
an NRSRO at the time of
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<PAGE> 99
purchase (E.G. , at least "A" from Moody's or S&P (including all
sub-classifications indicated by modifiers of such "A" ratings)) or, if not
rated, found by the Investment Adviser under guidelines established by the
Funds' Board of Trustees to be of comparable quality.
It is a fundamental policy of the Balanced Fund that it will invest at
least 25% of its total assets in fixed-income securities. For this purpose,
fixed-income securities include debt securities, mortgage-related securities,
nonconvertible preferred stock and that portion of the value of securities
convertible into common stock, including convertible preferred stock and
convertible debt, which is attributable to the fixed-income characteristics of
those securities.
Certain debt securities such as, but not limited to, mortgage backed
securities and CMOs, as well as securities subject to prepayment of principal
prior to the stated maturity date, are expected to be repaid prior to their
stated maturity dates. The Adviser determines the "effective maturity" of the
securities based on the expected payment date (which is earlier than the stated
maturity dates of the securities). For purposes of calculating the Balanced
Fund's weighted average portfolio maturity, the effective maturity of such
securities, as determined by the Adviser, will be used.
INVESTMENT COMPANY SECURITIES. Each of the Equity Investment Funds may invest in
shares of other investment companies, including other American Performance
Funds. However, none of the Equity Investment Funds may invest more than 5% of
its total assets in the securities of any one investment company, nor may any
Equity Investment 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 an Equity Investment Fund.
This fee is in addition to the fees received by an Equity Investment Fund's
Investment Adviser and Administrator. In order to avoid the imposition of
additional fees as a result of investments by an Equity Investment Fund in
shares of other American Performance Funds, the Investment Adviser and
Administrator have agreed to promptly forward to the Equity Investment Fund any
portion of their usual asset-based service fees from an American Performance
Fund which is attributable to investment by the Equity Investment Fund in shares
of such other American Performance Fund.
OPTIONS AND FUTURES CONTRACTS. Each Equity Investment 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 an Equity
Investment Fund to segregate assets to cover contracts that would require it to
purchase securities. An Equity
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<PAGE> 100
Investment 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
Equity Investment Fund had not entered into any futures transactions. In
addition, the value of an Equity Investment Fund's futures positions may not
prove to be perfectly or even highly correlated with the value of its portfolio
securities, limiting the Equity Investment 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.
FOREIGN SECURITIES. Each Equity Investment 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, an Equity Investment
Fund may, from time to time, lend its portfolio securities to broker-dealers,
banks, or institutional borrowers of securities. The Funds will enter into loan
agreements only with broker-dealers, banks, or other institutions that BOK 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 an Equity Investment Fund may be
subject to repurchase agreements. Under the terms of a repurchase agreement, an
Equity Investment 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 Equity Investment
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, as amended (the "1940 Act"). See the
Statement of Additional Information for more information regarding this
investment practice.
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<PAGE> 101
REVERSE REPURCHASE AGREEMENTS. Each Equity Investment 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,
an Equity Investment 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 an Equity Investment Fund
enters into a reverse repurchase agreement, it will place in a segregated
custodial account assets, such as liquid high quality securities, consistent
with the Equity Investment 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 an Equity Investment Fund 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. Each Equity Investment 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. An Equity Investment
Fund will generally not pay for such securities or start earning interest on
them until they are received. When an Equity Investment 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 Equity Investment 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. Each Equity
Investment 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 exceed 25% of the value of its assets, an Equity Investment Fund's
liquidity and the ability of the Investment Adviser to manage it might be
severely affected. No Equity Investment Fund intends to purchase when- issued
securities for speculative purposes but only in furtherance of its investment
objective.
PRIVATE PLACEMENT INVESTMENTS. The Equity Investment Funds 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
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<PAGE> 102
investment dealers who make a market in the Section 4(2) paper, thus providing
liquidity. No Equity Investment Fund will 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 Equity Investment 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 Equity Investment
Funds' investments in these securities, focusing on such important factors,
among others, as valuation, liquidity, and availability of information.
Investments in Section 4(2) paper could have the effect of reducing the Equity
Investment Funds' liquidity to the extent that qualified institutional buyers
become for a time not interested in purchasing these restricted securities.
MORTGAGE RELATED SECURITIES. The Balanced Fund may purchase mortgage-related
securities representing 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 private 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 the Balanced 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. Prepayments occur when the borrower under an individual mortgage
prepays the remaining principal before the mortgage's scheduled maturity date.
As a result of the pass-through of prepayments of principal on the underlying
securities, mortgage-backed pass-through securities are often subject to more
rapid prepayments of principal than their stated maturity would indicate.
Because the prepayment characteristics of the underlying mortgages vary, it is
not possible to predict accurately the realized yield or average life of a
particular issue of pass-through certificates. Prepayments are important because
of their effect on the yield and price of the securities. During periods of
declining interest rates, such prepayments can be expected to accelerate, and
the Funds would be required to reinvest the proceeds at the lower interest rates
then available. In addition, prepayments of mortgages which underlie securities
purchased at a premium may not have been fully amortized
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at the time the obligation is repaid. As a result of these principal prepayment
features, mortgage-backed pass-through securities are generally more volatile
investments than other U.S. government securities. For these 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 the Balanced 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 the Balanced
Fund will receive when these amounts are reinvested. The Balanced Fund also may
invest in collateralized mortgage obligations structured on pools of mortgage
pass-through certificates or mortgage loans. Collateralized mortgage obligations
will be purchased only if rated at the time of purchase in one of the three
highest rating categories by an NRSRO or, if not rated, found by the Investment
Adviser under guidelines established by the Funds' Board of Trustees to be of
comparable quality. For further discussion concerning the investment
considerations involved, see "INVESTMENT OBJECTIVE AND POLICIES -- Additional
Information on Fund Instruments -- Mortgage-Related Securities" in the Statement
of Additional Information.
INVESTMENT RESTRICTIONS
-----------------------
Each Equity Investment 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 Equity Investment Fund (as defined in "GENERAL
INFORMATION-Miscellaneous").
Pursuant to these investment restrictions:
1. Each of the Equity Investment Funds 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. Each of the Equity Investment Funds 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
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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 Equity Investment Funds may not borrow money or issue senior
securities, except that each Equity Investment 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 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 each Equity Investment Fund's total assets at the time of its
borrowing. No Equity Investment Fund will purchase securities while its
borrowings (including reverse repurchase agreements) exceed 5% of its total
assets.
4. No Equity Investment Fund may make loans, except that each Equity
Investment Fund may, in accordance with its investment objectives and policies,
purchase or hold debt instruments, lend portfolio securities, and enter into
repurchase agreements.
5. No Equity Investment Fund will 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 such
Fund's net assets.
VALUATION OF SHARES
-------------------
The net asset value of the Funds are determined and their 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 a 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 each Equity Investment Fund, less the liabilities charged to
each Equity Investment Fund, by the number of its outstanding Shares.
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The securities in each Equity Investment 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.
HOW TO PURCHASE SHARES
----------------------
Shares of the Equity Investment Funds 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 any Equity Investment 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 appropriate 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 Equity Investment
Funds 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 Equity Investment Funds ordered by
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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
canceled and the investor could be liable for any losses or fees incurred.
AUTO INVEST PLAN
The Funds offer an Auto Invest Plan which enables Shareholders of the
Equity Investment Funds 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 an Equity Investment 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
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persons ("Customers") by Participating Organizations under the Funds'
Distribution Plan (See "DISTRIBUTION"). Shares of any Equity Investment 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 investment in an Equity Investment 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 each Equity Investment 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 an Equity Investment
Fund will be effected only on a Business Day (as defined in "VALUATION OF
SHARES") of that Equity Investment 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.
Each Equity Investment 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 such
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 Equity Investment Funds by a
Participating Organization on behalf of a Customer will be sent by the
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Participating Organization. Shareholders may rely on these statements in lieu of
certificates. No certificates representing Shares of any Equity Investment Fund
will be issued.
SALES CHARGES
-------------
The public offering price of a Share of each of the Equity Investment
Funds 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. 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 each of the Equity Investment Funds.
<TABLE>
<CAPTION>
Dealer Discounts
Sales and Brokerage
Charge as a Sales Charge Commissions as
Percentage of as a Percentage a Percentage of
Net Amount of Net Public Offering
Amount of Purchase Invested Offering Price Price
------------------ ------------- --------------- ---------------
<S> <C> <C> <C>
Less than $50,000........................... 5.26% 5.00% 4.50%
$50,000 but less than $100,000.............. 3.90% 3.75% 3.25%
$100,000 but less than $250,000............. 2.83% 2.75% 2.50%
$250,000 but less than $500,000............. 2.04% 2.00% 1.75%
$500,000 but less than $1,000,000........... 1.78% 1.75% 1.60%
$1,000,000 or more.......................... 0.00% 0.00% 0.00%
</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 any of the Funds.
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,
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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.
SALES CHARGE WAIVERS
--------------------
The Distributor may periodically waive the sales charges for all
customers with respect to any of the Equity Investment 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
Equity Investment Funds within their trust accounts and purchase additional
Shares outside of these trust relationships; (7) investors within wrap accounts;
(8) investors who purchase in connection with 401(k) plans, 403(b) plans, and
other employer-sponsored, qualified retirement plans; and (9) investors who
purchase in connection with non-transactional fee fund programs and programs
offered by fee-based financial planners and other types of financial
institutions.
Each investor described in paragraphs (2), (3), (4), (6), (8), and (9)
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
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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 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
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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.
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 any Equity Investment 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 Equity Investment 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
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<PAGE> 112
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.
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
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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,
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 Trust 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 Trust or the Shareholders
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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, an Equity Investment 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 Equity Investment Funds
intend 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, each
Equity Investment Fund reserves the right to redeem, at net asset value, the
Shares of any Shareholder if, because of redemptions of Shares by or on behalf
of the Shareholder, the account of such Shareholder in any Equity Investment
Fund has a value of less than $500. Accordingly, an investor purchasing Shares
of any Equity Investment 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 any Equity Investment 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 Equity Fund, the Aggressive Growth Fund,
the Balanced Fund and 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.
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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
--------------------
Each Equity Investment Fund is treated as a separate entity for federal
income tax purposes. Each Fund intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"), and
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 that meet the holding period requirement in the Code to the extent
the distribution represents amounts that would qualify for the
dividends-received deduction if the Equity Investment Fund making the
distribution were a regular corporation, and to the extent designated by such
Equity Investment Fund as so qualifying.
Distributions designated by each Equity Investment Fund as deriving
from net gains on securities held for more than one year are generally taxable
to Shareholders as such in the year in which they are received, regardless of
how long the Shareholder has held Shares in the Equity Investment Fund. Such
capital gain dividends are not eligible for the dividends-received deduction.
A Shareholder will generally recognize capital gain or loss on the sale
or exchange of Shares in an Equity Investment Fund. If a Shareholder disposes of
Shares in the Equity Investment 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.
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<PAGE> 116
Fund investments in foreign securities may be subject to withholding
taxes at the source on dividend or interest payments. In that case, the Fund's
yield on those securities would be decreased.
Distributions are taxable to a shareholder of a fund even if they are
paid from income or gains earned by the fund prior to the shareholder's
investment (and thus were included in the price paid by the shareholder).
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
Equity Investment Funds and their 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 an Equity Investment Fund are advised to consult their
tax adviser with special reference to their own tax situations, including the
Potential application of foreign, state and local taxes.
DISTRIBUTION
------------
Shares of the Equity Investment Funds 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 Equity Investment Funds 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 (0.25%) of the
average daily net assets of each of the Equity Investment Funds. The Distributor
may use the distribution fee to provide distribution assistance with respect to
the Equity Investment Funds' Shares or to provide Shareholder services to the
holders of the Equity Investment Funds' 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.
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<PAGE> 117
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 EQUITY INVESTMENT FUNDS - Banking Laws" for information
concerning the applicability of the Glass-Steagall Act to the Investment
Adviser's investment advisory services to the Funds.
MANAGEMENT OF THE EQUITY INVESTMENT FUNDS
-----------------------------------------
TRUSTEES OF THE FUNDS
Overall responsibility for management of the Equity Investment 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:
Position(s) Held Principal Occupation
Name, Address and Age With the Funds During Past Five Years
--------------------- -------------- ----------------------
Walter B. Grimm*, 53 Chairman From June, 1992 to present,
3435 Stelzer Road and Trustee employee of BISYS Fund
Columbus, Ohio 43219 Services.
Michael J. Hall, Trustee From December, 1997 to
7130 South Lewis, Suite 850 present, Vice President and
Tulsa, Oklahoma 74136 Chief Executive Officer,
Matrix Service Company;
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<PAGE> 118
From December, 1995 To
November, 1997, Vice
President and Chief
Financial Officer, Worldwide
Sports & Recreation, Inc.;
from January, 1994 to
present, Vice President and
Chief Financial Officer,
Pexco Holdings, Inc.
Perry A. Wimpey, Trustee From January, 1992 to
4843 S. 69th East Avenue present, Local Financial
Tulsa, Oklahoma 74145 and Regulatory Consultant.
I. Edgar Hendrix, Trustee From June, 1983 to present,
8 East 3rd Street Vice President and Treasurer,
Tulsa, Oklahoma 74103 Parker Drilling Co.
--------
*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
Bank of Oklahoma, N.A. serves as investment adviser to the Equity
Investment Funds. BOK, the largest trust company in the State of Oklahoma, 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
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<PAGE> 119
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 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 July 31, 1998 BOK was responsible for approximately $12.3
billion in assets including approximately $5.7 billion in assets under
management and possessed average equity capital at $429 million.
Subject to the general supervision of the Funds' Board of Trustees and
in accordance with the investment objective and restrictions of each Equity
Investment Fund, BOK manages the Equity Investment Funds, makes decisions with
respect to and places orders for all purchases and sales of their portfolio
securities, and maintains each Equity Investment Fund's records relating to such
purchases.
The persons primarily responsible for the day-to-day management of each
Equity Investment Fund, as well as their previous business experience, are as
follows:
Portfolio Manager Business Experience
----------------- -------------------
Joe P. Sing, Jr. Manager of the Aggressive Growth Fund since its
inception. Since 1984, Mr. Sing has been a portfolio
manager for BOK.
Grafton M. Potter Manager of the Equity Fund and Growth Equity Fund
since their inception. Since 1988, Mr. Potter has
served as Director of Equity Research for BOK.
Andy H. Hood Manager of the Balanced Fund since its inception. Since
1993, Mr. Hood has been a portfolio manager for BOK.
From 1987 to 1993 Mr. Hood was a portfolio manager for
Sun Trust Bank in Florida.
For the services provided and expenses assumed pursuant to its
investment advisory agreement with the Funds, BOK receives a fee from the Equity
Fund, the Aggressive Growth Fund and 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 (0.69%) of each Fund's average daily net assets. BOK receives a fee from
the Balanced Fund computed daily and paid monthly equaling the lesser of (1)
such fee as
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<PAGE> 120
may from time to time be agreed upon by the Fund and BOK, or (2)
seventy-four-one- hundredths of one percent (0.74%) of the Balanced Fund's
average daily net assets. BOK receives fee income from the Funds from several
other sources. (See "SALES CHARGES," "DISTRIBUTION," and "GENERAL INFORMATION --
Custodian and Transfer Agent.") BOK may periodically waive all or a portion of
its advisory fee with respect to any Equity Investment Fund to increase the net
income of such Equity Investment Fund available for distribution as dividends.
In order to reduce operating expenses, BOK has currently established the
investment advisory fees pertaining to the Equity Fund, the Aggressive Growth
Fund, the Balanced Fund and the Growth Equity Fund at 0.50%, 0.50%, 0.17% and
0.50% of each respective Fund's average daily net assets.
For investment advisory services for the fiscal year ended August 31,
1998, the Equity Fund and the Aggressive Growth Fund each paid BOK, after
voluntary fee reductions, 0.50% of their average DAILY net assets, the Balanced
Fund paid BOK investment advisory fees, after voluntary fee reductions, 0.17% of
its average daily net assets. For investment advisory services for the period
from November 1, 1997 to August 31, 1998, the Growth Equity Fund paid BOK, after
voluntary reductions, 0.50% Of its average daily net assets.
ADMINISTRATOR AND DISTRIBUTOR
- -----------------------------
BISYS is the Administrator for the Funds, and also acts as the Funds'
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 each 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 each Equity Investment Fund, computed daily and paid periodically, at the
lesser of (1) such fee as may from time to time be agreed upon in writing by the
Funds and the Administrator, or (2) twenty one-hundredths of one percent (0.20%)
of each Equity Investment Fund's average daily net assets. The Administrator may
periodically waive all or a portion of its administrative fee with respect to an
Equity Investment Fund to increase the net income of the Equity Investment Fund
available for distribution as dividends.
For administration services for the Equity Fund, the Aggressive Growth
Fund and the Balanced Fund, for the fiscal year ended August 31, 1998, each Fund
paid the Administrator 0.20% of its average daily net assets. For administrative
services for the period from
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<PAGE> 121
November 1, 1997 to August 31, 1998, the Growth Equity Fund paid the
Administrator 0.20% Of its average daily net assets.
SUB-ADMINISTRATOR
BOK serves as the Sub-Administrator to the Funds 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 (0.05%) of each Fund's average DAILY 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 Funds. Each
Equity Investment 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 particular Fund,
certain insurance premiums, costs of maintenance of the Funds' 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 Equity Investment Funds 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> 122
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 Equity Fund, the Aggressive Growth Fund, the Balanced Fund and the
Growth Equity Fund represent four 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 for the Growth Equity Fund were
capitalized and will be amortized during the Fund's first five years of
operations. Such amortization will reduce the amount available for distributions
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.
As of October 15, 1998, Bank of Oklahoma, N.A. (Bank of Oklahoma Tower,
One Williams Center, Tulsa, Oklahoma 74103) and its bank affiliates were the
Shareholders of record of 98.41% of the Equity Fund's Shares, 92.67% of the
Aggressive Growth Fund's Shares, 99.55% of the Balanced Fund's Shares and 97.27%
of the Growth Equity Fund's Shares. As of October __, 1998, Bank of Oklahoma,
N.A. and its bank affiliates possessed, on behalf of its underlying accounts
voting and investment power with respect to [____%] of the Equity Fund's Shares,
[____%] of the Aggressive Growth Fund's Shares, [____%] of the Balanced Fund's
Shares and [____%] of the Growth Equity Fund's Shares, and, as a consequence,
Bank of Oklahoma, N.A. and its bank affiliates may be deemed to be a controlling
person of each of these Equity Investment Funds under the 1940 Act.
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.
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<PAGE> 123
Overall responsibility for the management of the Funds is vested in the
Board of Trustees. See "MANAGEMENT OF THE EQUITY INVESTMENT FUNDS - 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 services.
PERFORMANCE INFORMATION
From time to time performance information for the Equity Investment
Funds showing their 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 Equity Investment Funds 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 Equity Investment
Funds 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 an Equity Investment 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 an
Equity Investment 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 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
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such items. Distribution rates may also be presented excluding the effect of a
sales charge, if any.
Investors may also judge the performance of an Equity Investment 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 these Funds 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 Equity
Investment Funds 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 each Equity Investment
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.
THE GROWTH EQUITY FUND
The Growth Equity Fund commenced operations on November 3, 1997
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 was 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.
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<PAGE> 125
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
AUGUST 31, 1997
<TABLE>
NO LOAD AVERAGE ANNUAL TOTAL RETURN*
<CAPTION>
Fund 1 Year 3 Year Since Inception
---- ------ ------ ---------------
<S> <C> <C> <C>
Equity Growth Trust B 44.25% 27.66% 27.14%
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
SUBJECT TO SALES LOAD**
<S> <C> <C> <C>
Equity Growth Trust B 36.96% 25.48% 25.13%
</TABLE>
*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 as of August 31, 1997.
**The maximum sales load is 5.00% for the American Performance Growth Equity
Fund.
The aggregate annual return for the Equity Growth Trust B from June 30,
1994 through August 31, 1997, absent any sales load, was 117.19%. The aggregate
annual return for the Equity Growth Trust B from June 30, 1994 through August
31, 1997, taking into account a sales load, was 106.30%.
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 fees and expenses applicable to the
American Performance Growth Equity Fund as stated in this prospectus in the Fee
Table (i.e., adjusted to reflect anticipated fees and expenses, absent any fee
waivers). 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.
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YEAR 2000
The investment services industry is evaluating the capability of
existing application software programs and operating systems to accommodate the
date value for the year 2000. Many existing application software products in the
marketplace were designed only to accommodate a two-digit date position, which
represents the year (e.g., "95" is stored on the system and represents the year
1995). If the year 1999 is the maximum date value these systems are able to
accurately process, the improper identification of the year 2000 could result in
a computer system failure or miscalculations causing a disruption of operations.
The Funds' principal services providers are taking steps the Funds believe are
reasonably designed to address the year 2000 issues with respect to the computer
systems those providers operate. However, this is an ongoing process and testing
and other steps are scheduled to be completed in 1999. Nevertheless, the
inability of service providers to successfully address year 2000 issues could
result in interruptions in the Funds' business and have material adverse impact
on the Funds' operations.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual
reports audited by independent public accountants.
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.
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<PAGE> 127
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 each Equity Investment 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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AMERICAN PERFORMANCE FUNDS
EQUITY INVESTMENT FUNDS
EQUITY FUND
AGGRESSIVE GROWTH FUND
BALANCED FUND
GROWTH EQUITY FUND
INVESTMENT ADVISER
------------------
Bank of Oklahoma, N.A.
Bank of Oklahoma Tower
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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TABLE OF CONTENTS
PAGE
----
FEE TABLE ..................................................................
FINANCIAL HIGHLIGHTS........................................................
INVESTMENT OBJECTIVES.......................................................
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 EQUITY INVESTMENT FUNDS...................................
GENERAL INFORMATION.........................................................
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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 Equity
Investment Funds or the Distributor. This Prospectus does not constitute an
offering by the Equity Investment Funds or by the Distributor in any
jurisdiction in which such offering may not lawfully be made.
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<PAGE> 131
CROSS REFERENCE SHEET
---------------------
AMERICAN PERFORMANCE FUNDS
--------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
<TABLE>
<CAPTION>
Form N-1A Part B Item
- ---------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Funds; Additional
Information - Description of Shares
13. Investment Objectives Investment Objective and Policies
and Policies
14. Management of the Fund Management and Service Providers
of the Funds
15. Control Persons and Principal Additional Information - Miscellaneous
Holders of Securities
16. Investment Advisory and Management and Service Providers
of the Funds
Other Services
17. Brokerage Allocation Management of the Funds - Portfolio
and Other Practices Transactions
18. Capital Stock and Other Valuation; Additional Purchase and
Securities Redemption Information; Additional
Information
19. Purchase, Redemption and Valuation; Additional Purchase and
Pricing of Securities Redemption Information; Management
Being Offered and Service Providers of the Funds
</TABLE>
<PAGE> 132
<TABLE>
<S> <C>
20. Tax Status Investment Objective and Policies -
Additional Tax Information Concerning
All of the Funds; Investment Objective
and Policies - Additional Tax
Information Concerning the Intermediate
Tax-Free Bond Fund
21. Underwriters Management and Service Providers
of the Funds - Distributor;
Management and Service Providers
of the Funds - Distribution
22. Calculation of Performance Additional Information -
Data Calculation of Performance Data
23. Financial Statements Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
-2-
<PAGE> 133
STATEMENT OF ADDITIONAL INFORMATION
AMERICAN PERFORMANCE FUNDS
American Performance Money Market Funds
American Performance Bond Investment Funds
American Performance Equity Investment Funds
December 29 , 1998
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 Fund, and the American
Performance Equity Investment Funds, each dated December 29, 1998. This
Statement of Additional Information is incorporated in its entirety into those
Prospectuses. A copy of each Prospectus for the American Performance Funds (the
"Funds") may be obtained by writing to the Funds at 3435 Stelzer Road, Columbus,
Ohio 43219, or by telephoning toll free at (800) 762-7085.
<PAGE> 134
TABLE OF CONTENTS
-----------------
Page
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........................................3
Covered Calls...............................................4
Puts .......................................................6
Futures Contracts...........................................6
Mortgage-Related Securities.................................7
Loan Participation..........................................9
Foreign Investments.........................................9
When-Issued Securities.....................................10
Securities Lending.........................................10
Repurchase Agreements......................................10
Municipal Securities.......................................11
INVESTMENT RESTRICTIONS.............................................12
PORTFOLIO TURNOVER..................................................14
ADDITIONAL TAX INFORMATION CONCERNING ALL THE FUNDS ................14
ADDITIONAL TAX INFORMATION CONCERNING THE INTERMEDIATE
TAX-FREE BOND FUND ........................................16
VALUATION.................................................................18
THE MONEY MARKET FUNDS..............................................18
THE BOND INVESTMENT FUNDS AND THE EQUITY INVESTMENT FUNDS...........19
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................19
MANAGEMENT AND SERVICE PROVIDERS OF THE FUNDS.............................20
TRUSTEES AND OFFICERS...............................................20
INVESTMENT ADVISER AND SUB-ADVISER..................................22
DISTRIBUTION........................................................24
GLASS-STEAGALL ACT..................................................26
PORTFOLIO TRANSACTIONS..............................................27
ADMINISTRATOR.......................................................29
SUB-ADMINISTRATOR...................................................31
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<PAGE> 135
DISTRIBUTOR.........................................................31
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTANT.......................32
LEGAL COUNSEL.......................................................34
ADDITIONAL INFORMATION....................................................34
DESCRIPTION OF SHARES...............................................34
SHAREHOLDER AND TRUSTEE LIABILITY...................................35
CALCULATION OF PERFORMANCE DATA ..................................35
PERFORMANCE COMPARISONS.............................................38
MISCELLANEOUS.......................................................39
FINANCIAL STATEMENTS......................................................45
APPENDIX..................................................................46
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<PAGE> 136
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"), 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
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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).
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.
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<PAGE> 138
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 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 amortized cost rule of the Securities and Exchange
Commission ("SEC"), 17 C.F.R. Section 270.2a-7, be deemed to have shorter
maturities in accordance with such Rule.
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 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
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<PAGE> 139
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 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
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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 ("NYSE")), 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.
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.
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<PAGE> 141
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.
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
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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
maintain each Equity Investment Funds' or Bond Investment Funds' 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. The Equity
Fund, the Aggressive Growth Fund, the Growth Equity Fund and the Intermediate
Tax-Free Bond Fund will each 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
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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 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
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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
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
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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. Special U.S. tax considerations
may apply to a Fund's foreign investments.
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 33 1/3% of the value of its total 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 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
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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, as amended (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 Fund, the Intermediate Bond Fund and
the Short-Term Income Fund, 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 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
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<PAGE> 147
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 each Fund's Prospectus).
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."
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
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<PAGE> 148
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.
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.
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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. High turnover rates will generally result in higher
transaction costs to a Fund and may result in additional tax consequences
(including an increase in short-term capital gains which are generally taxed at
ordinary income tax rates) to a Fund's Shareholders.
For the fiscal year ended August 31, 1998, the portfolio turnover rates
were as follows: 47.80% for the Bond Fund; 31.98% for the Intermediate Bond
Fund; 72.10% for the Equity Fund; 19.10% for the Intermediate Tax-Free Bond
Fund; 138.15% for the Aggressive Growth Fund; and 60.02% for the Short-Term
Income Fund. The portfolio turnover rate for the Balanced Fund for the fiscal
year ended August 31, 1998, was 117.18% with respect to the common stock portion
of its portfolio and 16.56% with respect to the fixed income portion of its
portfolio. The portfolio turnover rate for the Growth Equity Fund for the period
ended August 31, 1998 was 36.08%.
For the fiscal year ended August 31, 1997, the portfolio turnover rates
were as follows: 83.65% for the Bond Fund; 40.77% for the Intermediate Bond
Fund; 93.82% for the Equity Fund; 11.38% for the Intermediate Tax-Free Bond
Fund; 76.47% for the Aggressive Growth Fund; and 37.55% for the Short-Term
Income Fund. The portfolio turnover rate for the Balanced Fund for the fiscal
year ended August 31, 1997, was 95.92% with respect to the common stock portion
of its portfolio and 15.24% 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 regulated investment company (a "RIC") under
Subchapter M 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, and (2) diversify its holdings so that at the end of
each quarter of its
B-14
<PAGE> 150
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 securities of other RICs) 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 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 90% of the sum of its taxable net
investment income, its net tax-exempt income and the excess, if any, of net
short-term capital gains over net long-term capital losses for such year. Each
Fund intends to make sufficient distributions to Shareholders to meet this
requirement.
Distributions from a Fund (other than exempt-interest dividends, as
discussed below) generally will be taxable to shareholders as ordinary income to
the extent derived from the Fund's investment income and short-term capital
gains. Distributions of long-term capital gains (generally subject to a 20% tax
rate) will be taxable to shareholders as such, regardless of how long a
shareholder has held shares of the Fund.
Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when a Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed. Such realized gains may be required to be
distributed even when a Fund's net asset value also reflects unrealized losses.
The Code imposes a non-deductible 4% 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
one-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. A dividend paid to
Shareholders by a Fund in January of a year generally is deemed to have been
paid by the Fund on December 31 of the preceding year, if the dividend was
declared and payable to Shareholders of record on a date in October, November or
December of that preceding year. If distributions during a calendar year by a
Fund did not meet the 98% threshold, that particular Fund would be subject to
this 4% excise tax on the undistributed amounts. Each Fund generally intends to
make distributions sufficient to avoid the imposition of this 4% excise tax.
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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. 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, convert long-term capital gains into short-term
capital gains, or otherwise affect the character of the Fund's income.
Consequently, the amount, timing, and character of distributions to Shareholders
could be affected. 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 or her tax return payments of 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 each Fund. Further
tax information regarding the Intermediate Tax-Free Bond Fund is included in the
next 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, including the potential application of foreign, state and local
taxes.
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
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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. Such dividends will not exceed, in the aggregate, the net
interest the Fund receives during the taxable year from Municipal Securities and
other securities exempt from the regular federal income tax. 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) 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) 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 any non-exempt person who regularly
uses a part of such facilities in his or her 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" include 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.
The Intermediate Tax-Free Bond Fund may acquire rights regarding
specified portfolio securities under puts. (See "INVESTMENT OBJECTIVE AND
POLICIES - Additional Information on Fund Instruments - Puts" above for further
information.) 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 definitive rule that 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.
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<PAGE> 153
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.
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 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.
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<PAGE> 154
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 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 INVESTMENT FUNDS
AND THE EQUITY INVESTMENT FUNDS
- -------------------------------
Except as noted below, the Bond Investment Funds and the Equity
Investment Funds will value securities for which the principal market is a
securities exchange, 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.
Securities, the principal market for which is not a securities exchange, will be
valued based on bid quotations in such principal market. Securities and other
assets for which quotations are not readily available will be valued at their
fair market value, as determined in good faith under 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
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<PAGE> 155
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 NYSE is restricted
by applicable rules and regulations of the SEC, (b) the NYSE is closed for other
than customary weekend and holiday closings, (c) the SEC has by order permitted
such suspension, or (d) an emergency exists as determined by the SEC.
The 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.)
MANAGEMENT AND SERVICE PROVIDERS 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, Address and Age With the Funds During Past 5 Years
---------------------- -------------- -------------------
<S> <C> <C>
Walter B. Grimm*, 53 Chairman, From June, 1992 to present,
3435 Stelzer Road President, employee of BISYS Fund
Columbus, OH 43219 and Trustee Services.
Alaina V. Metz*, 31 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.
</TABLE>
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<PAGE> 156
<TABLE>
<S> <C> <C>
Joel Engle, 32 Treasurer From September, 1998 to
3435 Stelzer Road present, employee of BISYS Fund
Columbus, OH 43219 Services; from March, 1995 to
September, 1998, Vice President,
The Northern Trust Company;
from September, 1988 to June
1994, Manager, Ernst & Young LLP.
Jeffrey Cusick*, 39 Vice President and From July, 1995 to present,
3435 Stelzer Road Secretary employee of BISYS Fund Services;
Columbus, OH 43219 from September 1993 to July 1995,
Assistant Vice President,
Federated Administration Services;
from 1989 to September 1993,
Client Services Manager,
Federated Administration Services.
</TABLE>
- ----------------
Messrs. Grimm, Engle and Cusick and Ms. Moore and Ms. Metz are each
considered to be an "interested person" of the Funds as defined in the 1940
Act.
<TABLE>
<CAPTION>
COMPENSATION TABLE (1)
------------------
Aggregate Compensation Pension or Retirement Estimated Annual Total Compensation from
Name of Person, from The American Benefits Accrued As Benefits Upon The American Performance
Position Performance Funds Part of Fund Expenses Retirement Funds Paid to Trustee
-------- ----------------- --------------------- ---------- ---------------------
<S> <C> <C> <C> <C>
Walter B. Grimm $0 None None $0
Michael J. Hall $6,000.00 None None $6,000.00
Perry A. Wimpey $6,000.00 None None $6,000.00
I. Edgar Hendrix $6,000.00 None None $6,000.00
1 Figures are for the Funds' fiscal year ended August 31, 1998.
</TABLE>
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<PAGE> 157
INVESTMENT ADVISER AND SUB-ADVISER
- ----------------------------------
Investment advisory services are provided to each of the Funds by Bank
of Oklahoma, N.A. ("BOK" or "Investment Adviser"), pursuant to an Investment
Advisory Agreement dated October 1, 1994 (hereinafter referred to as the
"Advisory Agreement").
Under the Advisory Agreement, the Investment Adviser has agreed to
provide to the Funds the 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 (0.40%) annually; the Equity Fund and the
Aggressive Growth Fund and the Growth Equity Fund - sixty-nine one-hundredths of
one percent (0.69%) annually; the Balanced Fund -seventy-four one-hundredths of
one percent (0.74%) 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 (0.55%) annually.
For its investment advisory services during the fiscal year ending
August 31, 1998, BOK received $1,495,245 with respect to the U.S. Treasury Fund;
$1,630,192 with respect to the Cash Management Fund ; $162,521, which is $92,870
less than the maximum amount of advisory fees, if charged, with respect to the
Bond Fund; $284,465, which is $162,552 less than the maximum amount of advisory
fees, if charged, with respect to the Intermediate Bond Fund; $974,200, which is
$370,196 less than the maximum amount of advisory fees, if charged, with respect
to the Equity Fund; $100,362, which is $57,350 less than the maximum amount of
advisory fees, if charged, with respect to the Intermediate Tax-Free Bond Fund;
$188,145, which is $81,755 less than the maximum amount of advisory fees, if
charged, with respect to the Aggressive Growth Fund; $0, which is $117,712 less
than the maximum amount of advisory fees, if charged, with respect to the
Short-Term Income Fund; and $46,817, which is $236,504 less than the maximum
amount of advisory fees, if charged, with respect to the Balanced Fund. For its
investment advisory services during the period ending August 31, 1998, BOK
received $287,102, which is $109,099 less than the maximum amount of advisory
fees if charged, with respect to the Growth Equity Fund.
For its investment advisory services during the fiscal year ending
August 31, 1997, BOK received $984,884 with respect to the U.S. Treasury Fund;
$1,476,099 with respect to the Cash Management Fund; $114,994, which is $65,711
less than the maximum amount of advisory fees, if charged, with respect to the
Bond Fund; $224,198, which is $128,113 less than the maximum amount of advisory
fees, if charged, with respect to the Intermediate Bond Fund; $604,087, which is
$229,553 less than the amount of advisory fees, if charged, with respect to the
Equity Fund; $95,309, which is $54,462 less than the amount of advisory fees, if
charged, with respect to the Intermediate Tax-Free Bond Fund; $225,838, which is
$85,818
B-22
<PAGE> 158
less than the amount of advisory fees, if charged, with respect to the
Aggressive Growth Fund; $0, which is $80,882 less than the amount of advisory
fees, if charged, with respect to the Short-Term Income Fund; and $0, which is
$196,422 less than the amount of advisory fees, if charged, with respect to the
Balanced Fund.
For its investment advisory services during the fiscal year ending
August 31, 1996, BOK received $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.
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 (0.15%) nor
more than forty one-hundredths of one percent (0.40%) of the average daily net
assets of the Cash Management Fund.
For its sub-advisory services during the fiscal year ending August 31,
1998, AMR received $954,195 with respect to the Cash Management Fund. For its
sub-advisory services during the fiscal year ending August 31, 1997, AMR
received $553,537 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, 1998, 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, 1999. 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
B-23
<PAGE> 159
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, 1999 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.
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 (0.25%) 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
B-24
<PAGE> 160
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 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
lower operating expenses, the Distributor may voluntarily reduce its fees under
the Distribution Plan. 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,
1998, the Distributor received the maximum amount receivable under the Plan with
respect to the following Funds and in the following amounts: $116,086 with
respect to the Bond Fund; $203,189 with respect to the Intermediate Bond Fund;
$487,100 with respect to the Equity Fund; and $107,572 with respect to the
Aggressive Growth Fund. Under the Distribution Plan during the fiscal year ended
August 31, 1998, the Distributor waived its entire fee with respect to the
following Funds and in the following amounts: $934,531 with respect to the U.S.
Treasury Fund; $1,018,870 with respect to the Cash Management Fund; $71,687 with
respect to the Intermediate Tax-Free Bond Fund; $95,717 with respect to the
Balanced Fund; and $53,506 with respect to the Short-Term Income Fund. Under the
Distribution Plan during the period ended August 31, 1998, the Distributor
received the maximum amount receivable under the Plan, $143,551 with respect to
the Growth Equity Fund.
B-25
<PAGE> 161
Substantially all of the amount received by the Distributor under the
Distribution Plan during the last fiscal year, the period from September 1, 1997
to August 31, 1998, was spent on compensation to dealers. BISYS retained 0.56%
and spent this amount on printing and mailing of prospectuses. The total amount
spent on compensation to dealers during the last fiscal year was $1,043,016. The
total amount retained by BISYS during the last fiscal year was $5,885.
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 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
B-26
<PAGE> 162
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.
During the fiscal year ended August 31, 1998, the Equity Fund paid
aggregate brokerage commissions in the amount of $279,771; the Aggressive Growth
Fund paid aggregate brokerage commissions in the amount of $118,045; the
Balanced Fund paid aggregate brokerage commissions in the amount of $56,206; and
the Growth Equity Fund paid aggregate brokerage commissions in the amount of
$61,297.
During the fiscal year ended August 31, 1997, the Equity Fund paid
aggregate brokerage commissions in the amount of $212,467; the Aggressive Growth
Fund paid aggregate brokerage commissions in the amount of $37,432; and the
Balanced Fund paid aggregate brokerage commissions in the amount of $26,379.
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, BOK 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, BOK directed brokerage transactions for the Aggressive Growth
Fund to brokers because of research services provided in the following amounts:
B-27
<PAGE> 163
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. BOK 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.
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 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
B-28
<PAGE> 164
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 SEC and is a member of the
National Association of Securities Dealers, Inc.
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,
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 SEC, 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 (0.20%) 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 administrative services during the fiscal year ended
August 31, 1998, BISYS received $747,624 with respect to the U.S. Treasury Fund;
$815,098 with respect to the Cash Management Fund; $92,870 with respect to the
Bond Fund; $162,552 with respect to the Intermediate Bond Fund; $57,350 with
respect to the Intermediate Tax-Free Bond Fund; $389,681 with respect to the
Equity Fund; $86,058 with respect to the Aggressive Growth Fund; $42,805 with
respect to the Short-Term Income Fund; and $76,574 with respect to the Balanced
Fund. For management and administrative services during the period ended August
31, 1998, BISYS received $114,841 with respect to the Growth Equity Fund.
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<PAGE> 165
For management and administrative services during the fiscal year ended
August 31, 1997, BISYS received $492,442 with respect to the U.S. Treasury Fund;
$738,049 with respect to the Cash Management Fund; $65,711 with respect to the
Bond Fund; $128,113 with respect to the Intermediate Bond Fund; $54,462 with
respect to the Intermediate Tax-Free Bond Fund; $241,635 with respect to the
Equity Fund; $90,335 with respect to the Aggressive Growth Fund; $29,412 with
respect to the Short-Term Income Fund; and $53,087 with respect to the Balanced
Fund. As of August 31, 1997, the Growth Equity Fund had not commenced
operations.
For management and administration services during the fiscal year ended
August 31, 1996, BISYS received $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.
Unless sooner terminated, the Administration Agreement will continue in
effect until December 31, 1999 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.
B-30
<PAGE> 166
SUB-ADMINISTRATOR
- -----------------
Effective May 12, 1995, BOK became the Sub-Administrator to the Funds
pursuant to an agreement between the Administrator and BOK. Pursuant to this
agreement, BOK 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 (0.05%) of each Fund's average net assets.
For Sub-Administration services during the fiscal year ended August 31,
1998, BOK received fees in the following amounts from the Administrator:
$373,811 with respect to the U.S. Treasury Fund; $407,548 with respect to the
Cash Management Fund; $63,848 with respect to the Bond Fund; $111,754 with
respect to the Intermediate Bond Fund; $39,428 with respect to the Intermediate
Tax-Free Bond Fund; $29,428 with respect to the Short-Term Income Fund; $70,830
with respect to the Balanced Fund; $336,099 with respect to the Equity Fund; and
$74,225 with respect to the Aggressive Growth Fund. For Sub-Administration
services during the period ended August 31, 1998, BOK received fees of $99,050
from the Administrator with respect to the Growth Equity Fund.
For Sub-Administration services during the fiscal year ended August 31,
1997, BOK received fees in the following amounts from the Administrator:
$123,111 with respect to the U.S. Treasury Fund; $184,512 with respect to the
Cash Management Fund; $16,428 with respect to the Bond Fund; $32,028 with
respect to the Intermediate Bond Fund; $13,616 with respect to the Intermediate
Tax-Free Bond Fund; $7,353 with respect to the Short-Term Income Fund; $13,272
with respect to the Balanced Fund; $60,409 with respect to the Equity Fund; and
$22,584 with respect to the Aggressive Growth Fund. As of August 31, 1997, the
Growth Equity Fund had not commenced operations.
For Sub-Administration services during the fiscal year ended August 31,
1996, BOK 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.
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, 1999 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'
B-31
<PAGE> 167
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 BOK as
custodian. Under the Custodian Agreement 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.
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 (0.03%) 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.
For custodian services during the fiscal year ended August 31, 1998,
BOK received $112,143 with respect to the U.S. Treasury Fund; $122,264 with
respect to the Cash Management Fund; $13,930 with respect to the Bond Fund;
$24,383 with respect to the Intermediate Bond Fund; $58,452 with respect to the
Equity Fund; $9,074 with respect to the Intermediate Tax-Free Bond Fund; and
$12,909 with respect to the Aggressive Growth Fund. For custodian services
during the fiscal year ended August 31, 1998, BOK received $4,306, which is
$2,115 less than the maximum amount of custody fees, if charged, with respect to
the Short-Term Income Fund and $8,262, which is $3,224 less than the maximum
amount of custody fees, if charged, with respect to the Balanced Fund. For
custodian services during the period ended August 31, 1998, BOK received $17,226
with respect to the Growth Equity Fund.
B-32
<PAGE> 168
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 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
(0.03%) 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 (0.04%) 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, 1998, BISYS Fund Services Ohio, Inc. received $164,113 with
respect to the
B-33
<PAGE> 169
U.S. Treasury Fund; $179,164 with respect to the Cash Management Fund; $39,980
with respect to the Bond Fund; $70,267 with respect to the Intermediate Bond
Fund; $105,495 with respect to the Equity Fund; $31,831 with respect to the
Intermediate Tax-Free Bond Fund; $37,825 with respect to Aggressive Growth Fund;
$31,564 with respect to the Short-Term Income Fund; and $33,070 with respect to
the Balanced Fund. For transfer agency and Fund accounting services during the
period ended August 31, 1998, BISYS Fund Services Ohio, Inc. received $32,198
with respect to the Growth Equity Fund.
AUDITORS
- --------
KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, Ohio, 43215,
serves as independent public accountants for the Funds.
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 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 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.
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.
B-34
<PAGE> 170
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 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 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, 1998 (the "base
period"), the yield of the Cash Management Fund was 4.98% and the Fund's
effective yield was 5.10%. Based on the same base period, the yield of the U.S.
Treasury Fund was 4.87% and the Fund's effective yield was 4.99%. Each Money
Market Fund's seven-day yield is computed
B-35
<PAGE> 171
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, 1998 ("30-day base
period"), the 30-day yields of the Bond Investment Funds were as follows: the
Bond Fund, 5.75% (without load) and 5.52% (with load); the Intermediate Bond
Fund, 5.45% (without load) and 5.29% (with load); and the Intermediate Tax-Free
Bond Fund, 3.25% (without load) and 3.16% (with load); the Short-Term Income
Fund, 5.99% (without load) and 5.87% (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)to the sixth power -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 return of each Bond Investment and Equity
Investment Fund is determined by calculating the change in the value of a
hypothetical $1,000 investment in the Fund for each of the periods shown.
Average annual total return for each Fund was computed by determining the
average annual compounded rate of return over the applicable period that would
equate the initial amount invested to the ending redeemable value of the
investment. The ending redeemable value includes dividends and capital gain
distributions reinvested at net asset value. The resulting percentages indicated
the positive or negative investment results that an investor would have
experienced from changes in Share price and reinvestment of dividends and
capital gains distributions. The total return data above are calculated assuming
the imposition of the maximum sales charge for each respective Fund.
The average annual total returns for the one-year period ended August
31, 1998 for the Bond Investment Funds, assuming the imposition of a sales load,
were as follows: the
B-36
<PAGE> 172
Bond Fund, 7.04%; the Intermediate Bond Fund, 5.50%; the Intermediate Tax-Free
Bond Fund, 4.09%; and the Short-Term Income Fund, 6.33%. The average annual
total returns for the one-year period ended August 31, 1998 for the Equity
Investment Funds, assuming the imposition of a sales load, were as follows: the
Equity Fund, -4.24%; the Aggressive Growth Fund, -34.29%; the Balanced Fund,
- -0.64%; and the Growth Equity Fund, 8.99%.(1)
The average annual total returns, for Shareholders who are not subject
to a sales charge, for the one-year period ended August 31, 1998 were as
follows: the Equity Fund 0.79%, the Aggressive Growth -30.85%, the Bond Fund
11.54%, the Intermediate Bond Fund 8.80%, the Intermediate Tax-Free Bond Fund
7.28%, the Short-Term Income Fund 8.47%, the Balanced Fund 4.55%, and the Growth
Equity Fund 14.76%.(1)
The average annual total returns for the five-year period ended August
31, 1998 were: 6.02% (without sales charge) and 5.16% (as adjusted for maximum
sales charge) for the Bond Fund; 5.19% (without sales charge) and 4.55% (as
adjusted for maximum sales charge) for the Intermediate Bond Fund; 15.99%
(without sales charge) and 14.81% (as adjusted for maximum sales charge) for the
Equity Fund; 5.40% (without sales charge) and 4.77% (as adjusted for maximum
sales charge) for the Intermediate Tax-Free Bond Fund; and 2.15% (without sales
charge) and 1.11% (as adjusted for maximum sales charge) for the Aggressive
Growth Fund.
The average annual total returns for the following Funds are:
Short-Term Income Fund from commencement of operations (October 19, 1994) to
August 31, 1998 was 6.66% (without sales charge) and 6.11% (as adjusted for
maximum sales charge); and Balanced Fund from commencement of operations (June
1, 1995) to August 31, 1998 was 14.81% (without sales charge) and 13.00% (as
adjusted for maximum sales charge).
The average annual total returns for the following Funds are: Bond Fund
from commencement of operations (September 28, 1990) to August 31, 1998, 8.50%
(without sales charge) and 7.94% (as adjusted for maximum sales charge);
Intermediate Bond Fund from commencement of operations (September 28, 1990) to
August 31, 1998, 7.39% (without sales charge) and 6.97% (as adjusted for maximum
sales charge); Intermediate Tax-Free Bond Fund from commencement of operations
(May 29, 1992) to August 31, 1998, 6.66% (without sales charge) and 6.14% (as
adjusted for maximum sales charge), Equity Fund from commencement of operations
(September 28, 1990) to August 31, 1998.
- ----------------------
1 The performance data for the Growth Equity Fund includes the
performance history of its predecessor fund, a common trust fund, for the period
before the Growth Equity Fund commenced operations on November 1, 1997. The
predecessor fund was not registered under the 1940 Act and therefore was not
subject to certain investment restrictions, limitations and diversification
requirements imposed by the 1940 Act and the Code. If the predecessor fund had
been subject to such requirements under the 1940 Act and the Code its
performance may have been adversely affected.
B-37
<PAGE> 173
14.34% (without sales charge) and 13.59% (as adjusted for maximum sales charge);
Aggressive Growth Fund from commencement of operations (February 3, 1992) to
August 31, 1998, 4.49% (without sales charge) and 3.67% (as adjusted for maximum
sales charge), and Growth Equity Fund from commencement of operations (June 10,
1994) to August 31, 1998, 24.14% (without sales charge) and 22.63% (as adjusted
for maximum sales charge).1
Performance will fluctuate from time to time and is not necessarily
representative of future results. Accordingly, a Fund's performance may not
provide for comparison with bank deposits or other investments that pay a fixed
return for a stated period of time. Performance is a function of a Fund's
quality, composition, and maturity, as well as expenses allocated to the Fund.
Fees imposed upon Customer accounts by Participating Organizations will reduce a
Fund's effective yield to customers.
PERFORMANCE COMPARISONS
- -----------------------
Investors may judge the performance of the Funds by comparing their
performance 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 the Morgan Stanley Capital International EAFE Index
and those prepared by Dow Jones & Co., Inc., Standard & Poor's Corporation,
Shearson Lehman Brothers, Inc. and The Russell 2000 Index and to data prepared
by Lipper Analytical Services, Inc., a widely recognized independent service
which monitors the performance of mutual funds, Morningstar, Inc. and the
Consumer Price Index. Comparisons may also be made to indices or data published
in Donoghue's MONEY FUND REPORT of Holliston, Massachusetts 01746, a nationally
recognized money market fund reporting service, Money Magazine, Forbes, Fortune,
Ibbotson Associates, Inc., CDA/Wiesenberger, American Banker, Institutional
Investor, Barron's, The Wall Street Journal, The Bond Buyer's Weekly 20-Bond
Index, The Bond Buyer's Index, The Bond Buyer, The New York Times, Business
Week, Pensions and Investments, U.S.A. Today and local newspapers. In addition
to performance information, general information about these Funds that appears
in a publication such as those mentioned above may be included in advertisements
and in reports to Shareholders.
From time to time, the Funds may include the following types of
information in advertisements, supplemental sales literature and reports to
Shareholders: (1) discussions of general economic or financial principles (such
as the effects of inflation, the power of compounding and the benefits of
dollar-cost averaging); (2) discussions of general economic trends; (3)
presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for one or more of the
Funds within the Trust; (5) descriptions of investment strategies for one or
more of such Funds; (6) descriptions or comparisons of various savings and
investment products (including but not limited to insured bank products,
annuities, qualified retirement plans and individual stocks and bonds) which may
or may not include the Funds; (7) comparisons of investment products (including
the Funds) with relevant market or industry indices or other appropriate
benchmarks; (8) discussions of fund rankings or ratings by recognized rating
organizations; and (9) testimonials
B-38
<PAGE> 174
describing the experience of persons that have invested in one or more of the
Funds. In addition, with respect to the Intermediate Tax-Free Bond Fund, the
benefits of tax-free investments may be communicated to shareholders. For
example, the Intermediate Tax-Free Bond Fund may present information on the
yield that a taxable investment must earn at various income brackets to produce
after-tax yields equivalent to those of the tax-exempt investments.
The Funds may also include calculations, such as hypothetical
compounding examples, which describe hypothetical investment results in such
communications. Such performance examples will be based on an express set of
assumptions and are not indicative of the performance of any of the Funds.
Morningstar, Inc., Chicago, Illinois, rates mutual funds on a one- to
five-star rating scale with five stars representing the highest rating. Such
ratings are based upon a fund's historical risk/reward ratio as determined by
Morningstar relative to other funds in that fund's class. Funds are divided into
classes based upon their respective investment objectives. The one- to five-star
ratings represent the following ratings by Morningstar, respectively:
Lowest, Below Average, Neutral, Above Average and Highest.
Current yields or performance will fluctuate from time to time and are
not necessarily representative of future results. Accordingly, a Fund's yield or
performance may not provide for comparison with bank deposits or other
investments that pay a fixed return for a stated period of time. Yield and
performance are functions of a Fund's quality, composition, and maturity, as
well as expenses allocated to the Fund.
Fees imposed on its affiliated or correspondent banks for cash
management services will reduce a Fund's effective yield to Customers.
MISCELLANEOUS
- -------------
The Funds are not required to hold a meeting of Shareholders for the
purpose of electing Trustees except that (i) the Funds are required to hold a
Shareholders' meeting for the election of Trustees at such time as less than a
majority of the Trustees holding office have been elected by Shareholders and
(ii) if, as a result of a vacancy on the Board of Trustees, less than two-thirds
of the Trustees holding office have been elected by the Shareholders, that
vacancy may only be filled by a vote of the Shareholders. In addition, Trustees
may be removed from office by a written consent signed by the holders of Shares
representing two-thirds of the outstanding Shares of the Funds at a meeting duly
called for the purpose, which meeting shall be held upon the written request of
the holders of Shares representing not less than 10% of the outstanding Shares
of the Funds. Upon written request by the holders of Shares representing 1% of
the outstanding Shares of the Funds stating that such Shareholders wish to
communicate with the other Shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Funds will provide a list of Shareholders or disseminate appropriate materials
(at the expense of the requesting Shareholders). Except as set forth above, the
Trustees may continue to hold office and may appoint successor Trustees.
B-39
<PAGE> 175
The Funds are registered with the SEC as a management investment
company. Such registration does not involve supervision by the Commission of the
management or policies of the Funds.
The Prospectuses and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the SEC. Copies of such information may be obtained from the Commission upon
payment of the prescribed fee.
The Prospectuses and this Statement of Additional Information are not
an offering of the securities herein described in any state in which such
offering may not lawfully be made. No salesman, dealer, or other person is
authorized to give any information or make any representation other than those
contained in the Prospectus and Statement of Additional Information.
As of October 15, 1998, Bank of Oklahoma, N.A. (Bank of Oklahoma Tower,
One Williams Center, Tulsa, Oklahoma 74103) and its bank affiliates were the
Shareholder of record of 99.61% of the U.S. Treasury Fund's Shares, 99.92% of
the Cash Management Fund's Shares, 98.41% of the Equity Fund's Shares, 92.67% of
the Aggressive Growth Fund's Shares, 99.55% of the Balanced Fund's Shares, 99%
of the Bond Fund's Shares, 97.44% of the Intermediate Bond Fund's Shares, 100%
of the Short-Term Income Fund's Shares, 85.46% of the Intermediate Tax-Free Bond
Fund's Shares and 97.27% of the Growth Equity Fund's Shares. As of October __,
1998 Bank of Oklahoma, N.A. and its bank affiliates possessed, on behalf of its
underlying accounts, voting and investment power with respect to [____%] of the
U.S. Treasury Fund's Shares, [ %] of the Cash Management Fund's Shares, [ %] of
the Equity Fund's Shares, [ %] of the Aggressive Growth Fund's Shares, [ %] of
the Balanced Fund's Shares, [ %] of the Bond Fund's Shares, [ %] of the
Intermediate Bond Fund's Shares, [ %] of the Short-Term Income Fund's Shares, [
%] of the Intermediate Tax-Free Bond Fund's Shares and [ %] of the Growth Equity
Fund's Shares, and, as a consequence, Bank of Oklahoma, N.A. and its bank
affiliates may be deemed to be a controlling person of each Fund under the 1940
Act.
As of October 15, 1998, the trustees and officers of the Funds, as a
group, owned less than one percent of the Shares of each of the Funds.
B-40
<PAGE> 176
The following table indicates each additional person known by the Funds
to own beneficially five percent (5%) or more of the Shares of the Funds as of
October 15, 1998:
<TABLE>
<CAPTION>
Amount of Beneficial Percent
Name and Address Ownership (Shares) of Fund
- ---------------- ------------------ -------
<S> <C> <C>
Cash Management Fund
--------------------
NABANK and Co. 99.92%
CASH
P.O. Box 2300
Tulsa, OK 74192
U.S. Treasury Fund
------------------
NABANK and Co. 99.61%
CASH
P.O. Box 2300
Tulsa, OK 74192
Intermediate Tax-Free Bond Fund
-------------------------------
NABANK and Co. 5.43%
Trust Accounting
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 80.03%
Income CAS/CG
Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
</TABLE>
B-41
<PAGE> 177
<TABLE>
<S> <C> <C>
Equity Fund
-----------
NABANK and Co. 47.91%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 50.50%
Income Cash/CG
Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
Bond Fund
---------
NABANK and Co. 52.04%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 49.96%
Income Cash/CG
Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
Intermediate Bond Fund
----------------------
NABANK and Co. 33.79%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 63.65%
Income
Cash/CG/Reinvest
P.O. Box 2300
Tulsa, OK 74192
</TABLE>
B-42
<PAGE> 178
<TABLE>
<S> <C> <C>
Aggressive Growth Fund
----------------------
NABANK and Co. 56.41%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 36.26%
Income
Cash/CG/Reinvest
P.O. Box 2300
Tulsa, OK 74192
HC Limited Partnership 5.11%
1300 Belmont No. 209
Chicago, IL 60657
Short Term Income Fund
----------------------
NABANK and Co. 41.21%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 58.88%
Income
Cash/CG/Reinvest
P.O. Box 2300
Tulsa, OK 74192
Balanced Fund
-------------
NABANK and Co. 99.55%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
</TABLE>
B-43
<PAGE> 179
<TABLE>
<S> <C> <C>
Growth Equity Fund
------------------
NABANK and Co. 73.99%
Income
Cash/CG/Reinvest
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 23.28%
All Reinvest
P.O. Box 2300
Tulsa, OK 74192
</TABLE>
B-44
<PAGE> 180
FINANCIAL STATEMENTS
The Independent Auditors' Report for the American Performance Funds for
the year ended August 31, 1998 and Financial Statements for the American
Performance Funds for the five year period ended August 31, 1998, appearing in
the Annual Report, are incorporated by reference in the Statement of Additional
Information. A copy of the Annual Report dated as of August 31, 1998 and the
Semi-Annual Report dated as of February 28, 1998 may be obtained without charge
by contacting the Distributor, BISYS Fund Services at 3435 Stelzer Road,
Columbus, Ohio 43219 or by telephoning toll-free at 1-800-762-7085.
B-45
<PAGE> 181
APPENDIX
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by the Funds with regard to
portfolio investments for the Funds include Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Corporation ("S&P"), Duff & Phelps, Inc.
("Duff"), Fitch IBCA, and Thomson BankWatch, Inc. ("Thomson"). Set forth below
is a description of the relevant ratings of each such NRSRO. The NRSROs that may
be utilized by the Funds and the description of each NRSRO's ratings is as of
the date of this Statement of Additional Information, and may subsequently
change.
LONG-TERM DEBT RATINGS (may be assigned, for example, to corporate and municipal
bonds)
Description of the five highest long-term debt ratings by Moody's (Moody's
applies numerical modifiers (1, 2, and 3) in each rating category to indicate
the security's ranking within the category):
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of
such issues.
Aa Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be
as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat
larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment some time in the
future.
Baa Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor
poorly secured). Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded
B-46
<PAGE> 182
during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
Description of the five highest long-term debt ratings by S&P (S&P may apply a
plus (+) or minus (-) to a particular rating classification to show relative
standing within that classification):
AAA An obligation rated AAA has the highest rating assigned by
S&P. The obligor's capacity to meet its financial commitment
on the obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated
obligations only in small degree. The obligor's capacity to
meet its financial commitment on the obligation is very
strong.
A An obligation rated A is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher-rated categories.
However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity
of the obligor to meet its financial commitment on the
obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having
significant speculative characteristics . BB indicates the
least degree of speculation and C the highest. While such
obligations will likely have some quality and protective
characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
BB An obligation rated BB is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the
obligation.
Description of the three highest long-term debt ratings by Duff:
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong.
AA Risk is modest but may vary slightly from time to
B-47
<PAGE> 183
AA- time because of economic conditions.
A+ Protection factors are average but adequate. However,
A risk factors are more variable and greater in periods
A- of economic stress.
Description of the three highest long-term debt ratings by Fitch IBCA (plus or
minus signs are used with a rating symbol to indicate the relative position of
the credit within the rating category):
AAA Obligations which have the highest rating assigned by Fitch
IBCA. Capacity for timely repayment principal and interest is
extremely strong relative to other obligors in the same
country.
AA Obligations for which capacity for timely repayment of
principal and interest is very strong relative to other
obligors in the same country. The risk attached to these
obligations differs only slightly from the country's highest
rated debt.
A Obligations for which capacity for timely repayment of
principal and interest is strong relative to other obligors in
the same country. However, adverse changes in business,
economic or financial conditions are more likely to affect the
capacity for timely repayment than for obligations in higher
rated categories.
SHORT-TERM DEBT RATINGS (may be assigned, for example, to commercial paper,
master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have
a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often
be evidenced by many of the following characteristics:
-Leading market positions in
well-established industries.
-High rates of return on funds employed.
-Conservative capitalization structures with
moderate reliance on debt and ample asset
protection.
-Broad margins in earnings coverage of fixed
financial charges and high internal cash
generation.
B-48
<PAGE> 184
-Well-established access to a range of
financial markets and assured sources of
alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have
a strong ability for repayment of senior short-term
debt obligations. This will normally be evidenced by
many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while
sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate
liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have
an acceptable ability for repayment of senior
short-term obligations. The effect of industry
characteristics and market compositions may be more
pronounced. Variability in earnings and profitability
may result in changes in the level of debt protection
measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1 A short-term obligation rated A-1 is rated in the highest
category by S&P. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category,
certain obligations are designated with a plus sign (+). This
indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible
to the adverse effects of changes in circumstances and
economic conditions than obligations in higher rating
categories. However, the obligor's capacity to meet its
financial commitment on the obligation is satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity
of the obligor to meet its financial commitment on the
obligation.
Duff's description of its three highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is
just below risk-free U.S. Treasury short-term obligations.
B-49
<PAGE> 185
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection
factors. Risk factors are minor.
D-1- High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
D-2 Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs
may enlarge total financing requirements, access to capital
markets is good. Risk factors are small.
D-3 Satisfactory liquidity and other protection factors qualify
issues as to investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is
expected.
Fitch IBCA's description of its three highest short-term debt ratings:
Fl Obligations assigned this rating have the highest capacity for
timely repayment under Fitch IBCA's national rating scale for
that country, relative to other obligations in the same
country. Where issues possess a particularly strong credit
feature, a "+" is added to the assigned rating.
F2 Obligations supported by a strong capacity for timely
repayment relative to other obligors in the same country.
However, the relative degree of risk is slightly higher than
for issues classified as 'Al' and capacity for timely
repayment may be susceptible to adverse changes in business,
economic, or financial conditions.
F3 Obligations supported by an adequate capacity for timely
repayment relative to other obligors in the same country. Such
capacity is more susceptible to adverse changes in business,
economic, or financial conditions than for obligations in
higher categories.
Short-Term Loan/Municipal Note Ratings
- --------------------------------------
Moody's description of its two highest short-term loan/municipal note ratings:
MIG-1/VMIG-1 This designation denotes best quality. There is present
strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to
the market for refinancing.
MIG-2/VMIG-2 This designation denotes high quality. Margins of
protection are ample although not so large as in the
preceding group.
B-50
<PAGE> 186
Short-Term Debt Ratings
- -----------------------
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative and
quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.
BankWatchJ Ratings do not constitute a recommendation to buy or sell securities
of any of these companies. Further, BankWatch does not suggest specific
investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior short-term
obligations and deposit obligations of the entities to which the rating has been
assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that have a
maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an untimely
payment of principal or interest.
TBW-1 The highest category; indicates a very high likelihood
that principal and interest will be paid on a timely
basis.
TBW-2 The second highest category; while the degree of safety
regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as
for issues rated "TBW-1".
TBW-3 The lowest investment-grade category; indicates that
while the obligation is more susceptible to adverse
developments (both internal and external) than those
with higher ratings, capacity to service principal and
interest in a timely fashion is considered adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
B-51
<PAGE> 187
REGISTRATION STATEMENT
OF
AMERICAN PERFORMANCE FUNDS
ON
FORM N-LA
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Included in Part A:
- Financial Highlights.
Included in Part B:
The following financial statements have been incorporated into the
Statement of Additional Information by reference to American
Performance Funds' Annual Report to Shareholders, dated
August 31, 1998:
- Independent Auditors' Report dated October 9, 1998.
- Statements of Assets and Liabilities as of August 31, 1998
(audited).
- Statements of Operations for the fiscal year ended August 31,
1998 (audited).
- Statements of Changes in Net Assets for the years ended August
31, 1998 and 1997 (audited).
- Schedules of Portfolio Investments at August 31, 1998
(audited).
- Notes to Financial Statements dated August 31, 1998 (audited).
- Financial Highlights for each of the periods or years ended
August 31, 1994, August 31, 1995, August 31, 1996, August 31,
1997, and August 31, 1998 (audited).
C-1
<PAGE> 188
(b) Exhibits:
(1) Agreement and Declaration of Trust dated October 1, 1987,
as amended and restated on August 20, 1990 is incorporated
by reference to Exhibit 1 to Post-Effective Amendment No.
1 to the Funds' Registration Statement (filed October 31,
1990).
(2)(a) Bylaws as approved and adopted by Registrant's Board of
Trustees is incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 1 to the Funds' Registration
Statement (filed October 31, 1990).
(2)(b) Certified Resolution of the Registrant's Board of Trustees
amending the Registrant's Bylaws as adopted by a unanimous
vote at a meeting of the Board of Trustees on October 25,
1991 is incorporated by reference to Exhibit 2(b) to
Post-Effective Amendment No. 3 to the Funds' Registration
Statement (filed November 26, 1991).
(3) None.
(4)(a) Article III, Section 4 and 5, Article V, Article VIII,
Section 4, and Article IX, Sections 1, 4, 5 and 7 of the
Agreement and Declaration of Trust dated October 1, 1987,
as amended and restated on August 20, 1990 is incorporated
by reference to Exhibit 1 to Post-Effective Amendment No.
1 to the Funds' Registration Statement (filed October 31,
1990).
(4)(b) Article 9, Article 10, Section 6 and Article 11 of the
Bylaws as approved and adopted by Registrant's Board of
Trustees is incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 1 to the Funds' Registration
Statement (filed October 31, 1990).
(4)(c) Certified Resolution of the Registrant's Board of Trustees
amending the Registrant's Bylaws as adopted by a unanimous
vote at a meeting of the Board of Trustees on October 25,
1991 is incorporated by reference to Exhibit 2(b) to
Post-Effective Amendment No. 3 to the Funds' Registration
Statement (filed November 26, 1991).
(5)(a) Investment Advisory Agreement between Registrant and Bank
of Oklahoma, N.A. (formerly BancOklahoma Trust Company)
dated
C-2
<PAGE> 189
October 1, 1994 is incorporated by reference to Exhibit
(5)(a) to Post- Effective Amendment No. 11 to the Funds'
Registration Statement (filed February 13, 1995).
(5)(b) Sub-Investment Advisory Agreement between Bank of
Oklahoma, N.A. and AMR Investment Services, Inc. dated
June 16, 1997 is incorporated by reference to Exhibit 5(b)
to Post-Effective Amendment No. 16 to the Funds'
Registration Statement (filed December 17, 1997).
(5)(c) Amended Schedule A to the Investment Advisory Agreement
between Registrant and Bank of Oklahoma, N.A. (formerly
BancOklahoma Trust Company) dated October 1, 1994 is
incorporated by reference to Exhibit 5(d) to
Post-Effective Amendment No. 16 to the Funds' Registration
Statement (filed December 17, 1997).
(6)(a) Distribution Agreement between Registrant and BISYS Fund
Services, LP (formerly, The Winsbury Company Limited
Partnership) is incorporated by reference to Exhibit 6(a)
to Post-Effective Amendment No. 6 to the Funds'
Registration Statement (filed December 7, 1993).
(6)(b) Amended Schedules A and B to Distribution Agreement
between Registrant and BISYS Fund Services, LP (formerly,
The Winsbury Company Limited Partnership) dated October 1,
1993 are incorporated by reference to Exhibit 6(c) to
Post-Effective Amendment No. 16 to the Funds' Registration
Statement (filed December 17, 1997).
(7) None.
(8)(a) Custodian Agreement between Registrant and Bank of
Oklahoma, N.A. is incorporated by reference to Exhibit
8(a) to Post-Effective Amendment No. 1 to the Funds'
Registration Statement (filed October 31, 1990).
(8)(b) Amended Schedule A to Custodian Agreement between
Registrant and Bank of Oklahoma, N.A. is incorporated by
reference to Exhibit 8(c) to Post-Effective Amendment No.
16 to the Funds' Registration Statement (filed December
17, 1997).
(9)(a) Management and Administration Agreement between Registrant
and BISYS Fund Services, LP (formerly The Winsbury Company
Limited
C-3
<PAGE> 190
Partnership) dated September 5, 1990, as amended and
restated on May 12, 1995, is incorporated by reference to
Exhibit 9(a) to Post-Effective Amendment No. 13 to the
Funds' Registration Statement (filed October 31, 1995).
(9)(b) Amended Schedule A to the Management and Administration
Agreement between Registrant and BISYS Fund Services, LP
(formerly The Winsbury Company Limited Partnership) dated
September 5, 1990, as amended and restated on May 12, 1995
is incorporated by reference to Exhibit 9(b) to
Post-Effective Amendment No. 16 to the Funds' Registration
Statement (filed December 17, 1997).
(9)(c) Transfer Agency and Shareholder Service Agreement between
Registrant and BISYS Fund Services Ohio, Inc. (formerly,
The Winsbury Service Corporation) is incorporated by
reference to Exhibit 9(b) to Post-Effective Amendment No.
1 to the Funds' Registration Statement (filed October 31,
1990).
(9)(d) Fund Accounting Agreement between Registrant and BISYS
Fund Services Ohio, Inc. (formerly, The Winsbury Service
Corporation) dated September 5, 1990, as amended and
restated May 12, 1995, is incorporated by reference to
Exhibit 9(d) to Post-Effective Amendment No. 15 to the
Funds' Registration Statement (filed June 24, 1997).
(9)(e) Sub-Administration Agreement between BISYS Fund Services,
Limited Partnership and Bank of Oklahoma, N.A. dated July
25, 1997 is incorporated by reference to Exhibit 9(f) to
Post-Effective Amendment No. 16 to the Funds' Registration
Statement (filed December 17, 1997).
(9)(f) Amended Schedule A to Transfer Agency and Shareholder
Service Agreement between Registrant and BISYS Fund
Services Ohio, Inc. (formerly The Winsbury Service
Corporation) dated September 5, 1990 is incorporated by
reference to Exhibit 9(g) to Post-Effective Amendment No.
16 to the Funds' Registration Statement (filed December
17, 1997).
C-4
<PAGE> 191
(9)(g) Amended Schedule A to Fund Accounting Agreement between
Registrant and BISYS Fund Services Ohio, Inc. (formerly,
The Winsbury Service Corporation) dated September 5, 1990,
as amended and restated May 12, 1995 is incorporated by
reference to Exhibit 9(h) to Post-Effective Amendment No.
16 to the Funds' Registration Statement (filed December
17, 1997).
(9)(h) Amended Schedule A to Sub-Administration Agreement between
BISYS Fund Services, LP (formerly, The Winsbury Company
Limited Partnership) and Bank of Oklahoma, N.A. (formerly,
BancOklahoma Trust Company) dated May 12, 1995 is
incorporated by reference to Exhibit 9(i) to
Post-Effective Amendment No. 16 to the Funds' Registration
Statement (filed December 17, 1997).
(10) Opinion of Ropes & Gray is filed herewith.
(11)(a) Consent of KPMG Peat Marwick LLP is filed herewith.
(11)(b) Consent of Ropes & Gray is filed herewith.
(12) None.
(13) Purchase Agreement dated August 3, 1990 between Registrant
and Winsbury Associates is incorporated by reference to
Exhibit 13 to Post- Effective Amendment No. 1 to the
Funds' Registration Statement (filed October 31, 1990).
(14) None.
(15)(a) Amended and Restated Distribution and Shareholder Services
Plan dated October 1, 1993 is incorporated by reference to
Exhibit 15(a) to Post-Effective Amendment No. 7 to the
Funds' Registration Statement
(filed December 16, 1993).
(15)(b) Servicing Agreement with Respect to Shareholder Services
to be utilized in connection with Distribution and
Shareholder Services Plan is incorporated by reference to
Exhibit 15(b) to Pre-Effective Amendment No. 1 to the
Funds' Registration Statement (filed August 29, 1990).
C-5
<PAGE> 192
(15)(c) Servicing Agreement with Respect to Distribution
Assistance and Shareholder Services to be utilized in
connection with Distribution and Shareholder Services Plan
is incorporated by reference to Exhibit 15(c) to
Pre-Effective Amendment No. 1 to the Funds' Registration
Statement (filed August 29, 1990).
(15)(d) Amended Schedule A to Amended and Restated Distribution
and Shareholder Services Plan dated October 1, 1993 is
incorporated by reference to Exhibit 15(e) to
Post-Effective Amendment No. 16 to the Funds' Registration
Statement (filed December 17, 1997).
(16)(a) Performance Calculations Schedules for every Fund (except
the Short- Term Income Fund, Balanced Fund and Growth
Equity Fund) are incorporated by reference to Exhibit 16
to Post-Effective Amendment No. 6 to the Funds'
Registration Statement (filed December 7, 1993).
(16)(b) Performance Calculations Schedules for the Short-Term
Income Fund and the Balanced Fund are incorporated by
reference to Exhibit 16(b) to Post-Effective Amendment No.
13 to the Funds' Registration Statement (filed October
31, 1995).
(16)(c) Performance Calculations Schedules for the Growth Equity
Fund are incorporated by reference to Exhibit 16(c) to
Post-Effective Amendment No. 17 to the Funds' Registration
Statement (filed April 30, 1998).
(17) Financial Data Schedules, as follow, are filed herewith:
(a) Cash Management Fund
(b) U.S. Treasury Fund
(c) Bond Fund
(d) Intermediate Bond Fund
(e) Equity Fund
(f) Aggressive Growth Fund
(g) Intermediate Tax-Free Bond Fund
(h) Short-Term Income Fund
(i) Balanced Fund
(j) Growth Equity Fund
C-6
<PAGE> 193
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
There are no persons controlled or under common control with the
Registrant.
Item 26. Number of Holders of Securities
-------------------------------
As of October 1, 1998 the number of record holders of each series of
the Funds were as follows:
Title of Series Number of Record Holders
--------------- ------------------------
U.S. Treasury Fund 11
Cash Management Fund 32
Equity Fund 70
Aggressive Growth Fund 89
Bond Fund 15
Intermediate Bond Fund 59
Intermediate Tax-Free 102
Bond Fund
Short-Term Income Fund 10
Balanced Fund 10
Growth Equity Fund 21
Item 27. Indemnification
---------------
Article VIII of Registrant's Agreement and Declaration of
Trust, filed or incorporated by reference as Exhibit (1)
hereto, provides for the indemnification of Registrant's
trustees and officers. Indemnification of Registrant's
principal underwriter is provided for in the Agreement between
Registrant and that service provider as filed or incorporated
by reference as Exhibits hereto. As of the effective date of
this Registration Statement,
C-7
<PAGE> 194
Registrant has obtained from a major insurance carrier a
trustees and officers' liability policy covering certain types
of errors and omissions. In no event will Registrant indemnify
any of its trustees, officers, employees, or agents against
any liability to which such person would otherwise be subject
by reason of his willful misfeasance, bad faith, or gross
negligence in the performance of his duties, or by reason of
his reckless disregard of the duties involved in the conduct
of his office or under his agreement with Registrant.
Registrant will comply with Rule 484 under the Securities Act
of 1933 and Release 11330 under the Investment Company Act of
1940 in connection with any indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses
incurred or paid by a trustee, officer or controlling person
of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser and
--------------------------------------------------------
Investment Sub-Adviser
----------------------
Bank of Oklahoma, N.A. ("BOK") serves as Registrant's
investment adviser. AMR Investment Services, Inc. serves as
the sub-investment adviser to the American Performance Cash
Management Fund.
To the knowledge of Registrant, none of the directors or
officers of BOK and AMR Investment Services, Inc. except those
set forth below is or has been, at any time during the past
two calendar years, engaged in any other business, profession,
vocation or employment of a substantial nature. Set forth
below are the names and principal businesses of the directors
of BOK
C-8
<PAGE> 195
and AMR Investment Services, Inc. who are engaged in any other
business, profession, vocation or employment of a substantial
nature.
BANK OF OKLAHOMA, N.A.
----------------------
Name and Position With Other
Bank of Oklahoma Substantial Type of
N.A. Occupation Business
- ---------------------- ----------- --------
W. Wayne Allen Chairman and Chief Executive Oil
Director Officer, Phillips Petroleum
Company, 18 Phillips Building,
Bartlesville, OK 74004
Keith E. Bailey Chairman, President and Chief Oil, Gas and
Director Executive Officer, The Williams Telecommunications
Companies, Inc., P.O. Box 2400,
Tulsa, OK 74102
Glenn A. Cox (Retired President and Chief Oil
Director Operating Officer, Phillips
Petroleum Company), 401 SE
Dewey, Suite 318, Bartlesville,
OK 74003
Dr. Robert H. Donaldson (Former President, University of Education
Director Tulsa), 6449 S. Richmond, Tulsa,
OK 74136
James O. Goodwin Chief Executive Officer, The Publishing
Director Oklahoma Eagle Publ. Co., 624
East Archer, Tulsa, OK 74120
D. Joseph Graham Vice President and Chief Financial Oil
Director Officer, Kaiser-Francis Oil
Company, P.O. Box 21468, Tulsa,
OK 74121-1468
C-9
<PAGE> 196
V. Burns Hargis None
Director and Vice Chairman
Eugene A. Harris None
Director and Executive
Vice President
E. Carey Joullian IV President, Mustang Fuel Energy
Director Corporation, 2000 Classen Blvd.,
800E, Oklahoma City, OK 73106-
6036
George B. Kaiser Chairman of the Board Oil
Director and President and Owner, Kaiser-
Francis Oil Co., P.O. Box 21468,
Tulsa, OK 74121-1468
David R. Lopez Director Telecommunications
President, Oklahoma
Southwestern Bell Telephone, 800
North Harvey, Oklahoma City,
OK 73102
Stanley A. Lybarger None
Director, President and
Chief Executive Officer
Frank A. McPherson (Retired Chairman and Chief Oil
Director Executive Officer Kerr-McGee
Corporation), The Oil Center,
2601 Northwest Expressway,
Suite 805E, Oklahoma City, OK
73112
J. Larry Nichols Chief Executive Officer and Energy
Director President, Devon Energy
Corporation, 20 North Broadway,
Suite 1500, Oklahoma City, OK
73102-8260
C-10
<PAGE> 197
James W. Pielsticker President, Arrow Trucking Trucking
Director Company, 4230 South Elwood,
P.O. Box 3750, Tulsa, OK 74101
E.C. "Kip" Richards Senior Vice President of Oil
Director Operations, Sooner Pipe and
Supply Corporation,
MidContinent Tower, 10th Floor,
401 S. Boston, Tulsa, OK 74103
L. Francis Rooney, III Chairman and Chief Executive Construction
Director Officer, Manhattan Construction
Company, 111 W. 5th Street, Suite
1000, Tulsa, OK 74103-4253
James A. White None
Director, Executive Vice
President and Chief
Financial Officer
The address of Bank of Oklahoma, N.A. is P.O. Box 2300, Tulsa, Oklahoma 74192.
The address of the BOK Financial Corporation is One Williams Center, Bank of
Oklahoma Tower, Tulsa, Oklahoma 74192.
C-11
<PAGE> 198
AMR INVESTMENT SERVICES, INC.
Name and Position with Other Substantial Occupation Type of Business
- ---------------------- ---------------------------- ----------------
AMR
- ---
Robert L. Crandall Executive Officer, AMR Airline;
Director and Chairman Corporation; Director, Chairman, Travel and
Chairman, President and Chief and Chief Executive Officer, Information
American Airlines, Inc.; Director, Technology;
The Sabre Group, Inc. Mr. Oil Service
Crandall also serves as an officer
and/or director of various
subsidiaries of AMR Corporation.
Director, Halliburton Company.
Gerard J. Arpey Senior Vice President and Chief Airline;
Director and Vice Chairman Financial Officer, AMR Travel and
Corporation; Director, The Information
Sabre Group, Inc. Mr. Arpey Technology
also serves as an officer and/or
director of various subsidiaries
of AMR Corporation.
Jeffrey M. Jackson Vice President of Corporate Airline
Vice President and Treasurer Development and Treasurer,
AMR Corporation, (March
1995-Present); Vice President
of Corporate Development,
AMR Corporation. Mr. Jackson
also serves as an officer and/or
director of various subsidiaries
of AMR Corporation.
C-12
<PAGE> 199
Charles D. Marlett Corporate Secretary, AMR Airline; Arts
Secretary Corporation; Corporate
Secretary, American Airlines,
Inc. Mr. Marlett also serves as
an officer and/or director of
various subsidiaries of AMR
Corporation. Director, Dallas
Summer Musicals.
Anne H. McNamara Senior Vice President and Airline; Travel
Director General Counsel, AMR and Information
Corporation; Senior Vice Technology;
President, Administration and Energy
General Counsel, American
Airlines, Inc.; Director, The
Sabre Group, Inc.; Ms.
McNamara also serves as an
officer and/or director of
various subsidiaries of AMR
Corporation. Director, LGE
Energy Corp.
William F. Quinn President, AMR Investment Investment Adviser;
President Services, Inc.; Chairman and Credit Union; REIT;
Director, American Airlines Airline
Employees Federal Credit
Union. Mr. Quinn also serves
as an officer and/or director of
various subsidiaries of AMR
Corporation. Trustee and
President, AMR Investment
Services Trust, American
AAdvantage Funds, American
AAdvantage Mileage Funds;
Director, Crescent Real Estate
Equities, Inc.
The address of each director or officer of AMR Investment Services,
Inc. is 4333 Amon Carter Boulevard, Ft. Worth, Texas 76155.
C-13
<PAGE> 200
Item 29. Principal Underwriter
---------------------
(a) BISYS Fund Services, Limited Partnership acts as distributor and
administrator for Registrant. BISYS Fund Services also
distributes the securities of the following investment
companies: Alpine Equity Trust, AmSouth Mutual Funds, The ARCH
Fund, Inc., The BB&T Mutual Funds Group, The Coventry Group, ,
ESC Strategic Funds, Inc., The Eureka Funds, Fountain Square
Funds, Hirtle Callaghan Trust, HSBC Family of Funds, The
Infinity Mutual Funds, Inc., INTRUST Funds Trust, The Kent
Funds, Magna Funds, Meyers Investment Trust, MMA Praxis Mutual
Funds, M.S.D.&T. Funds, Pacific Capital Funds, Parkstone Group
of Funds, The Parkstone Advantage Fund, Pegasus Funds, Puget
Sound Alternative Investment Series Trust, The Republic Funds
Trust, The Republic Advisors Funds Trust, The Riverfront Funds,
Inc., SBSF Funds, Inc. dba Key Mutual Funds, Sefton Funds, The
Sessions Group, Summit Investment Trust, Variable Insurance
Funds, The Victory Portfolios, The Victory Variable Funds, and
Vintage Mutual Funds, Inc.
(b) Partners of BISYS Fund Services as of the date of this Part C
are as follows:
Positions and Positions and
Name and Principal Offices with Offices with
Business Address BISYS Fund Services Registrant
---------------- ------------------- ----------
BISYS Fund Services, Inc. Sole General Partner None
150 Clove Road
Little Falls, NJ 07424
WC Subsidiary Corporation Sole Limited Partner None
150 Clove Road
Little Falls, NJ 07424
Each of these corporations is a subsidiary of The BISYS Group, Inc., 150
Clove Road, Little Falls, NJ 07424.
Item 30. Location of Accounts and Records
--------------------------------
(1) Bank of Oklahoma, N.A. , Bank of Oklahoma Tower, Tulsa,
Oklahoma 74103 (records relating to its functions as
Investment Adviser).
(2) AMR Investment Services, Inc., P.O. Box 619003, Dallas/Ft.
Worth Airport, Texas 75261-9003 (records relating to its
function as Sub-Investment Adviser).
C-14
<PAGE> 201
(3) BISYS Fund Services, LP, 3435 Stelzer Road, Columbus, Ohio
43219 (records relating to its functions as Administrator and
Distributor).
(4) BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus,
OH 43219 (records relating to its functions as Transfer Agent
and Fund Accountant).
(5) Bank of Oklahoma, N.A., Bank of Oklahoma Tower, Tulsa,
Oklahoma 74103 (records relating to its functions as
Custodian).
(6) Ropes & Gray, One Franklin Square, 1301 K Street, N.W., Suite
800 East, Washington, D.C. 20005 (Agreement and Declaration of
Trust, Bylaws and Minute Books).
Item 31. Management Services
-------------------
N/A.
Item 32. Undertakings
------------
(a) Registrant undertakes to call a meeting of shareholders, at
the request of holders of 10% of the Registrant's outstanding
shares, for the purpose of voting upon the question of removal
of a trustee or trustees and undertakes to assist in
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
(b) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
C-15
<PAGE> 202
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Amendment No. 18 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Washington, District of
Columbia on the 30th day of October, 1998.
American Performance Funds
Registrant
*/s/ Walter B. Grimm
---------------------------
Walter B. Grimm
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 18 to the Registration Statement has been signed
below by the following persons in the capacity and on the date indicated.
Signature Title Date
- --------- ----- ----
Chairman, President
*/s/ Walter B. Grimm and Trustee October 30, 1998
- -------------------
Walter B. Grimm
*/s/ Joel Engle Treasurer October 30, 1998
- -------------------
Joel Engle
*/s/ Michael J. Hall Trustee October 30, 1998
- -------------------
Michael J. Hall
*/s/ Perry A. Wimpey Trustee October 30, 1998
- -------------------
Perry A. Wimpey
*/s/ I. Edgar Hendrix Trustee October 30, 1998
- --------------------
I. Edgar Hendrix
* By: /s/ Alan G. Priest
- ------------------------
Alan G. Priest, As
Attorney-in-Fact Pursuant
to Powers of Attorney Filed Herewith.
C-16
<PAGE> 203
POWER OF ATTORNEY
-----------------
Michael J. Hall, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Maryellen M. Lundquist, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable the American
Performance Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee and/or officer of the Trust any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue thereof.
Dated: July 25, 1997 /s/ Michael J. Hall
------------------------
Michael J. Hall
-17-
<PAGE> 204
POWER OF ATTORNEY
-----------------
Perry A. Wimpey, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Maryellen M. Lundquist, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable the American
Performance Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee and/or officer of the Trust any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue thereof.
Dated: July 25, 1997 /s/ Perry A. Wimpey
------------------------
Perry A. Wimpey
-18-
<PAGE> 205
POWER OF ATTORNEY
-----------------
I. Edgar Hendrix, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Maryellen M. Lundquist, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable the American
Performance Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee and/or officer of the Trust any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue thereof.
Dated: July 25, 1997 /s/ I. Edgar Hendrix
-------------------------
I. Edgar Hendrix
-19-
<PAGE> 206
POWER OF ATTORNEY
-----------------
Walter B. Grimm, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Maryellen M. Lundquist, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable the American
Performance Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee and/or officer of the Trust any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue thereof.
Dated: July 25, 1997 /s/ Walter B. Grimm
------------------------
Walter B. Grimm
-20-
<PAGE> 207
POWER OF ATTORNEY
-----------------
Joel Engle, whose signature appears below, does hereby constitute and
appoint Martin E. Lybecker, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable the American
Performance Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee and/or officer of the trust any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue thereof.
/s/ Joel Engle
Dated: October 30, 1998 ------------------------------------
Joel Engle
-21-
<PAGE> 208
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE NO.
--- ----------- --------
(10) Opinion of Ropes & Gray.
(11)(a) Consent of KPMG Peat Marwick LLP.
(11)(b) Consent of Ropes & Gray.
(27) Financial Data Schedules
(a) Cash Management Fund
(b) U.S. Treasury Fund
(c) Bond Fund
(d) Intermediate Bond Fund
(e) Equity Fund
(f) Aggressive Growth Fund
(g) Intermediate Tax-Free Bond Fund
(h) Short-Term Income Fund
(i) Balanced Fund
(j) Growth Equity Fund
<PAGE> 1
EXHIBIT (10)
Opinion of Ropes & Gray
<PAGE> 2
ROPES & GRAY
ONE FRANKLIN SQUARE
1301 K STREET, N.W., SUITE 800 EAST
WASHINGTON, D.C. 20005
WRITER'S DIRECT DIAL NUMBER: (202) 626-3925
OCTOBER 30, 1998
American Performance Funds
3435 Stelzer Road
Columbus, Ohio 43219
Gentlemen:
You have registered under the Securities Act of 1933, as amended (the
"1933 Act") an indefinite number of shares of beneficial interest ("Shares") of
the American Performance Funds ("Trust"), as permitted by Rule 24f-2 under the
Investment Company Act of 1940, as amended (the "1940 Act"). You propose to file
a post-effective amendment on Form N-1A (the "Post-Effective Amendment") to your
Registration Statement as required by Section 10(a)(3) of the 1933 Act and the
Rules thereunder and Section 8(b) of the 1940 Act and the rules thereunder. The
purpose of this filing is to provide unaudited financial statements for the
American Performance Growth Equity Fund and to modify an investment policy with
respect to the American Performance Intermediate Bond Fund.
We have examined your Agreement and Declaration of Trust on file in the
office of the Secretary of The Commonwealth of Massachusetts and the Clerk of
the City of Boston. We have also examined a copy of your Bylaws and such other
documents, receipts and records as we have deemed necessary for the purpose of
this opinion.
Based upon the foregoing, we are of the opinion that the issue and sale
of the authorized but unissued Shares of each Fund of the Trust described in
said Registration Statement (each a "Series") have been duly authorized under
Massachusetts law. Upon the original issue and sale of your authorized but
unissued Shares and upon receipt of the authorized consideration therefor in an
amount not less than the net asset value of the Shares established and in force
at the time of their sale, the Shares issued will be validly issued, fully paid
and non-assessable.
<PAGE> 3
October 30, 1998
Page 2
The American Performance Funds is an entity of the type commonly known
as a "Massachusetts business trust." Under Massachusetts law, shareholders
could, under certain circumstances, be held personally liable for the
obligations of the Trust. However, the Agreement and Declaration of Trust
provides for indemnification out of the property of a particular series of
Shares for all loss and expenses of any shareholder of that series held
personally liable solely by reason of his being or having been a shareholder.
Thus, the risk of shareholder liability is limited to circumstances in which
that series of Shares itself would be unable to meet its obligations.
We understand that this opinion is to be used in connection with the
filing of the Post-Effective Amendment. We consent to the filing of this
opinion with and as part of your Post-Effective Amendment.
Sincerely,
/s/ Ropes & Gray
Ropes & Gray
<PAGE> 1
EXHIBIT (11)(a)
Consent of KPMG Peat Marwick LLP
<PAGE> 2
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees of
American Performance Funds:
We consent to the use of our report dated October 9, 1998 for the American
Performance Funds as incorporated by reference herein and to the reference to
our firm under the headings "Financial Highlights" in the Prospectus and
"Auditors" in the Statement of Additional Information included herein.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Columbus, Ohio
October 29, 1998
<PAGE> 1
EXHIBIT (11)(b)
Consent of Ropes & Gray
<PAGE> 2
CONSENT OF COUNSEL
We hereby consent to the use of our name and the references to our firm
under the caption "Legal Counsel" included in or made a part of Post-Effective
Amendment No. 18 to the Registration Statement of the American Performance Funds
on Form N-1A under the Securities Act of 1933, as amended.
/s/ ROPES & GRAY
ROPES & GRAY
Washington, D.C.
October 30, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 01
<NAME> CASH MANAGEMENT FUND
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<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
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<INTEREST-INCOME> 23362263
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<EXPENSES-NET> 2894088
<NET-INVESTMENT-INCOME> 20468175
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<NET-CHANGE-FROM-OPS> 20480661
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<DISTRIBUTIONS-OF-INCOME> 20468175
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<PER-SHARE-NII> 0.05
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<PER-SHARE-NAV-END> 1.00
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 02
<NAME> U.S. TREASURY FUND
<S> <C>
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<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
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<INVESTMENTS-AT-VALUE> 390085758
<RECEIVABLES> 66824
<ASSETS-OTHER> 3057
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 390155639
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1836668
<TOTAL-LIABILITIES> 1836668
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 388311039
<SHARES-COMMON-STOCK> 388311038
<SHARES-COMMON-PRIOR> 298381286
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<INTEREST-INCOME> 20758785
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<EXPENSES-NET> 2694979
<NET-INVESTMENT-INCOME> 18063806
<REALIZED-GAINS-CURRENT> 21082
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 18084888
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 18063806
<DISTRIBUTIONS-OF-GAINS> 56293
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1070787836
<NUMBER-OF-SHARES-REDEEMED> 980900895
<SHARES-REINVESTED> 42811
<NET-CHANGE-IN-ASSETS> 89894541
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 43143
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1495245
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3629510
<AVERAGE-NET-ASSETS> 373828833
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.48
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 03
<NAME> BOND FUND
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 50358534
<INVESTMENTS-AT-VALUE> 52701259
<RECEIVABLES> 682962
<ASSETS-OTHER> 1963
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53386184
<PAYABLE-FOR-SECURITIES> 383132
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 297041
<TOTAL-LIABILITIES> 680173
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50520944
<SHARES-COMMON-STOCK> 5402892
<SHARES-COMMON-PRIOR> 3815832
<ACCUMULATED-NII-CURRENT> 9225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 166883
<ACCUM-APPREC-OR-DEPREC> 2342725
<NET-ASSETS> 52706011
<DIVIDEND-INCOME> 48001
<INTEREST-INCOME> 3195730
<OTHER-INCOME> 0
<EXPENSES-NET> 446937
<NET-INVESTMENT-INCOME> 2796794
<REALIZED-GAINS-CURRENT> 293685
<APPREC-INCREASE-CURRENT> 1891340
<NET-CHANGE-FROM-OPS> 4981819
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2796794
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2260859
<NUMBER-OF-SHARES-REDEEMED> 835283
<SHARES-REINVESTED> 161484
<NET-CHANGE-IN-ASSETS> 17251860
<ACCUMULATED-NII-PRIOR> 17925
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 461389
<GROSS-ADVISORY-FEES> 255391
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 539807
<AVERAGE-NET-ASSETS> 46482023
<PER-SHARE-NAV-BEGIN> 9.29
<PER-SHARE-NII> 0.57
<PER-SHARE-GAIN-APPREC> 0.47
<PER-SHARE-DIVIDEND> 0.57
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.76
<EXPENSE-RATIO> 0.96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 04
<NAME> INTERMEDIATE BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 05
<NAME> EQUITY FUND
<S> <C>
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<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 06
<NAME> AGGRESSIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 07
<NAME> INTERMEDIATE TAX-FREE FUND
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 08
<NAME> SHORT TERM INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 09
<NAME> BALANCED FUND
<S> <C>
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 10
<NAME> GROWTH EQUITY FUND
<S> <C>
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