<PAGE> 1
Registration Nos. 33-35190 and 811-6114
As filed with the Securities and Exchange Commission on APRIL 30, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 17 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
Amendment No. 16
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AMERICAN PERFORMANCE FUNDS
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(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
800-762-7085
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Thomas E. Line, Treasurer
American Performance Funds
3435 Stelzer Road, Columbus, Ohio 43219
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(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
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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
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TITLE OF SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST
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<PAGE> 2
American Performance U.S. Treasury Fund
American Performance Cash Management Fund
American Performance Equity Fund
American Performance Aggressive Growth Fund
American Performance Balanced Fund
American Performance Growth Equity Fund
American Performance Bond Fund
American Performance Intermediate Bond Fund
American Performance Intermediate Tax-Free Bond Fund
American Performance Short-Term Income Fund
The information required by Items 1 through 9 for the above-referenced
investment portfolios of American Performance Funds (the "Registrant") is hereby
incorporated by reference to Part A of Post-Effective Amendment No. 16 to the
Registrant's Registration Statement on Form N-1A, filed with the Securities and
Exchange Commission on December 17, 1997.
<PAGE> 3
AMERICAN PERFORMANCE FUNDS
BOND INVESTMENT FUNDS
Supplement Dated June 30, 1998 to
Prospectus Dated December 17, 1997
Capitalized terms used in this Supplement and not defined have the
meaning assigned to them in the Prospectus.
1. Under FINANCIAL HIGHLIGHTS on pages 4-7, the financial highlights of
each Bond Investment Fund are hereby supplemented to include unaudited financial
statements for the six-month period ended February 28, 1998. The following
information for the six-month period ended February 28, 1998 is unaudited.
<TABLE>
<CAPTION>
INTERMEDIATE INTERMEDIATE
BOND TAX-FREE BOND SHORT-TERM
BOND FUND FUND FUND INCOME FUND
--------- ---------- ---------- ----------
SIX-MONTHS SIX-MONTHS SIX-MONTHS SIX-MONTHS
ENDED ENDED ENDED ENDED
02/28/98 02/28/98 02/28/98 02/28/98
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.29 $10.23 $10.78 $9.92
----- ------ ------ ------
INVESTMENT ACTIVITIES
Net investment income 0.29 0.30 0.24 0.31
Net realized and unrealized gains
(losses) on investments 0.26 0.14 0.20 0.11
----- ------ ------ ------
Total from Investment Activities 0.55 0.44 0.44 0.42
----- ------ ------ ------
DISTRIBUTIONS
Net investment income (0.29) (0.30) (0.24) (0.31)
Net realized gains -- -- -- --
----- ------ ------ ------
Total Distributions (0.29) (0.30) (0.24) (0.31)
----- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $9.55 $10.37 $10.91 $10.03
===== ====== ====== ======
Total Return (excludes sales charge) 5.96%(b) 4.38%(b) 4.19%(b) 4.30%(b)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $47,034 $81,395 $29,324 $20,005
Ratio of expenses to average net assets 0.93%(a) 0.93%(a) 0.72%(a) 0.35%(a)
Ratio of net investment income to
average net assets 6.13%(a) 5.91%(a) 4.50%(a) 6.29%(a)
Ratio of expenses to average net assets* 1.13%(a) 1.13%(a) 1.17%(a) 1.17%(a)
Ratio of net investment income to
average net assets* 5.93%(a) 5.71%(a) 4.05%(a) 5.47%(a)
Portfolio turnover 27.55% 19.09% 11.17% 35.31%
</TABLE>
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* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not annualized.
<PAGE> 4
2. Under "INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS - BOND FUND,
INTERMEDIATE BOND FUND AND SHORT-TERM INCOME FUND" on page 10, in the first full
paragraph, the investment policy with respect to the Intermediate Bond Fund as
stated in the second and third sentences is deleted. The Intermediate Bond Fund
will no longer pursue the stated investment policy.
3. The following paragraph replaces the second paragraph under GENERAL
INFORMATION - DESCRIPTION OF THE FUNDS AND THEIR SHARES on page 34:
As of April 14, 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% of the Bond Fund's Shares, 98% of the Intermediate
Bond Fund's Shares, 99% of the Short-Term Income Fund's Shares and 79% of the
Intermediate Tax-Free Bond Fund's Shares. As of March 31, 1998 Bank of Oklahoma,
N.A. and its bank affiliates possessed, on behalf of its underlying accounts,
voting and investment power with respect to 78% of the Bond Fund's Shares, 81%
of the Intermediate Bond Fund's Shares, 97% of the Short-Term Income Fund's
Shares and 73% of the Intermediate Tax-Free Bond 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.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE PROSPECTUS
FOR FUTURE REFERENCE.
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AMERICAN PERFORMANCE FUNDS
EQUITY INVESTMENT FUNDS
Supplement Dated June 30, 1998 to
Prospectus Dated December 17, 1997
Capitalized terms used in this Supplement that are not defined have the
meaning assigned to them in the Prospectus.
1. Under FINANCIAL HIGHLIGHTS on pages 5-7, the financial highlights of
each Equity Investment Fund are hereby supplemented to include unaudited
financial statements for the six-month period ended February 28, 1998. The
following information for the six-month period ended February 28, 1998 is
unaudited.
<TABLE>
<CAPTION>
AGGRESSIVE BALANCED GROWTH
EQUITY FUND GROWTH FUND FUND EQUITY FUND
----------- ----------- ---------- -------------------
SIX-MONTHS SIX-MONTHS SIX-MONTHS
ENDED ENDED ENDED NOVEMBER 1, 1997 TO
02/28/98 02/28/98 02/28/98 FEBRUARY 28, 1998 (a)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $17.33 $18.88 $13.38 $10.00
------ ------ ------ ------
INVESTMENT ACTIVITIES
Net investment income (loss) 0.04 (0.04) 0.18 0.01
Net realized and unrealized gains
(losses) on investments 2.25 (0.76) 0.94 1.59
------ ------ ------ ------
Total from Investment Activities 2.29 (0.80) 1.12 1.60
------ ------ ------ ------
DISTRIBUTIONS
Net investment income (0.03) -- (0.15) (0.01)
Net realized gains (2.47) (2.59) (1.28) --
------ ------ ------ ------
Total Distributions (2.50) (2.59) (1.43) (0.01)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $17.12 $15.49 $13.07 $11.59
====== ====== ====== ======
Total Return (excludes sales charge) 14.34%(c) 3.06%(c) 8.87%(c) 16.13%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000) $199,520 $38,921 $39,368 $65,345
Ratio of expenses to average net assets 1.05%(b) 1.05%(b) 0.36%(b) 1.09%(b)
Ratio of net investment income to
average net assets 0.54%(b) (0.42)%(b) 3.25%(b) 0.37%(b)
Ratio of expenses to average net assets* 1.24%(b) 1.24%(b) 1.31%(b) 1.28%(b)
Ratio of net investment income to
average net assets* 0.35%(b) (0.61)%(b) 2.30%(b) 0.18%(b)
Portfolio turnover 40.89% 32.71% 49.68% 12.21%
Average commission rate (d) $0.0501 $0.0626 $0.0583 $0.0502
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</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) Not annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by the total number of shares purchased and sold by
the Fund for which commissions were charged.
<PAGE> 6
The following paragraphs replace the second paragraph under the title
AGGRESSIVE GROWTH FUND on page 8:
2. As of February 5, 1998, the Aggressive Growth Fund no longer follows
a "bottom-up" securities selection strategy, but instead employs a
"quantitative" investment approach. Under this approach, stocks are ranked
according to their return characteristics and other quantitative factors. The
portfolio is being 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 this Index. This
"quantitative" investment approach is being implemented gradually over the next
few months.
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.
3. The following paragraph replaces the second paragraph under GENERAL
INFORMATION - DESCRIPTION OF THE FUNDS AND THEIR SHARES on page 29:
As of April 14, 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% of the Equity Fund's Shares, 93% of the Aggressive
Growth Fund's Shares, 98% of the Balanced Fund's Shares and 99% of the Growth
Equity Fund's Shares. As of March 31, 1998, Bank of Oklahoma, N.A. and its bank
affiliates possessed, on behalf of its underlying accounts, voting and
investment power with respect to 77% of the Equity Fund's Shares, 61% of the
Aggressive Growth Fund's Shares, 58% of the Balanced Fund's Shares and 98% 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.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE PROSPECTUS
FOR FUTURE REFERENCE.
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<PAGE> 7
CROSS REFERENCE SHEET
AMERICAN PERFORMANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
Form N-1A Part B Item
<TABLE>
<S> <C> <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 and Service Providers of the Funds -
and Other Practices Portfolio 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> 8
<TABLE>
<S> <C> <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.
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<PAGE> 9
STATEMENT OF ADDITIONAL INFORMATION
AMERICAN PERFORMANCE FUNDS
AMERICAN PERFORMANCE MONEY MARKET FUNDS
AMERICAN PERFORMANCE BOND INVESTMENT FUNDS
AMERICAN PERFORMANCE EQUITY INVESTMENT FUNDS
December 17, 1997,
AS AMENDED JUNE 30, 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, DATED DECEMBER 17, 1997, AND FOR the American Performance Bond Investment
FUND, and the American Performance Equity Investment Funds, each DATED DECEMBER
17, 1997 AS SUPPLEMENTED JUNE 30, 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> 10
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..............................................13
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..............................21
DISTRIBUTION....................................................24
GLASS-STEAGALL ACT..............................................26
PORTFOLIO TRANSACTIONS..........................................27
ADMINISTRATOR...................................................29
SUB-ADMINISTRATOR...............................................31
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<PAGE> 11
DISTRIBUTOR.....................................................31
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTANT...................32
AUDITORS .......................................................34
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..................................................42
APPENDIX..............................................................43
-ii-
<PAGE> 12
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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<PAGE> 13
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> 14
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. ss. 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
B-3
<PAGE> 15
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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<PAGE> 16
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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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.
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 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 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
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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
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
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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 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
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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.
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
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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 to a Fund's Shareholders.
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.
For the fiscal year ended August 31, 1996, the portfolio turnover rates
were as follows: 61.02% for the Bond Fund; 129.97% for the Intermediate Bond
Fund; 67.46% for the Equity Fund; 19.53% for the Intermediate Tax-Free Bond
Fund; 32.89% for the Aggressive Growth Fund; and 80.98% for the Short-Term
Income Fund. The portfolio turnover rate for the Balanced Fund for the
fiscal year ended August 31, 1996, was 71.89% with respect to the common
stock portion of its portfolio and 72.29% 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 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
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the range of the Fund's investments. If a Fund qualifies as a RIC, it will
not be subject to federal income tax on the part of its net investment
income and net realized capital gains, if any, that it distributes to
shareholders, provided the Fund distributes during its taxable year at least
(a) 90% of its "investment company taxable income" (as that term is defined
in the Code), and (b) 90% of the excess of (i) its tax-exempt interest
income over (ii) certain deductions attributable to that income. Each Fund
intends to make sufficient distributions to Shareholders to meet this
requirement.
In addition, until the start of the Aggressive Growth Fund's first tax
year beginning after August 5, 1997, the Aggressive Growth Fund must derive
less than 30% of its gross income from the sale or disposition of certain
assets (including stock or securities and certain options, futures
contracts, forward contracts and foreign currencies) held for less than
three months in order to qualify as a RIC. This requirement may restrict the
degree to which the Aggressive Growth Fund may engage in short-term trading.
The other Funds do not need to meet this requirement as they have already
begun their first tax year after August 5, 1997.
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.
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, 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 tax consequences of certain hedging
transactions have been modified by the Taxpayer Relief Act of 1997 (the
"1997 Act.")
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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.
The foregoing discussion and the discussion below regarding the
Intermediate Tax-Free Bond Fund are based on tax laws and regulations which
are in effect on the date of this Statement of Additional Information; such
laws and regulations may be changed by legislative or administrative action,
and such changes may be retroactive.
ADDITIONAL TAX INFORMATION CONCERNING THE INTERMEDIATE TAX-
FREE BOND FUND
The Code permits a RIC which invests at least 50% of its assets in
tax-free Municipal Securities and other securities exempt from the regular
federal income tax to pass through to its investors, tax-free, net interest
income from such securities.
The policy of the Intermediate Tax-Free Bond Fund is to pay each year
as dividends substantially all the Fund's interest income net of certain
deductions. An exempt-interest dividend is any dividend or part thereof
(other than a capital gain dividend) paid by the Intermediate Tax-Free Bond
Fund and designated as an exempt-interest dividend in a written notice
mailed to Shareholders after the close of the Fund's taxable year. 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
B-16
<PAGE> 28
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.
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
B-17
<PAGE> 29
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.
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,
B-18
<PAGE> 30
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 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.)
B-19
<PAGE> 31
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 and Address With the Funds During Past 5 Years
---------------- ---------------- --------------------
<S> <C> <C>
Walter B. Grimm* Chairman, From June, 1992 to present,
3435 Stelzer Road President, and employee of BISYS Fund
Columbus, OH 43219 Trustee Services; from 1987 to
June, 1992, President of
Leigh Consulting/Investments
(investment firm).
D'Ray Moore* Vice President From February, 1990 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, OH 43219 Services.
Alaina J. Metz* Assistant Secretary From June, 1995 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, OH 43219 from May 1989 to June 1995,
Supervisor, Mutual Fund Legal
Department, Alliance Capital
Management.
Thomas E. Line* Treasurer From December, 1996 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, OH 43219 from September, 1989 to November,
1996, Audit Senior Manager at
KPMG Peat Marwick LLP.
</TABLE>
B-20
<PAGE> 32
<TABLE>
<S> <C> <C>
Jeffrey Cusick* 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, Line 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.
COMPENSATION TABLE 1
<TABLE>
<CAPTION>
Total
Aggregate Pension or Compensation
Compensation Retirement from The
from The Benefits Estimated American
American Accrued As Annual Performance
Name of Person, Performance Part of Fund Benefits Upon Funds Paid to
Position Funds Expenses Retirement Trustee
-------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Walter B. Grimm $0 None None $0
Michael J. Hall $5,250 None None $5,250
Perry A. Wimpey $5,250 None None $5,250
I. Edgar Hendrix $6,000 None None $6,000
</TABLE>
1 Figures are for the Funds' fiscal year ended August 31, 1997.
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:
B-21
<PAGE> 33
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.
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 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 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. As of August 31, 1997, the Growth Equity Fund had not
commenced operations.
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.
For its investment advisory services during the fiscal year ended
August 31, 1995, BOK received $732,975, which is $27,001 less than the
maximum amount of advisory fees, if
B-22
<PAGE> 34
charged, with respect to the U.S. Treasury Fund; $119,282 which is $66,995
less than the maximum amount of advisory fees, if charged, with respect to
the Bond Fund; $271,212 which is $152,206 less than the maximum amount of
advisory fees, if charged, with respect to the Intermediate Bond Fund;
$360,139 which is $134,698 less than the maximum amount of advisory fees, if
charged, with respect to the Equity Fund; $56,984, which is $96,109 less
than the maximum amount of advisory fees, if charged, with respect to the
Intermediate Tax-Free Bond Fund; $130,408 which is $49,067 less than the
maximum amount of advisory fees, if charged, with respect to the Aggressive
Growth Fund. For investment advisory services during the period from October
1, 1994 to August 31, 1995, BOK received from the Funds $799,677 which is
$30,520 less than the maximum amount of advisory fees, if charged, with
respect to the Cash Management Fund. For the period from commencement of
operations, October 19, 1994, to August 31, 1995, BOK received from the
Funds $17,642 which is $39,100 less than the maximum amount of advisory
fees, if charged, with respect to the Short- Term Income Fund; and for the
period from commencement of operations, June 1, 1995, to August 31, 1995,
BOK received from the Funds $0 which is $21,992 less than the maximum amount
of advisory fees, if charged, with respect to the Balanced Fund.
For its sub-advisory services during the fiscal year ending August 31,
1997, AMR received $553,537 with respect to the Cash Management Fund.
Investment advisory services formerly were provided by AMR, jointly
with BOK, to the U.S. Treasury Fund and by AMR solely to the Cash Management
Fund pursuant to an Investment Advisory Agreement dated September 5, 1990.
AMR ceased providing investment advisory services to the U.S. Treasury Fund
and the Cash Management Fund on September 30, 1994. For services provided
and expenses assumed under the AMR Investment Advisory Agreement, the U.S.
Treasury Fund and the Cash Management Fund paid AMR a fee, computed daily
and paid monthly, based on the lower of (1) such fee as was, from time to
time, agreed upon in writing by the Funds and AMR or (2) the average daily
net assets of the respective Funds, as follows: the Cash Management Fund -
forty one-hundredths of one percent (0.40%) annually and the U.S. Treasury
Fund - twenty one-hundredths of one percent (0.20%) annually.
For investment advisory services during the period from September 1,
1994 to September 30, 1994, at which time the Investment Advisory Agreement
terminated, AMR received $13,468 with respect to the U.S. Treasury Fund and
$29,578 with respect to the Cash Management Fund. For Sub-Advisory services
during the period from October 1, 1994 to August 31, 1995, AMR received from
BOK $281,081 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, 1997, concerning a particular Fund, see "MANAGEMENT
OF THE FUND - Investment Adviser" in the Prospectus pertaining to such Fund.
B-23
<PAGE> 35
Unless sooner terminated, the Advisory Agreement will continue in
effect until August 1, 1998. The Advisory Agreement will continue in effect
as to a particular Fund for successive one-year terms after the
aforementioned date, if such continuance is approved at least annually by
the Funds' Board of Trustees or by vote of a majority of the outstanding
voting Shares of such Fund (as defined under "GENERAL
INFORMATION--Miscellaneous" in the Funds' Prospectuses), and a majority of
the Trustees who are not parties to the Advisory Agreement, or interested
persons (as defined in 1940 Act) of any party to the Advisory Agreement by
votes cast in person at a meeting called for such purpose.
The Sub-Advisory Agreement between BOK and AMR provides that unless
sooner terminated, it will continue in effect until August 1, 1998 and for
successive one-year terms thereafter, provided that such continuance is
approved annually in the manner set forth above. The Advisory and
Sub-Advisory Agreements are terminable as to a particular Fund at any time
on 60 days' written notice without penalty by the Trustees, by vote of a
majority of the outstanding voting Shares of that Fund, or by the Investment
Adviser or the Sub-Adviser, as the case may be. The Advisory and
Sub-Advisory Agreements also terminate automatically in the event of any
assignment, as defined in the 1940 Act.
The Advisory and Sub-Advisory Agreements provide that the Investment
Adviser or the Sub-Adviser, as the case may be, shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Funds in
connection with the performance of the respective Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the respective provider of
services to the Funds in the performance of its duties, or from reckless
disregard by it of its duties and obligations thereunder.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Funds
may include descriptions of the Investment Adviser or Sub-Adviser including,
but not limited to, (i) descriptions of the adviser's operations; (ii)
descriptions of certain personnel and their functions; and (iii) statistics
and rankings related to the adviser's operations.
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
B-24
<PAGE> 36
banks, other financial institutions and intermediaries, broker-dealers, and
the Distributor's affiliates and subsidiaries compensation for services or
reimbursement of expenses incurred in connection with the provision of
Shareholder services. All payments by the Distributor for distribution
assistance or Shareholder services under the Distribution Plan will be made
pursuant to an agreement between the Distributor and such bank, other
financial institution or intermediary, broker-dealer, or affiliate or
subsidiary of the Distributor (a "Servicing Agreement"; banks, other
financial institutions and intermediaries, broker-dealers, and the
Distributor's affiliates and subsidiaries which may enter into a Servicing
Agreement are hereinafter referred to individually as a "Participating
Organization"). A Servicing Agreement will relate to the provision of
distribution assistance in connection with the distribution of the Funds'
Shares to the Participating Organization's customers on whose behalf the
investment in such Shares is made and/or to the provision of Shareholder
services rendered to the Participating Organization's customers owning the
Funds' Shares. Under the Distribution Plan, a Participating Organization may
include the Funds' Advisers or their affiliates. A Servicing Agreement
entered into with a bank (or any of its subsidiaries or affiliates) will
contain a representation that the bank (or subsidiary or affiliate) believes
that it possesses the legal authority to perform the services contemplated
by the Servicing Agreement without violation of applicable banking laws
(including the Glass-Steagall Act).
The distribution fee will be payable without regard to whether the
amount of the fee is more or less than the actual expenses incurred in a
particular year by the Distributor in connection with distribution
assistance or Shareholder services rendered by the Distributor itself or
incurred by the Distributor pursuant to the Servicing Agreements entered
into under the Distribution Plan. If the amount of the distribution fee is
greater than the Distributor's actual expenses incurred in a particular year
(and the Distributor does not waive that portion of the distribution fee),
the Distributor will realize a profit in that year from the distribution
fee. If the amount of the distribution fee is less than the Distributor's
actual expenses incurred in a particular year, the Distributor will realize
a loss in that year under the Distribution Plan and will not recover from
the Funds the excess of expenses for the year over the distribution fee,
unless 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,
1997, the Distributor received the maximum amount receivable under the Plan
with respect to the following Funds and in the following amounts: $82,138
with respect to the Bond Fund; $160,141 with respect to the Intermediate
Bond Fund; $302,044 with respect to the Equity Fund; and $112,919 with
respect to the Aggressive Growth Fund. Under the distribution Plan
during the fiscal year ended August 31, 1997, the Distributor waived its
entire fee with respect to the following Funds and in the following amounts:
$615,553 with respect to the U.S. Treasury Fund; $922,562 with respect to
the Cash Management Fund; $68,078 with respect to
B-25
<PAGE> 37
the Intermediate Tax-Free Bond Fund; $66,359 with respect to the Balanced
Fund; and $36,765 with respect to the Short-Term Income Fund. As of August
31, 1997 the Growth Equity Fund had not commenced operations.
Substantially all of the amount received by the Distributor under the
Distribution Plan during the last fiscal year, the period from September 1,
1996 to August 31, 1997, was spent on compensation to dealers. BISYS
retained 1.14% and spent this amount on printing and mailing of
prospectuses. The total amount spent on compensation to dealers during the
last fiscal year was $649,926. The total amount retained by BISYS during the
last fiscal year was $7,517.
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.
B-26
<PAGE> 38
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of BOK, or other banks serving as
Participating Organizations under the Funds' Distribution and Shareholder
Services Plan, in connection with Customer purchases of Shares of the Funds,
such banks may be required to alter materially or discontinue the services
offered by them to Customers under the Distribution and Shareholder Services
Plan. It is not anticipated, however, that any change in the Funds'
Distribution and Shareholder Services Plan would affect its net asset value
per Share or result in financial losses to any Customer.
PORTFOLIO TRANSACTIONS
Pursuant to the Advisory and Sub-Advisory Agreements, subject to the
general supervision of the Board of Trustees of the Funds and in accordance
with each Fund's investment objective, policies and restrictions, which
securities are to be purchased and sold by each such Fund and which brokers
are to be eligible to execute its portfolio transactions. Purchases and
sales of portfolio securities with respect to the Money Market Funds and the
Bond Investment Funds usually are principal transactions in which portfolio
securities are purchased directly from the issuer or from an underwriter or
market maker for the securities. Purchases from underwriters of portfolio
securities include a commission or concession paid by the issuer to the
underwriter and purchases from dealers serving as market makers may include
the spread between the bid and asked price. Transactions with respect to the
Equity Investment Funds on stock exchanges (other than certain foreign stock
exchanges) involve the payment of negotiated brokerage commissions.
Transactions in the over-the-counter market are generally principal
transactions with dealers. With respect to the over-the-counter market, the
Funds, where possible, will deal directly with the dealers who make a market
in the securities involved except in those circumstances where better price
and execution are available elsewhere. While the Investment Adviser and
Sub-Adviser generally seek competitive spreads or commissions, the Funds may
not necessarily pay the lowest spread or commission available on each
transaction, for reasons discussed below.
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: aggregate transactions --
$20,047; aggregate commissions -- $0. During the fiscal year ended August
31, 1996 the Balanced Fund paid aggregate brokerage commissions in the
amountof $25,340. BOK directed brokerage transactions for the Balanced Fund
to brokers because of
B-27
<PAGE> 39
research services provided in the following amounts: aggregate transactions
-- $19,722 and aggregate commissions -- $5,618.
During the fiscal year ended August 31, 1995, the Equity Fund paid
aggregate brokerage commissions in the amount of $159,829. During the fiscal
year ended August 31, 1995, BOK directed brokerage transactions for the
Equity Fund to brokers because of research services provided in the
following amounts: aggregate transactions -- $158,700,000; aggregate
commissions -- $159,069. During the fiscal year ended August 31, 1995, the
Aggressive Growth Fund paid aggregate brokerage commissions in the amount of
$10,768. During the fiscal year ended August 31, 1995, BOK directed
brokerage transactions for the Aggressive Growth Fund to brokers because of
research services provided in the following amounts: aggregate transactions
-- $14,600,000; aggregate commissions -- $10,648. For the period June 1,
1995 to August 31, 1995, the Balanced Fund paid aggregate brokerage
commissions in the amount of $9,818.
Allocation of transactions, including their frequency, to various
dealers is determined by the Investment Adviser and/or Sub-Adviser with
respect to the Funds it serves based on its best judgment and in a manner
deemed fair and reasonable to Shareholders. The primary consideration is
prompt execution of orders in an effective manner at the most favorable
price. Subject to this consideration, dealers who provide supplemental
investment research to the Investment Adviser and Sub-Adviser may receive
orders for transactions by the Funds. Information so received is in addition
to and not in lieu of services required to be performed by the Investment
Adviser and Sub-Adviser and does not reduce the advisory fees payable to the
Investment Adviser and Sub-Adviser. Such information may be useful to the
Investment Adviser and Sub-Adviser in serving both the Funds and other
clients and, conversely, supplemental information obtained by the placement
of business of other clients may be useful to such adviser in carrying out
its obligations to the Funds.
The Funds will not execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with the Investment Adviser or
Sub-Adviser, its Distributor, or their affiliates except as may be permitted
under the 1940 Act, and will not give preference to correspondents of an
Investment 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
B-28
<PAGE> 40
may aggregate the securities to be sold or purchased by it for a Fund with
those to be sold or purchased by it for other Funds or for other investment
companies or accounts in order to obtain best execution. As provided by
Investment Advisory and Sub-Advisory Agreements, in making investment
recommendations for the Funds, the Investment Adviser or Sub-Adviser will
not inquire or take into consideration whether an issuer of securities
proposed for purchase or sale by the Funds is a customer of the Investment
Adviser or Sub-Adviser or their respective parents or subsidiaries or
affiliates unless legally required to do so and, in dealing with its
commercial customers, the Investment Adviser or Sub-Adviser and their
respective parents, subsidiaries, and affiliates will not inquire or take
into consideration whether securities of such customers are held by the
Funds.
ADMINISTRATOR
BISYS Fund Services ("BISYS") serves as general manager and
administrator (the "Administrator") to each Fund pursuant to the Management
and Administration Agreement with the Funds dated September 5, 1990, as
amended and restated on August 30, 1994 (hereinafter referred to as the
"Administration Agreement"). The Administrator assists in supervising all
operations of each Fund (other than those performed under the Investment
Advisory, Sub-Advisory, Custodian, Fund Accounting, and Transfer Agency
Agreements for that Fund). The Administrator is a broker-dealer registered
with the 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, 1997, BISYS received $492,442 with respect to the U.S. Treasury
Fund; $738,049 with
B-29
<PAGE> 41
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.
For management and administration services during the fiscal year ended
August 31, 1995, BISYS received $379,988 with respect to the U.S. Treasury
Fund; $415,071 with respect to the Cash Management Fund; $67,742 with
respect to the Bond Fund; $154,024 with respect to the Intermediate Bond
Fund; $17,180 with respect to the Intermediate Tax-Free Bond Fund, which
represents a waiver of $38,490; $143,476 with respect to the Equity Fund;
and $51,949 with respect to the Aggressive Growth Fund. For the period from
commencement of operations, October 19, 1994, to August 31, 1995, BISYS
received $10,031 which represents a waiver of $10,603 with respect to the
Short-Term Income Fund, and for the period from commencement of operations,
June 1, 1995, to August 31, 1995, BISYS received $5,873 with respect to the
Balanced Fund.
Unless sooner terminated, the Administration Agreement will continue in
effect until December 31, 1998 and thereafter will automatically continue in
effect for successive three-year periods unless written notice not to renew
is given by the non-renewing party at least sixty days prior to the
expiration of the then-current term. Otherwise, the Administration Agreement
is terminable, with respect to a particular Fund only upon mutual agreement
or for "cause" in either case on not less than sixty days' notice by the
Funds' Board of Trustees or by the Administrator. For purposes of the
Administration Agreement, "cause" means (i) willful misfeasance, bad faith,
gross negligence, abandonment, or reckless disregard on the part of either
party with respect to its obligations and duties set forth herein; (ii)
regulatory, administrative, or judicial action initiated against either
party with regard to the violation of any rule, regulation, order, or law;
(iii) the dissolution or liquidation of either party or other cessation of
business other than a reorganization or recapitalization of such party as an
ongoing business; (iv) financial difficulties on the part of either party
which is evidenced by the authorization or commencement of, or involvement
by way of pleading, answer, consent, or acquiescence in, a voluntary or
involuntary case under Title 11 of the United States Code, as, from time to
time, in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to
the modification or alteration of the rights of creditors; or (v) any
circumstance which substantially impairs the performance of either party's
obligations and duties as contemplated herein.
B-30
<PAGE> 42
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered
by the Funds in connection with the matters to which the Agreement relates,
except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard
by it of its obligations and duties thereunder.
SUB-ADMINISTRATOR
Effective May 12, 1995, 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,
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.
For Sub-Administration services during the period from May 12, 1995 to
August 31, 1995 BOK received fees in the following amounts from the
Administrator: $33,272 with respect to the U.S. Treasury Fund; $33,645 with
respect to the Cash Management Fund; $4,429 with respect to the Bond Fund;
$9,680 with respect to the Intermediate Bond Fund; $3,594 with respect to
the Intermediate Tax-Free Bond Fund; $9,488 with respect to the Equity Fund;
$4,200 with respect to the Aggressive Growth Fund; and $1,589 with respect
to the Short-Term Income Fund. For the period from commencement of
operations, June 1, 1995 to August 31, 1995, BOK received $1,241 with
respect to the Balanced Fund.
DISTRIBUTOR
BISYS serves as distributor to each of the Funds pursuant to its
Distribution Agreement with the Funds dated October 1, 1993 (the
"Distribution Agreement"). Unless otherwise terminated, the Distribution
Agreement will continue in effect until August 1, 1998 and
B-31
<PAGE> 43
thereafter will continue for successive one-year periods if approved at
least annually (i) by the Funds' Board of Trustees or by the vote of a
majority of the outstanding voting Shares of the Funds (as defined in
"GENERAL INFORMATION-Miscellaneous" in the Funds' Prospectuses) that are
parties to the Distribution Agreement, and (ii) by the vote of a majority of
the Trustees of the Funds who are not parties to the Distribution Agreement
or interested persons (as defined in the 1940 Act) of any such party, cast
in person at a meeting called for the purpose of voting on such approval.
The Agreement may be terminated in the event of its assignment, as defined
in the 1940 Act.
The Distribution Agreement is the successor to the previous
distribution agreement, which terminated automatically by its terms upon
consummation of the acquisition of BISYS by The BISYS Group, Inc. The
Distribution Agreement was unanimously approved by the Board of Trustees of
the Funds and is materially identical to the terminated distribution
agreement.
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTANT
Cash and securities owned by each of the Funds are held by 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, 1997,
BOK received $73,866 with respect to the U.S. Treasury Fund; $110,707 with
respect to the Cash Management Fund; $9,856 with respect to the Bond Fund;
$19,217 with respect to the Intermediate Bond Fund; $36,245 with respect to
the Equity Fund; $8,169 with respect to the Intermediate Tax-Free Bond Fund;
and $13,550 with respect to the Aggressive Growth Fund. For custodian
services during the fiscal year ended August 31, 1997, BOK waived its entire
fee of $4,412 with respect to the Short-Term Income Fund and waived its
entire fee of $7,963 with respect to the Balanced Fund. As of August 31,
1997, the Growth Equity Fund had not commenced operations.
B-32
<PAGE> 44
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, 1997, BISYS Fund Services Ohio, Inc. received $115,900 with
respect to the U.S.
B-33
<PAGE> 45
Treasury Fund; $164,177 with respect to the Cash Management Fund;
$24,166 with respect to the Bond Fund; $45,971 with respect to the
Intermediate Bond Fund; $69,023 with respect to the Equity Fund; $29,602
with respect to the Intermediate Tax-Free Bond Fund; $32,147 with respect to
Aggressive Growth Fund; $10,419 with respect to the Short-Term Income Fund;
and $21,229 with respect to the Balanced Fund. As of August 31, 1997, the
Growth Equity Fund had not commenced operations.
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> 46
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, 1997 (the "base
period"), the yield of the Cash Management Fund was 5.07% and the Fund's
effective yield was 5.20%. Based on the same base period, the yield of the
U.S. Treasury Fund was 4.85% and the Fund's effective yield was 4.97%. Each
Money Market Fund's seven-day yield is computed by determining the
B-35
<PAGE> 47
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 February 28, 1998 ("30-day base
period"), the 30-day yields of the Bond Investment Funds were as follows:
the Bond Fund, -.03% (without load) and -4.03 (with load); the Intermediate
Bond Fund, -.10% (without load) and -3.07 (with load); and the Intermediate
Tax-Free Bond Fund, -.03% (without load) and -3.04 (with load); the
Short-Term Income Fund, 2.18% (without load) and -1.93 (with load). The
30-day yield of each Bond Investment Fund is calculated by dividing the net
investment income per-share earned during the 30-day base period by the
maximum offering price per share on the last day of the period, according
to the following formula:
30-Day Yield = 2[( a-b +1)6-1]
---
cd
In the above formula, "a" represents dividends and interest earned
during the 30-day base period; "b" represents expenses accrued for the
30-day base period (net of reimbursements); "c" represents the average daily
number of shares outstanding during the 30- day base period that were
entitled to receive dividends; and "d" represents the maximum offering price
per share on the last day of the 30-day base period.
The tax equivalent yield for the Intermediate Tax-Free Bond Fund is
computed by dividing that portion of the Intermediate Tax Free Bond Fund's
yield which is tax-exempt by one minus a stated income tax rate and adding
the product to that portion, if any, of the yield of the Fund that is not
tax-exempt. The tax-equivalent yield for the Intermediate Tax-Free Bond Fund
will generally be computed based on an assumed effective Federal income tax
rate of 39.6%.
The average annual total 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.
B-36
<PAGE> 48
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE ONE-YEAR PERIOD ENDED FEBRUARY
28, 1998 FOR THE BOND INVESTMENT FUNDS, ASSUMING THE IMPOSITION OF A SALES
LOAD, WERE AS FOLLOWS: THE BOND FUND, 6.64%; THE INTERMEDIATE BOND FUND,
5.26%; THE INTERMEDIATE TAX-FREE BOND FUND, 4.05%; AND THE SHORT-TERM INCOME
FUND, 6.23%. THE AVERAGE ANNUAL TOTAL RETURNS FOR THE ONE-YEAR PERIOD ENDED
FEBRUARY 28, 1998 FOR THE EQUITY INVESTMENT FUNDS, ASSUMING THE IMPOSITION
OF A SALES LOAD, WERE AS FOLLOWS: THE EQUITY FUND, 23.21%; THE AGGRESSIVE
GROWTH FUND, 9.66%; THE BALANCED FUND, 15.55%; AND THE GROWTH EQUITY FUND,
28.89%.
The average annual total returns, for Shareholders who are not subject
to a sales charge, for the one-year period ended FEBRUARY 28, 1998 were as
follows: the Equity Fund 29.71%, the Aggressive Growth 15.40%, the Bond Fund
11.07%, the Intermediate Bond Fund 8.48%, the Intermediate Tax-Free Bond
Fund 7.25%, the Short-Term Income Fund 8.38%, THE BALANCED FUND 21.62%, AND
THE GROWTH EQUITY FUND 35.61%.1. 1
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE FOLLOWING FUNDS ARE:
SHORT-TERM INCOME FUND FROM COMMENCEMENT OF OPERATIONS (OCTOBER 19, 1994) TO
FEBRUARY 28, 1998 WAS 6.43% (WITHOUT SALES CHARGE) AND 5.81% (AS ADJUSTED
FOR MAXIMUM SALES CHARGE); AND BALANCED FUND FROM COMMENCEMENT OF OPERATIONS
(JUNE 1, 1995) TO FEBRUARY 28, 1998 WAS 19.47% (WITHOUT SALES CHARGE) AND
17.25% (AS ADJUSTED FOR MAXIMUM SALES CHARGE).
The average annual total returns for the five-year period ended
FEBRUARY 28, 1998 were: 6.08% (without sales charge) and 5.21% (as adjusted
for maximum sales charge) for the Bond Fund; 5.18% (without sales charge)
and 4.54% (as adjusted for maximum sales charge) for the Intermediate Bond
Fund; 20.40% (without sales charge) and 19.16% (as adjusted for maximum
sales charge) for the Equity Fund; 5.66% (without sales charge) and 5.02%
(as adjusted for maximum sales charge) for the INTERMEDIATE Tax-Free Bond
Fund; and 12.61% (without sales charge) and 11.46% (as adjusted for maximum
sales charge) for the Aggressive Growth Fund.
The average annual total returns for the following Funds are: Bond Fund
from commencement of operations (September 28, 1990) to FEBRUARY 28, 1998,
8.34% (without sales charge) and 7.74% (as adjusted for maximum sales
charge); Intermediate Bond Fund from commencement of operations (September
28, 1990) to FEBRUARY 28, 1998, 7.30% (without sales charge) and 6.86% (as
adjusted for maximum sales charge); INTERMEDIATE TAX- FREE BOND Fund from
commencement of operations (MAY 29, 1992) TO FEBRUARY 28,
- --------
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> 49
1998, 6.71% (without sales charge) and 6.15% (as adjusted for maximum
sales charge), EQUITY FUND FROM COMMENCEMENT OF OPERATIONS (SEPTEMBER 28,
1990) TO FEBRUARY 28, 1998, 17.34% (WITHOUT SALES CHARGE) AND 16.53% (AS
ADJUSTED FOR MAXIMUM SALES CHARGE); Aggressive Growth Fund from commencement
of operations (February 3, 1992) to FEBRUARY 28, 1998, 10.86% (without sales
charge) and 9.92% (as adjusted for maximum sales charge), AND GROWTH EQUITY
Fund from commencement of operations (JUNE 10, 1994) to FEBRUARY 28, 1998,
28.82% (without sales charge) and 27.06% (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
B-38
<PAGE> 50
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 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
B-39
<PAGE> 51
Shareholders). Except as set forth above, the Trustees may continue to
hold office and may appoint successor Trustees.
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 APRIL 14, 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% of the U.S. Treasury Fund's Shares, 99.9% of
the Cash Management Fund's Shares, 99% of the Equity Fund's Shares, 93% of
the Aggressive Growth Fund's Shares, 98% of the Balanced Fund's Shares, 99%
of the Bond Fund's Shares, 98% of the Intermediate Bond Fund's Shares, 99%
of the Short-Term Income Fund's Shares, 79% of the Intermediate Tax- Free
Bond Fund's Shares and 99% of the Growth Equity Fund's Shares. As of MARCH
31, 1998 Bank of Oklahoma, N.A. and its bank affiliates possessed, on behalf
of its underlying accounts, voting and investment power with respect to 69%
of the U.S. Treasury Fund's Shares, 66% of the Cash Management Fund's
Shares, 77% of the Equity Fund's Shares, 61% of the Aggressive Growth Fund's
Shares, 58% of the Balanced Fund's Shares, 78% of the Bond Fund's Shares,
81% of the Intermediate Bond Fund's Shares, 97% of the Short-Term Income
Fund's Shares, 73% of the Intermediate Tax-Free Bond Fund's Shares and 98%
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 MARCH 31, 1998, the trustees and officers of the Funds, as a
group, owned less than one percent of the Shares of each of the Funds.
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 MARCH 31, 1998:
B-40
<PAGE> 52
<TABLE>
<CAPTION>
Amount of Beneficial Percent
Name and Address Ownership (Shares) of Fund
---------------- -------------------- -------
<S> <C> <C>
Cash Management Fund
Superstar/Netlink 36,398,286 8%
7140 South Lewis Avenue
Tulsa, Oklahoma 74136-5422
U.S. Treasury Fund
Amount of Beneficial Percent
Name and Address Ownership (Shares) of Fund
---------------- -------------------- -------
ONEOK, THRIFT PLAN 20,473,607.91 6%
Bank of Oklahoma Trustee
One Williams Center
Tulsa, Oklahoma 74192
Bond Fund
ONEOK, Thrift Plan 402,492.40 8%
Bank of Oklahoma Trustee
One Williams Center
Tulsa, Oklahoma 74192
Balanced Fund
JACKS SERVICE CO. 401-K 160,817.72 5%
Bank of Oklahoma Trustee
One Williams Center
Tulsa, Oklahoma 74192
NORDAM AP BALANCED FUND 170,632.25 6%
Bank of Oklahoma Trustee
One Williams Center
Tulsa, Oklahoma 74192
HUGHES-ANDERSON 241,047.38 8%
Bank of Oklahoma Trustee
One Williams Center
Tulsa, Oklahoma 74192
RCB BANK 401-K 320,699.57 11%
Bank of Oklahoma Trustee
One Williams Center
Tulsa, Oklahoma 74192
AGGRESSIVE GROWTH FUND
BOK THRIFT PLAN 336,654.42 15%
BANK OF OKLAHOMA TRUSTEE
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74192
</TABLE>
B-41
<PAGE> 53
FINANCIAL STATEMENTS
The Independent Auditors' Report for the American Performance Funds for
the year ended August 31, 1997 and Financial Statements for the American
Performance Funds for the five year period ended August 31, 1997, appearing
in the Annual Report, are incorporated by reference in the Statement of
Additional Information. THE UNAUDITED FINANCIAL STATEMENTS FOR THE EQUITY
INVESTMENT FUNDS AND BOND INVESTMENT FUNDS OF THE AMERICAN PERFORMANCE
FUNDS, APPEARING IN THE SEMI-ANNUAL REPORT, ARE INCORPORATED BY REFERENCE IN
THE STATEMENT OF ADDITIONAL INFORMATION. A copy of the Annual Report dated
as of August 31, 1997 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-42
<PAGE> 54
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 Investors Service, Inc. ("Fitch"), IBCA Limited and its
affiliate, IBCA Inc. (collectively, "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
B-43
<PAGE> 55
principal payments may be very moderate, and thereby not well
safeguarded 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 Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely
strong.
AA Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only
in small degree.
A Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
BB BB debt is regarded as having significant speculative
characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation.
While such debt will likely have some quality and protective
characteristics, these may be outweighed by large
uncertainties or major exposure to adverse conditions.
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
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 (plus or
minus signs are used with a rating symbol to indicate the relative position
of the credit within the rating category):
B-44
<PAGE> 56
AAA Bonds and preferred stock considered to be investment grade
and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and/or dividends
and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA Bonds and preferred stock considered to be investment grade
and of very high credit quality. The obligor's ability to pay
interest and/or dividends and repay principal is very strong,
although not quite as strong as bonds rated "AAA." Because
bonds and preferred stock rated in the "AAA" and "AA"
categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issues is
generally rated "F-1+."
A Bonds and preferred stock considered to be investment grade
and of high credit quality. The obligor's ability to pay
interest and/or dividends and repay principal is considered to
be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than debt or preferred
securities with higher ratings.
IBCA's description of its three highest long-term debt ratings:
AAA Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal
and interest is substantial, such that adverse changes in
business, economic or financial conditions are unlikely to
increase investment risk significantly.
AA Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal
and interest is substantial. Adverse changes in business,
economic, or financial conditions may increase investment
risk, albeit not very significantly.
A Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest
is strong, although adverse changes in business, economic or
financial conditions may lead to increased investment risk.
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:
B-45
<PAGE> 57
-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.
-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 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have
extremely strong safety characteristics are denoted with a
plus sign (+).
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as
high as for issues designated "A-1."
A-3 Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations.
B-46
<PAGE> 58
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.
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's description of its three highest short-term debt ratings:
F-1+ Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of
assurance for timely payment.
F-1 Very Strong Credit Quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in
degree than issues rated F-1+.
F-2 Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as for issues assigned F-1+
or F-1 ratings.
F-3 Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for
timely payment is adequate, however, near-term adverse changes
could cause these securities to be rated below investment
grade.
IBCA's description of its three highest short-term debt ratings:
A1 Obligations supported by the highest capacity for timely
repayment. Where issues possess a particularly strong credit
feature, a rating of A1+ is assigned.
B-47
<PAGE> 59
A2 Obligations supported by a satisfactory capacity for timely
repayment, although such capacity may be susceptible to
adverse changes in business, economic or financial conditions.
A3 Obligations supported by an adequate capacity for timely
repayment. 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.
S&P's description of its two highest municipal note ratings:
SP-1 Strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will
be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over
the term of the notes.
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.
BankWatch(TM) 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.
B-48
<PAGE> 60
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-49
<PAGE> 61
REGISTRATION STATEMENT
OF
AMERICAN PERFORMANCE FUNDS
ON
FORM N-1A
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, 1997:
-- Independent Auditors' Report dated October 17, 1997.
-- Statements of Assets and Liabilities as of August 31, 1997
(audited).
-- Statements of Operations for the fiscal year ended August 31,
1997 (audited).
-- Statements of Changes in Net Assets for the years ended
August 31, 1997 AND 1996 (audited).
-- Schedules of Portfolio Investments AT August 31, 1997
(audited).
-- Notes to Financial Statements dated August 31, 1997 (audited).
-- Financial Highlights for each of the periods or years ended
August 31, 1993, August 31, 1994, August 31, 1995, August 31,
1996 and August 31, 1997 (audited).
THE FOLLOWING FINANCIAL STATEMENTS (UNAUDITED) FOR THE BOND INVESTMENT
FUNDS AND THE EQUITY INVESTMENT FUNDS OF THE AMERICAN PERFORMANCE
FUNDS HAVE
<PAGE> 62
BEEN INCORPORATED INTO THE STATEMENT OF ADDITIONAL INFORMATION BY
REFERENCE TO AMERICAN PERFORMANCE FUNDS' SEMI-ANNUAL REPORT TO
SHAREHOLDERS, DATED FEBRUARY 28, 1998:
-- STATEMENTS OF ASSETS AND LIABILITIES AS OF FEBRUARY 28, 1998
(UNAUDITED).
-- STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED FEBRUARY 28,
1998 (UNAUDITED).
-- STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED
FEBRUARY 28, 1998 (UNAUDITED).
-- SCHEDULES OF PORTFOLIO INVESTMENTS AT FEBRUARY 28, 1998
(UNAUDITED).
-- NOTES TO FINANCIAL STATEMENTS DATED FEBRUARY 28, 1998
(UNAUDITED).
-- FINANCIAL HIGHLIGHTS FOR THE PERIOD ENDED FEBRUARY 28, 1998
(UNAUDITED).
(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.
C-2
<PAGE> 63
(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 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).
C-3
<PAGE> 64
(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 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
C-4
<PAGE> 65
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,
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(G) TO POST-EFFECTIVE AMENDMENT NO. 13 TO THE
FUNDS' REGISTRATION STATEMENT (FILED OCTOBER 31, 1995).
(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).
(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.
C-5
<PAGE> 66
(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).
(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 FILED HEREWITH.
C-6
<PAGE> 67
(17) 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
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 APRIL 2, 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 10
Cash Management Fund 32
Equity Fund 59
Aggressive Growth Fund 110
Bond Fund 16
Intermediate Bond Fund 57
Intermediate Tax-Free 108
Bond Fund
Short-Term Income Fund 5
C-7
<PAGE> 68
Balanced Fund 9
Growth Equity Fund 6
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, 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.
C-8
<PAGE> 69
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 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.
<TABLE>
<CAPTION>
Name and Position With Other
Bank of Oklahoma Substantial Type of
N.A. Occupation Business
---------------------- ----------- --------
<S> <C> <C>
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
</TABLE>
C-9
<PAGE> 70
<TABLE>
<S> <C> <C>
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
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 President and Owner, Kaiser- Oil
Director and Francis Oil Co., P.O. BOX 21468,
Chairman of the Board TULSA, OK 74121-1468
David R. Lopez President, Oklahoma Telecommunications
Director Southwestern Bell Telephone, 800
North Harvey, Oklahoma CITY,
OK 73102
STANLEY A. LYBARGER NONE
DIRECTOR, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
</TABLE>
C-10
<PAGE> 71
<TABLE>
<S> <C> <C>
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
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
</TABLE>
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> 72
AMR INVESTMENT SERVICES, INC.
<TABLE>
<CAPTION>
Name and Position With
AMR Other Substantial Occupation Type of Business
---------------------- ---------------------------- ----------------
<S> <C> <C>
Robert L. Crandall Chairman, President and Chief Airline; Travel and
Director and Chairman Executive Officer, AMR Information Technology;
Corporation; Director, Chairman, Oil Service
and Chief Executive Officer,
American Airlines, Inc.; Director,
The Sabre Group, Inc. Mr.
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; Travel and
Director and Vice Chairman Financial Officer, AMR Information Technology
Corporation; Director, The
Sabre Group, Inc. Mr. Arpey
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.
</TABLE>
C-12
<PAGE> 73
<TABLE>
<S> <C> <C>
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 and
Director General Counsel, AMR Information Technology;
Corporation; Senior Vice Energy
President, Administration and
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.
</TABLE>
The address of each director or officer of AMR Investment Services,
Inc. is 4333 Amon Carter Boulevard, Ft. Worth, Texas 76155.
C-13
<PAGE> 74
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: AmSouth Mutual Funds, The ARCH FUND, INC., THE BB&T
Mutual Funds Group, The Coventry Group, THE EMPIRE BUILDER TAX
FREE BOND FUND, 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, 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:
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address BISYS Fund Services Registrant
------------------ ------------------- -------------
<S> <C> <C>
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
</TABLE>
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> 75
(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> 76
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. 17 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 APRIL, 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. 17 to the Registration Statement has been
signed below by the following persons in the capacity and on the date
indicated.
Signature Title Date
--------- ----- ----
*/s/Walter B. Grimm Chairman, President APRIL 30, 1998
----------------------- and Trustee
Walter B. Grimm
*/s/ Thomas E. Line Treasurer APRIL 30, 1998
-----------------------
Thomas E. Line
*/s/ Michael J. Hall Trustee APRIL 30, 1998
-----------------------
Michael J. Hall
*/s/ Perry A. Wimpey Trustee APRIL 30, 1998
-----------------------
Perry A. Wimpey
*/s/ I. Edgar Hendrix Trustee APRIL 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> 77
POWER OF ATTORNEY
Thomas E. Line 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: April 23, 1997 /s/ Thomas E. Line
-----------------------
Thomas E. Line
<PAGE> 78
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
<PAGE> 79
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
<PAGE> 80
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
<PAGE> 81
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
<PAGE> 82
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.
(16)(c) Performance Calculation Schedule for Growth
Equity Fund
(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
ONE INTERNATIONAL PLACE WASHINGTON, DC 20005-3333 30 KENNEDY PLAZA
BOSTON, MA 02110-2624 (202) 626-3900 PROVIDENCE, RI 02903-2328
(617) 951-7000 (401) 459-4400
FAX: (617) 951-7050 FAX: (202) 626-3961 FAX: (401) 455-4401
WRITER'S DIRECT DIAL NUMBER: (202) 626-3925
April 29, 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
April 29, 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
AUDITOR'S CONSENT
The Board of Trustees of
American Performance Funds
We consent to the use of our report dated October 17, 1997 and incorporated
by reference for the American Performance Funds as of August 31, 1997 and
for the periods indicated therein, and to the reference to our firm under
the heading "Auditors" in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Columbus, Ohio
April 30, 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. 17 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.
April 29, 1998
<PAGE> 1
EXHIBIT (16)(c)
Performance Calculations
Schedules
<PAGE> 2
AMERICAN PERFORMANCE FUNDS
EXHIBIT 16
30-DAY S.E.C. YIELD CALCULATIONS
GROWTH EQUITY FUND
(a-b)
30-Day S.E.C. Yield Equation = 2*[[( (cd) +1)*6] - 1)
WHERE a = Dividends and interest earned during the period
b = Expenses accrued for the period (net of reimbursements)
c = The average daily number of shares outstanding during the period
that were entitled to receive dividends
d = The maximum offering price (NAV for No Load) per share on the last
day of the period.
WITH 5.00% LOAD:
( 73,214.16 - 55,678.91)
= 2*[[( +1)*6]-1]= 0.31%
( 5,597,902.547 * 12.20)
WITHOUT 5.00% LOAD:
( 73,214.16 - 55,678.91)
= 2*[[( +1)*6]-1]= 0.32%
( 5,597,902.547 * 11.59)
The performance was computed based on the thirty day period ending February 28,
1998.
<PAGE> 3
AMERICAN PERFORMANCE FUNDS
EXHIBIT 16
TOTAL RETURN
LOAD CALCULATIONS
GROWTH EQUITY FUND
AVERAGE ANNUAL TOTAL RETURN
WITH SALES LOAD OF: 5.00%
T = (ERV/P)*1/N - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
N = NUMBER OF DAYS
EXAMPLE:
SINCE INCEPTION: ( 06/10/94 TO 02/28/98):
( 2,440.9 /1000*(1/( 1360/365))-1) = 27.06%
ONE YEAR: ( 02/28/97 TO 02/28/98 ):
( 1,288.9 /1000*(1/( 365/365))-1) = 28.89%
AGGREGATE TOTAL RETURN
WITH SALES LOAD OF: 0.00%
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
YEAR TO DATE: ( 12/31/97 TO 02/28/98 ):
( 1,057.4 /1000) - 1 = 5.74%
SINCE INCEPTION: ( 06/10/94 TO 02/28/98 ):
( 2,440.9 /1000) - 1 = 144.09%
QUARTERLY: ( 11/30/97 TO 02/28/98 ):
( 1.063.0 /1,000) - 1 = 6.30%
MONTHLY: ( 0/31/98 TO 02/28/98 ):
( 1,018.4 /1.000) - 1 = 1.84%
<PAGE> 4
AMERICAN PERFORMANCE FUNDS
EXHIBIT 16
TOTAL RETURN
NO LOAD CALCULATIONS
GROWTH EQUITY FUND
AVERAGE ANNUAL TOTAL RETURN
WITH SALES LOAD OF: 0.00%
T = (ERV/P)*1/N - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
N = NUMBER OF DAYS
EXAMPLE:
SINCE INCEPTION: ( 06/10/94 TO 02/28/98):
( 2,569.4 /1000*(1/( 1360/365))-1) = 28.82%
ONE YEAR: ( 02/28/97 TO 02/28/98):
( 1,356.1 /1000*(1/( 365/365))-1) = 35.61%
AGGREGATE TOTAL RETURN
WITH SALES LOAD OF: 0.00%
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
YEAR TO DATE: ( 12/31/97 TO 02/28/98 ):
( 1,113.2 /1000) - 1 = 11.32%
SINCE INCEPTION: ( 06/10/94 TO 02/28/98 ):
( 2,569.4 /1000) - 1 = 156.94%
QUARTERLY: ( 11/30/97 TO 02/28/98 ):
( 1.119.4 /1,000) - 1 = 11.94%
MONTHLY: ( 0/31/98 TO 02/28/98 ):
( 1,072.1 /1.000) - 1 = 7.21&
<TABLE> <S> <C>
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<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
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<NUMBER> 01
<NAME> CASH MANAGEMENT FUND
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<INVESTMENTS-AT-VALUE> 407597344
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<OTHER-ITEMS-LIABILITIES> 1756825
<TOTAL-LIABILITIES> 1756825
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<PAID-IN-CAPITAL-COMMON> 408860829
<SHARES-COMMON-STOCK> 408860828
<SHARES-COMMON-PRIOR> 331100389
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4977
<ACCUMULATED-NET-GAINS> 13937
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<NET-ASSETS> 408869789
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10777062
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<EXPENSES-NET> 1313547
<NET-INVESTMENT-INCOME> 9463515
<REALIZED-GAINS-CURRENT> 13939
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<NET-CHANGE-FROM-OPS> 9477454
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<DISTRIBUTIONS-OF-INCOME> 9463515
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<NUMBER-OF-SHARES-SOLD> 493707557
<NUMBER-OF-SHARES-REDEEMED> 415960659
<SHARES-REINVESTED> 13542
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<OVERDISTRIB-NII-PRIOR> 4977
<OVERDIST-NET-GAINS-PRIOR> 2
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<GROSS-EXPENSE> 1779893
<AVERAGE-NET-ASSETS> 376168724
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .025
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .025
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<PER-SHARE-NAV-END> 1
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 02
<NAME> U.S. TREASURY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 371308683
<INVESTMENTS-AT-VALUE> 371308683
<RECEIVABLES> 86814
<ASSETS-OTHER> 29121
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 371424618
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1523766
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 369904967
<SHARES-COMMON-STOCK> 369904967
<SHARES-COMMON-PRIOR> 298381286
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 4115
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<NET-ASSETS> 369900852
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9986911
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<EXPENSES-NET> 1281070
<NET-INVESTMENT-INCOME> 8705841
<REALIZED-GAINS-CURRENT> 9035
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 8714876
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8705841
<DISTRIBUTIONS-OF-GAINS> 56293
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 487387670
<NUMBER-OF-SHARES-REDEEMED> 415882110
<SHARES-REINVESTED> 18120
<NET-CHANGE-IN-ASSETS> 71476422
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<ACCUMULATED-GAINS-PRIOR> 43143
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 716730
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<GROSS-EXPENSE> 1729027
<AVERAGE-NET-ASSETS> 361335330
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .024
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .024
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<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .71
<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
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 47294341
<INVESTMENTS-AT-VALUE> 48724116
<RECEIVABLES> 656295
<ASSETS-OTHER> 1394
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 49381805
<PAYABLE-FOR-SECURITIES> 2048212
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<OTHER-ITEMS-LIABILITIES> 299276
<TOTAL-LIABILITIES> 2347488
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45944838
<SHARES-COMMON-STOCK> 4924144
<SHARES-COMMON-PRIOR> 3815832
<ACCUMULATED-NII-CURRENT> 17925
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 358221
<ACCUM-APPREC-OR-DEPREC> 1429775
<NET-ASSETS> 47034317
<DIVIDEND-INCOME> 23594
<INTEREST-INCOME> 1426833
<OTHER-INCOME> 0
<EXPENSES-NET> 191264
<NET-INVESTMENT-INCOME> 1259163
<REALIZED-GAINS-CURRENT> 103168
<APPREC-INCREASE-CURRENT> 978390
<NET-CHANGE-FROM-OPS> 2340721
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1259163
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1266774
<NUMBER-OF-SHARES-REDEEMED> 233075
<SHARES-REINVESTED> 74613
<NET-CHANGE-IN-ASSETS> 11580166
<ACCUMULATED-NII-PRIOR> 17925
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 461389
<GROSS-ADVISORY-FEES> 111074
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 232286
<AVERAGE-NET-ASSETS> 41362396
<PER-SHARE-NAV-BEGIN> 9.29
<PER-SHARE-NII> .29
<PER-SHARE-GAIN-APPREC> .26
<PER-SHARE-DIVIDEND> .29
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<PER-SHARE-NAV-END> 9.55
<EXPENSE-RATIO> .93
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<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> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
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<INVESTMENTS-AT-VALUE> 83175875
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<PAYABLE-FOR-SECURITIES> 2082956
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<OTHER-ITEMS-LIABILITIES> 481019
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<PAID-IN-CAPITAL-COMMON> 80711812
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<OVERDISTRIBUTION-NII> 19520
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<OVERDISTRIBUTION-GAINS> 661967
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<EXPENSES-NET> 367442
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<NUMBER-OF-SHARES-SOLD> 774465
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 05
<NAME> EQUITY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
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<INVESTMENTS-AT-VALUE> 199325433
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<TOTAL-ASSETS> 199658797
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<ACCUMULATED-NET-GAINS> 3290533
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 56924000
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<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 963723
<NET-INVESTMENT-INCOME> 497403
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<APPREC-INCREASE-CURRENT> 14246592
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<DISTRIBUTIONS-OF-GAINS> 25074277
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<NUMBER-OF-SHARES-SOLD> 1150915
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<ACCUMULATED-GAINS-PRIOR> 18199803
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<PER-SHARE-NII> .04
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 06
<NAME> AGGRESSIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34494
<TOTAL-LIABILITIES> 34494
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26394366
<SHARES-COMMON-STOCK> 2513426
<SHARES-COMMON-PRIOR> 3123579
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 134335
<ACCUMULATED-NET-GAINS> 7182274
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<ACCUM-APPREC-OR-DEPREC> 5478891
<NET-ASSETS> 38921196
<DIVIDEND-INCOME> 135889
<INTEREST-INCOME> 28644
<OTHER-INCOME> 0
<EXPENSES-NET> 274760
<NET-INVESTMENT-INCOME> (110227)
<REALIZED-GAINS-CURRENT> 9019984
<APPREC-INCREASE-CURRENT> (11352984)
<NET-CHANGE-FROM-OPS> (2443227)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 7598060
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<NUMBER-OF-SHARES-SOLD> 661712
<NUMBER-OF-SHARES-REDEEMED> 1802138
<SHARES-REINVESTED> 530273
<NET-CHANGE-IN-ASSETS> (20060833)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5760350
<OVERDISTRIB-NII-PRIOR> 24108
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 324585
<AVERAGE-NET-ASSETS> 52882005
<PER-SHARE-NAV-BEGIN> 18.88
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> (.76)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000864508
<NAME> AMERICAN PERFORMANCE FUNDS
<SERIES>
<NUMBER> 07
<NAME> INTERMEDIATE TAX-FREE BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
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<INVESTMENTS-AT-VALUE> 29063399
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<SHARES-COMMON-STOCK> 2688087
<SHARES-COMMON-PRIOR> 2462508
<ACCUMULATED-NII-CURRENT> 15282
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 69554
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1301710
<NET-ASSETS> 29323888
<DIVIDEND-INCOME> 11697
<INTEREST-INCOME> 706045
<OTHER-INCOME> 0
<EXPENSES-NET> 99420
<NET-INVESTMENT-INCOME> 618322
<REALIZED-GAINS-CURRENT> 111209
<APPREC-INCREASE-CURRENT> 386129
<NET-CHANGE-FROM-OPS> 1115660
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