<PAGE> 1
AMERICAN PERFORMANCE FUNDS
Money Market Funds
American Performance Cash Management Fund
Supplement dated February 17, 1999
to Prospectus dated February 17, 1999
Capitalized terms not defined in this Supplement have the meaning
assigned to them in the Prospectus.
1. In order to reflect the sub-advisory relationship and fee structure
with AMR Investment Services, Inc. (" AMR"), in effect through April 30, 1999,
the Fee Table for the Cash Management Fund on page 4 is hereby replaced as
follows, through April 30, 1999:
FEE TABLE
Cash Management
Fund
---------------
Shareholder Transaction Expenses(1)
Maximum Sales Load
Imposed on Purchases 0%
(as a percentage of offering price)
Maximum Sales Load Imposed
on Reinvested Dividends 0%
(as a percentage of offering price)
Deferred Sales Load 0%
(as a percentage of original
purchase price or redemption
proceeds, if applicable)
Redemption Fees(2) 0%
(as a percentage of amount
redeemed, if applicable)
Exchange Fees $0
___________
(1) Participating Organizations (as defined in "DISTRIBUTION") may charge
a Customer (as defined in "DISTRIBUTION") account fees for automatic investment
and other investment and trust services provided in connection with investment
in the Funds. (See "HOW TO PURCHASE SHARES.")
(2) A wire redemption charge may be deducted from the amount of a wire
redemption payment made at the request of a Shareholder. The current charge,
which is subject to change upon notice to Shareholders, is $15.00. (See "HOW TO
REDEEM SHARES - By Telephone.")
<PAGE> 2
Cash
Management
Fund
----
Annual Operating Expenses
- -------------------------
(as a percentage of average net assets)
Management Fees 0.40%
12b-1 Fees (after voluntary fee reductions(3) 0.00%
Other Expenses (after voluntary fee reductions(4) 0.27%
----------
Total Fund Operating Expenses (after voluntary fee reductions)(5) 0.67%
EXAMPLE: You would pay the following expenses on a $1,000 investment in each of
the Funds, assuming (1) 5% annual return and (2) redemption at the end of each
time period:
<TABLE>
<CAPTION>
Cash Management
Fund
---------------
<S> <C>
1 Year $7
3 Years $21
5 Years $37
10 Years $83
____________
</TABLE>
(3) In order to reduce operating expenses, the Distributor has
voluntarily agreed to reduce the 12b-1 Fees. Absent a voluntary fee reduction,
the 12b-1 Fees would be 0.25% of the average daily net assets for the Cash
Management Fund.
(4) In order to reduce operating expenses, the Administrator has
voluntarily agreed to reduce administration fees. Absent a voluntary fee
reduction, the Other Expenses would be 0.31% of the average daily net assets for
the Cash Management Fund.
(5) Absent a voluntary fee reduction, the Total Fund Operating Expenses
would be 0.96% of the average daily net assets of the Cash Management Fund.
The purpose of the above table is to assist a potential purchaser of
Shares of the Cash Management Fund in understanding the various costs and
expenses that an investor in that Fund will bear directly or indirectly. The
examples reflect voluntary reductions of 12b-1 Fees and Other Expenses. Although
the Distributor and Administrator currently have agreed to these voluntary
reductions, they may cease to provide these reductions, which would have the
effect of increasing the expenses set forth above in the examples. Such expenses
do not include any fees charged by BOK or any of its affiliates to its
customers' account which may have invested in Shares of a Fund. See "MANAGEMENT
OF THE MONEY MARKET FUNDS" and "DISTRIBUTION" for a more complete discussion of
the transaction expenses and annual operating expenses of the Fund.
THE FOREGOING EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
<PAGE> 3
2. The following paragraphs should be inserted under INVESTMENT
ADVISER on page 22 of the Prospectus:
Bank of Oklahoma, N.A. ("BOK") serves as the Investment Adviser to the
Cash Management Fund and AMR will continue to serve as the Sub-Adviser to the
Cash Management Fund until April 30, 1999, pursuant to a sub-investment advisory
agreement between BOK and AMR.
Subject to the general supervision of the Funds' Board of Trustees and
BOK, and in accordance with the investment objective and restrictions of the
Cash Management Fund, AMR performs the following services: management of the
Cash Management Fund, decisions with respect to portfolio securities, placement
of orders for all purchases and sales of the portfolio securities of the Cash
Management Fund, and maintenance of the Cash Management Fund's records directly
relating to such purchases and sales.
AMR is a wholly-owned subsidiary of AMR Corporation, the parent company
of American Airlines, Inc., organized in 1986 to provide business management,
advisory, administrative and asset management consulting services. As of August
31, 1998 AMR assets under management (including assets under fiduciary advisory
control) totaled approximately $19.3 billion including approximately $6.8
billion under active management and $12.5 billion as named fiduciary or
fiduciary adviser. Of the total, approximately $14.6 billion of assets are
related to AMR Corporation.
For the services provided and expenses assumed pursuant to its
Investment Advisory Agreement with the Funds regarding the Cash Management Fund,
BOK receives a fee from the Cash Management Fund, computed daily and paid
monthly of the lesser of (1) such fee as may from time to time be agreed upon in
writing by the Funds and BOK, or (2) forty one-hundredths of one percent
(0.40%) of the Fund's average daily net assets. Of this amount, BOK pays to AMR
a fee, computed daily and paid monthly, at the annual rate of fifteen one-
hundredths of one percent (0.15%) of the Cash Management Fund's average daily
net assets, pursuant to a sub-investment advisory agreement between BOK and AMR.
BOK may periodically waive all or a portion of its fee with respect to the Cash
Management Fund to increase the net income of such Fund available for
distribution as dividends.
For investment advisory services to the Cash Management Fund, the Fund
paid BOK, 0.40% of its average daily net assets for the fiscal year ended August
31, 1998. Of this amount, BOK paid AMR 0.15% of the Cash Management Fund's
average daily net assets for the fiscal year ended August 31, 1998.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE PROSPECTUS FOR FUTURE
REFERENCE.
<PAGE> 4
AMERICAN PERFORMANCE FUNDS
MONEY MARKET FUNDS
[FLAG LOGO]
AMERICAN PERFORMANCE FUNDS
The Right Fit For Your Investment Goals
U.S. TREASURY FUND
CASH MANAGEMENT FUND
INVESTMENT ADVISER
Bank of Oklahoma, N.A.
Bank Oklahoma Tower
Tulsa, Oklahoma 74103
ADMINISTRATOR/DISTRIBUTOR
BISYS Fund Services U.S. TREASURY FUND
3435 Stelzer Road
Columbus, Ohio 43219-3035 CASH MANAGEMENT
FUND
LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street N.W.
Suite 800 East
Washington, DC 20005
AUDITORS
KPMG LLP
Two Nationwide Plaza
Columbus, Ohio 43215
Prospectus
AP1P021799 February 17, 1999
<PAGE> 5
<TABLE>
<S> <C>
American For performance, purchase, and
Performance redemption information, call
MONEY MARKET (800) 762-7085
Funds 3435 Stelzer Road
Two Stable Net Asset Value Columbus, Ohio 43219
Investment Portfolios of
American Performance Funds
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
The American Performance Money Market Funds (the "Money Market Funds") are
two stable net asset value portfolios of the AMERICAN PERFORMANCE FUNDS (the
"Funds"), a diversified open-end management investment company which currently
consists of ten separately managed portfolios. All securities or instruments in
which the Money Market Funds invest have remaining maturities of 397 days or
less, although obligations subject to repurchase agreements and certain variable
and floating rate instruments may bear longer maturities. Each Money Market Fund
seeks current income with liquidity and stability of principal.
AMERICAN PERFORMANCE U.S. TREASURY FUND (the "U.S. Treasury Fund") invests
exclusively in U.S. Treasury bills, notes, and other obligations backed by the
full faith and credit of the U.S. government, some of which may be subject to
repurchase agreements.
AMERICAN PERFORMANCE CASH MANAGEMENT FUND (the "Cash Management Fund")
invests in U.S. dollar-denominated, high quality, short-term debt and other
short-term obligations of high quality.
(Continued on following page)
- --------------------------------------------------------------------------------
AN INVESTMENT IN THE MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY, BANK OF OKLAHOMA, N.A. OR ANY OF ITS AFFILIATES. THE FUNDS' SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR BY ANY OTHER AGENCY. AN INVESTMENT IN THE FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
The date of this Prospectus is February 17, 1999.
prospectus
<PAGE> 6
(Continued from previous page)
Bank of Oklahoma, N.A., Tulsa, Oklahoma ("BOK") serves as investment
adviser ("Investment Adviser") to the Money Market Funds. BISYS Fund Services
Limited Partnership, d/b/a BISYS Fund Services, Columbus, Ohio ("BISYS" or the
"Distributor") acts as the Administrator and Distributor to the Money Market
Funds.
This Prospectus relates only to the Money Market Funds. The Funds also
include four bond portfolios to which BOK serves as Investment Adviser: the
American Performance Bond Fund, the American Performance Intermediate Bond Fund,
and the American Performance Short-Term Income Fund, each of which seeks current
income, and the American Performance Intermediate Tax-Free Bond Fund, which
seeks current income exempt from Federal taxation, through investing in
diversified portfolios of bonds and other fixed income securities (collectively,
the "American Performance Bond Investment Funds"). The Funds also include four
equity portfolios to which BOK serves as Investment Adviser: the American
Performance Equity Fund, which seeks growth of capital and, secondarily, income
through investing primarily in common stocks and securities convertible into
common stocks, the American Performance Balanced Fund, which seeks current
income and, secondarily, long-term capital growth by investing primarily in a
broadly diversified portfolio of securities, including common stocks, preferred
stocks and bonds, the American Performance Growth Equity Fund, which seeks long-
term capital appreciation income by investing primarily in a diversified
portfolio of common stocks and securities convertible into common stocks, and
the American Performance Small Cap Equity Fund, which seeks long-term capital
appreciation and, secondarily, income by investing in a diversified portfolio of
common stocks and securities convertible into common stocks of small-size
companies (collectively, the "American Performance Equity Investment Funds").
Persons who wish to obtain a copy of the Prospectus for the American Performance
Bond Investment Funds or the American Performance Equity Investment Funds may
contact the Funds at the telephone number shown above.
A Statement of Additional Information bearing the same date as this
Prospectus, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Statement of Additional Information can be
obtained without charge by writing to or calling the Funds at the address or
telephone number shown above.
This Prospectus sets forth concisely the information about the Money Market
Funds that a prospective investor should know before investing. Investors should
read this Prospectus and retain it for future reference.
prospectus
2
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table................................................... 4
Financial Highlights........................................ 5
Investment Objectives....................................... 7
Investment Policies and Special Considerations.............. 8
Other Investment Techniques of the Money Market Funds....... 10
Investment Restrictions..................................... 13
Valuation of Shares......................................... 14
How to Purchase Shares...................................... 15
Sales Charges............................................... 17
Exchange Privilege.......................................... 17
How to Redeem Shares........................................ 18
Dividends................................................... 20
Federal Income Taxes........................................ 20
Distribution................................................ 21
Management of the Money Market Funds........................ 21
General Information......................................... 24
</TABLE>
prospectus
3
<PAGE> 8
FEE TABLE
<TABLE>
<CAPTION>
CASH
U.S. TREASURY MANAGEMENT
FUND FUND
------------- ---------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
- ----------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)....................... 0% 0%
Maximum Sales Load Imposed on Reinvested Dividends (as a
percentage of offering price)............................. 0% 0%
Deferred Sales Load (as a percentage of original purchase
price or redemption proceeds, if applicable).............. 0% 0%
Redemption Fees(2) (as a percentage of amount redeemed, if
applicable)............................................... 0% 0%
Exchange Fees............................................... $ 0 $ 0
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
- ----------------------------------------------------------------------------------------------
Management Fees(3) (after voluntary fee reductions)......... 0.40% 0.29%
12b-1 Fees(4) (after voluntary fee reductions).............. 0.00% 0.00%
Other Expenses(5) (after voluntary fee reductions).......... 0.32% 0.27%
---- ----
Total Fund Operating Expenses(6) (after voluntary fee
reductions)........................................... 0.72% 0.56%
==== ====
EXAMPLE:
- ----------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000
investment in each of the Funds, assuming (1) 5% annual
return and (2) redemption at the end of each time
period:
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY CASH MANAGEMENT
FUND FUND
------------- ---------------
<S> <C> <C>
1 Year...................................................... $ 7 $ 6
3 Years..................................................... $ 23 $ 18
5 Years..................................................... $ 40 $ 31
10 Years.................................................... $ 89 $ 70
</TABLE>
The purpose of the above table is to assist a potential purchaser of Shares of
the U.S. Treasury Fund and the Cash Management Fund in understanding the various
costs and expenses that an investor in each Fund will bear directly or
indirectly. The examples reflect voluntary reductions of investment advisory
fees, 12b-1 Fees and/or other expenses, as applicable. Although the Investment
Adviser, Distributor, and Administrator currently have agreed to these voluntary
reductions, they may cease to provide these reductions, which would have the
effect of increasing the expenses set forth above in the examples. Such expenses
do not include any fees charged by BOK or any of its affiliates to its
customers' account which may have invested in Shares of a Fund. See "MANAGEMENT
OF THE MONEY MARKET FUNDS" and "DISTRIBUTION" for a more complete discussion of
the transaction expenses and annual operating expenses of each Fund.
THE FOREGOING EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
prospectus
4
<PAGE> 9
- ---------------
(1) Participating Organizations (as defined in "DISTRIBUTION") may charge a
Customer (as defined in "DISTRIBUTION") account fees for automatic
investment and other investment and trust services provided in connection
with investment in the Funds. (See "HOW TO PURCHASE SHARES.")
(2) A wire redemption charge may be deducted from the amount of a wire
redemption payment made at the request of a Shareholder. The current charge,
which is subject to change upon notice to Shareholders, is $15.00. (See "HOW
TO REDEEM SHARES -- By Telephone.")
(3) In order to reduce operating expenses, the Investment Adviser has
voluntarily agreed to reduce the investment advisory fees. Absent a
voluntary fee reduction, the investment advisory fees would be 0.40% of the
average daily net assets of the Cash Management Fund.
(4) In order to reduce operating expenses, the Distributor has voluntarily
agreed to reduce the 12b-1 Fees. Absent a voluntary fee reduction, the 12b-1
Fees would be 0.25% of the average daily net assets for the U.S. Treasury
Fund and the Cash Management Fund, respectively.
(5) In order to reduce operating expenses, the Administrator has voluntarily
agreed to reduce administration fees. Absent a voluntary fee reduction, the
Other Expenses would be 0.31% of the average daily net assets for the Cash
Management Fund.
(6) Absent a voluntary fee reduction, the Total Fund Operating Expenses would be
0.97% and 0.96% of the average daily net assets of the U.S. Treasury Fund
and the Cash Management Fund, respectively.
FINANCIAL HIGHLIGHTS
The American Performance Funds were organized as a Massachusetts business trust
and began active operations in August of 1990. The Funds currently consist of
ten series of units of beneficial interest ("Shares"). Two such series represent
interests in the U.S. Treasury Fund and the Cash Management Fund.
The Tables below set forth certain financial highlights for the U.S. Treasury
Fund and the Cash Management Fund for the periods indicated. The most recent
five years of each Table are part of the Fund's financial statements which are
included in the Fund's Annual Report and are incorporated by reference into the
Statement of Additional Information, which a Shareholder may obtain by calling
the
prospectus
5
<PAGE> 10
Funds. The financial statements have been audited by KPMG LLP, independent
public accountants for the Funds, whose report thereon, is included in the
Fund's Annual Report.
<TABLE>
<CAPTION>
CASH MANAGEMENT FUND
-------------------------------------------------------------------------------------------
SEPTEMBER 21,
YEAR ENDED AUGUST 31, 1990 TO
--------------------------------------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994 1993 1992 1991(a)
-------- -------- -------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------- -------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.050 0.049 0.050 0.052 0.030 0.028 0.042 0.063
Net realized loss on
investments................. -- (0.10) -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------
Total from investment
activities................ 0.050 0.039 0.050 0.052 0.030 0.028 0.042 0.063
-------- -------- -------- -------- -------- -------- -------- -------
DISTRIBUTIONS
Net investment income......... (0.050) (0.049) (0.050) (0.052) (0.030) (0.028) (0.042) (0.063)
-------- -------- -------- -------- -------- -------- -------- -------
Total Distributions........... (0.050) (0.049) (0.050) (0.052) (0.030) (0.028) (0.042) (0.063)
-------- -------- -------- -------- -------- -------- -------- -------
Capital Transaction........... -- 0.010 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ======== ======== =======
Total Return................... 5.14% 5.05%(d) 5.14% 5.30% 3.08% 2.87% 4.38% 6.55%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period
(000)....................... $466,571 $331,095 $375,797 $194,807 $195,490 $167,269 $152,652 $95,962
Ratio of expenses to average
net assets.................. 0.71% 0.72% 0.71% 0.74% 0.78% 0.78% 0.79% 0.76%(b)
Ratio of net investment income
to average net assets....... 5.02% 4.93% 5.01% 5.18% 3.05% 2.80% 4.14% 6.75%(b)
Ratio of expenses to average
net assets*................. 0.96% 0.97% 0.96% 0.99% 0.98% 0.98% 1.03% 1.01%(b)
Ratio of net investment income
to average net assets*...... 4.77% 4.68% 4.76% 4.94% 2.85% 2.60% 3.91% 6.50%(b)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
(d) The total return includes the effect of a capital contribution of $0.010 per
share. The return without capital contribution would have been 4.05%.
prospectus
6
<PAGE> 11
<TABLE>
<CAPTION>
U.S. TREASURY FUND
------------------------------------------------------------------------------------------
SEPTEMBER 5,
YEAR ENDED AUGUST 31, 1990 TO
-------------------------------------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994 1993 1992 1991(a)
-------- -------- -------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------- -------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.048 0.046 0.047 0.048 0.028 0.025 0.038 0.061
DISTRIBUTIONS
Net investment income......... (0.048) (0.046) (0.047) (0.048) (0.028) (0.025) (0.038) (0.061)
-------- -------- -------- -------- -------- -------- -------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ======== ======== =======
Total Return................... 4.94% 4.74% 4.85% 4.95% 2.87% 2.57% 3.91% 6.28%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period
(000)....................... $388,319 $298,424 $217,406 $187,007 $165,353 $169,428 $136,637 $95,585
Ratio of expenses to average
net assets.................. 0.72% 0.72% 0.74% 0.75% 0.81% 0.81% 0.81% 0.78%(b)
Ratio of net investment income
to average net assets....... 4.83% 4.65% 4.74% 4.88% 2.81% 2.51% 3.65% 6.10%(b)
Ratio of expenses to average
net assets*................. 0.97% 0.97% 0.99% 1.00% 1.01% 1.01% 1.04% 1.03%(b)
Ratio of net investment income
to average net assets*...... 4.58% 4.40% 4.49% 4.63% 2.61% 2.31% 3.41% 5.85%(b)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
INVESTMENT OBJECTIVES
U.S. TREASURY FUND
The investment objective of the U.S. Treasury Fund is to seek current income
with liquidity and stability of principal by investing exclusively in short-term
obligations backed by the full faith and credit of the U.S. government, some of
which may be subject to repurchase agreements.
CASH MANAGEMENT FUND
The investment objective of the Cash Management Fund is to seek current income
with liquidity and stability of principal by investing in money market
instruments which are considered by the Board of Trustees to present minimal
credit risks.
BOTH MONEY MARKET FUNDS
All securities or instruments in which either of the Money Market Funds invests
are valued based on the amortized cost valuation technique pursuant to Rule 2a-7
under the Investment Company Act of 1940, as amended (the "1940 Act"). All
instruments in which either of the Money Market Funds invests will have
remaining maturities of 397 days or less, although instruments subject to
repurchase agreements
prospectus
7
<PAGE> 12
and certain variable or floating rate obligations may bear longer maturities.
The average dollar-weighted maturity of the securities in each of the Money
Market Funds will not exceed 90 days. Obligations purchased by the Money Market
Funds are limited to U.S. dollar-denominated obligations which the Board of
Trustees has determined present minimal credit risks. See the Statement of
Additional Information for an explanation of the amortized cost valuation
method.
Although the U.S. Treasury Fund and the Cash Management Fund have similar
investment objectives, their particular portfolio securities and yields will
differ due to differences in the types of permitted investments, cash flow, and
the availability of particular portfolio investments. The investment objective
with respect to each of the Money Market Funds is fundamental and may not be
changed without a vote of the holders of a majority of the outstanding Shares
(as defined in "GENERAL INFORMATION -- Miscellaneous") of the respective Fund.
There can be, of course, no assurance that either of the Money Market Funds will
achieve its investment objective.
Additionally, the Money Market Funds may engage in certain investment techniques
which may subject the Funds to certain risks (see "OTHER INVESTMENT TECHNIQUES
OF THE MONEY MARKET FUNDS").
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS
U.S. TREASURY FUND
The U.S. Treasury Fund will invest exclusively in obligations backed by the full
faith and credit of the U.S. government and at least 65% of the Fund's total
assets will be invested in direct U.S. Treasury obligations, some of which may
be subject to repurchase agreements. Such obligations may include "stripped"
U.S. Treasury obligations such as Treasury Receipts issued by the U.S. Treasury
representing either future interest or principal payments. Stripped securities
are issued at a discount to their "face value," and may exhibit greater price
volatility than ordinary debt securities because of the manner in which their
principal and interest are returned to investors. Obligations purchased by the
U.S. Treasury Fund may be subject to repurchase agreements.
CASH MANAGEMENT FUND
The Fund may invest in (1) obligations of the U.S. government or its agencies or
instrumentalities; (2) commercial paper, loan participation interests,
medium-term notes, asset-backed securities and other promissory notes, including
floating or variable rate obligations; and (3) domestic, Yankeedollar and
Eurodollar certificates of deposit, time deposits, bankers' acceptances, bearer
deposit notes and promissory notes including floating or variable rate
obligations issued by U.S. or foreign bank holding companies and their bank
subsidiaries, branches and agencies. The Fund will invest only in issuers or
instruments that at the time of purchase (1) have received the highest
short-term rating by at least two nationally recognized statistical ratings
organizations ("NRSROs") (e.g., "A-1" by Standard & Poor's Corporation and
"Prime-1" by Moody's Investors Services, Inc.); or (2) are single rated and have
received the highest short-term rating by a NRSRO; or (3) are unrated, but are
determined to be of comparable quality by the Investment Adviser pursuant to
guidelines approved by the Board of Trustees and subject to the ratification of
the Board of Trustees. See the Statement of Additional Information for
definitions of the foregoing instruments and rating systems.
prospectus
8
<PAGE> 13
The Fund will concentrate its investments in obligations issued by the banking
industry. Concentration in this context means the investment of more than 25% of
the Fund's assets in such investments. However, for temporary defensive purposes
during periods when the Investment Adviser believes that maintaining this
concentration may be inconsistent with the best interest of Shareholders, the
Fund will not maintain this concentration. Concentration in obligations issued
by commercial banks and bank holding companies will involve a greater exposure
to economic, business, political, or regulatory changes that are generally
adverse to banks and bank holding companies. Such changes could include
significant changes in interest rates, general declines in bank asset quality,
including real estate loans, and the imposition of costly or otherwise
burdensome government regulations or restrictions. The Fund will not purchase
securities issued by BOK or any of its affiliates.
Investments in Eurodollar and Yankeedollar obligations involve additional risks
not present with domestic securities. Most notably, there generally is less
publicly available information about foreign companies; there may be less
governmental regulation and supervision; they may use different accounting and
financial standards; and the adoption of foreign governmental restrictions might
adversely affect the payment of principal and interest on foreign investments.
In addition, not all foreign branches of U.S. banks are supervised or examined
by regulatory authorities as are U.S. banks, and such branches may not be
subject to reserve requirements.
Obligations issued or guaranteed by U.S. government agencies or
instrumentalities in which the Cash Management Fund may invest can vary
significantly in terms of the credit risk involved. Obligations of certain
agencies and instrumentalities of the U.S. government such as the Government
National Mortgage Association and the Export-Import Bank of the United States,
are supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal National Mortgage Association, are supported by the right
of the issuer to borrow from the U.S. Treasury; others, such as those of the
Student Loan Marketing Association, are supported by the discretionary authority
of the U.S. government to purchase the agency's obligations; still others, such
as those of the Federal Farm Credit Banks or the Federal Home Loan Mortgage
Corporation, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. government would provide financial support
to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. The Cash Management Fund will invest in the
obligations of such agencies or instrumentalities only when the Investment
Adviser deems the credit risk with respect thereto to be minimal.
Investments in loan participation interests are generally not traded in a
secondary market and are regarded by the Funds as illiquid; the Cash Management
Fund intends to limit investments in loan participation interests to 5% of its
total assets.
Variable amount master demand notes in which the Cash Management Fund may invest
are unsecured demand notes that permit the indebtedness thereunder to vary, and
provide for periodic adjustments in the interest rate according to the terms of
the instrument. Because master demand notes are direct lending arrangements
between the Cash Management Fund and the issuer, they are not normally traded.
Although there is no secondary market for the notes, the Cash Management Fund
may demand payment of principal and accrued interest at any time. The period of
time remaining until the principal amount actually can be recovered under a
variable amount master demand note generally shall not exceed seven days. To the
extent such maximum period were exceeded, the note in question would be
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considered illiquid. While the notes are not typically rated by credit rating
agencies, issuers of variable amount master demand notes (which are normally
manufacturing, retail, financial, and other business concerns) must satisfy the
same criteria as set forth above for commercial paper. The Cash Management Fund
will invest in variable amount master demand notes only where such notes are
determined by its Investment Adviser pursuant to guidelines established by the
Funds' Board of Trustees to be of comparable quality to rated issuers or
instruments eligible for investment by the Cash Management Fund. The Investment
Adviser will consider the earning power, cash flow, and other liquidity ratios
of the issuers of such notes and will continuously monitor their financial
status and ability to meet payment on demand. In determining average weighted
portfolio maturity, a variable amount master demand note will be deemed to have
a maturity equal to the longer of the period of time remaining until the next
readjustment of the interest rate or the period of time remaining until the
principal amount can be recovered from the issuer through demand.
The Cash Management Fund may acquire puts with respect to obligations in its
portfolio and sell those puts in conjunction with a sale of those obligations.
See the Statement of Additional Information for more information regarding puts.
OTHER INVESTMENT TECHNIQUES OF THE MONEY MARKET FUNDS
MORTGAGE-RELATED SECURITIES
The Money Market Funds may purchase mortgage-related securities representing
pools of mortgage loans assembled for sale to investors. The U.S. Treasury Fund
will invest only in mortgage-related securities backed by the full faith and
credit of the U.S. government. The Cash Management Fund may also invest in such
instruments and, in addition, may invest in mortgage-backed securities issued
and/or guaranteed only by U.S. government agencies or instrumentalities, or by
private issuers such as commercial banks, savings and loan institutions,
mortgage bankers, and private mortgage insurance companies. Although certain
mortgage-related securities are guaranteed by a third party, or otherwise
similarly secured, the market value of the security, which may fluctuate is not
so secured. If a Money Market Fund purchases a mortgage-related security at a
premium, that premium may be lost if there is a decline in the market value of
the security whether resulting from changes in interest rates or prepayments in
the underlying mortgage collateral. As with other interest-bearing securities,
the prices of such securities are inversely affected by changes in interest
rates. However, though the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true since in periods of
declining interest rates, the mortgages underlying the securities are prone to
prepayment. For this and other reasons, a mortgage-related security's stated
maturity may be shortened by unscheduled prepayments on the underlying mortgages
and, therefore, it is not possible to predict accurately the security's return
to the Fund holding the security. In addition, regular payments received in
respect of mortgage-related securities include both interest and principal. No
assurance can be given as to the return the Money Market Fund holding a
mortgage-related security will receive when these amounts are reinvested. The
Cash Management Fund also may invest in collateralized mortgage obligations
structured on pools of mortgage pass-through certificates or mortgage loans. For
further discussion concerning the investment considerations involved, see
"INVESTMENT OBJECTIVE AND POLICIES -- Additional Information on Fund
Instruments -- Mortgage-Related Securities" in the Statement of Additional
Information.
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REPURCHASE AGREEMENTS
Securities held by a Money Market Fund may be subject to repurchase agreements.
Under the terms of a repurchase agreement, a Money Market Fund would acquire
securities from financial institutions such as member banks of the Federal
Deposit Insurance Corporation or registered broker-dealers which the Investment
Adviser deems creditworthy under guidelines approved by the Funds' Board of
Trustees, subject to the seller's agreement to repurchase such securities at a
mutually agreed upon date and price. The repurchase price would generally equal
the price paid by the Money Market Fund plus interest negotiated on the basis of
current short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller under a repurchase agreement will be
required to maintain the value of collateral held pursuant to the agreement at
not less than the repurchase price (including accrued interest) and the
Investment Adviser possessing investment authority will monitor the collateral's
value to ensure that it equals or exceeds the repurchase price. In addition,
securities subject to repurchase agreements will be held in a segregated account
by the Custodian or a Sub-Custodian of the Fund. Repurchase agreements are
considered to be loans by an investment company under the 1940 Act. See the
Statement of Additional Information for more information regarding this
investment practice.
WHEN-ISSUED SECURITIES
The Money Market Funds may purchase securities on a when-issued basis.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield and thereby involve a risk that the
yield obtained in the transaction will be less than those available in the
market when delivery takes place. A Money Market Fund will generally not pay for
such securities or start earning interest on them until they are received. When
a Money Market Fund agrees to purchase such securities, its Custodian will set
aside cash or liquid securities equal to the amount of the commitment in a
separate account. Securities purchased on a when-issued basis are recorded as an
asset and are subject to changes in value based upon changes in the general
level of interest rates. Each Money Market Fund expects that commitments to
purchase when-issued securities will not exceed 25% of the value of its total
assets absent unusual market conditions. In the event that its commitments to
purchase when-issued securities ever exceeded 25% of the value of its assets, a
Money Market Fund's liquidity and the ability of the Investment Adviser to
manage it might be severely affected. No Money Market Fund intends to purchase
when-issued securities for speculative purposes but only in furtherance of its
investment objective.
REVERSE REPURCHASE AGREEMENTS
The Money Market Funds may borrow funds for temporary purposes by entering into
reverse repurchase agreements in accordance with the investment restrictions
described below. Pursuant to such agreements, a Money Market Fund would sell
portfolio securities to financial institutions such as banks and broker-dealers
and agree to repurchase them at a mutually agreed-upon date and price. At the
time a Money Market Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account assets such as liquid high quality
securities, consistent with the Fund's investment objective having a value not
less than 100% of the repurchase price (including accrued interest), and will
subsequently monitor the account to ensure that such required value is
maintained. Reverse repurchase agreements involve the risk that the market value
of the securities sold by a Money Market
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<PAGE> 16
Fund may decline below the price at which such Fund is obligated to repurchase
the securities. Reverse repurchase agreements are considered to be borrowings by
an investment company under the 1940 Act.
SECURITIES LENDING
In order to generate additional income, a Money Market Fund may, from time to
time, lend its portfolio securities to broker-dealers, banks, or institutional
borrowers of securities. The Funds will enter into loan agreements only with
broker-dealers, banks, or institutions that BOK has determined are creditworthy
under guidelines established by the Funds' Board of Trustees. The Money Market
Funds intend to limit their securities lending to 5% of their respective total
assets. See the Statement of Additional Information for more information on
these investment activities.
PRIVATE PLACEMENT INVESTMENTS
The Cash Management Fund may invest in commercial paper issued in reliance on
the so-called "private placement" exemption from registration afforded by
Section 4(2) of the Securities Act of 1933 (the "Securities Act"), and resold to
qualified institutional buyers under Securities Act Rule 144A ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Fund who agree that they are purchasing the paper for investment and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction and may be accomplished in accordance with Rule 144A. Section 4(2)
paper normally is resold to other institutional investors like the Fund through
or with the assistance of the issuer or investment dealers who make a market in
the Section 4(2) paper, thus providing liquidity. The Cash Management Fund will
not invest more than 10% of its assets in Section 4(2) paper and illiquid
securities unless the Investment Adviser determines, by continuous reference to
the appropriate trading markets and pursuant to guidelines approved by the Board
of Trustees, that any Section 4(2) paper held by the Cash Management Fund in
excess of this level is at all times liquid.
Because it is not possible to predict with assurance exactly how this market for
Section 4(2) paper sold and offered under Rule 144A will develop, the Board of
Trustees and the Investment Adviser, pursuant to the guidelines approved by the
Board of Trustees, will carefully monitor the Cash Management Fund's investments
in these securities, focusing on such important factors, among others, as
valuation, liquidity, and availability of information. Investments in Section
4(2) paper could have the effect of reducing the Cash Management Fund's
liquidity to the extent that qualified institutional buyers become for a time
not interested in purchasing these restricted securities.
ASSET-BACKED SECURITIES
The Cash Management Fund may invest in securities backed by automobile
receivables and credit-card receivables and other securities backed by other
types of receivables or other assets. Credit support for asset-backed securities
may be based on the underlying assets and/or provided through credit
enhancements by a third party. Credit enhancement techniques include letters of
credit, insurance bonds, limited guarantees (which are generally provided by the
issuer), senior-subordinated structures and over-collateralization. The Cash
Management Fund will only purchase an asset-backed security if it
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<PAGE> 17
is rated within the three highest ratings categories assigned by a NRSRO (e.g.,
at least "A" by S&P or Moody's). Asset-backed securities are generally
considered to be illiquid.
INVESTMENT RESTRICTIONS
The U.S. Treasury Fund and the Cash Management Fund are subject to a number of
fundamental investment restrictions that may be changed with respect to a
particular Money Market Fund only by a vote of a majority of the outstanding
Shares of such Money Market Fund (see "GENERAL INFORMATION -- Miscellaneous").
U.S. TREASURY FUND
The U.S. Treasury Fund may not purchase securities other than U.S. Treasury
bills, notes and other obligations backed by the full faith and credit of the
U.S. government, some of which may be subject to repurchase agreements.
BOTH MONEY MARKET FUNDS
The U.S. Treasury Fund and the Cash Management Fund may not:
1. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. government (and, with respect to the Cash
Management Fund, other than obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities) if, as a result, with
respect to 75% of its portfolio, more than 5% of the value of each Fund's
total assets would be invested in such issuer.*
2. Purchase any securities which would cause more than 25% of the value
of each Fund's total assets at the time of purchase to be invested in
securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no limitation
with respect to obligations issued or guaranteed by the U.S. government or
its agencies or instrumentalities, obligations issued by commercial banks
and bank holding companies, repurchase agreements secured by bank
instruments or obligations of the U.S. government or its agencies or
instrumentalities and obligations issued by commercial banks and bank
holding companies primarily engaged in the banking industry; (b)
wholly-owned finance companies will be considered to be in the industries
of their parents if their activities are primarily related to financing the
activities of their parents; and (c) utilities will be divided according to
their services. For example, gas, gas transmission, electric and gas,
electric, and telephone will each be considered a separate industry.
3. Borrow money or issue senior securities, except that each Fund may
borrow from banks and enter into reverse repurchase agreements for
temporary purposes in amounts up to 10% of the value of its total assets at
the time of such borrowing; or mortgage, pledge, or hypothecate any assets,
except in connection with any such borrowing and in amounts not in excess
of the
- ---------------
* In addition, although not a fundamental investment restriction (and therefore
subject to change without a Shareholder vote), to the extent required by rules
of the Securities and Exchange Commission the U.S. Treasury Fund and the Cash
Management Fund each generally apply the above restriction with respect to
100% of their portfolios.
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<PAGE> 18
lesser of the dollar amounts borrowed or 10% of the value of such Fund's
total assets at the time of its borrowing. Neither Fund will purchase
securities while its borrowings (including reverse repurchase agreements)
exceed 5% of the total assets of such Fund.
4. Make loans, except that each Fund may purchase or hold debt
instruments in accordance with its investment objective and policies, may
lend portfolio securities in accordance with its investment objective and
policies, and may enter into repurchase agreements.
5. Enter into repurchase agreements with maturities in excess of seven
days if such investment, together with other instruments in such Fund which
are not readily marketable, exceeds 10% of such Fund's net assets.
6. Invest in securities of other investment companies except as they may
be acquired as part of a merger, consolidation, reorganization, or
acquisition of assets.
CASH MANAGEMENT FUND
The Cash Management Fund may not write or sell puts, calls, straddles, spreads
or combinations thereof except that the Cash Management Fund may acquire puts
with respect to obligations in its portfolio and sell those puts in conjunction
with a sale of those obligations. The Cash Management Fund will not:
(1) Acquire a put, if, immediately after such acquisition, over 5% of
the total value of the Cash Management Fund's assets would be subject to
puts from such issuer (except that the 5% limitation is inapplicable to
puts that, by their terms, would be readily exercisable in the event of a
default in payment of principal or interest on the underlying securities).
For the purpose of this investment restriction and the investment
restriction immediately below, a put will be considered to be from the
party to whom the Cash Management Fund will look for payment of the
exercise price;
(2) Acquire a put that, by its terms, would be readily exercisable in
the event of a default in payment of principal and interest on the
underlying security or securities if immediately after that acquisition the
value of the security or securities underlying that put, when aggregated
with the value of any other securities issued or guaranteed by the issuer
of the put, would exceed 10% of the total value of the Cash Management
Fund's assets.
VALUATION OF SHARES
The net asset values of the Funds are determined and their Shares are priced as
of 12:00 (noon) Eastern time and as of the close of regular trading of the New
York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern time) on each Business
Day ("Valuation Time"). As used herein, a "Business Day" constitutes any day on
which the NYSE is open for trading, and the Federal Reserve Bank of Kansas City
is open, except days on which there are not sufficient changes in the value of a
Fund's portfolio securities that the Fund's net asset value might be materially
affected, or days during which no Shares are tendered for redemption and no
orders to purchase Shares are received. Currently, the NYSE or the Federal
Reserve Bank of Kansas City is closed on the following holidays: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day and
Christmas Day. Net asset value per Share for
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<PAGE> 19
purposes of pricing sales and redemptions is calculated by dividing the value of
a Money Market Fund's assets, less its liabilities, by the number of such Money
Market Fund's outstanding Shares.
The assets in each Money Market Fund are valued based upon the amortized cost
method. Pursuant to the rules and regulations of the Securities and Exchange
Commission regarding the use of the amortized cost method, each Money Market
Fund will maintain a dollar-weighted average portfolio maturity of 90 days or
less and no security will have a remaining maturity in excess of 397 days,
although obligations subject to repurchase agreements and certain variable and
floating rate instruments may bear longer maturities.
Although each of the Money Market Funds seeks to maintain the net asset value
per Share at $1.00, there can be no assurance that this net asset value will be
maintained.
HOW TO PURCHASE SHARES
Shares of the Money Market Funds ("Shares") are sold on a continuous basis and
may be purchased directly from the Funds' Distributor, BISYS, either by mail, by
telephone, or by electronic transfer. Shares may also be purchased through a
bank or broker-dealer who has established a dealer agreement with the
Distributor. Except as described in "Auto Invest Plan" below, the minimum
initial purchase is $1,000, and the minimum for subsequent purchases is $100.
These minimums may be waived if purchases are made in connection with Individual
Retirement Accounts ("IRAs"), Keoghs, qualified pension plans or other employer
plans. For information on IRAs, Keoghs or similar plans, contact BOK at (918)
588-6586.
Shares of each Money Market Fund are purchased at the net asset value per Share
of each such Money Market Fund (see "VALUATION OF SHARES") next determined after
receipt by the Distributor of an order to purchase Shares in good form. An order
accepted after the last Valuation Time on any Business Day will be executed at
the net asset value determined as of the first Valuation Time on the next
Business Day. An order to purchase Shares will be deemed to have been received
and accepted by the Distributor only when federal funds with respect thereto are
available to the Funds' Custodian for investment. Federal funds are monies
credited to a bank's account with a Federal Reserve Bank. Payment for an order
to purchase Shares which is transmitted by federal funds wire will be available
the same day for investment by the Funds' Custodian, if received prior to 12:00
(noon) Eastern time. Payments transmitted by other means (such as by check drawn
on a member of the Federal Reserve System) will normally be converted into
federal funds within two banking days after receipt. The Funds strongly
recommend that investors of substantial amounts use federal funds to purchase
Shares.
BY MAIL
Investors may make an initial purchase of Shares of the Money Market Funds by
completing and signing an Account Registration form and mailing it, along with a
check (or other negotiable bank instrument or money order) for at least $1,000,
payable to the appropriate Money Market Fund, in care of the Funds' Custodian at
Bank of Oklahoma, N.A., Attention: American Performance Funds, Department 12,
Tulsa, Oklahoma 74182. Subsequent purchases of Shares may be made at any time by
mailing a check (or other negotiable bank draft or money order) for at least
$100 to the above address.
Account Registration forms can be obtained by calling the Funds at (800)
762-7085.
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<PAGE> 20
BY TELEPHONE OR ELECTRONIC TRANSFER
If an investor's Account Registration form has been previously received by the
Distributor, investors may also purchase Shares of either of the Money Market
Funds by telephone or by electronic transfer to the Funds' Custodian. To place
an order by telephone, call the Funds toll-free at (800) 762-7085. Payment for
Shares ordered by telephone may be made by check and must be received by the
Funds' Custodian within the settlement requirements defined under the Securities
Exchange Act of 1934. Shares of the Funds ordered by telephone will be purchased
for the Shareholder's account when the order has been received and federal funds
with respect thereto are available to the Funds' Custodian for investment. Any
questions regarding current settlement requirements or electronic payment
instructions can be directed to the Funds at (800) 762-7085.
AUTO INVEST PLAN
The Funds offer an Auto Invest Plan which enables Shareholders of the Funds to
make regular monthly or quarterly purchases of Shares through automatic
deductions from their bank accounts. With Shareholder authorization, the
Transfer Agent deducts the amount specified from the Shareholder's bank account
which is then automatically invested in Shares at net asset value. The required
minimum initial investments when opening an account using the Auto Invest Plan
is $100; the minimum amount for subsequent investments in the Fund is $50. To
participate in the Auto Invest Plan, Shareholders should complete the
appropriate section of the Account Registration form which can be acquired by
calling (800) 762-7085. To change the Auto Invest instructions, a Shareholder
must submit a written request to the Distributor. A Shareholder may discontinue
the feature by submitting a written request to or by calling the Funds.
FUND DIRECT INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS")
A Fund Direct IRA enables individuals, even if they participate in an
employer-sponsored retirement plan, to establish their own retirement program.
IRA contributions may be tax-deductible and earnings are tax-deferred. Under the
Tax Reform Act of 1986, the tax deductibility of IRA contributions is restricted
or eliminated for individuals who participate in certain employer pension plans
and whose annual income exceeds certain limits. Existing IRAs and future
contributions up to the IRA maximums, whether deductible or not, still earn
income on a tax-deferred basis.
All IRA distribution requests must be made in writing to the Funds. Any
additional deposits to an IRA must distinguish the type and year of the
contribution. For more information on an IRA call the Funds at (800) 762-7085.
Shareholders are advised to consult a tax adviser on IRA contributions and
withdrawal requirements and restrictions.
OTHER INFORMATION REGARDING PURCHASES
Shares may also be purchased through procedures established by the Distributor
in connection with the requirements of qualified accounts maintained by or on
behalf of certain persons ("Customers") by Participating Organizations under the
Funds' Distribution Plan (see "DISTRIBUTION"). Shares of the Funds sold to a
Participating Organization acting on behalf of Customers will normally be held
of record by the Participating Organization, and it is the responsibility of the
Participating Organization to transmit purchase or redemption orders to the
Distributor and to deliver funds for the purchase
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<PAGE> 21
thereof to the Custodian on a timely basis. Beneficial ownership of Shares of
the Funds will be reflected in the account statements provided to customers by
Participating Organizations.
Depending upon the terms of a particular Customer account, Participating
Organizations may charge a Customer account fees for services provided in
connection with investment in any Money Market Fund. Information concerning
these services and any charges can be obtained from the Participating
Organization. This Prospectus should be read in conjunction with any such
information so received.
In the case of orders for the purchase of Shares placed through a broker-dealer,
the applicable public offering price will be the net asset value as so
determined, but only if the broker-dealer receives the order prior to the
Valuation Time for that day and transmits it to the Distributor prior to the
Valuation Time for that day. The broker-dealer is responsible for transmitting
such orders promptly. If the broker-dealer fails to do so, the investor's right
to that day's closing price must be settled between the investor and the
broker-dealer. If the broker-dealer receives the order after the Valuation Time
for that day, the price will be based on the net asset value determined as of
the Valuation Time for the next day.
Each Money Market Fund reserves the right to reject any order for the purchase
of its Shares in whole or in part, including purchases made with foreign and
third party checks.
Every Shareholder will receive a confirmation of each new transaction in the
Shareholder's account, which will also show the total number of Shares of such
Fund owned by the Shareholder and the number of Shares being held in safekeeping
by the Transfer Agent for the account of the Shareholder. Shareholders may rely
on these confirmations in lieu of certificates. No certificates representing
Shares of any Fund will be issued.
SALES CHARGES
There is no sales charge imposed by the Funds in connection with the purchase of
Shares of the Money Market Funds. Sales charges apply to purchases of the eight
other Funds of the American Performance Funds.
EXCHANGE PRIVILEGE
Shareholders may exchange Shares of the Money Market Funds for Shares of any
other Funds of the American Performance Funds so long as they maintain the
respective minimum account balance in each such Fund in which they own Shares.
Exchanges made from the Money Market Funds to the American Performance Bond
Investment Funds and the American Performance Equity Investment Funds will be
subject to the applicable sales charge upon the exchange, up to a maximum of
5.00%. Exchanges made from either Money Market Fund into the other Money Market
Fund will be accomplished on the basis of current net asset value. An exchange
is considered to be a sale of Shares for federal income tax purposes on which a
Shareholder may realize a capital gain or loss. The exchange privilege may only
be exercised in states where the exchange may legally be made. The Funds reserve
the right to eliminate or to alter the terms of this exchange offer upon sixty
days' notice to Shareholders.
A Shareholder wishing to exchange his or her Shares may do so by contacting the
Funds at (800) 762-7085 or by providing written instructions to the Distributor.
Any Shareholder who wishes to
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<PAGE> 22
make an exchange must have received a current Prospectus of the Fund in which he
or she wishes to invest before the exchange will be effected.
HOW TO REDEEM SHARES
Shares may ordinarily be redeemed by mail or by telephone. Shareholders may
redeem their Shares without charge on any day that net asset value is calculated
(see "VALUATION OF SHARES"). However, all or part of a Customer's Shares may be
redeemed in accordance with instructions and limitations pertaining to his or
her account held at a Participating Organization.
BY MAIL
Shares may be redeemed by mail by sending a written request to the Distributor
in care of the Funds' Custodian at Bank of Oklahoma, N.A., Attention: American
Performance Funds, Department 12, Tulsa, Oklahoma 74182. The Distributor may
require a signature guarantee by an eligible guarantor institution. For purposes
of this policy, the term "eligible guarantor institution" shall include banks,
brokers, dealers, credit unions, securities exchanges and associations, clearing
agencies and savings associations as those terms are defined in Rule 17Ad-15
under the Securities Exchange Act of 1934. The Distributor reserves the right to
reject any signature guarantee if (i) it has reason to believe that the
signature is not genuine, (ii) it has reason to believe that the transaction
would otherwise be improper, or (iii) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000. The signature guarantee requirements will be
waived if all of the following conditions apply: (1) the redemption check is
payable to the Shareholder(s) of record, and (2) the redemption check is mailed
to the Shareholder(s) at the address of record. The Shareholder may also have
the proceeds mailed or sent electronically to a commercial bank account
previously designated on the Account Registration form or by written instruction
to the Distributor. There is no charge for having redemption requests mailed to
a designated bank account.
BY TELEPHONE
Shares may be redeemed by telephone if the Account Registration form reflects
that the Shareholder has that capability. The Shareholder may have the proceeds
mailed to his or her address or mailed or sent electronically to a commercial
bank account previously designated on the Account Registration form. Under most
circumstances, payments will be transmitted on the next Business Day following
receipt of a valid request for redemption. Electronic payment requests may be
made by the Shareholder by calling the Funds at (800) 762-7085. The Transfer
Agent may reduce the amount of a wire redemption payment by the Custodian's
then-current wire redemption charge (presently $15.00). Neither the Distributor,
the Investment Adviser, nor the Funds will be liable for any losses, damages,
expenses or costs arising out of any telephone transaction (including exchanges
and redemptions) effected in accordance with the Funds' telephone transaction
procedures, upon instructions reasonably believed to be genuine. The Funds will
employ procedures designed to provide reasonable assurance that instructions
communicated by telephone are genuine; if these procedures are not followed, the
Funds may be liable for any losses due to unauthorized or fraudulent
instructions. These procedures include recording all phone conversations,
sending confirmations to Shareholders within 72 hours of the telephone
transaction, verifying the account number or tax identification number and
sending redemption proceeds only to the address of record or to a previously
authorized account. If, due to
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<PAGE> 23
temporary adverse conditions, investors are unable to effect telephone
transactions, Shareholders may also mail the redemption request to the
Distributor at the address listed above under "HOW TO REDEEM SHARES -- By Mail."
The telephone redemption option will be suspended for a period of 10 days
following a telephonic address change.
SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan enables Shareholders of the Fund to make regular
monthly or quarterly redemptions of Shares if their account has at least
$10,000. With Shareholder authorization, the Transfer Agent will automatically
redeem Shares at the net asset value on the dates of the withdrawal and have a
check in the amount specified mailed to the Shareholder. The required minimum
withdrawal is $100. To participate in the Systematic Withdrawal Plan,
Shareholders should call (800) 762-7085 for more information. Purchases of
additional Shares concurrent with withdrawals may be disadvantageous to certain
Shareholders because of tax liabilities. To change the Systematic Withdrawal
instructions, a Shareholder must submit a written request to the Distributor. A
Shareholder may discontinue the feature by submitting a written request to or by
calling the Funds.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per Share next
determined after receipt of a valid request for redemption, as described above.
Payment to Shareholders for Shares redeemed will be made within the settlement
requirements defined in the Securities Exchange Act of 1934, after receipt by
the Distributor of the request for redemption. However, to the greatest extent
possible, requests from Shareholders for payments upon redemption of Shares
received by the Distributor before 12:00 (noon) Eastern time, will be honored on
that Business Day or, if received after 12:00 (noon) Eastern time, on the
following Business Day, unless it would be disadvantageous to the Fund or its
Shareholders to sell or liquidate portfolio securities in an amount sufficient
to satisfy requests for payments in that manner.
At various times a Money Market Fund may be requested to redeem Shares for which
it has not yet received good payment. In such circumstances, the forwarding of
proceeds may be delayed for up to 15 days until payment has been collected for
the purchase of such Shares. The Money Market Funds intend to pay cash for all
Shares redeemed, but under abnormal conditions which make payment in cash
unwise, payment may be made wholly or partly in readily marketable portfolio
securities with a market value equal to the redemption price. In such cases, an
investor may incur brokerage costs in converting such securities to cash.
Due to the relatively high cost of handling small investments, each Money Market
Fund reserves the right to redeem, at net asset value, the Shares of any
Shareholder if, because of redemptions of Shares by or on behalf of the
Shareholder, the account of such Shareholder in any Money Market Fund has a
value of less than $500. Before any Money Market Fund exercises its right to
redeem such Shares and to send the proceeds to the Shareholder, the Shareholder
will be given notice that the value of the Shares in his or her account is less
than the minimum amount and will be allowed 60 days to make an additional
investment in such Fund in an amount which will increase the value of the
account to at least $500.
prospectus
19
<PAGE> 24
See the Funds' Statement of Additional Information -- "ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION" -- for examples of when the right of redemption may be
suspended.
DIVIDENDS
The net investment income of each Money Market Fund is declared daily and paid
monthly as a dividend to the respective Shareholders of each such Fund. Net
capital gain income (if any) is distributed at least once a year. Shares in the
Money Market Funds purchased before 12:00 (noon) Eastern time begin earning
dividends on the same Business Day. All Shares continue to earn dividends
through the day before their redemption. A Shareholder will automatically
receive all dividends from a Fund in additional full and fractional Shares of
such Fund at the net asset value as of the ex-dividend date, unless the
Shareholder elects to receive dividends in cash. Reinvested dividends receive
the same tax treatment as dividends paid in cash. Dividends are paid in cash not
later than seven Business Days after a Shareholder's complete redemption of his
Shares in a Money Market Fund. Such election, or any revocation thereof, must be
made in writing to the Distributor, BISYS Fund Services, 3435 Stelzer Road,
Columbus, Ohio 43219, and will become effective with respect to dividends paid
after its receipt by the Distributor.
Shareholders may elect to have all income, dividends, and capital gains
distributions paid by check or reinvested in the Fund. If you elect to receive
distributions paid by check and the check (1) is returned and marked as
"undeliverable" or (2) remains uncashed for six months, your payment election
will be changed automatically and your future dividend and capital gains
distribution will be reinvested in the Fund at the per share net asset value
determined as of the date of payment of the distribution. In addition, any
undeliverable check that remains uncashed for six months will be canceled and
reinvested in the Fund at the per share net asset value determined as of the
date of cancellation.
FEDERAL INCOME TAXES
Each of the Money Market Funds is treated as a separate entity for federal
income tax purposes. Each Fund intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"), and
intends to distribute on a current basis all of its net investment income and
net capital gains, if any, so that it is not required to pay federal income
taxes on amounts so distributed to Shareholders. In general, distributions,
whether paid in cash or additional shares, are taxable to Shareholders as
ordinary income. Shareholders will be advised at least annually as to the
federal income tax consequences of distributions made during the year.
The Money Market Funds do not expect to realize any long-term capital gains and,
therefore, do not foresee paying any "capital gain dividends" as described in
the Code.
Dividends attributable to interest earned on obligations of the U.S. government
may not be exempt from state taxes even though the interest, if earned directly
by the Shareholders, would be exempt from such taxes. Shareholders should
consult their tax advisers for further information concerning state and local
taxes, which may differ from federal income tax rules.
Additional information regarding federal taxes is contained in the Statement of
Additional Information under "INVESTMENT OBJECTIVES AND POLICIES -- Additional
Tax Information Concerning All the Funds." However, the foregoing and the
material in the Statement of Additional Information are only
prospectus
20
<PAGE> 25
brief summaries of some of the important tax considerations generally affecting
the Funds and their Shareholders. In addition, the foregoing discussion and the
federal tax information in the Statement of Additional Information are based on
tax laws and regulations which are in effect as of the date of this Prospectus;
these laws and regulations may subsequently change. Potential investors in a
Money Market Fund are urged to consult their tax advisers with special reference
to their own tax situation.
DISTRIBUTION
Shares of the Money Market Funds are sold on a continuous basis by the
Distributor for the Funds, BISYS Fund Services (the "Distributor"). Under the
Funds' Distribution and Shareholder Services Plan (the "Distribution Plan"), the
Money Market Funds will pay a monthly distribution fee (also referred to as a
12b-1 Fee) to the Distributor as compensation for its services in connection
with the Distribution Plan at an annual rate equal to the lesser of (1) such fee
as may from time to time be agreed upon in writing by the Funds and the
Distributor, or (2) twenty-five one-hundredths of one percent (0.25%) of the
average daily net assets of each of the Money Market Funds. The Distributor may
use the distribution fee to provide distribution assistance with respect to the
Money Market Funds' Shares or to provide Shareholder services to the holders of
the Money Market Funds' Shares ("Customers") purchased through financial
institutions and intermediaries, broker-dealers, or similar entities, including
affiliates or subsidiaries of the Distributor ("Participating Organizations")
pursuant to contractual arrangements with the Distributor under the Distribution
Plan.
The distribution fee will be payable without regard to whether the amount of the
fee is more or less than the actual expenses incurred in a particular year by
the Distributor in connection with distribution assistance or Shareholder
services rendered by the Distributor itself or incurred by the Distributor
pursuant to the contractual agreement entered into under the Distribution Plan.
The Glass-Steagall Act and other applicable laws generally prohibit banks from
engaging in the business of underwriting securities, but in general do not
prohibit banks from purchasing securities as agent for and upon the order of
customers. Accordingly, banks acting as Participating Organizations may provide
only those services which, in the banks' opinion, are consistent with the then
current legal requirements. It is possible, however, that future legislative,
judicial or administrative action affecting the securities activities of banks
will cause the Funds to alter or discontinue their arrangements with banks that
act as Participating Organizations, or change their method of operations. It is
not anticipated, however, that any change in the Funds' method of operations
would affect their net asset value per share or result in financial loss to any
customer. See the Statement of Additional Information for further information
regarding the Distribution Plan.
MANAGEMENT OF THE MONEY MARKET FUNDS
TRUSTEES OF THE FUNDS
Overall responsibility for management of the Money Market Funds rests with the
Board of Trustees of the Funds, who are elected by the Shareholders of the
Funds. The Funds will be managed by the Board of Trustees in accordance with the
laws of The Commonwealth of Massachusetts governing business trusts. There are
currently four Trustees, three of whom are not "interested persons" of the Funds
within the meaning of that term under the 1940 Act. The Board of Trustees, in
turn, elects the officers of the Funds to supervise actively the Funds'
day-to-day operations.
prospectus
21
<PAGE> 26
The Trustees of the Funds, their addresses, and principal occupations during the
past five years are as follows:
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE FUNDS DURING PAST FIVE YEARS
- --------------------- --------------------- ----------------------
<S> <C> <C>
Walter B. Grimm*, 53 Chairman and Trustee From June, 1992 to present, employee of BISYS Fund
3435 Stelzer Road Services.
Columbus, Ohio 43219
Michael J. Hall, 54 Trustee From December, 1997 to present, Vice President Finance
10701 E. Ute Street and Chief Financial Officer and Director, Matrix
Tulsa, Oklahoma 74116 Service Company; from December, 1995 to November,
1997, Vice President and Chief Financial Officer,
Worldwide Sports & Recreation, Inc.; from January,
1994 to December, 1995, Vice President and Chief
Financial Officer, Pexco Holdings, Inc.
Perry A. Wimpey, 67 Trustee From January, 1992 to present, Local Financial and
4843 S. 69th East Avenue Regulatory Consultant.
Tulsa, Oklahoma 74145
I. Edgar Hendrix, 54 Trustee From June 1983 to present, Vice President and
8 East 3rd Street Treasurer, Parker Drilling Co.
Tulsa, Oklahoma 74103
</TABLE>
- ---------------
*Indicates an "interested person" of the Funds as defined in the 1940 Act.
The Trustees of the Funds receive fees and are reimbursed for their expenses in
connection with each meeting of the Board of Trustees they attend. However, no
officer or employee of the Investment Adviser or the Administrator of the Funds
receives any compensation from the Funds for acting as a Trustee. The officers
of the Funds receive no compensation directly from the Funds for performing the
duties of their offices. BISYS receives fees from the Funds for acting as
Administrator and may receive additional income under the Distribution Plan of
the Funds.
INVESTMENT ADVISER
BOK serves as the Investment Adviser to the Money Market Funds. BOK, the largest
trust company in the State of Oklahoma, is a subsidiary of BOK Financial
Corporation ("BOK Financial"). BOK Financial is controlled by its principal
shareholder, George B. Kaiser. Through its subsidiaries, BOK Financial provides
a full array of trust, commercial banking and retail banking services. Its
non-bank subsidiaries engage in various bank-related services, including
mortgage banking and providing credit, life, accident, and health insurance on
certain loans originated by its subsidiaries.
BOK maintains offices in Oklahoma, Arkansas, Texas and New Mexico and offers a
variety of services for both corporate and individual customers. Individual
financial trust services include personal trust management, administration of
estates, and management of individual investments and custodial accounts. For
corporate clients, the array of services includes management, administration and
recordkeeping of pension plans, thrift plans, 401(k) plans and master trust
plans. BOK has experience in providing investment advisory service to the Funds
and experience in managing collective investment funds with investment
portfolios and objectives comparable to those of the Funds. BOK also serves as
transfer agent and registrar for corporate securities, paying agent for
dividends and interest, and indenture trustee of bond issues. At July 31, 1998
BOK was responsible for approximately $12.3 billion in assets including
approximately $5.7 billion in assets under management and possessed average
equity capital at $429 million.
prospectus
22
<PAGE> 27
Subject to the general supervision of the Funds' Board of Trustees and in
accordance with the investment objective and restrictions of each of the Money
Market Funds, BOK reviews, supervises, and provides general investment advice
regarding each of the Money Market Funds' investment programs. Subject to the
general supervision of the Funds' Board of Trustees and in accordance with the
investment objective and restrictions of each of the Money Market Funds, BOK
makes all final decisions with respect to portfolio securities of each of the
Money Market Funds, places orders for all purchases and sales of the portfolio
securities of each of the Money Market Funds, and maintains each Money Market
Fund's records directly relating to such purchases and sales.
For the services provided and expenses assumed pursuant to the Investment
Advisory Agreement with the Funds, BOK receives a fee from the U.S. Treasury
Fund and the Cash Management Fund, computed daily and paid monthly equaling the
lesser of (1) such fee as may from time to time be agreed upon in writing by the
Funds and BOK, or (2) forty one-hundredths of one percent (0.40%) of each Fund's
average daily net assets. BOK receives fee income from the Funds from several
other sources. (See "SALES CHARGES," "DISTRIBUTION," and "GENERAL
INFORMATION -- Custodian and Transfer Agent.") BOK may periodically waive all or
a portion of its fee with respect to any Money Market Fund to increase the net
income of such Fund available for distribution as dividends. BOK has currently
established its investment advisory fee pertaining to the U.S. Treasury Fund and
the Cash Management Fund at forty one-hundredths of one percent (0.40%) of each
Fund's average daily net assets.
For investment advisory services to the U.S. Treasury Fund, the Fund paid BOK:
0.40% of its average daily net assets for the fiscal year ended August 31, 1998.
For investment advisory services to the Cash Management Fund, the Fund paid BOK:
0.40% of its average daily net assets for the fiscal year ended August 31, 1998.
Of this amount, BOK paid AMR Investment Services, Inc., the Fund's sub-adviser
until April 30, 1999, 0.15% of the Cash Management Fund's average daily net
assets for the fiscal year ended August 31, 1998.
ADMINISTRATOR AND DISTRIBUTOR
BISYS is the Administrator for each of the Funds and also acts as the Funds'
principal underwriter and Distributor (the "Administrator" or the "Distributor,"
as the context indicates). BISYS is a subsidiary of The BISYS Group, Inc., 150
Clove Road, Little Falls, New Jersey 07424, a publicly owned company engaged in
information processing, loan servicing and 401(k) administration and
recordkeeping services to and through banking and other financial organizations.
The Administrator generally assists in all aspects of the administration and
operation of the Money Market Funds.
For expenses assumed and services provided as Administrator pursuant to its
administration agreement with the Funds, BISYS is entitled to receive a fee from
each Money Market Fund, computed daily and paid periodically, at the lesser of
(1) such fee as may from time to time be agreed upon in writing by the Funds and
the Administrator, and (2) an annual rate of twenty one-hundredths of one
percent (0.20%) of each Money Market Fund's average daily net assets. The
Administrator may periodically waive all or a portion of its administrative fee
with respect to a Fund to increase the net income of the Fund available for
distribution as dividends.
For administration services to the U.S. Treasury Fund and the Cash Management
Fund for the fiscal year ended August 31, 1998, each Fund paid the Administrator
0.20% of its average daily net assets.
prospectus
23
<PAGE> 28
SUB-ADMINISTRATOR
BOK serves as the Sub-Administrator to the Funds pursuant to an agreement
between the Administrator and BOK. Pursuant to this agreement, BOK assumed many
of the Administrator's duties, for which BOK receives a fee, paid by the
Administrator, calculated at an annual rate of five one-hundredths of one
percent (0.05%) of each Fund's average daily net assets.
EXPENSES
The Investment Adviser and the Administrator each bear all expenses in
connection with the performance of their services, other than the cost of
securities (including brokerage commissions, if any) purchased for the Funds.
Each Money Market Fund bears the following expenses relating to its respective
operations: taxes, interest, any brokerage fees and commissions, fees and travel
expenses of the Trustees of the Funds, Securities and Exchange Commission fees,
state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to current
Shareholders, outside auditing and legal expenses, advisory and administration
fees, fees and reasonable out-of-pocket expenses of the custodian and transfer
agent, expenses incurred for pricing securities owned by the particular Fund,
certain insurance premiums, costs of maintenance of the Funds' existence, costs
of Shareholders' and Trustees' reports and meetings, and any extraordinary
expenses incurred in each Fund's operation.
BANKING LAWS
BOK believes that it may perform the investment advisory services contemplated
by its agreement with the Funds and this Prospectus without violating the
Glass-Steagall Act. Future changes in federal or state statutes and regulations
relating to permissible activities of banks or bank holding companies and their
subsidiaries and affiliates as well as further judicial or administrative
decisions or interpretations of present and future statutes and regulations
could change the manner in which BOK could continue to perform such services for
the Funds. See "MANAGEMENT OF THE FUNDS -- Glass-Steagall Act" in the Statement
of Additional Information for further discussion of applicable banking laws and
regulations.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
GENERAL INFORMATION
DESCRIPTION OF THE FUNDS AND THEIR SHARES
The Money Market Funds represent two separate series of units of beneficial
interest ("Shares") of American Performance Funds, a Massachusetts business
trust which was organized in October of 1987 and began active operations in
August of 1990. Each Share represents an equal proportionate interest in a Fund
with other Shares of the same series, and is entitled to such dividends and
distributions out of the income earned on the assets belonging to that Fund as
are declared at the discretion of the Trustees.
As of October 15, 1998, Bank of Oklahoma, N.A. (Bank of Oklahoma Tower, One
Williams Center, Tulsa, Oklahoma 74103) and its bank affiliates were the
shareholders of record of 99.61% of the U.S. Treasury Fund's Shares and 99.92%
of the Cash Management Fund's Shares. As of December 17,
prospectus
24
<PAGE> 29
1998, Bank of Oklahoma, N.A. and its bank affiliates were the beneficial
shareholders with respect to 49% of the U.S. Treasury Fund's Shares and 62% of
the Cash Management Fund's Shares, and as a consequence, Bank of Oklahoma, N.A.
and its bank affiliates may be deemed to be a controlling person of the U.S.
Treasury Fund and the Cash Management Fund under the 1940 Act.
Shareholders are entitled to one vote for each Share, and a proportionate
fractional vote for any fraction of a Share, and will vote in the aggregate and
not by series except as otherwise expressly required by law.
Although the Funds are not required to hold annual meetings of Shareholders,
Shareholders have the right (1) to call a meeting to elect or remove one or more
of the Trustees of the Funds and (2) to be assisted by the Trustees in
communicating with other Shareholders of the Funds. Shareholder inquiries should
be directed to the Secretary of the Funds, at 3435 Stelzer Road, Columbus, Ohio
43219.
Overall responsibility for the management of the Funds is vested in the Board of
Trustees. See "MANAGEMENT OF THE MONEY MARKET FUNDS -- Trustees of the Funds."
Individual Trustees are elected by the Shareholders and may be removed by the
Board of Trustees or Shareholders in accordance with the provisions of the
Declaration of Trust and By-laws of the Funds and Massachusetts law. See
"ADDITIONAL INFORMATION -- Miscellaneous" in the Statement of Additional
Information for further information.
CUSTODIAN AND TRANSFER AGENT
Bank of Oklahoma, N.A. serves as custodian for the Funds. BISYS Fund Services
Ohio, Inc., an affiliate of BISYS, serves as the transfer agent ("Transfer
Agent") for the Funds and performs fund accounting services.
PERFORMANCE INFORMATION
From time to time each Money Market Fund may present its "current yield" and
"effective yield." Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "yield" of a Money Market Fund
refers to the income generated by an investment in the Money Market Fund over a
seven calendar-day period (which period will be stated in the advertisement).
This income is then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a one-year
period and is shown as a percentage of the investment. The "effective yield" is
calculated similarly but, when annualized, the income earned by an investment in
a Money Market Fund is assumed to be reinvested. The "effective yield" will be
slightly higher than the "yield" because of the compounding effect of this
assumed reinvestment. Performance information for the Money Market Funds showing
their average annual total return and aggregate total return may also be
presented in advertisements, sales literature, and shareholder reports. Such
performance figures are based on historical earnings and are not intended to
indicate future performance. Total return will be calculated for the period
since the establishment of the Money Market Funds. Average annual total return
is measured by comparing the value of an investment in a Money Market Fund at
the beginning of the relevant period and the redemption value of the investment
at the end of the period (assuming immediate reinvestment of any dividends or
capital gains distributions) and annualizing the result. Aggregate total return
is measured similarly to average
prospectus
25
<PAGE> 30
annual total return, however, the resulting difference is not annualized.
Investors may also judge the performance of other mutual funds with similar
investment objectives and other relevant indices. For example, the performance
of the Money Market Funds may be compared to the Donoghue's "Money Fund
Average", which is an average compiled by IBC/Donoghue's MONEY FUND REPORT(R) of
Holliston, MA 01746, a widely recognized independent publication that monitors
the performance of money market funds, to the average yields reported by the
Bank Rate Monitor from money market deposit accounts offered by the 50 leading
banks and thrift institutions in the top five standard metropolitan statistical
areas, or to data prepared by Lipper, Inc., as well as to performance data as
reported in publications such as Money Magazine, Forbes, Barron's, The Wall
Street Journal, The New York Times, Business Week, Pensions and Investments,
U.S.A. Today, Ibbotson Associates, Inc., Morningstar, Inc., CDA/Wiesenberger,
American Banker, Fortune, Institutional Investor and local newspapers. In
addition to yield information, general information about these Funds that
appears in a publication such as those mentioned above may also be quoted or
reproduced in advertisements or in reports to Shareholders. Additional
performance information is contained in the Funds' Annual Report, which is
available free of charge by calling the telephone number on the front page of
the prospectus.
Yields will fluctuate and any quotation of yield should not be considered as
representative of the future performance of any Money Market Fund. Since yields
fluctuate, yield data cannot necessarily be used to compare an investment in
these Money Market Funds' Shares with bank deposits, savings accounts, and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance and yield are generally functions of kind and quality of the
investments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any fees charged by Participating Organizations to Customer
accounts investing in Shares of these Money Market Funds will not be included in
yield calculations; such fees, if charged, would reduce the actual yield from
that quoted. For further information on performance information, see
"PERFORMANCE COMPARISONS" in the Statement of Additional Information.
YEAR 2000
The investment services industry is evaluating the capability of existing
application software programs and operating systems to accommodate the date
value for the year 2000. Many existing application software products in the
marketplace were designed only to accommodate a two-digit date position, which
represents the year (e.g., "95" is stored on the system and represents the year
1995). If the year 1999 is the maximum date value these systems are able to
accurately process, the improper identification of the year 2000 could result in
a computer system failure or miscalculations causing a disruption of operations.
The Funds' principal service providers are taking steps the Funds believe are
reasonably designed to address the year 2000 issues with respect to the computer
systems those providers operate. However, this is an ongoing process and testing
and other steps are scheduled to be completed in 1999. Nevertheless, the
inability of service providers to successfully address year 2000 issues could
result in interruptions in the Funds' business and have material adverse impact
on the Funds' operations. In addition, year 2000 issues could have a negative
effect on the portfolio securities in which the Funds invest, thereby affecting
the performance of the Funds.
prospectus
26
<PAGE> 31
MISCELLANEOUS
Shareholders will receive unaudited mid-year reports describing the investment
operations of the Money Market Funds and annual financial statements audited by
independent public accountants.
As used in this Prospectus and in the Statement of Additional Information,
"assets belonging to" a Fund means the consideration received by the Fund upon
the issuance or sale of Shares in that Fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof including any proceeds
from the sale, exchange, or liquidation of such investments, and any funds or
payments derived from any reinvestment of such proceeds, and any general assets
of the Funds not readily identified as belonging to a particular Fund that are
allocated to that Fund by the Funds' Board of Trustees. The Board of Trustees
may allocate such general assets in any manner it deems fair and equitable. It
is anticipated that the factor that will be used by the Board of Trustees in
making allocations of general assets to particular Funds will be the relative
total net assets of the respective Funds at the time of allocation. Assets
belonging to a particular Fund are charged with the direct liabilities and
expenses with respect to that Fund, and with a share of the general liabilities
and expenses of the Fund not readily identified as belonging to a particular
Fund that are allocated to that Fund in proportion to the relative total net
assets of the respective Funds at the time of allocation. The timing of
allocations of general assets and general liabilities and expenses of the Fund
to particular Funds will be determined by the Board of Trustees of the Funds and
will be in accordance with generally accepted accounting principles.
Determinations by the Board of Trustees of the Funds as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular Fund are
conclusive.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of the Funds or a particular Fund
means the affirmative vote, at a meeting of Shareholders duly called, of the
lesser of (a) 67% or more of the outstanding Shares of the Funds or such Fund
present at a meeting at which the holders of more than 50% of the outstanding
Shares of the Funds or such Fund are represented in person or by proxy, or (b)
the holders of more than 50% of the outstanding Shares of the Funds or such
Fund.
Inquiries regarding the Funds may be directed in writing to the Funds at 3435
Stelzer Road, Columbus, Ohio 43219, or by calling toll free (800) 762-7085.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE MONEY
MARKET FUNDS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE MONEY MARKET FUNDS OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
prospectus
27
<PAGE> 32
AMERICAN PERFORMANCE FUNDS
BOND INVESTMENT FUNDS
[FLAG LOGO]
AMERICAN PERFORMANCE FUNDS
The Right Fit For Your Investment Goals
BOND FUND
INTERMEDIATE BOND FUND
INTERMEDIATE TAX-FREE BOND FUND
SHORT-TERM INCOME FUND
INVESTMENT ADVISER
Bank of Oklahoma, N.A.
Bank Oklahoma Tower
Tulsa, Oklahoma 74103
ADMINISTRATOR/DISTRIBUTOR
BISYS Fund Services BOND FUND
3435 Stelzer Road
Columbus, Ohio 43219-3035 INTERMEDIATE BOND
FUND
LEGAL COUNSEL
Ropes & Gray
One Franklin Square INTERMEDIATE TAX-FREE
1301 K Street N.W. BOND FUND
Suite 800 East
Washington, DC 20005
SHORT-TERM INCOME
FUND
AUDITORS
KPMG LLP
Two Nationwide Plaza
Columbus, Ohio 43215
Prospectus
AP2P021799 February 17, 1999
<PAGE> 33
<TABLE>
<S> <C>
American For performance, purchase, and
Performance redemption information, call
BOND INVESTMENT (800) 762-7085
Funds 3435 Stelzer Road
Four Variable Net Asset Value Columbus, Ohio 43219
Investment Portfolios of
American Performance Funds
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
The American Performance Bond Investment Funds (the "Bond Investment
Funds") are four variable net asset value portfolios of the AMERICAN PERFORMANCE
FUNDS (the "Funds"), a diversified open-end management investment company which
currently consists of ten separately managed portfolios. Each of the Bond
Investment Funds has a different investment objective, and the net asset value
per unit of beneficial interest ("Share") of each Bond Investment Fund may be
expected to fluctuate in accordance with the value of each Fund's portfolio
investments.
AMERICAN PERFORMANCE BOND FUND (the "Bond Fund") seeks to maximize total
return by investing primarily in an actively managed, diversified portfolio of
short, intermediate, and long-term bonds and other fixed income securities. The
total return on a portfolio of such fixed income securities consists of a
combination of interest income and capital appreciation.
AMERICAN PERFORMANCE INTERMEDIATE BOND FUND (the "Intermediate Bond Fund")
seeks current income consistent with preservation of capital by investing
primarily in a diversified portfolio of intermediate term bonds and other fixed
income securities.
AMERICAN PERFORMANCE INTERMEDIATE TAX-FREE BOND FUND (the "Intermediate
Tax-Free Bond Fund") seeks current income consistent with preservation of
capital that is exempt from federal income taxes by investing primarily in a
diversified portfolio of intermediate term tax-free bonds and other tax-free
fixed income securities.
(Continued on following page)
- --------------------------------------------------------------------------------
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY, BANK OF OKLAHOMA, N.A. OR ANY OF ITS AFFILIATES. THE FUNDS' SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR BY ANY OTHER AGENCY. AN INVESTMENT IN THE FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
The date of this Prospectus is February 17, 1999.
prospectus
<PAGE> 34
(Continued from previous page)
AMERICAN PERFORMANCE SHORT-TERM INCOME FUND (the "Short-Term Income Fund")
seeks current income consistent with preservation of capital by investing
primarily in a diversified portfolio of short-term bonds and other fixed income
securities.
Bank of Oklahoma, N.A., Tulsa, Oklahoma ("BOK") serves as the investment
adviser ("Investment Adviser") to each Bond Investment Fund. BISYS Fund Services
Limited Partnership, d/b/a BISYS Fund Services, Columbus, Ohio, ("BISYS" or the
"Distributor") acts as the Bond Investment Funds' Administrator and Distributor.
This Prospectus relates only to the Bond Investment Funds. The Funds also
include two money market portfolios to which BOK serves as Investment Adviser:
the American Performance Cash Management Fund and the American Performance U.S.
Treasury Fund, each of which seeks current income with liquidity and stability
of principal (collectively, the "American Performance Money Market Funds"). The
Funds also include four equity portfolios to which BOK serves as Investment
Adviser: the American Performance Equity Fund, which seeks growth of capital
and, secondarily, income through investing primarily in common stocks and
securities convertible into common stocks, the American Performance Balanced
Fund, which seeks current income and, secondarily, long-term capital growth by
investing primarily in a broadly diversified portfolio of securities, including
common stocks, preferred stocks and bonds, the American Performance Growth
Equity Fund, which seeks long-term capital appreciation income by investing
primarily in a diversified portfolio of common stocks and securities convertible
into common stocks and the American Performance Small Cap Equity Fund, which
seeks long-term capital appreciation and, secondarily, income, by investing in a
diversified portfolio of common stocks and securities convertible into common
stocks of small-size companies (collectively, the "American Performance Equity
Investment Funds"). Persons who wish to obtain a copy of the Prospectus for the
American Performance Money Market Funds or the American Performance Equity
Investment Funds may contact the Funds at the telephone number shown above.
A Statement of Additional Information bearing the same date as this
Prospectus, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Statement of Additional Information can be
obtained without charge by writing to or calling the Funds at the address or
telephone number shown above.
This Prospectus sets forth concisely the information about the Bond
Investment Funds that a prospective investor ought to know before investing.
Investors should read this Prospectus and retain it for future reference.
prospectus
2
<PAGE> 35
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table................................................... 4
Financial Highlights........................................ 6
Investment Objectives....................................... 9
Investment Policies and Special Considerations.............. 10
Other Investment Techniques of the Bond Investment Funds.... 16
Investment Restrictions..................................... 18
Valuation of Shares......................................... 20
How to Purchase Shares...................................... 20
Sales Charges............................................... 22
Sales Charge Waivers........................................ 24
Concurrent Purchases and Right of Accumulation.............. 25
Letter of Intent............................................ 25
Exchange Privilege.......................................... 26
How to Redeem Shares........................................ 26
Dividends................................................... 28
Federal Income Taxes........................................ 29
Distribution................................................ 30
Management of the Bond Investment Funds..................... 31
General Information......................................... 35
</TABLE>
prospectus
3
<PAGE> 36
FEE TABLE
<TABLE>
<CAPTION>
INTERMEDIATE SHORT-TERM
BOND INTERMEDIATE TAX-FREE INCOME
FUND BOND FUND BOND FUND FUND
---- ------------ ------------ ----------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
- ----------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on Purchases(2)
(as a percentage of offering price)................. 4.00% 3.00% 3.00% 2.00%
Maximum Sales Load Imposed on Reinvested Dividends (as
a percentage of offering price)..................... 0% 0% 0% 0%
Deferred Sales Load(3) (as a percentage of original
purchase price or redemption proceeds, if
applicable)......................................... 0% 0% 0% 0%
Redemption Fees(4) (as a percentage of amount
redeemed, if applicable)............................ 0% 0% 0% 0%
Exchange Fees......................................... $ 0 $ 0 $ 0 $ 0
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE
NET ASSETS)
- ----------------------------------------------------------------------------------------------------------
Management Fees(5) (after voluntary fee reductions)... 0.35% 0.35% 0.35% 0.00%
12b-1 Fees(6) (after voluntary fee reductions in the
case of the Intermediate Tax-Free Bond Fund and the
Short-Term Income Fund)............................. 0.25% 0.25% 0.00% 0.17%
Other Expenses........................................ 0.35% 0.35% 0.39% 0.41%
---- ---- ---- ----
Total Fund Operating Expenses(7) (after voluntary fee
reductions)......................................... 0.95% 0.95% 0.74% 0.58%
==== ==== ==== ====
EXAMPLE:
- ----------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000
investment in each of the Funds, assuming (1) 5%
annual return and (2) redemption at the end of
each time period:
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE SHORT-TERM
BOND INTERMEDIATE TAX-FREE INCOME
FUND BOND FUND BOND FUND FUND
---- ------------ ------------ ----------
<S> <C> <C> <C> <C>
1 Year................................................ $49 $ 39 $ 37 $ 26
3 Years............................................... $69 $ 59 $ 53 $ 38
5 Years............................................... $90 $ 81 $ 70 $ 52
10 Years.............................................. $152 $143 $119 $ 91
</TABLE>
The purpose of the above table is to assist a potential purchaser of Shares of
any of the Bond Investment Funds in understanding the various costs and expenses
that an investor in any of the Bond Investment Funds will bear directly or
indirectly. The examples reflect voluntary reductions of investment advisory
and/or 12b-1 Fees, as applicable. Although the Investment Adviser and the
Distributor have currently agreed to these voluntary reductions, they may cease
to provide these reductions, which would have the effect of increasing the
projected expenses set forth above in the examples. Such expenses do not include
any fees charged by BOK or any of its affiliates to its customers' accounts
which may have invested in shares of a Fund. See "MANAGEMENT OF THE BOND
INVESTMENT FUNDS," "SALES CHARGES," and "DISTRIBUTION" for a more complete
discussion of the transaction expenses and annual operating expenses of each
Bond Investment Fund. NASD rules generally limit the amount that a Bond
Investment Fund may pay under a Distribution Plan. A Bond Investment Fund would
stop accruing payments under the Distribution Plan if, to the extent, and for as
long as, such
prospectus
4
<PAGE> 37
limit would otherwise be exceeded. Long-term shareholders may pay more than the
equivalent of the maximum front-end sales charges otherwise permitted by the
rules of the National Association of Securities Dealers, Inc.
THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
- ------------
(1) Participating organizations (as defined in "DISTRIBUTION") may charge a
Customer's (as defined in "DISTRIBUTION") account fees for automatic
investment and other investment and trust services provided in connection
with investment in the Funds. (See "HOW TO PURCHASE SHARES.")
(2) There may be no sales load imposed upon purchases of shares of the Funds by
(1) investors who purchase through the Investment Adviser and who have an
existing trust relationship with the Investment Adviser; (2) employees of
the Investment Adviser or its affiliates; (3) each Trustee of the Funds and
any employee of a company that constitutes the principal business activity
of a Trustee; (4) employees of the Distributor and its affiliates; (5)
orders placed on behalf of other investment companies distributed by The
BISYS Group, Inc. or its affiliated companies; (6) existing Shareholders who
own Shares in any of the Bond Investment Funds within their trust accounts
and purchase additional Shares outside of their trust relationships; (7)
investors within wrap accounts; (8) investors who purchase in connection
with 401(k) plans, 403(b) plans, and other employer-sponsored, qualified
retirement plans; and (9) investors who purchase in connection with
non-transactional fee fund programs and programs offered by fee-based
financial planners and other types of financial institutions.
(3) A Contingent Deferred Sales Load of 1.00% for the Bond Fund, 0.75% for the
Intermediate Bond Fund and Intermediate Tax-Free Bond Fund, and 0.50% for
the Short-Term Income Fund will be assessed against the proceeds of any
redemption request relating to Shares of that Fund which were purchased
without a sales charge in reliance upon the waiver accorded to purchases in
the amount of $1 million or more, but only where such redemption request is
made within one year of the date the Shares were purchased.
(4) A wire redemption charge may be deducted from the amount of a wire
redemption payment made at the request of a holder of Shares. The current
charge, which is subject to change upon notice to Shareholders, is $15.00.
(See "HOW TO REDEEM SHARES -- By Telephone.")
(5) In order to reduce operating expenses, the Investment Adviser has
voluntarily agreed to reduce the investment advisory fees. Absent voluntary
fee reductions, the investment advisory fees would be 0.55% of the average
daily net assets for the Bond Fund, Intermediate Bond Fund, Intermediate
Tax-Free Bond Fund and Short-Term Income Fund.
(6) In order to reduce operating expenses, the Distributor has voluntarily
agreed to reduce the 12b-1 Fees. Absent voluntary fee reductions, 12b-1 Fees
would be 0.25% of the average daily net assets of the Intermediate Tax-Free
Bond Fund and the Short-Term Income Fund.
(7) Absent voluntary fee reductions, the Total Fund Operating Expenses for the
Bond Fund, Intermediate Bond Fund, Intermediate Tax-Free Bond Fund and
Short-Term Income Fund would be 1.15%, 1.15%, 1.19% and 1.21% of each Fund's
average daily net assets, respectively.
prospectus
5
<PAGE> 38
FINANCIAL HIGHLIGHTS
The American Performance Funds (the "Funds") were organized as a Massachusetts
business trust and began active operations in August of 1990. The Funds
currently consist of ten series of units of beneficial interests ("Shares").
Four such series represent interests in the Bond Fund, Intermediate Bond Fund,
Intermediate Tax-Free Bond Fund, and Short-Term Income Fund.
The Tables below set forth certain financial highlights for the Bond Fund, the
Intermediate Bond Fund, the Intermediate Tax-Free Bond Fund and the Short-Term
Income Fund for the periods indicated. The most recent five years of each Table
are part of the Funds' financial statements which are included in the Funds'
Annual Report and are incorporated by reference into the Statement of Additional
Information, which a Shareholder may obtain by calling the Funds. The financial
statements have been audited by KPMG LLP, independent accountants for the Funds,
whose report thereon, is included in the Funds' Annual Report.
<TABLE>
<CAPTION>
BOND FUND
-----------------------------------------------------------------------------------
SEPTEMBER 28,
YEAR ENDED AUGUST 31, 1990 TO
------------------------------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994 1993 1992 1991(a)
------- ------- ------- ------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 9.29 $ 8.99 $ 9.29 $ 9.36 $ 11.05 $ 10.99 $ 10.57 $ 10.00
------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.57 0.58 0.57 0.56 0.58 0.70 0.76 0.71
Net realized and unrealized
gains (losses) on
investments................. 0.47 0.30 (0.30) 0.15 (0.77) 0.50 0.54 0.57
------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Activities................ 1.04 0.88 0.27 0.71 (0.19) 1.20 1.30 1.28
------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income......... (0.57) (0.58) (0.57) (0.56) (0.58) (0.70) (0.76) (0.71)
Net realized gains............ -- -- -- -- (0.43) (0.44) (0.12) --
In excess of net realized
gains....................... -- -- -- (0.22) (0.49) -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total Distributions......... (0.57) (0.58) (0.57) (0.78) (1.50) (1.14) (0.88) (0.71)
------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 9.76 $ 9.29 $ 8.99 $ 9.29 $ 9.36 $ 11.05 $ 10.99 $ 10.57
======= ======= ======= ======= ======= ======= ======= =======
Total Return (excludes sales
charge)....................... 11.54% 10.03% 2.84% 8.21% (1.92)% 11.76% 12.71% 13.12%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period
(000)....................... $52,706 $35,454 $32,807 $37,293 $38,257 $23,554 $42,396 $45,911
Ratio of expenses to average
net assets.................. 0.96% 0.94% 0.96% 1.03% 1.05% 1.12% 1.06% 1.07%(b)
Ratio of net investment income
to average net assets....... 6.02% 6.29% 6.08% 6.18% 5.72% 6.49% 6.96% 7.35%(b)
Ratio of expenses to average
net assets*................. 1.16% 1.14% 1.16% 1.23% 1.25% 1.33% 1.30% 1.32%(b)
Ratio of net investment income
to average net assets*...... 5.82% 6.09% 5.88% 5.98% 5.52% 6.28% 6.72% 7.10%(b)
Portfolio turnover............ 47.80% 83.65% 61.02% 185.48% 122.14% 26.27% 60.84% 37.99%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
prospectus
6
<PAGE> 39
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
-----------------------------------------------------------------------------------
SEPTEMBER 28,
YEAR ENDED AUGUST 31, 1990 TO
------------------------------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994 1993 1992 1991(a)
------- ------- ------- ------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 10.23 $ 10.01 $ 10.26 $ 10.23 $ 11.06 $ 10.89 $ 10.45 $ 10.00
------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.61 0.60 0.60 0.61 0.61 0.64 0.71 0.66
Net realized and unrealized
gains (losses) on
investments................. 0.27 0.22 (0.25) 0.06 (0.73) 0.30 0.54 0.45
------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Activities................ 0.88 0.82 0.35 0.67 (0.12) 0.94 1.25 1.11
------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income......... (0.61) (0.60) (0.60) (0.61) (0.61) (0.64) (0.71) (0.66)
Net realized gains............ -- -- -- -- (0.06) (0.13) (0.10) --
In excess of net realized
gains....................... -- -- -- (0.03) (0.04) -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total Distributions......... (0.61) (0.60) (0.60) (0.64) (0.71) (0.77) (0.81) (0.66)
------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 10.50 $ 10.23 $ 10.01 $ 10.26 $ 10.23 $ 11.06 $ 10.89 $ 10.45
======= ======= ======= ======= ======= ======= ======= =======
Total Return (excludes sales
charge)....................... 8.80% 8.38% 3.41% 6.81% (1.14)% 9.04% 12.41% 11.42%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period
(000)....................... $85,382 $77,319 $63,088 $74,395 $84,144 $57,085 $47,523 $41,894
Ratio of expenses to average
net assets.................. 0.95% 0.93% 0.95% 0.98% 0.98% 1.02% 1.07% 1.10%(b)
Ratio of net investment income
to average net assets....... 5.86% 5.89% 5.84% 6.00% 5.72% 5.95% 6.62% 6.98%(b)
Ratio of expenses to average
net assets*................. 1.15% 1.13% 1.15% 1.18% 1.18% 1.24% 1.31% 1.33%(b)
Ratio of net investment income
to average net assets*...... 5.66% 5.69% 5.64% 5.80% 5.52% 5.74% 6.39% 6.75%(b)
Portfolio turnover............ 31.98% 40.77% 129.97% 154.43% 76.30% 47.79% 60.53% 22.18%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
prospectus
7
<PAGE> 40
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
-------------------------------------------------------------------------
MAY 29,
YEAR ENDED AUGUST 31, 1992 TO
--------------------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994 1993 1992(a)
------- ------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 10.78 $ 10.57 $ 10.67 $ 10.42 $ 10.77 $ 10.18 $ 10.00
------- ------- ------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.48 0.49 0.49 0.51 0.54 0.55 0.13
Net realized and unrealized
gains (losses) on
investments................. 0.28 0.21 (0.10) 0.25 (0.35) 0.59 0.18
------- ------- ------- ------- ------- ------- -------
Total from Investment
Activities................ 0.76 0.70 0.39 0.76 0.19 1.14 0.31
------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income......... (0.48) (0.49) (0.49) (0.51) (0.54) (0.55) (0.13)
Net realized gains............ (0.07) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total Distributions......... (0.55) (0.49) (0.49) (0.51) (0.54) (0.55) (0.13)
------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 10.99 $ 10.78 $ 10.57 $ 10.67 $ 10.42 $ 10.77 $ 10.18
======= ======= ======= ======= ======= ======= =======
Total Return (excludes sales
charge)....................... 7.28% 6.79% 3.68% 7.62% 1.76% 11.56% 3.14%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period
(000)....................... $30,454 $26,544 $31,036 $28,114 $30,097 $17,415 $ 7,560
Ratio of expenses to average
net assets.................. 0.74% 0.74% 0.75% 0.51% 0.25% 0.25% 0.35%(b)
Ratio of net investment income
to average net assets....... 4.44% 4.61% 4.58% 4.99% 5.06% 5.34% 5.28%(b)
Ratio of expenses to average
net assets*................. 1.19% 1.19% 1.20% 1.24% 1.44% 1.63% 2.03%(b)
Ratio of net investment income
to average net assets*...... 3.99% 4.16% 4.13% 4.25% 3.87% 3.96% 3.60%(b)
Portfolio turnover............ 19.10% 11.38% 19.53% 8.35% 14.33% 13.19% 19.33%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operation.
(b) Annualized.
(c) Unannualized.
prospectus
8
<PAGE> 41
<TABLE>
<CAPTION>
SHORT-TERM INCOME FUND
----------------------------------------------------
OCTOBER 19,
YEAR ENDED AUGUST 31, 1994 TO
--------------------------------- AUGUST 31,
1998 1997 1996 1995(a)
------- ------- ------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................ $ 9.92 $ 9.79 $ 9.95 $ 10.00
------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income............................. 0.62 0.61 0.59 0.52
Net realized and unrealized gains (losses) on
investments..................................... 0.20 0.14 (0.14) (0.05)
------- ------- ------- -------
Total from Investment Activities................ 0.82 0.75 0.45 0.47
------- ------- ------- -------
DISTRIBUTIONS
Net investment income............................. (0.62) (0.61) (0.59) (0.52)
In excess of net investment income................ -- (0.01) -- --
Net realized gains................................ -- -- (0.01) --
In excess of net realized gains................... -- -- (0.01) --
------- ------- ------- -------
Total Distributions............................. (0.62) (0.62) (0.61) (0.52)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD...................... $ 10.12 $ 9.92 $ 9.79 $ 9.95
======= ======= ======= =======
Total Return (excludes sales charge)................ 8.47% 7.85% 4.64% 4.81%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000)................. $32,390 $15,658 $14,399 $10,228
Ratio of expenses to average net assets........... 0.40% 0.33% 0.41% 0.57%(b)
Ratio of net investment income to average net
assets.......................................... 6.15% 6.14% 5.95% 5.96%(b)
Ratio of expenses to average net assets*.......... 1.22% 1.16% 1.24% 1.47%(b)
Ratio of net investment income to average net
assets*......................................... 5.34% 5.31% 5.12% 5.06%(b)
Portfolio turnover................................ 60.02% 37.55% 80.98% 212.35%(b)
</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 operation.
(b) Annualized.
(c) Unannualized.
INVESTMENT OBJECTIVES
BOND FUND
The investment objective of the Bond Fund is to maximize total return by
investing primarily in an actively managed, diversified portfolio of short,
intermediate and long-term bonds and other fixed income securities. (See
"INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS" for discussion of such other
fixed income securities.) Total return on a portfolio of fixed income securities
consists of a combination of interest income and capital appreciation. The Bond
Fund will seek to maximize total return through active adjustment, when
appropriate, of portfolio composition and maturity in response to actual or
anticipated changes or trends in interest rates, the financial markets, or the
economy.
INTERMEDIATE BOND FUND
The investment objective of the Intermediate Bond Fund is to seek current
income, consistent with the preservation of capital, by investing primarily in a
diversified portfolio of intermediate bonds and other
prospectus
9
<PAGE> 42
fixed income securities. (See "INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS"
for discussion of such other fixed income securities.)
INTERMEDIATE TAX-FREE BOND FUND
The investment objective of the Intermediate Tax-Free Bond Fund is to seek
current income, consistent with the preservation of capital, that is exempt from
federal income taxes by investing primarily in a diversified portfolio of
intermediate term bonds and other fixed income securities. Investments in the
Intermediate Tax-Free Bond Fund, therefore, would not be appropriate for tax
deferred plans, such as IRA and Keogh Plans.
SHORT-TERM INCOME FUND
The investment objective of the Short-Term Income Fund is to seek current
income, consistent with preservation of capital, by investing primarily in a
diversified portfolio of short-term bonds and other fixed income securities.
(See "INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS" for discussion of such
other fixed income securities.)
ALL BOND INVESTMENT FUNDS
The Bond Fund, Intermediate Bond Fund, Intermediate Tax-Free Bond Fund and
Short-Term Income Fund are collectively referred to herein as Bond Investment
Funds. The investment objectives with respect to each of the Bond Investment
Funds may not be changed without a vote of the holders of a majority of the
outstanding Shares of that Bond Investment Fund (as defined in "GENERAL
INFORMATION -- Miscellaneous"). There can be no assurance that the investment
objective of a Bond Investment Fund will be achieved. Depending upon the
performance of a Bond Investment Fund's investment portfolio, the net asset
value per share of the Bond Investment Fund may decrease instead of increase.
Additionally, the Bond Investment Funds may engage in certain investment
techniques which may subject the Bond Investment Funds to certain risks (see
"OTHER INVESTMENT TECHNIQUES OF THE BOND INVESTMENT FUNDS").
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS
BOND FUND, INTERMEDIATE BOND FUND AND SHORT-TERM INCOME FUND
The investments of the Bond Fund, the Intermediate Bond Fund and the Short-Term
Income Fund will primarily consist of, but will not be limited to, debt
obligations such as bonds, notes and debentures, bills which are issued by
United States corporations or issued or guaranteed by the U.S. government or its
agencies or instrumentalities and municipal securities which possess all the
characteristics detailed under "Intermediate Tax-Free Bond Fund" below, other
than exemption from federal income taxes. As described in greater detail below,
the Bond Fund, the Intermediate Bond Fund and the Short-Term Income Fund may
also invest in certain foreign securities, asset-backed securities, mortgage-
related securities and zero coupon obligations. The Bond Fund, the Intermediate
Bond Fund and the Short-Term Income Fund will invest in debt securities only if
they carry a rating within the three highest ratings categories assigned by a
nationally recognized statistical ratings organization (an "NRSRO") (e.g., at
least "A" from Moody's Investors Services ("Moody's"), or Standard & Poor's
prospectus
10
<PAGE> 43
Corporation ("S&P") (including all sub-classifications indicated by modifiers of
such "A" ratings)) or, if unrated, are deemed by the Investment Adviser under
guidelines established by the Funds' Board of Trustees to present attractive
opportunities and to be of comparable quality to the securities so rated. See
"Appendix" to the Statement of Additional Information for an explanation of
these ratings.
The Bond, Intermediate Bond, and Short-Term Income Funds, under normal market
conditions, will each invest at least 65% of the value of their total assets in
bonds, except that, when market conditions indicate a temporary defensive
investment strategy as determined by the Funds' Investment Adviser, more than
35% of the Bond, Intermediate Bond, or Short-Term Income Funds' assets may be
held in cash equivalents. For purposes of the above-stated policies, "bonds"
includes any debt instrument with a remaining maturity of one year or more.
Certain debt securities such as, but not limited to, mortgage backed securities,
CMOs and asset-backed securities, as well as securities subject to prepayment of
principal prior to the stated maturity date, are expected to be repaid prior to
their stated maturity dates. As a result, the effective maturity of these
securities is expected to be shorter than the stated maturity. For purposes of
calculating a Bond Investment Fund's weighted average portfolio maturity, the
effective maturity of such securities, as determined by the Investment Adviser,
will be used.
"Cash equivalents" are deposits or high quality interest-bearing instruments
with a remaining maturity of one year or less. The purpose of cash equivalents
is to provide liquidity and income at money market rates while minimizing the
risk of decline in value to the maximum extent possible. The instruments may
include, but are not limited to, commercial paper, domestic and Eurodollar
certificates of deposit, repurchase agreements, bankers' acceptances, U.S.
Treasury bills, master demand notes, agency discount notes, bank money market
deposit accounts and money market mutual funds. The Bond, Intermediate Bond, and
Short-Term Income Funds will only purchase commercial paper rated at the time of
purchase within the highest ratings categories assigned by an NRSRO (e.g., A-1
by S&P, Prime-1 by Moody's or F-1 by Fitch Investors Service) or, if not rated,
found by the Investment Adviser under guidelines established by the Funds' Board
of Trustees to be of comparable quality. See "Appendix" to the Statement of
Additional Information for an explanation of these ratings. During temporary
defensive periods as determined by the Investment Adviser, the Bond Fund, the
Intermediate Bond Fund, or the Short-Term Income Fund may hold up to 100% of its
total assets in cash equivalents.
The Intermediate Bond Fund intends that, under normal market conditions, its
portfolio will maintain an average dollar-weighted maturity of approximately
three to ten years. The Bond Fund intends that, under normal market conditions,
its portfolio will maintain an average dollar-weighted maturity of seven years
or more. The Short-Term Income Fund intends that, under normal market
conditions, its portfolio will maintain an average dollar-weighted maturity of
three years or less. However, for temporary defensive purposes the Intermediate
Bond Fund, the Bond Fund, and the Short-Term Income Fund may shorten the average
dollar-weighted maturity of its portfolio depending upon anticipated changes in
interest rates or other relevant market factors.
The Bond Fund will attempt to maximize total return by allocating portfolio
assets among various fixed income markets, securities, and maturities.
Securities and maturities selected will be those that offer
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the greatest potential for maximizing total return without assuming undue risk.
The Investment Adviser will monitor the Fund's portfolio performance on an
ongoing basis and reallocate assets in response to actual and anticipated market
and economic changes. This approach may result in significant variations in the
Bond Fund's average weighted maturity.
FOREIGN SECURITIES
The Bond, Intermediate Bond, and Short-Term Income Funds may invest in Canadian,
Supra-national, and World Bank Bonds, Eurodollars, and similar instruments.
Investment in foreign securities is subject to special risks, such as future
adverse political and economic developments, possible seizure, nationalization,
or expropriation of foreign investments, less stringent disclosure requirements,
the possible establishment of exchange controls or taxation at the source, or
the adoption of other foreign governmental restrictions.
ASSET-BACKED SECURITIES
The Bond, Intermediate Bond, and Short-Term Income Funds may invest in
securities backed by automobile receivables and credit-card receivables and
other securities backed by other types of receivables or other assets. Credit
support for asset-backed securities may be based on the underlying assets and/or
provided through credit enhancements by a third party. Credit enhancement
techniques include letters of credit, insurance bonds, limited guarantees (which
are generally provided by the issuer), senior-subordinated structures and
over-collateralization. The Bond, Intermediate Bond, and Short-Term Income Funds
will only purchase an asset-backed security if it is rated within the three
highest ratings categories assigned by an NRSRO (e.g., at least "A" by S&P or
Moody's). Asset-backed securities are generally considered to be illiquid.
MORTGAGE-RELATED SECURITIES
The Bond, Intermediate Bond, and Short-Term Income Funds may purchase
mortgage-related securities representing pools of mortgage loans assembled for
sale to investors by various governmental agencies such as the Government
National Mortgage Association and government-related organizations such as the
Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation, as well as by private issuers such as commercial banks, savings and
loan institutions, mortgage bankers and private mortgage insurance companies.
Although certain mortgage-related securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If the Bond Fund, the Intermediate Bond Fund, or
the Short-Term Income Fund purchases a mortgage-related security at a premium,
that portion may be lost if there is a decline in the market value of the
security whether resulting from changes in interest rates or prepayments in the
underlying mortgage collateral. As with other interest-bearing securities, the
prices of such securities are inversely affected by changes in interest rates.
However, though the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true since in periods of
declining interest rates, the mortgages underlying the securities are prone to
prepayment. For this and other reasons, a mortgage-related security's stated
maturity may be shortened by unscheduled prepayments on the underlying mortgages
and, therefore, it is not possible to predict accurately the security's return
to the Bond Investment Fund holding the security. In addition, regular payments
received in respect of mortgage-related securities include both interest and
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principal. No assurance can be given as to the return the Bond Investment Fund
holding a mortgage related security will receive when these amounts are
reinvested. The Bond, the Intermediate Bond, and the Short-Term Income Funds
also may invest in collateralized mortgage obligations structured on pools of
mortgage pass-through certificates or mortgage loans. Collateralized mortgage
obligations will be purchased only if rated in one of the three highest rating
categories by an NRSRO. For further discussion concerning the investment
considerations involved, see "INVESTMENT OBJECTIVE AND POLICIES -- Additional
Information on Fund Instruments -- Mortgage-Related Securities" in the Statement
of Additional Information.
ZERO COUPON OBLIGATIONS
The Bond, the Intermediate Bond, and the Short-Term Income Funds may hold
zero-coupon obligations issued by the U.S. Treasury and U.S. agencies. Such
zero-coupon obligations pay no current interest and are typically sold at prices
greatly discounted from par value, with par value to be paid to the holder at
maturity. The return on a zero-coupon obligation, when held to maturity, equals
the difference between the par value and the original purchase price.
Zero-coupon obligations have greater price volatility than coupon obligations
and such obligations will be purchased only if, at the time of purchase, the
yield spread, considered in light of the obligation's duration, is considered
advantageous.
Even though such bonds do not pay current interest in cash, a Fund nonetheless
is required to accrue interest income on these investments and to distribute the
interest income on a current basis. Thus, a Fund could be required at times to
liquidate other investments in order to satisfy its distribution requirements.
INTERMEDIATE TAX-FREE BOND FUND
Under normal market conditions at least 80% of the net assets of the
Intermediate Tax-Free Bond Fund will be invested in a diversified portfolio of
obligations (such as bonds, notes, and debentures) issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and other political subdivisions, agencies, instrumentalities and
authorities, the interest on which is both exempt from federal income taxes and
not treated as a preference item for individuals for purposes of the federal
alternative minimum tax ("Municipal Securities"). This is a fundamental policy
and may only be changed by the vote of a majority of the outstanding Shares of
the Intermediate Tax-Free Bond Fund (as defined in "GENERAL
INFORMATION -- Miscellaneous"). The Intermediate Tax-Free Bond Fund will
maintain a dollar-weighted average portfolio maturity between three and ten
years. Under normal market conditions, at least 65% of the Intermediate Tax-Free
Bond Fund's total assets will be invested in Municipal Securities which are
bonds and debentures.
The two principal classifications of Municipal Securities which may be held by
the Intermediate Tax-Free Bond Fund are "general obligation" securities and
"revenue" securities. General obligation securities are secured by the issuer's
pledge of its full faith, credit and taxing power for the payment of principal
and interest. Revenue securities are payable only from the revenues derived from
a particular facility or class of facilities or, in some cases, from proceeds of
a special excise tax or other specific revenue source such as the user of the
facility being financed. Private activity bonds held by the Intermediate
Tax-Free Bond Fund are in most cases revenue securities and are not payable from
the
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unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved.
The Intermediate Tax-Free Bond Fund may also invest in "moral obligation"
securities, which are normally issued by special purpose public authorities. If
the issuer of moral obligation securities is unable to meet its debt service
obligations from current revenues, it may draw on a reserve fund, the
restoration of which is a moral commitment, but not a legal obligation of the
state or municipality which created the issuer.
The Intermediate Tax-Free Bond Fund invests in Municipal Securities which are
rated at the time of purchase within the three highest rating groups assigned by
an NRSRO, in the case of bonds (e.g. at least A by Moody's or S&P); rated within
the highest ratings category assigned by an NRSRO, in the case of notes (e.g.,
"SP-1" by S&P or "MIG-1" by Moody's); rated in the highest ratings category
assigned by an NRSRO, in the case of tax-exempt commercial paper (e.g., "A-1" or
higher by S&P or "Prime-1" by Moody's); or rated in the highest ratings category
assigned by an NRSRO, in the case of variable rate demand obligations, (e.g.,
"VMIG-1" by Moody's). The Intermediate Tax-Free Bond Fund may also purchase
Municipal Securities which are unrated at the time of purchase but are
determined to be of comparable quality by the Investment Adviser pursuant to
guidelines approved by the Funds' Board of Trustees. The applicable Municipal
Securities ratings are described in the Appendix to the Statement of Additional
Information.
Interest income from certain types of municipal securities may constitute a
preference item for individuals for purposes of the federal alternative minimum
tax. The Intermediate Tax-Free Bond Fund will not treat these securities as
"Municipal Securities" for purposes of measuring compliance with the 80% test
described above. To the extent the Intermediate Tax-Free Bond Fund invests in
these securities, individual shareholders, depending on their own tax status,
may be subject to alternative minimum tax on that part of the Intermediate
Tax-Free Bond Fund's distributions derived from these securities. More
generally, corporate Shareholders may be subject to the federal alternative
minimum tax on distributions derived by the Intermediate Tax-Free Bond Fund from
Municipal Securities. See "FEDERAL INCOME TAXES" for more information on the
impact of the federal alternative minimum tax on investors in the Intermediate
Tax-Free Bond Fund.
Opinions relating to the validity of Municipal Securities and to the exemption
of interest thereon from federal income tax are rendered by bond counsel to the
respective issuers at the time of issuance. Neither the Intermediate Tax-Free
Bond Fund nor its Investment Adviser will review the proceedings relating to the
issuance of Municipal Securities or the basis for such opinions.
Although the Intermediate Tax-Free Bond Fund may invest more than 25% of its net
assets in (i) Municipal Securities whose issuers are in the same state (ii)
Municipal Securities the interest on which is paid solely from revenues of
similar projects, and (iii) private activity bonds, it does not presently intend
to do so on a regular basis. To the extent the Intermediate Tax-Free Bond Fund's
assets are concentrated in Municipal Securities that are payable from the
revenues of similar projects or are issued by issuers located in the same state,
or are concentrated in private activity bonds, the Intermediate Tax-Free Bond
Fund will be subject to the peculiar risks presented by the laws and
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economic conditions relating to such states, projects and bonds to a greater
extent than it would be if its assets were not so concentrated.
The Intermediate Tax-Free Bond Fund may invest in short-term Municipal
Securities up to 100% of its assets during temporary defensive periods.
TAXABLE OBLIGATIONS
Under normal market conditions, at least 80% of the net assets of the
Intermediate Tax-Free Bond Fund will be invested in Municipal Securities.
However, investments of the Intermediate Tax-Free Bond Fund may be made in
taxable obligations if, for example, suitable tax-exempt obligations are
unavailable or if acquisition of U.S. government or other taxable securities is
deemed appropriate for temporary defensive purposes. Such taxable obligations,
which are further described in the Statement of Additional Information may
include obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities (some of which may be subject to repurchase agreements),
certificates of deposit and bankers' acceptances of selected banks and
commercial paper meeting the Intermediate Tax-Free Bond Fund's quality standards
(as described above) for tax-exempt commercial paper. Under such circumstances
and during the period of such investment, the Intermediate Tax-Free Bond Fund
may not achieve its stated investment objective.
VARIABLE AND FLOATING RATE NOTES
Municipal Securities purchased by the Intermediate Tax-Free Bond Fund may
include rated and unrated variable and floating rate tax-exempt notes. There may
be no active secondary market with respect to a particular variable or floating
rate note. Nevertheless, the periodic readjustments of their interest rates tend
to assure that their value to the Intermediate Tax-Free Bond Fund will
approximate their par value. Variable and floating rate notes for which no
readily available market exists will be purchased in an amount which, together
with other securities described in Investment Restriction Number 5 below (see
"INVESTMENT RESTRICTIONS"), exceeds 10% of the Intermediate Tax-Free Bond Fund's
net assets only if such notes are subject to a demand feature that will permit
the Intermediate Tax-Free Bond Fund to receive payment of the principal within
seven days after demand by the Intermediate Tax-Free Bond Fund.
THE BOND INVESTMENT FUNDS
Bonds, notes, and debentures in which the Bond Investment Funds may invest may
differ in interest rates, maturities and times of issuance. The market value of
the Bond Investment Funds' debt securities will change in response to interest
rate changes and other factors. During periods of falling interest rates, the
value of outstanding debt securities generally rise. Conversely, during periods
of rising interest rates, the value of such securities generally decline.
Moreover, while securities with longer maturities tend to produce higher yields,
the price of longer maturity securities is also subject to greater fluctuations
as a result of changes in interest rates. Conversely, securities with shorter
maturities generally have less price movement than securities of comparable
quality with longer maturities. Changes by recognized agencies in the rating of
any debt security and in the ability of an issuer to make payments of interest
and principal also affect the value of these investments. Except under
conditions of default, changes in the value of a Bond Investment Fund's
portfolio securities will
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not affect cash income derived from these securities but will affect a Bond
Investment Fund's net asset value.
OTHER INVESTMENT TECHNIQUES OF THE BOND INVESTMENT FUNDS
INVESTMENT COMPANY SECURITIES
Each Bond Investment Fund may invest in shares of other investment companies,
including the American Performance Money Market Funds. However, none of the Bond
Investment Funds may invest more than 5% of its total assets in the securities
of any one investment company, nor may any Bond Investment Fund own more than 3%
of the securities of any investment company or invest more than 10% of its total
assets in the securities of other investment companies. These investment
companies typically pay an investment advisory fee out of their assets.
Therefore, investments may be subject to duplicate management, advisory and
distribution fees. The Investment Adviser will consider this fee in its
investment analysis when determining whether to purchase shares of these
companies for a Bond Investment Fund. This fee is in addition to the fees
received by a Bond Investment Fund's Investment Adviser and Administrator. In
order to avoid the imposition of additional fees as a result of investments by a
Bond Investment Fund in shares of the American Performance Money Market Funds,
the Investment Adviser and Administrator have agreed to promptly forward to the
Bond Investment Fund any portion of their usual asset-based service fees from an
American Performance Money Market Fund which is attributable to investment by
the Bond Investment Fund in Shares of such American Performance Money Market
Fund.
OPTIONS AND FUTURES CONTRACTS
Each Bond Investment Fund may acquire put or call options and futures contracts
and may write covered call options. See the Statement of Additional Information
for more information on these investment activities.
Futures transactions involve brokerage costs and require a Bond Investment Fund
to segregate assets to cover contracts that would require it to purchase
securities. A Bond Investment Fund may lose the expected benefit of futures
transactions if interest rates or securities prices move in an unanticipated
manner. Such unanticipated changes may also result in poorer overall performance
than if the Bond Investment Fund had not entered into any futures transactions.
In addition, the value of a Bond Investment Fund's futures positions may not
prove to be perfectly or even highly correlated with the value of its portfolio
securities, limiting the Bond Investment Fund's ability to hedge effectively
against interest rate and/or market risk and giving rise to additional risks.
There is no assurance of liquidity in the secondary market for purposes of
closing out futures positions.
WHEN-ISSUED SECURITIES
Each Bond Investment Fund may purchase securities on a when-issued basis.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield and thereby involve a risk that the
yield obtained in the transaction will be less than those available in the
market when delivery takes place. A Bond Investment Fund will generally not pay
for such securities or start earning interest on them until they are received.
When a Bond Investment Fund agrees to purchase such securities, its Custodian
will set aside cash or liquid high grade securities equal to the
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amount of the commitment in a separate account with the Custodian or a
Sub-Custodian of the Bond Investment Fund. Securities purchased on a when-issued
basis are recorded as an asset and are subject to changes in value based upon
changes in the general level of interest rates. Each Bond Investment Fund
expects that commitments to purchase when-issued securities will not exceed 25%
of the value of its total assets absent unusual market conditions. In the event
that its commitments to purchase when-issued securities ever exceed 25% of the
value of its assets, a Bond Investment Fund's liquidity and the ability of the
Investment Adviser to manage it might be severely affected. No Bond Investment
Fund intends to purchase when-issued securities for speculative purposes but
only in furtherance of its investment objective.
SECURITIES LENDING
In order to generate additional income, each Bond Investment Fund may, from time
to time, lend its portfolio securities to broker-dealers, banks, or
institutional borrowers of securities. The Funds will enter into loan agreements
with broker-dealers, banks, or other institutions that BOK has determined are
creditworthy under guidelines established by the Funds' Board of Trustees. See
the Statement of Additional Information for more information regarding these
investment activities.
REPURCHASE AGREEMENTS
Securities held by a Bond Investment Fund may be subject to repurchase
agreements. Under the terms of a repurchase agreement, a Bond Investment Fund
would acquire securities from financial institutions, such as member banks of
the Federal Deposit Insurance Corporation or registered broker-dealers which the
Investment Adviser deems creditworthy under guidelines approved by the Funds'
Board of Trustees, subject to the seller's agreement to repurchase such
securities at a mutually agreed upon date and price. The repurchase price would
generally equal the price paid by the Bond Investment Fund plus interest
negotiated on the basis of current short-term rates, which may be more or less
than the rate on the underlying portfolio securities. The seller under a
repurchase agreement will be required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest) and the Investment Adviser will monitor the collateral's value
to ensure that it equals or exceeds the repurchase price. In addition,
securities subject to repurchase agreements will be held in a segregated
account. Repurchase agreements are considered to be loans by an investment
company under the Investment Company Act of 1940 (the "1940 Act"). See the
Statement of Additional Information for more information regarding this
investment practice.
REVERSE REPURCHASE AGREEMENTS
Each Bond Investment Fund may borrow funds for temporary purposes by entering
into reverse repurchase agreements in accordance with the investment
restrictions described below. Pursuant to such agreements, a Bond Investment
Fund would sell portfolio securities to financial institutions such as banks and
broker-dealers and agree to repurchase them at a mutually agreed upon date and
price. At the time a Bond Investment Fund enters into a reverse repurchase
agreement, it will place in a segregated custodial account assets, such as
liquid high quality debt securities, consistent with the Bond Investment Fund's
investment objective having a value not less than 100% of the repurchase price
(including accrued interest), and will subsequently monitor the account to
ensure that such required value is maintained. Reverse repurchase agreements
involve the risk that the market value of
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the securities sold by a Bond Investment Fund may decline below the price at
which such Fund is obligated to repurchase the securities. Reverse repurchase
agreements are considered to be borrowings by an investment company under the
1940 Act.
PRIVATE PLACEMENT INVESTMENTS
Each Bond Investment Fund may invest in commercial paper issued in reliance on
the so-called "private placement" exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, and resold to qualified
institutional buyers under Securities Act Rule 144A ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the federal securities
laws, and generally is sold to institutional investors such as the Funds who
agree that they are purchasing the paper for investment and not with a view to
public distribution. Any resale by the purchaser must be in an exempt
transaction and may be accomplished in accordance with Rule 144A. Section 4(2)
paper normally is resold to other institutional investors like the Funds through
or with the assistance of the issuer or investment dealers who make a market in
the Section 4(2) paper, thus providing liquidity. None of the Bond Investment
Funds will invest more than 10% of its net assets in Section 4(2) paper and
illiquid securities unless the Investment Adviser determines, by continuous
reference to the appropriate trading markets and pursuant to guidelines approved
by the Board of Trustees, that any Section 4(2) paper held by the Bond
Investment Fund in excess of this level is at all times liquid.
Because it is not possible to predict with assurance exactly how this market for
Section 4(2) paper sold and offered under Rule 144A will develop, the Board of
Trustees and the Investment Adviser, pursuant to the guidelines approved by the
Board of Trustees, will carefully monitor the Bond Investment Funds' investments
in these securities, focusing on such important factors, among others, as
valuation, liquidity, and availability of information. Investments in Section
4(2) paper could have the effect of reducing a Bond Investment Fund's liquidity
to the extent that qualified institutional buyers become for a time not
interested in purchasing these restricted securities.
INVESTMENT RESTRICTIONS
Each Bond Investment Fund is subject to a number of investment restrictions that
may be changed only by a vote of a majority of the outstanding Shares of the
Bond Investment Fund (as defined in "GENERAL INFORMATION -- Miscellaneous").
Pursuant to these investment restrictions:
1. Each of the Bond Investment Funds will not purchase a security if, as
a result, with respect to 75% of its portfolio (i) more than 5% of the
value of its total assets would be invested in any one issuer, or (ii) it
would hold more than 10% of any class of securities of such issuer. There
is no limit on the percentage of assets that may be invested in U.S.
Treasury bills, notes, or other obligations issued or guaranteed by the
U.S. government or its agencies and instrumentalities. For purposes of this
and the immediately following limitation, a security is considered to be
issued by the government entity (or entities) whose assets and revenues
back the security, or, with respect to a private activity bond that is
backed only by the assets and revenues of a non-governmental user, such
non-governmental user.
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2. Each of the Bond Investment Funds will not purchase a security if, as
a result, more than 25% of the value of its total assets would be invested
in securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) this limitation shall
not apply to obligations issued or guaranteed by the U.S. government or its
agencies and instrumentalities; (b) wholly owned finance companies will be
considered to be in the industries of their parents if their activities are
primarily related to financing the activities of their parents; (c)
utilities will be divided according to their services (for example, gas,
gas transmission, electric and gas, electric, and telephone will each be
considered a separate industry); and (d) this limitation shall not apply to
Municipal Securities or governmental guarantees of Municipal Securities;
and further, that for the purpose of this limitation only, private activity
bonds that are backed only by the assets and revenues of a non-governmental
user shall not be deemed to be Municipal Securities.
3. The Bond Investment Funds may not borrow money or issue senior
securities, except that each Bond Investment Fund may borrow from banks or
enter into reverse repurchase agreements for temporary purposes in amounts
up to 10% of the value of its total assets at the time of such borrowing;
or mortgage, pledge, or hypothecate any assets, except in connection with
any such borrowing and in amounts not in excess of the lesser of the dollar
amounts borrowed or 10% of the value of each Bond Investment Fund's total
assets at the time of its borrowing. No Bond Investment Fund will purchase
securities while its borrowings (including reverse repurchase agreements)
exceed 5% of its total assets.
4. No Bond Investment Fund may make loans, except that each Bond
Investment Fund may, in accordance with its investment objectives and
policies, purchase or hold debt instruments, lend portfolio securities, and
enter into repurchase agreements.
5. No Bond Investment Fund will enter into a repurchase agreement with a
maturity in excess of seven days if such investment, together with other
instruments in the Fund which are not readily marketable, exceeds 10% of
such Fund's net assets.
In addition, the Intermediate Tax-Free Bond Fund is subject to the following
additional investment restrictions pursuant to which it will not:
1. Acquire a put, if, immediately after such acquisition, over 5% of the
total value of the Intermediate Tax-Free Bond Fund's assets would be
subject to puts from such issuer (except that the 5% limitation is
inapplicable to puts that, by their terms, would be readily exercisable in
the event of a default in payment of principal or interest on the
underlying securities). For the purpose of this investment restriction and
Investment Restriction Number 2 below, a put will be considered to be from
the party to whom the Intermediate Tax-Free Bond Fund will look for payment
of the exercise price.
2. Acquire a put that, by its terms, would be readily exercisable in the
event of a default in payment of principal and interest on the underlying
security or securities if immediately after that acquisition the value of
the security or securities underlying that put, when aggregated with the
value of any other securities issued or guaranteed by the issuer of the
put, would exceed 10% of the total value of the Intermediate Tax-Free Bond
Fund's assets.
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VALUATION OF SHARES
The net asset value of the Funds are determined and their Shares are priced as
of the close of regular trading of the New York Stock Exchange ("NYSE")
(generally 4:00 p.m. Eastern time) on each Business Day ("Valuation Time"). As
used herein, a "Business Day" constitutes any day on which the NYSE is open for
trading, and the Federal Reserve Bank of Kansas City is open, except days on
which there are not sufficient changes in the value of a Fund's portfolio
securities that the Fund's net asset value might be materially affected, or days
during which no Shares are tendered for redemption and no orders to purchase
Shares are received. Currently, the NYSE or the Federal Reserve Bank of Kansas
City is closed on the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day. Net asset
value per share for purposes of pricing sales and redemptions is calculated by
dividing the value of all securities and other assets belonging to each Bond
Investment Fund, less the liabilities charged to each Bond Investment Fund, by
the number of its outstanding Shares.
The securities in each Bond Investment Fund will be valued at market value. If
market quotations are not readily available, the securities will be valued by a
method which the Funds' Board of Trustees believes accurately reflects fair
value. Debt securities with remaining maturities of 60 days or less will be
valued in accordance with the amortized cost method where the Funds' Trustees
determine that amortized cost is fair value. For further information about
valuation of investments, see the Statement of Additional Information.
HOW TO PURCHASE SHARES
Shares of the Bond Investment Funds are sold on a continuous basis and may be
purchased directly from the Funds' Distributor, BISYS, either by mail, by
telephone, or by electronic transfer. Shares may also be purchased through a
bank or broker-dealer who has established a dealer agreement with the
Distributor. Except as described under "Auto Invest Plan" below, the minimum
initial purchase is $1,000, and the minimum for subsequent purchases is only
$100. These minimums may be waived if purchases are made in connection with
Individual Retirement Accounts ("IRAs"), Keoghs, qualified pension plans,
similar plans, or other employer plans. For information on IRAs, Keoghs or
similar plans, contact BOK at (918) 588-6586.
BY MAIL
Investors may purchase Shares of any Bond Investment Fund by completing and
signing an Account Registration form and mailing it, along with a check (or
other negotiable bank instrument or money order) for at least $1,000, payable to
the appropriate Fund, in care of the Funds' Custodian at Bank of Oklahoma, N.A.,
Attention: American Performance Funds, Department 12, Tulsa, Oklahoma 74182.
Subsequent purchases of Shares may be made at any time by mailing a check (or
other negotiable bank draft or money order) for at least $100, to the above
address.
Account Registration forms can be obtained by calling the Funds at (800)
762-7085.
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BY TELEPHONE OR ELECTRONIC TRANSFER
If an investor's Account Registration form has been previously received by the
Distributor, investors may also purchase Shares of any of the Bond Investment
Funds by telephone or by electronic transfer to the Funds' Custodian. To place
an order by telephone, call the Funds toll-free at (800) 762-7085. Payment for
Shares ordered by telephone may be made by check and must be received by the
Funds' Custodian within the settlement requirements defined under the Securities
Exchange Act of 1934. Shares of the Bond Investment Funds ordered by telephone
will be purchased for the Shareholder's account when the order has been
received. Any questions regarding current settlement requirements or electronic
payment instructions should be directed to the Funds at (800) 762-7085.
If payment for the Shares is not received within the prescribed time periods, or
if a check timely received does not clear, the purchase will be canceled and the
investor could be liable for any losses or fees incurred.
AUTO INVEST PLAN
The Funds offer an Auto Invest Plan which enables Shareholders of the Bond
Investment Funds to make regular monthly or quarterly purchases of Shares
through automatic deductions from their bank accounts. With Shareholder
authorization, the Transfer Agent deducts the amount specified from the
Shareholder's bank account which is then automatically invested in Shares at net
asset value. The required minimum initial investment when opening an account
using the Auto Invest Plan is $100; the minimum amount for subsequent
investments in a Bond Investment Fund is $50. To participate in the Auto Invest
Plan, Shareholders should complete the appropriate section of the Account
Registration form which can be acquired by calling (800) 762-7085. To change the
Auto Invest instructions, a Shareholder must submit a written request to the
Funds. A Shareholder may discontinue the feature by submitting a written request
to or by calling the Funds.
FUND DIRECT INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS")
A Fund Direct IRA enables individuals, even if they participate in an
employer-sponsored retirement plan, to establish their own retirement program.
IRA contributions may be tax-deductible and earnings are tax-deferred. Under the
Tax Reform Act of 1986, the tax deductibility of IRA contributions is restricted
or eliminated for individuals who participate in certain employer pension plans
and whose annual income exceeds certain limits. Existing IRAs and future
contributions up to the IRA maximums, whether deductible or not, still earn
income on a tax-deferred basis.
All IRA distribution requests must be made in writing to the Funds. Any
additional deposits to an IRA must distinguish the type and year of the
contribution. For more information on an IRA call the Funds at (800) 762-7085.
Investment in Shares of the Intermediate Tax-Free Bond Fund would not be
appropriate for any IRA. Shareholders are advised to consult a tax adviser on
IRA contribution and withdrawal requirements and restrictions.
OTHER INFORMATION REGARDING PURCHASES
Shares may also be purchased through procedures established by the Distributor
in connection with the requirements of qualified accounts maintained by or on
behalf of certain persons ("Customers") by Participating Organizations under the
Funds' Distribution Plan (See "DISTRIBUTION"). Shares of
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any Bond Investment Fund sold to a Participating Organization on behalf of
Customers will normally be held of record by the Participating Organization and
it is the responsibility of the Participating Organization to transmit purchase
or redemption orders to the Distributor and to deliver funds for the purchase
thereof on a timely basis.
Depending upon the terms of a particular Customer account, a Participating
Organization may charge a Customer account fees for services provided in
connection with investment in any Bond Investment Fund. Information concerning
these services and any charges can be obtained from the Participating
Organization or one of its affiliates. This Prospectus should be read in
conjunction with any such information so received.
Shares of each Bond Investment Fund are purchased at the net asset value per
share (see "VALUATION OF SHARES") next determined after receipt by the
Distributor of an order to purchase Shares in good form, plus any applicable
sales charge as described below. Purchases of Shares in a Bond Investment Fund
will be effected only on a Business Day (as defined in "Valuation of Shares") of
that Bond Investment Fund. An order received prior to the Valuation Time on any
Business Day will be executed at the net asset value determined as of the
Valuation Time on the day of receipt. An order received after the Valuation Time
on any Business Day will be executed at the net asset value determined as of the
Valuation Time on the next Business Day.
In the case of orders for the purchase of Shares placed through a broker-dealer,
the applicable public offering price will be the net asset value as so
determined, but only if the broker-dealer receives the order prior to the
Valuation Time for that day and transmits it to the Distributor prior to the
Valuation Time for that day. The broker-dealer is responsible for transmitting
such orders promptly. If the broker-dealer fails to do so, the investor's right
to that day's closing price must be settled between the investor and the
broker-dealer. If the broker-dealer receives the order after the Valuation Time
for that day, the price will be based on the net asset value determined as of
the Valuation Time for the next day.
Each Bond Investment Fund reserves the right to reject any order for the
purchase of its Shares in whole or in part, including purchases made with
foreign and third party checks.
Every Shareholder will receive a confirmation of each new transaction in the
Shareholder's account, which will show the total number of Shares of such Fund
owned by the Shareholder and the number of Shares being held in safekeeping by
the Transfer Agent for the account of the Shareholder. Confirmation of purchases
and redemptions of Shares of the Bond Investment Funds by a Participating
Organization on behalf of a Customer will be sent by the Participating
Organization. Shareholders may rely on these statements in lieu of certificates.
No certificates representing Shares of any Bond Investment Fund will be issued.
SALES CHARGES
The public offering price of a Share of each of the Bond Investment Funds equals
its net asset value plus a sales charge. BISYS receives this sales charge as
Distributor and reallows a portion of it as dealer discounts and brokerage
commissions. However, the Distributor, at its sole discretion, may pay certain
dealers all or part of the portion of the sales charge it receives. A broker or
dealer who receives
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22
<PAGE> 55
a reallowance in excess of 90% of the sales charge may be deemed to be an
"underwriter" for purposes of the Securities Act of 1933.
The following table sets forth information pertaining to the sales charges for
the Bond Fund.
<TABLE>
<CAPTION>
DEALER DISCOUNTS
AND BROKERAGE
SALES CHARGE SALES CHARGE COMMISSIONS AS
AS A PERCENTAGE AS A PERCENTAGE PERCENTAGE OF
OF NET AMOUNT OF NET OFFERING PUBLIC OFFERING
AMOUNT OF PURCHASE INVESTED PRICE PRICE
- ------------------ --------------- --------------- ----------------
<S> <C> <C> <C>
Less than $50,000........................ 4.17% 4.00% 3.50%
$50,000 but less than $100,000........... 3.36% 3.25% 2.75%
$100,000 but less than $250,000.......... 2.56% 2.50% 2.00%
$250,000 but less than $500,000.......... 2.04% 2.00% 1.75%
$500,000 but less than $1,000,000........ 1.52% 1.50% 1.25%
$1,000,000 or more*...................... 0.00% 0.00% 1.00%
</TABLE>
The following table sets forth information pertaining to sales charges for the
Intermediate Bond Fund and the Intermediate Tax-Free Bond Fund.
<TABLE>
<CAPTION>
DEALER DISCOUNTS
AND BROKERAGE
SALES CHARGE SALES CHARGE COMMISSIONS AS
AS A PERCENTAGE AS A PERCENTAGE PERCENTAGE OF
OF NET AMOUNT OF NET OFFERING PUBLIC OFFERING
AMOUNT OF PURCHASE INVESTED PRICE PRICE
- ------------------ --------------- --------------- ----------------
<S> <C> <C> <C>
Less than $50,000........................ 3.09% 3.00% 2.50%
$50,000 but less than $100,000........... 2.56% 2.50% 2.00%
$100,000 but less than $250,000.......... 2.04% 2.00% 1.50%
$250,000 but less than $500,000.......... 1.52% 1.50% 1.25%
$500,000 but less than $1,000,000........ 1.27% 1.25% 1.00%
$1,000,000 or more*...................... 0.00% 0.00% 0.75%
</TABLE>
The following table sets forth information pertaining to sales charges for the
Short-Term Income Fund.
<TABLE>
<CAPTION>
DEALER DISCOUNTS
AND BROKERAGE
SALES CHARGE SALES CHARGE COMMISSIONS AS
AS A PERCENTAGE AS A PERCENTAGE PERCENTAGE OF
OF NET AMOUNT OF NET OFFERING PUBLIC OFFERING
AMOUNT OF PURCHASE INVESTED PRICE PRICE
- ------------------ --------------- --------------- ----------------
<S> <C> <C> <C>
Less than $50,000........................ 2.04% 2.00% 1.50%
$50,000 but less than $100,000........... 1.52% 1.50% 1.25%
$100,000 but less than $250,000.......... 1.27% 1.25% 1.00%
$250,000 but less than $500,000.......... 1.01% 1.00% 0.75%
$500,000 but less than $1,000,000........ 0.76% 0.75% 0.60%
$1,000,000 or more*...................... 0.00% 0.00% 0.50%
</TABLE>
prospectus
23
<PAGE> 56
From time to time dealers who receive dealer discounts and brokerage commissions
from the Distributor may reallow all or a portion of such dealer discounts and
brokerage commissions to other dealers or brokers.
- ---------------
* A Contingent Deferred Sales Load of 1.00% for the Bond Fund, 0.75% for the
Intermediate Bond Fund and Intermediate Tax-Free Bond Fund, and 0.50% for the
Short-Term Income Fund will be assessed against the proceeds of any redemption
request relating to Shares of that Fund which were purchased without a sales
charge in reliance upon the waiver accorded to purchases in the amount of $1
million or more, but only where such redemption request is made within one
year of the date the Shares were purchased.
SALES CHARGE WAIVERS
The Distributor may periodically waive the sales charges for all customers with
respect to any of the Bond Investment Funds. In addition, the Distributor may
waive the sales charge for the purchase of a Fund's shares with the proceeds
from the recent redemption of shares of another non-money market mutual fund
that imposes a sales charge.
The sales charges may also be waived for (1) investors who purchase through
accounts with the Investment Adviser and through their existing trust
relationship with the Investment Adviser; (2) employees of the Investment
Adviser or its affiliates; (3) each Trustee of the Funds and any employee of a
company that constitutes the principal business activity of a Trustee; (4)
employees of the Distributor and its affiliates; (5) orders placed on behalf of
other investment companies distributed by The BISYS Group, Inc. or its
affiliated companies; (6) existing Shareholders who own Shares in any of the
Bond Investment Funds within their trust accounts and purchase additional Shares
outside of these trust relationships; (7) investors within wrap accounts; (8)
investors who purchase in connection with 401(k) plans, 403(b) plans, and other
employer-sponsored, qualified retirement plans; and (9) investors who purchase
in connection with non-transactional fee fund programs and programs offered by
fee-based financial planners and other types of financial institutions.
Each investor described in paragraphs (2), (3), (4), and (6) above must identify
himself or herself at the time of purchase. When an investor who has previously
redeemed Shares of any American Performance Fund re-enters the American
Performance Funds, the sales charge on the newly purchased shares will be waived
on a one-time basis in an amount up to the total of any sales charge paid on the
shares previously redeemed. If the Shareholder exercising this re-entry
privilege paid a sales charge on the redeemed shares and held them for less than
91 days, such Shareholder must reduce his or her cost basis of the redeemed
shares for purposes of determining any capital gain or loss on the redemption by
the lesser of (1) the sales charge paid for those shares, or (2) the sales
charge waived in connection with the purchase of the new shares. The Funds
reserve the right to alter the terms of their sales charge waiver practices upon
sixty days' notice to Shareholders.
prospectus
24
<PAGE> 57
CONCURRENT PURCHASES AND RIGHT OF ACCUMULATION
For purposes of qualifying for a reduced sales charge, investors have the
privilege of combining concurrent purchases of, and holdings in, shares of any
Funds of the Funds sold with a sales charge ("Eligible Shares"). Investors are
permitted to purchase Eligible Shares at the public offering price applicable to
the total of (a) the dollar amount of the Eligible Shares then being purchased
plus (b) an amount equal to the then-current net asset value of the purchaser's
combined holdings of Eligible Shares.
To receive the applicable public offering price pursuant to concurrent purchases
and the right of accumulation, Shareholders must, at the time of purchase, give
the Distributor sufficient information to permit confirmation of qualification.
Investors may combine purchases of Eligible Shares that are made in their
individual capacity with (1) purchases that are made by members of their
immediate household and (2) purchases made by businesses that they own as sole
proprietorships, for purposes of obtaining reduced sales charges pursuant to
concurrent purchases and the right of accumulation. In order to accomplish this,
however, investors must designate on the Account Registration form the accounts
that are to be combined for this purpose. Investors can only designate accounts
that are open at the time of the concurrent purchases and when the right of
accumulation is exercised.
LETTER OF INTENT
You may obtain a reduced sales charge by means of a written Letter of Intent
which expresses your intention to invest, within a period of 13 months, a
certain amount in Shares of any of the American Performance Funds which charge a
sales load. Each purchase of Shares under a Letter of Intent will be made at the
public offering price plus the sales charge applicable at the time of such
purchase to a single transaction of the total dollar amount indicated in the
Letter of Intent. A Letter of Intent may include purchases of Shares made not
more than 90 days prior to the date the investor signs a Letter of Intent;
however, the 13-month period during which the Letter of Intent is in effect will
begin on the date of the earliest purchase to be included.
A Letter of Intent is not a binding obligation upon the investor to purchase the
full amount indicated. The minimum initial investment under a Letter of Intent
is 5% of such amount. Shares purchased with the first 5% of such amount will be
held in escrow (while remaining registered in the name of the investor) to
secure payment of the higher sales charge applicable to the Shares actually
purchased if the full amount indicated is not purchased. Such escrowed Shares
will be involuntarily redeemed to pay the additional sales charge, if necessary.
Dividends on escrowed Shares, whether paid in cash or reinvested in additional
Shares are not subject to escrow. The escrowed Shares will not be available for
disposal by the investor until all purchases pursuant to the Letter of Intent
have been made or the higher sales charge has been paid. When the full amount
indicated has been purchased, the escrow will be released.
Additionally, if the total purchases within the 13-month period exceed the
amount specified, an adjustment will be made to reflect further reduced sales
charges applicable to such purchases. Adjustments for these purchases and
purchases made during the 90-day period prior to submission of the Letter of
Intent will be made at the conclusion of the 13-month period and in the form of
additional
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25
<PAGE> 58
shares credited to the shareholder's account at the then current Public Offering
Price applicable to a single purchase of the total amount of the total purchase.
For further information, interested investors should contact the Distributor.
Letter of Intent privileges may be amended or terminated without notice at any
time by the Distributor.
EXCHANGE PRIVILEGE
Shares of any Bond Investment Fund may be exchanged without payment of a sales
charge for Shares of any other American Performance Fund having a sales charge
equal to or less than that of the Bond Investment Fund Shares sought to be
exchanged. If the Shareholder exercising the exchange privilege paid a sales
charge on the exchanged Shares that is less than the sales charge applicable to
the Shares sought to be acquired through the exchange, such Shareholder must pay
a sales charge on the exchange equal to the difference between the sales charge
paid for the exchanged Shares and the sales charge applicable to the Shares
sought to be acquired through the exchange. The exchange will be made on the
basis of the relative net asset values of the Shares exchanged. An exchange is
considered a sale of Shares and may result in a capital gain or loss for federal
income tax purposes. If the Shareholder exercising the exchange privilege paid a
sales charge on the exchanged Shares and held them for less than 91 days, for
purposes of determining the amount of the capital gain or loss, such Shareholder
must reduce his or her cost basis of the exchanged Shares by the lesser of (1)
the sales charge paid for those Shares, or (2) the sales charge waived on the
exchange. The sales charge is treated as incurred in connection with the
acquisition of the newly exchanged-for Shares. The exchange privilege may only
be exercised in states where the exchange may legally be made. The Funds reserve
the right to eliminate or to alter the terms of this exchange offer upon sixty
days' notice to Shareholders.
A Shareholder wishing to exchange his or her Shares may do so by contacting the
Funds at (800) 762-7085 or by providing written instructions to the Distributor.
Any Shareholder who wishes to make an exchange must have received a current
Prospectus of the Fund in which he or she wishes to invest before the exchange
will be effected.
HOW TO REDEEM SHARES
Shares may ordinarily be redeemed by mail or by telephone. Shareholders may
redeem their Shares without charge on any day that net asset value is calculated
(see "VALUATION OF SHARES"). However, all or part of a Customer's Shares may be
redeemed in accordance with instructions and limitations pertaining to his or
her account held at a Participating Organization.
BY MAIL
Shares may be redeemed by mail by sending a written request to the Distributor
in care of the Funds' Custodian at Bank of Oklahoma, N.A., Attention: American
Performance Funds, Department 12, Tulsa, Oklahoma 74182. The Distributor may
require a signature guarantee by an eligible guarantor institution. For purposes
of this policy, the term "eligible guarantor institution" shall include banks,
brokers, dealers, credit unions, securities exchanges and associations, clearing
agencies and savings associations as those terms are defined in Rule 17Ad-15
under the Securities Exchange Act of 1934. The
prospectus
26
<PAGE> 59
Distributor reserves the right to reject any signature guarantee if (i) it has
reason to believe that the signature is not genuine, (ii) it has reason to
believe that the transaction would otherwise be improper, or (iii) the guarantor
institution is a broker or dealer that is neither a member of a clearing
corporation nor maintains net capital of at least $100,000. The signature
guarantee requirements will be waived if all of the following conditions apply:
(1) the redemption check is payable to the Shareholder(s) of record, and (2) the
redemption check is mailed to the Shareholder(s) at the address of record. The
Shareholder may also have the proceeds mailed or sent electronically to a
commercial bank account previously designated on the Account Registration form
or by written instruction to the Distributor. There is no charge for having
redemption requests mailed to a designated bank account.
BY TELEPHONE
Shares may be redeemed by telephone if the Account Registration form reflects
that the Shareholder has that capability. The Shareholder may have the proceeds
mailed to his or her address or mailed or sent electronically to a commercial
bank account previously designated on the Account Registration. Under most
circumstances, payments will be transmitted on the next Business Day following
receipt of a valid request for redemption. Electronic payment requests may be
made by the Shareholder by calling the Funds at (800) 762-7085. The Transfer
Agent may reduce the amount of a wire redemption payment by the Custodian's
then-current wire redemption charge (presently $15.00). Neither the Distributor,
the Transfer Agent, the Investment Adviser, nor the Funds will be liable for any
losses, damages, expenses or costs arising out of any telephone transaction
(including exchanges and redemptions) effected in accordance with the Funds'
telephone transaction procedures, upon instructions reasonably believed to be
genuine. The Funds will employ procedures designed to provide reasonable
assurance that the instructions communicated by telephone are genuine; if these
procedures are not followed, the Funds may be liable for any losses due to
unauthorized or fraudulent instructions. These procedures include recording all
phone conversations, sending confirmations to shareholders within 72 hours of
the telephone transaction, verifying the account name and a shareholder's
account number or tax identification number and sending redemption proceeds only
to the address of record or to a previously authorized account. If, due to
temporary adverse conditions, investors are unable to effect telephone
transactions, Shareholders may also mail the redemption request to the
Distributor at the address listed above under "HOW TO REDEEM SHARES -- By Mail."
The telephone redemption option will be suspended for a period of 10 days
following a telephonic address change.
SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan enables Shareholders of the Funds to make regular
monthly or quarterly redemptions of Shares if their account has at least
$10,000. With Shareholder authorization, the Transfer Agent will automatically
redeem Shares at the net asset value on the dates of the withdrawal and have a
check in the amount specified mailed to the Shareholder. The required minimum
withdrawal is $100. To participate in the Systematic Withdrawal Plan,
Shareholders should call (800) 762-7085 for more information. Purchases of
additional Shares concurrent with withdrawals may be disadvantageous to certain
Shareholders because of tax liabilities. To change the Systematic Withdrawal
instructions, a Shareholder must submit a written request to the Distributor. A
Shareholder may discontinue the feature by submitting a written request to or by
calling the Funds.
prospectus
27
<PAGE> 60
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per Share next
determined after receipt of a valid request for redemption, as described above.
Payment to Shareholders for Shares redeemed will be made within the settlement
requirements defined in the Securities Exchange Act of 1934, after receipt by
the Distributor of the request for redemption. However, to the greatest extent
possible, the Trust will attempt to honor requests from Shareholders for next
Business Day payments upon redemption of Shares if the request for redemption is
received by the Transfer Agent before the last Valuation Time on a Business Day
or, if the request for redemption is received after the last Valuation Time, to
honor requests for payment within two Business Days, unless it would be
disadvantageous to the Trust or the Shareholders of the particular Fund to sell
or liquidate portfolio securities in an amount sufficient to satisfy requests
for payments in that manner.
At various times, a Bond Investment Fund may be requested to redeem Shares for
which it has not yet received good payment. In such circumstances, the
forwarding of proceeds may be delayed for up to 15 days until payment has been
collected for the purchase of such Shares. The Bond Investment Funds intend to
pay cash for all Shares redeemed, but under abnormal conditions which make
payment in cash unwise, payment may be made wholly or partly in readily
marketable portfolio securities with a market value equal to the redemption
price. In such cases, an investor may incur brokerage costs in converting such
securities to cash.
Due to the relatively high cost of handling small investments, each Bond
Investment Fund reserves the right to redeem, at net asset value, the Shares of
any Shareholder if, because of redemptions of Shares by or on behalf of the
Shareholder, the account of such Shareholder in any Bond Investment Fund has a
value of less than $500. Accordingly, an investor purchasing Shares of any Bond
Investment Fund in only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems some of his or her
Shares. Before any Bond Investment Fund exercises its right to redeem such
Shares and to send the proceeds to the Shareholder, the Shareholder will be
given notice that the value of the Shares in his or her account is less than the
minimum amount and will be allowed 60 days to make an additional investment in
such Fund in an amount which will increase the value of the account to at least
$500.
See the Funds' Statement of Additional Information -- "ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION" -- for examples of when the right of redemption may be
suspended.
DIVIDENDS
Net investment income of each Bond Investment Fund is declared daily as a
dividend and paid monthly to persons who are Shareholders at the close of
business on the day of declaration. Net capital gain income is distributed at
least once a year. A Shareholder will automatically receive all income dividends
and capital gains distributions in additional full and fractional Shares at net
asset value as of the ex-dividend date, unless the Shareholder elects to receive
dividends or distributions in cash. Reinvested dividends receive the same tax
treatment as dividends paid in cash. Such election, or any revocation thereof,
must be made in writing to the Distributor at: BISYS Fund Services, 3435 Stelzer
Road, Columbus, Ohio 43219 and will become effective with respect to dividends
and distributions having record dates after its receipt by the Distributor.
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<PAGE> 61
Shareholders may elect to have all income, dividends, and capital gains
distributions paid by check or reinvested in the Fund. If you elect to receive
distributions paid by check and the check (1) is returned and marked as
"undeliverable" or (2) remains uncashed for six months, your payment election
will be changed automatically and your future dividend and capital gains
distribution will be reinvested in the Fund at the per share net asset value
determined as of the date of payment of the distribution. In addition, any
undeliverable check that remains uncashed for six months will be canceled and
reinvested in the Fund at the per share net asset value determined as of the
date of cancellation.
FEDERAL INCOME TAXES
Each of the Funds is treated as a separate entity for federal income tax
purposes. Each Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended (the "Code"), and intends to
distribute all of its net investment income and capital gains so that it is not
required to pay federal income taxes on amounts so distributed to Shareholders.
Shareholders will be advised at least annually as to the federal income tax
consequences of distributions made during the year.
A Shareholder's receipt of a distribution of ordinary income and/or an excess of
net short-term capital gain over net long-term capital loss is treated as a
receipt of ordinary income, whether such distribution is paid in cash or in
additional shares. It is not expected that the dividends-received deduction for
corporations will apply to these distributions.
Distributions designated by each Bond Investment Fund as deriving from net gains
on securities held for more than one year are generally taxable to Shareholders
as such in the year in which they are received, regardless of how long the
Shareholder has held Shares in the Bond Investment Fund. Such capital gain
dividends are not eligible for the dividends-received deduction.
A Shareholder will generally recognize capital gain or loss on the sale or
exchange of Shares in a Bond Investment Fund. If a Shareholder disposes of
Shares in the Bond Investment Fund at a loss before holding such Shares for
longer than 6 months, such loss will be treated as a long-term capital loss to
the extent the Shareholder has received a capital gain dividend on the Shares.
Distributions are taxable to a shareholder of a Fund even if they are paid from
income or gains earned by the Fund prior to the shareholder's investment (and
thus were included in the price paid by the shareholder).
Dividends designated as exempt-interest dividends by the Intermediate Tax-Free
Bond Fund may be treated by such Fund's Shareholders as items of interest
excludable from their gross income for federal income tax purposes. However,
such dividends may be taxable to Shareholders under state or local law as
ordinary income even though all or a portion of the amounts may be derived from
interest on tax-exempt obligations which, if realized directly, would be exempt
from such taxes. In determining net exempt-interest income, expenses of the
Intermediate Tax-Free Bond Fund are allocated to gross tax-exempt interest
income in the proportion that the gross amount of such interest income bears to
the Intermediate Tax-Free Bond Fund's total gross income, excluding net capital
gains. Shareholders are advised to consult a tax adviser with respect to whether
exempt-interest dividends retain the exclusion if such Shareholder would be
treated as a "substantial user" of a facility financed through certain
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29
<PAGE> 62
private activity bonds or a "related person" to such user as defined in the
Code. Interest on indebtedness incurred by a Shareholder to purchase or carry
shares is not deductible for federal income tax purposes to the extent the
Intermediate Tax-Free Bond Fund distributes exempt-interest dividends during the
Shareholder's taxable year.
To the extent the Intermediate Tax-Free Bond Fund invests in securities the
interest on which is subject to the federal alternative minimum tax,
Shareholders, depending on their tax status, may be subject to the federal
alternative minimum tax on that part of the Fund's distributions derived from
those securities. Under normal market conditions, not more than 20% of the
Intermediate Tax-Free Bond Fund's total assets will be invested in securities,
the interest on which is treated as a preference item for purposes of the
federal alternative minimum tax for individuals. Interest income on all
Municipal Securities is included in "adjusted current earnings" for purposes of
computing the alternative minimum tax applicable to corporate shareholders of
the Intermediate Tax-Free Bond Fund.
Under the Code, if a Shareholder receives an exempt-interest dividend with
respect to any Share and such Share is held for six months or less, any loss on
the sale or exchange of such Share will be disallowed to the extent of the
amount of such exempt-interest dividend.
The Intermediate Tax-Free Bond Fund may at times purchase Municipal Securities
at a discount from the price at which they were originally issued. For federal
income tax purposes, some or all of this market discount will be included in the
Intermediate Tax-Free Bond Fund's ordinary income and will be taxable to
shareholders as such when it is distributed to them.
To the extent dividends paid to Shareholders of the Intermediate Tax-Free Bond
Fund are derived from taxable income (for example, from interest on certificates
of deposit, market discount or repurchase agreements), or from long-term or
short-term capital gains, such dividends will be subject to federal income tax,
whether such dividends are paid in the form of cash or additional shares.
Additional information regarding federal income taxes is contained in the
Statement of Additional Information under "INVESTMENT OBJECTIVE AND
POLICIES -- Additional Tax Information Concerning All the Funds" and "Additional
Tax Information Concerning the Intermediate Tax-Free Bond Fund." However, the
foregoing and the material in the Statement of Additional Information are only
brief summaries of some of the important tax considerations generally affecting
the Bond Investment Funds and their Shareholders. In addition, the foregoing
discussion and the federal tax information in the Statement of Additional
Information are based on tax laws and regulations which are in effect as of the
date of this Prospectus; these laws and regulations may subsequently change.
Prospective investors in a Bond Investment Fund are advised to consult their tax
adviser with special reference to their own tax situations, including the
potential application of foreign, state and local taxes.
DISTRIBUTION
Shares of the Bond Investment Funds are sold on a continuous basis by the
distributor for the Funds, BISYS Fund Services (the "Distributor"). Under the
Funds' Distribution and Shareholder Services Plan (the "Distribution Plan"), the
Bond Investment Funds will pay a monthly distribution fee (also referred to as a
12b-1 Fee) to the Distributor as compensation for its services in connection
with the Distribution Plan at an annual rate equal to the lesser of (1) such fee
as may from time to time be
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30
<PAGE> 63
agreed upon in writing by the Funds and the Distributor, or (2) twenty-five
one-hundredths of one percent (0.25%) of the average daily net assets of each of
the Bond Investment Funds. The Distributor may use the distribution fee to
provide distribution assistance with respect to the Bond Investment Funds'
Shares or to provide Shareholder services to the holders of the Bond Investment
Funds' Shares ("Customers") purchased through financial institutions and
intermediaries, broker-dealers, or similar entities, including affiliates or
subsidiaries of the Distributor ("Participating Organizations") pursuant to
contractual arrangements with the Distributor under the Distribution Plan.
The distribution fee will be payable without regard to whether the amount of the
fee is more or less than the actual expenses incurred in a particular year by
the Distributor in connection with distribution assistance or Shareholder
services rendered by the Distributor itself or incurred by the Distributor
pursuant to the contractual agreement entered into under the Distribution Plan.
The Glass-Steagall Act and other applicable laws generally prohibit banks from
engaging in the business of underwriting securities, but in general do not
prohibit banks from purchasing securities as agent for and upon the order of
customers. Accordingly, banks acting as Participating Organizations may provide
only those services which, in the banks' opinion, are consistent with the then
current legal requirements. It is possible, however, that future legislative,
judicial or administrative action affecting the securities activities of banks
will cause the Funds to alter or discontinue their arrangements with banks that
act as Participating Organizations, or change their method of operations. It is
not anticipated, however, that any change in the Funds' method of operations
would affect their net asset value per share or result in financial loss to any
customer. See the Statement of Additional Information for further information
regarding the Distribution Plan and "MANAGEMENT OF THE BOND INVESTMENT
FUNDS -- Banking Laws" for information concerning the applicability of the
Glass-Steagall Act to the Investment Adviser's investment advisory services to
the Funds.
MANAGEMENT OF THE BOND INVESTMENT FUNDS
TRUSTEES OF THE FUNDS
Overall responsibility for management of the Bond Investment Funds rests with
the Board of Trustees of the Funds, who are elected by the Shareholders of the
Funds. The Funds will be managed by the Trustees in accordance with the laws of
the Commonwealth of Massachusetts governing business trusts. There are currently
four Trustees, of whom three are not "interested persons" of the Funds within
the meaning of that term under the 1940 Act. The Trustees, in turn, elect the
officers of the Funds to supervise actively the Funds' day-to-day operations.
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<PAGE> 64
The Trustees of the Funds, their addresses, and their principal occupations
during the past five years are as follows:
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE FUNDS DURING PAST FIVE YEARS
- --------------------- --------------------- ----------------------
<S> <C> <C>
Walter B. Grimm*, 53 Chairman and Trustee From June, 1992 to present, employee of BISYS Fund
3435 Stelzer Road Services.
Columbus, Ohio 43219
Michael J. Hall, 54 Trustee From December, 1997 to present, Vice President Finance
10701 E. Ute Street and Chief Financial Officer and Director, Matrix
Tulsa, Oklahoma 74116 Service Company; from December, 1995 to November,
1997, Vice President and Chief Financial Officer,
Worldwide Sports & Recreation, Inc.; from January,
1994 to December, 1995, Vice President and Chief
Financial Officer, Pexco Holdings, Inc.
Perry A. Wimpey, 67 Trustee From January, 1992 to present, Local Financial and
4843 S. 69th East Avenue Regulatory Consultant.
Tulsa, Oklahoma 74145
I. Edgar Hendrix, 54 Trustee From June, 1983 to present, Vice President and
8 East 3rd Street Treasurer, Parker Drilling Co.
Tulsa, Oklahoma 74103
</TABLE>
- ---------------
*Indicates an "interested person" of the Funds as defined in the 1940 Act.
The Trustees receive fees and are reimbursed for their expenses in connection
with each meeting of the Board of Trustees they attend. However, no officer or
employee of an Investment Adviser or the Administrator of the Funds receives any
compensation from the Funds for acting as a Trustee. The officers of the Funds
receive no compensation directly from the Funds for performing the duties of
their offices. BISYS receives fees from each Fund of the Funds for acting as
Administrator and may receive additional income under the Distribution Plan for
the Funds.
INVESTMENT ADVISER
Bank of Oklahoma, N.A. serves as investment adviser to the Bond Investment
Funds. BOK, the largest trust company in the State of Oklahoma, is a subsidiary
of BOK Financial Corporation ("BOK Financial"). BOK Financial is controlled by
its principal shareholder, George B. Kaiser. Through its subsidiaries, BOK
Financial provides a full array of trust, commercial banking and retail banking
services. Its non-bank subsidiaries engage in various bank-related services,
including mortgage banking and providing credit life, accident, and health
insurance on certain loans originated by its subsidiaries.
BOK maintains offices in Oklahoma, Arkansas, Texas and New Mexico and offers a
variety of services for both corporate and individual customers. Individual
financial trust services include personal trust management, administration of
estates, and management of individual investments and custodial accounts. For
corporate clients, the array of services includes management, administration and
recordkeeping of pension plans, thrift plans, 401(k) plans and master trust
plans. BOK has experience in providing investment advisory services to the Funds
and experience in managing collective investment funds with investment
portfolios and objectives comparable to those of the Funds. BOK also serves as
transfer agent and registrar for corporate securities, paying agent for
dividends and interest, and
prospectus
32
<PAGE> 65
indenture trustee of bond issues. At July 31, 1998 BOK was responsible for
approximately $12.3 billion in assets including approximately $5.7 billion in
assets under management and possessed average equity capital at $429 million.
Subject to the general supervision of the Funds' Board of Trustees and in
accordance with the investment objective and restrictions of each Bond
Investment Fund, BOK manages the Bond Investment Funds, makes decisions with
respect to and places orders for all purchases and sales of their portfolio
securities, and maintains each Bond Investment Fund's records relating to such
purchases. The persons primarily responsible for the day-to-day management of
each Bond Investment Fund, as well as their previous business experience, are as
follows:
<TABLE>
<CAPTION>
PORTFOLIO MANAGER BUSINESS EXPERIENCE
- ----------------- -------------------
<S> <C>
William Bequette Co-Manager of the Intermediate Tax-Free Bond Fund since its
inception. Since 1963, Mr. Bequette has been a portfolio
manager for BOK.
J. Brian Henderson Manager of the Bond Fund and the Intermediate Bond Fund
since January 1993 and the Short-Term Income Fund since its
inception. In 1993, Mr. Henderson became a Portfolio
Manager. In 1991, Mr. Henderson joined BOK as a Government
Securities Trader and was named Investment Officer of the
Capital Market Division in 1992. Prior to joining BOK, Mr.
Henderson was a Financial Consultant and Equity Analyst with
Southwest Securities in Dallas, Texas.
K.C. Matthews Co-Manager of the Intermediate Tax-Free Bond Fund since
February 1999. In 1994, Mr. Matthews became a Portfolio
Manager. Mr. Matthews joined BOK in 1993 in the Capital
Markets Division.
</TABLE>
For the services provided and expenses assumed pursuant to its investment
advisory agreement with the Funds, BOK receives a fee from each Bond Investment
Fund, computed daily and paid monthly equaling the lesser of (1) such fee as may
from time to time be agreed upon by the Funds and BOK, or (2) fifty-five
one-hundredths of one percent (0.55%) of each of the Bond, Intermediate Bond,
Intermediate Tax-Free Bond and Short-Term Income Fund's average daily net
assets. BOK also receives fee income from the Funds from several other sources.
(See "SALES CHARGES," "DISTRIBUTION," and "GENERAL INFORMATION -- Custodian and
Transfer Agent.") BOK may periodically waive all or a portion of its advisory
fee with respect to any Fund to increase the net income of such Bond Investment
Fund available for distribution as dividends. In order to reduce operating
expenses, BOK has currently established the investment advisory fees at
thirty-five one-hundredths of one percent (0.35%) of the Intermediate Bond, Bond
and Intermediate Tax-Free Bond Funds' average daily net assets. BOK currently
waives the investment advisory fees with respect to the Short-Term Income Fund.
For investment advisory services for the fiscal year ended August 31, 1998, the
Bond Fund, the Intermediate Bond Fund and the Intermediate Tax-Free Bond Fund,
each paid BOK, after voluntary fee reductions, 0.35% of their average daily net
assets. For investment advisory services for the fiscal year ended August 31,
1998, the Short-Term Income Fund, after voluntary fee reductions, did not pay
any investment advisory fees to BOK.
prospectus
33
<PAGE> 66
ADMINISTRATOR AND DISTRIBUTOR
BISYS is the Administrator for the Funds, and also acts as the Funds' principal
underwriter and Distributor (the "Administrator" or the "Distributor," as the
context indicates). BISYS is a subsidiary of The BISYS Group, Inc., 150 Clove
Road, Little Falls, New Jersey 07424, a publicly owned company engaged in
information processing, loan servicing and 401(k) administration and
recordkeeping services to and through banking and other financial organizations.
The Administrator generally assists in all aspects of each Fund's administration
and operation.
For expenses assumed and services provided as Administrator pursuant to its
management and administration agreement with the Funds, BISYS receives a fee
from each Bond Investment Fund, computed daily and paid periodically, at the
lesser of (1) such fee as may from time to time be agreed upon in writing by the
Funds and the Administrator, and (2) an annual rate of twenty one-hundredths of
one percent (0.20%) of each Bond Investment Fund's average daily net assets. The
Administrator may periodically waive all or a portion of its administrative fee
with respect to a Fund to increase the net income of the Fund available for
distribution as dividends.
For administration services for the fiscal year ended August 31, 1998, the Funds
paid BISYS 0.20% of the average daily net assets of each of the Bond Investment
Funds.
SUB-ADMINISTRATOR
BOK serves as the Sub-Administrator to the Funds pursuant to an agreement
between the Administrator and BOK. Pursuant to this agreement, BOK assumed many
of the Administrator's duties, for which BOK receives a fee, paid by the
Administrator, calculated at an annual rate of five one-hundredths of one
percent (0.05%) of each Fund's average daily net assets.
EXPENSES
The Investment Adviser and the Administrator each bear all expenses in
connection with the performance of their services as investment adviser and
general manager and administrator, respectively, other than the cost of
securities (including brokerage commissions) purchased for the Funds. Each Bond
Investment Fund bears the following expenses relating to its respective
operations: taxes, interest, brokerage fees and commissions, fees and travel
expenses of the Trustees of the Funds, Securities and Exchange Commission fees,
state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to current
Shareholders, outside auditing and legal expenses, advisory and administration
fees, fees and reasonable out-of-pocket expenses of the custodian and transfer
agent, expenses incurred for pricing securities owned by the particular Fund,
certain insurance premiums, costs of maintenance of the Funds' existence, costs
of Shareholders' and Trustees' reports and meetings, and any extraordinary
expenses incurred in each Fund's operation.
BANKING LAWS
The Investment Adviser believes that it may perform the investment advisory
services for the Bond Investment Funds contemplated by its agreements with the
Funds and by this Prospectus without violating the Glass-Steagall Act. Future
changes in federal or state statutes and regulations relating to permissible
activities of banks or bank holding companies and their subsidiaries and
affiliates as well
prospectus
34
<PAGE> 67
as further judicial or administrative decisions or interpretations of present
and future statutes and regulations could change the manner in which the
Investment Adviser could continue to perform such services for the Funds. See
the Statement of Additional Information under the heading "MANAGEMENT OF THE
FUNDS -- Glass-Steagall Act" for further discussion of applicable banking laws
and regulations.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
GENERAL INFORMATION
DESCRIPTION OF THE FUNDS AND THEIR SHARES
The Bond Fund, Intermediate Bond Fund, Intermediate Tax-Free Bond Fund, and
Short-Term Income Fund represent four separate series of units of beneficial
interest ("Shares") of The American Performance Funds, a Massachusetts business
trust which was organized in October of 1987 and began active operations in
August of 1990. The organizational expenses of the Short-Term Income Fund will
be capitalized and amortized during the Fund's first two years of operations.
Such amortization will reduce amounts available for distribution as dividends to
Shareholders. Each Share represents an equal proportionate interest in a Fund
with other Shares of the same series, and is entitled to such dividends and
distributions out of the income earned on the assets belonging to that Fund as
are declared at the discretion of the Trustees.
As of October 15, 1998, Bank of Oklahoma, N.A. (Bank of Oklahoma Tower, One
Williams Center, Tulsa, Oklahoma 74103) and its bank affiliates were the
shareholders of record of 99% of the Bond Fund's Shares, 97.44% of the
Intermediate Bond Fund's Shares, 97.27% of the Intermediate Tax-Free Bond Fund's
Shares and 100% of the Short-Term Income Fund's Shares. As of December 17, 1998,
Bank of Oklahoma, N.A. and its bank affiliates were beneficial shareholders with
respect to 81% of the Bond Fund's Shares, 82% of the Intermediate Bond Fund's
Shares, 79% of the Intermediate Tax-Free Bond Fund's Shares and 96% of the
Short-Term Income Fund's Shares, and as a consequence, Bank of Oklahoma, N.A.
and its bank affiliates may be deemed to be a controlling person of each of
these Bond Investment Funds under the 1940 Act.
Shareholders are entitled to one vote for each Share, and a proportionate
fractional vote for any fraction of a Share, and will vote in the aggregate and
not by series except as otherwise expressly required by law.
Although the Funds are not required to hold annual meetings of Shareholders,
Shareholders have the right (1) to call a meeting to elect or remove one or more
of the Trustees of the Funds and (2) to be assisted by the Trustees in
communicating with other Shareholders of the Funds. Shareholder inquiries should
be directed to the Secretary of the Funds, at 3435 Stelzer Road, Columbus, Ohio
43219.
Overall responsibility for the management of the Funds is vested in the Board of
Trustees. See "MANAGEMENT OF THE BOND INVESTMENT FUNDS -- Trustees of the
Funds." Individual Trustees are elected by the Shareholders and may be removed
by the Board of Trustees or Shareholders in
prospectus
35
<PAGE> 68
accordance with the provisions of the Declaration of Trust and Bylaws of the
Funds and Massachusetts law. See "ADDITIONAL INFORMATION -- Miscellaneous" in
the Statement of Additional Information for further information.
CUSTODIAN AND TRANSFER AGENT
Bank of Oklahoma, N.A. serves as custodian for the Funds ("Custodian"). BISYS
Fund Services Ohio, Inc., an affiliate of BISYS, serves as the transfer agent
for the Funds ("Transfer Agent") and performs fund accounting services.
PERFORMANCE INFORMATION
From time to time performance information for the Bond Investment Funds showing
their average annual total return and aggregate total return may be presented in
advertisements, sales literature and shareholder reports. Such performance
figures are based on historical earnings and are not intended to indicate future
performance. Total return will be calculated for the period since the
establishment of the Bond Investment Funds and will, unless otherwise noted,
reflect the imposition of the maximum sales charge. For the information of
Shareholders not subject to a sales charge, the Bond Investment Funds may also
publish total return figures which include no sales charge. Average annual total
return is measured by comparing the value of an investment in a Bond Investment
Fund at the beginning of the relevant period to the redemption value of the
investment at the end of the period (assuming immediate reinvestment of any
dividends or capital gains distributions) and annualizing the result. Aggregate
total return is measured similarly to average annual total return, however the
resulting difference is not annualized. The yield of a Bond Investment Fund is
determined by annualizing the Fund's net investment income per share during a
recent specified thirty-day period ending on the last day of the most recent
calendar quarter, and dividing that amount by the Fund's per share net asset
value on the last day of the period.
In addition, from time to time the Funds may present their respective
distribution rates in supplemental sales literature which is accompanied or
preceded by a prospectus and in Shareholder reports. Distribution rates will be
computed by dividing the distribution per share made by a Fund over a
twelve-month period by the maximum offering price per share. The calculation of
income in the distribution rate includes both income and capital gain dividends
and does not reflect unrealized gains or losses, although a Fund may also
present a distribution rate excluding the effect of capital gains. The
distribution rate differs from the yield, because it includes capital items
which are often non-recurring in nature, whereas yield does not include such
items. Distribution rates may also be presented excluding the effect of a sales
charge, if any.
The Intermediate Tax-Free Bond Fund may also present its tax equivalent yield
which reflects the amount of income subject to federal income taxation that a
taxpayer would have to earn in order to obtain the same after-tax income as that
derived from the yield of the Intermediate Tax-Free Bond Fund. The tax
equivalent yield will be significantly higher than the yield of the Intermediate
Tax-Free Bond Fund.
Investors may also judge the performance of any Bond Investment Fund by
comparing it to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives
prospectus
36
<PAGE> 69
and policies through various mutual fund or market indices such as those
prepared by Dow Jones & Co., Inc., Standard & Poor's Corporation, The Russell
2000 Index, and Morningstar, Inc. and to data prepared by Lipper, Inc.
Comparisons may also be made to indices or data published in Money Magazine,
Forbes, Barron's, The Wall Street Journal, The New York Times, Business Week,
Pensions and Investments, Fortune, Ibbotson Associates, Inc., U.S.A. Today,
CDA/Wiesenberger, American Banker, Institutional Investor and local newspapers.
In addition to performance information, general information about these Funds
that appears in a publication such as those mentioned above may be included in
advertisements and in reports to Shareholders.
Total return and yield are functions of the type and quality of instruments held
in the portfolio, operating expenses, and market conditions. Consequently, total
return and yield will fluctuate and are not necessarily representative of future
results. Any fees charged by a Participating Organization with respect to
Customer accounts for investing in shares of Bond Investment Funds will not be
included in performance calculations; such fees, if charged, will reduce the
actual performance from that quoted. Further information regarding Performance
Comparisons may be found in the Statement of Additional Information under
"Performance Comparisons."
Additional information about the performance of each Bond Investment Fund is
contained in the Funds' annual report to Shareholders, which is available free
of charge by calling the telephone number on the front page of this Prospectus.
YEAR 2000
The investment services industry is evaluating the capability of existing
application software programs and operating industry systems to accommodate the
date value for the year 2000. Many existing application software products in the
marketplace were designed only to accommodate a two-digit date position, which
represents the year (e.g., "95" is stored on the system and represents the year
1995). If the year 1999 is the maximum date value these systems are able to
accurately process, the improper identification of the year 2000 could result in
a computer system failure or miscalculations causing a disruption of operations.
The Funds' principal service providers are taking steps the Funds believe are
reasonably designed to address the year 2000 issues with respect to the computer
systems those providers operate. However, this is an ongoing process and testing
and other steps are scheduled to be completed in 1999. Nevertheless, the
inability of service providers to successfully address year 2000 issues could
result in interruptions in the Funds' business and have material adverse impact
on the Funds' operations. In addition, year 2000 issues could have a negative
effect on the portfolio securities in which the Funds invest, thereby affecting
the performance of the Funds.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent public accountants.
As used in this Prospectus and in the Statement of Additional Information,
"assets belonging to" a Fund means the consideration received by the Funds upon
the issuance or sale of Shares in that Fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof including any proceeds
from the sale, exchange, or liquidation of such investments, and any funds or
payments
prospectus
37
<PAGE> 70
derived from any reinvestment of such proceeds, and any general assets of the
Funds not readily identified as belonging to a particular Fund that are
allocated to that Fund by the Funds' Board of Trustees. The Board of Trustees
may allocate such general assets in any manner it deems fair and equitable. It
is anticipated that the factor that will be used by the Board of Trustees in
making allocations of general assets to particular Funds will be the relative
net asset values of the respective Funds at the time of allocation. Assets
belonging to a particular Fund are charged with the direct liabilities and
expenses with respect to that Fund, and with a share of the general liabilities
and expenses of the Funds not readily identified as belonging to a particular
Fund that are allocated to that Fund in proportion to the relative net asset
values of the respective Funds at the time of allocation. The timing of
allocations of general assets and general liabilities and expenses of the Fund
to particular Funds will be determined by the Board of Trustees of the Funds and
will be in accordance with generally accepted accounting principles.
Determinations by the Board of Trustees of the Funds as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular Fund are
conclusive.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of the Funds or a particular Fund
means the affirmative vote, at a meeting of Shareholders duly called, of the
lesser of (a) 67% or more of the outstanding Shares of the Funds or such Fund
present at a meeting at which the holders of more than 50% of the outstanding
Shares of the Funds or such Fund are represented in person or by proxy, or (b)
the holders of more than 50% of the outstanding Shares of the Funds or such
Fund.
Inquiries regarding each Bond Investment Fund may be directed in writing to the
Funds at 3435 Stelzer Road, Columbus, Ohio, 43219, or by calling toll free (800)
762-7085.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE BOND
INVESTMENT FUNDS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY THE BOND INVESTMENT FUNDS OR BY THE DISTRIBUTOR IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
prospectus
38
<PAGE> 71
AMERICAN PERFORMANCE FUNDS
EQUITY INVESTMENT FUNDS
BALANCED FUND
Supplement dated February 17, 1999
to Prospectus dated January 1, 1999
Capitalized terms not defined in this Supplement have the meaning
assigned to them in the Prospectus.
1. In order to reflect a new investment advisory fee structure
for the American Performance Balanced Fund the Fee Table on page 4 is replaced
as follows:
<TABLE>
FEE TABLE
- ---------
<CAPTION>
Balanced
Fund
Shareholder Transaction Expenses(1) --------
- -----------------------------------
<S> <C>
Maximum Sales Load
Imposed on Purchases(2) 5.00%
(as a percentage of offering price)
Maximum Sales Load Imposed
on Reinvested Dividends 0%
(as a percentage of offering price)
Deferred Sales Load(3) 0%
(as a percentage of original
purchase price or redemption
proceeds, if applicable)
Redemption Fees(4) 0%
(as a percentage of amount
redeemed, if applicable)
Exchange Fees $0
</TABLE>
- ------------
(1) Participating Organizations (as defined in "DISTRIBUTION") may
charge a Customer's (as defined in "DISTRIBUTION") account fees for automatic
investment and other investment and trust services provided in connection with
investment in the Fund. (See "HOW TO PURCHASE SHARES.")
(2) There may be no sales load imposed upon purchases of shares of the
Fund by (1) investors who purchase through the Investment Adviser and who have
an existing trust relationship with the Investment Adviser; (2) employees of the
Investment Adviser, or its affiliates; (3) each Trustee of the Funds and any
employee of a company that constitutes the principal business activity of a
Trustee; (4) employees of the Distributor and its affiliates; (5) orders placed
on behalf of other investment companies distributed by The BISYS Group, Inc. or
its
<PAGE> 72
affiliated companies; (6) existing Shareholders who own Shares in any of the
Equity Investment Funds within their trust accounts and purchase additional
Shares outside of their trust relationship; (7) investors within wrap accounts;
(8) investors who purchase in connection with 401(k) plans, 403(b) plans, and
other employer-sponsored, qualified retirement plans; and (9) investors who
purchase in connection with non-transactional fee fund programs and programs
offered by fee-based financial planners and other types of financial
institutions.
(3) A Contingent Deferred Sales Load of 1.00% will be assessed against
the proceeds of any redemption request relating to Shares of the Fund that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such redemption
request is made within one year of the date the Shares were purchased.
(4) A wire redemption charge may be deducted from the amount of a wire
redemption payment made at the request of a holder of Shares. The current
charge, which is subject to change upon notice to Shareholders, is $15.00. (See
"HOW TO REDEEM SHARES -- By Telephone.")
<TABLE>
<CAPTION>
Balanced
Fund
Annual Operating Expenses --------
- -------------------------
<S> <C>
(as a percentage of average net assets)
Management Fees(5) 0.42%
(after voluntary fee reductions)
12b-1 Fees(6) 0.00%
(after voluntary fee reductions)
Other Expenses(7) 0.34%
----
Total Fund Operating Expenses(7) 0.76%
(after voluntary fee reductions) ====
</TABLE>
- ------------
(5) In order to reduce operating expenses, the Investment Adviser has
voluntarily agreed to reduce the investment advisory fees. Absent a voluntary
fee reduction, the investment advisory fees would be 0.74% of the average daily
net assets of the Balanced Fund.
(6) In order to reduce operating expenses, the Distributor has
voluntarily agreed to reduce the 12b-1 Fees. Absent a voluntary fee reduction,
the 12b-1 Fee would be 0.25% of the average daily net assets of the Balanced
Fund.
(7) Absent voluntary fee reductions, the Total Fund Operating Expenses
would be 1.33%, 1.29%, and 1.50% of the average daily net asset of the Balanced
Fund.
Example: You would pay the following expenses on a $1,000 investment in the
Fund, assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
Balanced
Fund
----
<S> <C>
1 Year $57
3 Years $73
5 Years $90
10 Years $140
</TABLE>
The purpose of the above table is to assist a potential purchaser of
Shares of the Fund in understanding the various costs and expenses that an
investor in the Fund will bear directly or indirectly. The examples reflect
voluntary reductions of investment advisory and 12b-1 Fees. Although the
Investment Adviser and the Distributor currently have agreed to these voluntary
reductions, they may cease to provide these reductions, which would have the
effect of increasing the projected expenses set forth above in the examples.
Such expenses do not include any fees charged by BOK or any of its affiliates to
its customers' accounts which may have invested in shares of a Fund. See
"MANAGEMENT OF THE EQUITY INVESTMENT FUNDS," "SALES CHARGES," and "DISTRIBUTION"
for a more complete discussion of the transaction expenses and annual operating
expenses of the Fund. NASD rules generally limit the amount that the Fund may
pay under a Distribution Plan. The Fund would stop accruing payments under the
Distribution Plan if, to the extent, and for as long as, such limit would
otherwise be exceeded. Long-term shareholders may pay more than the equivalent
of the maximum front-end sales charges otherwise permitted by the Rules of the
National Association of Securities Dealers, Inc.
2. Under the heading "Investment Adviser" on pages 27 - 28 the
last sentence of the fifth paragraph is replaced as follows:
In order to reduce operating expenses, Bank of Oklahoma, N.A. has
currently established the investment advisory fees pertaining to the Equity
Fund, the Balanced Fund and the Growth Equity Fund at 0.50%, 0.42%, and 0.50% of
each respective Fund's average daily net assets.
<PAGE> 73
AMERICAN PERFORMANCE FUNDS
EQUITY INVESTMENT FUNDS
[FLAG LOGO]
AMERICAN PERFORMANCE FUNDS
The Right Fit For Your Investment Goals
EQUITY FUND
BALANCED FUND
GROWTH EQUITY FUND
SMALL CAP EQUITY FUND
INVESTMENT ADVISER
Bank of Oklahoma, N.A.
Bank Oklahoma Tower
Tulsa, Oklahoma 74103
ADMINISTRATOR/DISTRIBUTOR
BISYS Fund Services EQUITY FUND
3435 Stelzer Road
Columbus, Ohio 43219-3035 BALANCED FUND
LEGAL COUNSEL
Ropes & Gray GROWTH EQUITY FUND
One Franklin Square
1301 K Street N.W. SMALL CAP EQUITY FUND
Suite 800 East
Washington, DC 20005
AUDITORS
KPMG LLP
Two Nationwide Plaza
Columbus, Ohio 43215
Prospectus
AP3P021799 February 17, 1999
<PAGE> 74
<TABLE>
<S> <C>
American For performance, purchase, and
Performance redemption information, call
EQUITY INVESTMENT (800) 762-7085
Funds 3435 Stelzer Road
Four Variable Net Asset Value Columbus, Ohio 43219
Investment Portfolios of
American Performance Funds
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
The American Performance Equity Investment Funds (the "Equity Investment
Funds") are four variable net asset value portfolios of the AMERICAN PERFORMANCE
FUNDS (the "Funds"), a diversified, open-end management investment company which
currently consists of ten separately managed portfolios. Each of the Equity
Investment Funds has a different investment objective, and the net asset value
per unit of beneficial interest ("Share") of each Equity Investment Fund may be
expected to fluctuate in accordance with the value of each Fund's portfolio
investments.
AMERICAN PERFORMANCE EQUITY FUND (the "Equity Fund") seeks growth of
capital and, secondarily, income by investing primarily in a diversified
portfolio of common stocks and securities convertible into common stocks.
AMERICAN PERFORMANCE BALANCED FUND (the "Balanced Fund") seeks current
income and, secondarily, long-term capital growth by investing primarily in a
broadly diversified portfolio of securities, including common stocks, preferred
stocks and bonds.
AMERICAN PERFORMANCE GROWTH EQUITY FUND (the "Growth Equity Fund") seeks
long-term capital appreciation and growth of income by investing primarily in a
diversified portfolio of common stocks and securities convertible into common
stocks.
AMERICAN PERFORMANCE SMALL CAP EQUITY FUND (the "Small Cap Equity Fund")
seeks long-term capital appreciation and, secondarily, income, by investing
primarily in a diversified portfolio of common stocks and securities convertible
into common stocks of small-size companies.
(Continued on following page)
- --------------------------------------------------------------------------------
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY, BANK OF OKLAHOMA, N.A. OR ANY OF ITS AFFILIATES. THE FUNDS' SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR BY ANY OTHER AGENCY. AN INVESTMENT IN THE FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
The date of this Prospectus is February 17, 1999.
prospectus
<PAGE> 75
(Continued from previous page)
Bank of Oklahoma, N.A., Tulsa, Oklahoma ("BOK") serves as the investment
adviser ("Investment Adviser") to each Equity Investment Fund. BISYS Fund
Services Limited Partnership, d/b/a BISYS Fund Services, Columbus, Ohio,
("BISYS") acts as the Equity Investment Funds' Administrator and Distributor.
This Prospectus relates only to the Equity Investment Funds. The Funds also
include two money market portfolios to which BOK serves as Investment Adviser:
the American Performance Cash Management Fund and the American Performance U.S.
Treasury Fund, each of which seeks current income with liquidity and stability
of principal (collectively, the "American Performance Money Market Funds"). The
Funds also include four bond portfolios to which BOK serves as Investment
Adviser: the American Performance Bond Fund, the American Performance
Intermediate Bond Fund, and the American Performance Short-Term Income Fund,
each of which seeks current income, and the American Performance Intermediate
Tax-Free Bond Fund, which seeks current income exempt from Federal taxation,
through investing in diversified portfolios of bonds and other fixed-income
securities (collectively, the "American Performance Bond Investment Funds").
Persons who wish to obtain a copy of the Prospectus for the American Performance
Money Market Funds or the American Performance Bond Investment Funds may contact
the Funds at the telephone number shown above.
A Statement of Additional Information bearing the same date as this
Prospectus, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Statement of Additional Information can be
obtained without charge by writing or calling the Funds at the address or
telephone number shown above.
This Prospectus sets forth the information about the Equity Investment
Funds that a prospective investor ought to know before investing. Investors
should read this Prospectus and retain it for future reference.
prospectus
2
<PAGE> 76
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table................................................... 4
Financial Highlights........................................ 5
Investment Objectives....................................... 8
Investment Policies and Special Considerations.............. 10
Investment Restrictions..................................... 15
Valuation of Shares......................................... 16
How to Purchase Shares...................................... 17
Sales Charges............................................... 19
Sales Charge Waivers........................................ 20
Concurrent Purchases and Right of Accumulation.............. 21
Letter of Intent............................................ 21
Exchange Privilege.......................................... 22
How to Redeem Shares........................................ 22
Dividends................................................... 25
Federal Income Taxes........................................ 25
Distribution................................................ 26
Management of the Equity Investment Funds................... 27
General Information......................................... 30
</TABLE>
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3
<PAGE> 77
FEE TABLE
<TABLE>
<CAPTION>
GROWTH SMALL CAP
EQUITY BALANCED EQUITY EQUITY
FUND FUND FUND FUND
------ -------- ------ ---------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
- ----------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on Purchases(2)
(as a percentage of offering price)..................... 5.00% 5.00% 5.00% 5.00%
Maximum Sales Load Imposed on Reinvested Dividends (as a
percentage of offering price)............................. 0% 0% 0% 0%
Deferred Sales Load(3) (as a percentage of original purchase
price or redemption proceeds, if applicable).............. 0% 0% 0% 0%
Redemption Fees(4) (as a percentage of amount redeemed, if
applicable)............................................... 0% 0% 0% 0%
Exchange Fees............................................... $ 0 $ 0 $ 0 $ 0
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
- ----------------------------------------------------------------------------------------------------
Management Fees(5) (after voluntary fee reductions)......... 0.50% 0.42% 0.50% 0.00%
12b-1 Fees(6) (after voluntary fee reductions).............. 0.25% 0.00% 0.25% 0.00%
Other Expenses(7)........................................... 0.31% 0.34% 0.35% 0.56%
---- ---- ---- ----
Total Fund Operating Expenses(8) (after voluntary fee
reductions)............................................... 1.06% 0.76% 1.10% 0.56%
==== ==== ==== ====
EXAMPLE:
- ----------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000
investment in each of the Funds, assuming (1) 5% annual
return and (2) redemption at the end of each time
period:
</TABLE>
<TABLE>
<CAPTION>
GROWTH SMALL CAP
EQUITY BALANCED EQUITY EQUITY
FUND FUND FUND FUND
------ -------- ------ ---------
<S> <C> <C> <C> <C>
1 Year...................................................... $ 60 $ 57 $ 61 $ 55
3 Years..................................................... $ 82 $ 73 $ 83 $ 67
5 Years..................................................... $106 $ 90 $108 N/A
10 Years.................................................... $173 $140 $177 N/A
</TABLE>
The purpose of the above table is to assist a potential purchaser of Shares of
any of the Equity Investment Funds in understanding the various costs and
expenses that an investor in each Fund will bear directly or indirectly. The
examples reflect voluntary reductions of investment advisory and/or 12b-1 Fees,
as applicable. Although the Investment Adviser and the Distributor currently
have agreed to these voluntary reductions, they may cease to provide these
reductions, which would have the effect of increasing the projected expenses set
forth above in the examples. Such expenses do not include any fees charged by
BOK or any of its affiliates to its customers' accounts which may have invested
in shares of a Fund. See "MANAGEMENT OF THE EQUITY INVESTMENT FUNDS," "SALES
CHARGES," and "DISTRIBUTION" for a more complete discussion of the transaction
expenses and annual operating expenses of each Fund. NASD rules generally limit
the amount that an Equity Investment Fund may pay under a Distribution Plan. An
Equity Investment Fund would stop accruing payments under the Distribution Plan
if, to the extent, and for as long as, such limit would otherwise be exceeded.
Long-term shareholders may pay more than the equivalent of the maximum front-end
sales charges otherwise permitted by the Rules of the National Association of
Securities Dealers, Inc.
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4
<PAGE> 78
THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
- ---------------
(1) Participating Organizations (as defined in "DISTRIBUTION") may charge a
Customer's (as defined in "DISTRIBUTION") account fees for automatic
investment and other investment and trust services provided in connection
with investment in the Funds. (See "HOW TO PURCHASE SHARES.")
(2) There may be no sales load imposed upon purchases of shares of the Funds by
(1) investors who purchase through the Investment Adviser and who have an
existing trust relationship with the Investment Adviser; (2) employees of
the Investment Adviser, or its affiliates; (3) each Trustee of the Funds and
any employee of a company that constitutes the principal business activity
of a Trustee; (4) employees of the Distributor and its affiliates; (5)
orders placed on behalf of other investment companies distributed by The
BISYS Group, Inc. or its affiliated companies; (6) existing Shareholders who
own Shares in any of the Equity Investment Funds within their trust accounts
and purchase additional Shares outside of their trust relationship; (7)
investors within wrap accounts; (8) investors who purchase in connection
with 401(k) plans, 403(b) plans, and other employer-sponsored, qualified
retirement plans; and (9) investors who purchase in connection with
non-transactional fee fund programs and programs offered by fee-based
financial planners and other types of financial institutions.
(3) A Contingent Deferred Sales Load of 1.00% will be assessed against the
proceeds of any redemption request relating to Shares of the Fund that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within one year of the date the Shares were
purchased.
(4) A wire redemption charge may be deducted from the amount of a wire
redemption payment made at the request of a holder of Shares. The current
charge, which is subject to change upon notice to Shareholders, is $15.00.
(See "HOW TO REDEEM SHARES -- By Telephone.")
(5) In order to reduce operating expenses, the Investment Adviser has
voluntarily agreed to reduce the investment advisory fees. Absent a
voluntary fee reduction, the investment advisory fees would be 0.69% of the
average daily net assets of the Equity Fund, the Growth Equity Fund, and the
Small Cap Equity Fund and 0.74% of the average daily net assets of the
Balanced Fund.
(6) In order to reduce operating expenses, the Distributor has voluntarily
agreed to reduce the 12b-1 Fees. Absent a voluntary fee reduction, the 12b-1
Fee would be 0.25% of the average daily net assets of the Balanced Fund and
the Small Cap Equity Fund.
(7) Other Expenses are based on estimated amounts for the current fiscal year
for the Small Cap Equity Fund.
(8) Absent voluntary fee reductions, the Total Fund Operating Expenses would be
1.25%, 1.33%, 1.29%, and 1.50%, respectively, of the average daily net asset
of the Equity Fund, the Balanced Fund, the Growth Equity Fund, and the Small
Cap Equity Fund.
FINANCIAL HIGHLIGHTS
The American Performance Funds (the "Funds") were organized as a Massachusetts
business trust and began active operations in August of 1990. The Funds
currently consist of ten series of units of
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5
<PAGE> 79
beneficial interests ("Shares"). Four such series represent interests in the
Equity Fund, the Balanced Fund, the Growth Equity Fund, and the Small Cap Equity
Fund.
The Tables below set forth certain financial highlights for the Equity Fund, the
Balanced Fund, and the Growth Equity Fund for the periods indicated. As of
August 31, 1998, the Small Cap Equity Fund had not commenced operations. The
most recent five years of each Table are part of the Funds' financial statements
which are included in the Funds' Annual Report and are incorporated by reference
into the Statement of Additional Information which a Shareholder may obtain by
calling the Funds. The financial statements have been audited by KPMG LLP,
independent public accountants for the Funds, whose report thereon, is included
in the Funds' Annual Report.
<TABLE>
<CAPTION>
EQUITY FUND
-------------------------------------------------------------------------------------
SEPTEMBER 28,
YEAR ENDED AUGUST 31, 1990 TO
--------------------------------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994 1993 1992 1991(a)
-------- -------- ------- ------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 17.33 $ 13.73 $ 12.33 $ 11.85 $ 12.78 $ 11.31 $ 12.13 $ 10.00
-------- -------- ------- ------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.08 0.13 0.18 0.20 0.14 0.14 0.17 0.30
Net realized and unrealized
gains (losses) on
investments................. 0.19 5.03 2.04 1.77 0.40 1.56 (0.63) 2.13
-------- -------- ------- ------- ------- ------- ------- -------
Total from Investment
Activities................ 0.27 5.16 2.22 1.97 0.54 1.70 (0.46) 2.43
-------- -------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income......... (0.07) (0.13) (0.18) (0.19) (0.14) (0.14) (0.17) (0.30)
Net realized gains............ (2.47) (1.42) (0.64) (0.39) (1.33) (0.09) (0.19) --
In excess of net investment
income...................... -- (0.01) -- -- -- -- -- --
In excess of net realized
gains....................... -- -- -- (0.91) -- -- -- --
-------- -------- ------- ------- ------- ------- ------- -------
Total Distributions........... (2.54) (1.56) (0.82) (1.49) (1.47) (0.23) (0.36) (0.30)
-------- -------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 15.06 $ 17.33 $ 13.73 $ 12.33 $ 11.85 $ 12.78 $ 11.31 $ 12.13
======== ======== ======= ======= ======= ======= ======= =======
Total Return (excludes sales
charge)....................... 0.79% 40.23% 18.53% 19.74% 4.66% 15.12% (3.98%) 24.57%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period
(000)....................... $166,965 $170,887 $86,352 $76,398 $84,618 $58,015 $90,890 $73,362
Ratio of expenses to average
net assets.................. 1.07% 1.06% 1.08% 1.14% 1.12% 1.16% 1.16% 1.17%(b)
Ratio of net investment income
to average net assets....... 0.44% 0.88% 1.35% 1.73% 1.32% 1.09% 1.46% 3.01%(b)
Ratio of expenses to average
net assets*................. 1.26% 1.25% 1.27% 1.33% 1.31% 1.36% 1.39% 1.42%(b)
Ratio of net investment income
to average net assets*...... 0.25% 0.69% 1.16% 1.54% 1.13% 0.88% 1.23% 2.76%(b)
Portfolio turnover............ 72.10% 93.82% 67.46% 100.44% 159.30% 66.54% 51.26% 69.94%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Unannualized.
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<PAGE> 80
<TABLE>
<CAPTION>
BALANCED FUND
------------------------------------------
JUNE 1,
YEAR ENDED AUGUST 31, 1995 TO
----------------------------- AUGUST 31,
1998 1997 1996 1995(a)
------- ------- ------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 13.38 $ 11.28 $ 10.62 $ 10.00
------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.40 0.41 0.35 0.08
Net realized and unrealized
gains (losses) on
investments................. 0.21 2.46 0.79 0.62
------- ------- ------- -------
Total from Investment
Activities................ 0.61 2.87 1.14 0.70
------- ------- ------- -------
DISTRIBUTIONS
Net investment income......... (0.34) (0.41) (0.35) (0.08)
Net realized gains............ (1.28) (0.36) (0.13) --
------- ------- ------- -------
Total Distributions......... (1.62) (0.77) (0.48) (0.08)
------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 12.37 $ 13.38 $ 11.28 $ 10.62
======= ======= ======= =======
Total Return (excludes sales
charge)....................... 4.55% 26.33% 10.87% 6.98%(c)
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period
(000)....................... $40,656 $30,249 $22,592 $12,842
Ratio of expenses to average
net assets.................. 0.47% 0.36% 0.38% 0.90%(b)
Ratio of net investment income
to average net assets....... 3.02% 3.34% 3.27% 3.17%(b)
Ratio of expenses to average
net assets*................. 1.34% 1.38% 1.40% 1.92%(b)
Ratio of net investment income
to average net assets*...... 2.15% 2.32% 2.25% 2.15%(b)
Portfolio turnover............ 78.07% 66.12% 71.89% 18.68%(b)
</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 operation.
(b) Annualized.
(c) Unannualized.
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<PAGE> 81
GROWTH EQUITY FUND
<TABLE>
<CAPTION>
NOVEMBER 1,
1997 TO
AUGUST 31,
1998(a)
-----------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.00
INVESTMENT ACTIVITIES
Net investment income..................................... 0.02
Net realized and unrealized gains (losses) on
investments............................................ 1.25
-------
Total from Investment Activities....................... 1.27
-------
DISTRIBUTIONS
Net investment income..................................... (0.02)
Net realized gains........................................ --
-------
Total Distributions.................................... (0.02)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.25
=======
Total Return (excludes sales charge)................... 12.69%(c)
=======
RATIOS/SUPPLEMENT DATA:
Net Assets at end of period (000)......................... $78,677
Ratio of expenses to average net assets................... 1.12%(b)
Ratio of net investment income to average net assets...... 0.24%(b)
Ratio of expenses to average net assets*.................. 1.31%(b)
Ratio of net investment income to average net assets*..... 0.05%(b)
Portfolio turnover........................................ 36.08%(b)
</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 operation.
(b) Annualized.
(c) Unannualized.
INVESTMENT OBJECTIVES
EQUITY FUND
The investment objective of the Equity Fund is to seek growth of capital and,
secondarily, income by investing primarily in a diversified portfolio of common
stocks and securities convertible into common stocks. The Equity Fund is managed
using a "quantitative" investment approach. Individual stocks in a universe are
ranked according to their return characteristics. The approach seeks to measure
some or all of the following quantitative factors which the Investment Adviser
may supplement or modify from time to time: relative strength, earning revision
and acceleration, and relative value. An additional factor in stock selection is
an attempt to structure the Equity Fund's portfolio so as to be relatively
neutral to the stocks comprising Standard & Poor's 500 Composite Stock Price
Index ("S&P 500")
prospectus
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<PAGE> 82
regarding both industry exposure and factor exposure (e.g., company size, yield,
trading activity, currency sensitivity, financial leverage, earnings
variability, book to price, earnings to price, growth, variability in markets
and momentum). The Equity Fund will not, however, seek to match or track the
performance of the S&P 500, nor limit investments to stocks in that index.
Equity securities such as those in which the Equity Fund may invest are more
volatile and carry more risk than some other forms of investment, including
investments in short-term high-grade fixed income funds. The Equity Fund
portfolio of securities will be composed of securities believed by its
Investment Adviser to be generally less volatile and carry less risk than those
generally held by an aggressive growth fund. Depending upon the performance of
the Equity Fund's investments, the net asset value per share of such fund may
decrease instead of increase.
BALANCED FUND
The investment objective of the Balanced Fund is to seek current income and,
secondarily, long-term capital growth by investing primarily in a broadly
diversified portfolio of securities, including common stocks, preferred stocks
and bonds. The portion of the Balanced Fund's assets invested in equity and debt
securities will vary in accordance with economic conditions, the general level
of common stock prices, interest rates and other relevant considerations,
including the risks associated with each investment medium. Although the
Balanced Fund seeks to reduce the risks associated with any one investment
medium by utilizing a variety of investments, performance will depend upon
additional factors such as timing and mix and the ability of its Investment
Adviser to judge and react to changing market conditions. Because the Balanced
Fund will invest in both debt and equity securities, the Balanced Fund is
expected to produce a higher level of current income than the Equity Fund.
GROWTH EQUITY FUND
The investment objective of the Growth Equity Fund is to seek long-term capital
appreciation by investing primarily in a diversified portfolio of common stocks
and securities convertible into common stocks. To achieve its objective, the
Fund under normal market conditions will invest substantially all, but not less
than 70%, of the value of its total assets in equity securities consisting of
common stocks or securities convertible into common stocks. The Fund will seek
to invest in companies with growth characteristics from a universe of equities
above a given market capitalization, currently $500 million. Growth companies
will generally be above average in such characteristics as past earnings per
share growth, future estimated earnings per share growth, sales per share
growth, and return on equity. The Fund may exhibit slightly more volatility than
the S&P 500.
THE SMALL CAP EQUITY FUND
The investment objective of the Small Cap Equity Fund is to seek long-term
capital appreciation and, secondarily, income, by investing primarily in a
diversified portfolio of common stocks and securities convertible into common
stocks of small-size companies. The inherent risks of small-size companies are
two-fold: business risk and market risk. Business risk refers to the possibility
that a company may do poorly due to competitive or financial factors. Market
risk refers mainly to the relatively small number of shares publicly owned as
compared to larger companies.
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<PAGE> 83
The Small Cap Equity Fund will employ a "quantitative" investment approach.
Under this approach, stocks will be ranked according to their return
characteristics and other quantitative factors. The portfolio will be
constructed to exhibit investment characteristics similar to those of the
Standard & Poor's Small Cap 600 Index (the "S&P 600 Index"). The S&P 600 Index
consists of 600 domestic stocks chosen for market size, liquidity and industry
group representation. As of the date of this Prospectus, the S&P 600 Index
statistics were as follows: the smallest company had a market value of $18
million, the largest company a market value of $3.3 billion, the mean market
value was $576 million, and the weighted average market value was $964 million.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in common stocks and securities convertible into common stocks of
companies having a market value included in the S&P 600 Index at the time the
security is purchased. The Small Cap Equity Fund will not seek to match or track
the performance of the S&P 600 Index, nor limit investments to stocks in that
index.
The securities of smaller, less well-known companies may be more volatile than
those of larger companies. An investment in the Small Cap Equity Fund may
increase or decrease in value.
The investment objective of the Fund may not be changed without a vote of the
holders of a majority of the outstanding Shares of the Fund (as defined in the
Statement of Additional Information). There can be no assurance that the
investment objective of the Fund will be achieved.
Additionally, the Small Cap Equity Fund may engage in certain investment
techniques which may subject the Fund to certain risks (see "INVESTMENT POLICIES
AND SPECIAL CONSIDERATIONS").
ALL EQUITY INVESTMENT FUNDS
The investment objectives with respect to the Equity Fund, the Balanced Fund or
the Growth Equity Fund may not be changed without a vote of the holders of a
majority of the outstanding Shares of that Equity Investment Fund (as defined in
the Statement of Additional Information). There can be no assurance that the
investment objectives of the Equity Fund, the Balanced Fund or the Growth Equity
Fund will be achieved.
Additionally, the Equity Fund, the Balanced Fund and the Growth Equity Fund may
engage in certain investment techniques which may subject the Funds to certain
risks (see "INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS").
INVESTMENT POLICIES AND SPECIAL CONSIDERATIONS
Under normal market conditions, the Equity Fund and the Growth Equity Fund will
invest at least 70%, and the Small Cap Equity Fund will invest at least 65%, of
the value of their respective total assets in common stocks and securities
convertible into common stocks of companies believed by the Investment Adviser
to be characterized by sound management and the ability to finance expected
growth. The Equity Fund, the Growth Equity Fund, and the Small Cap Equity Fund
may also invest up to 30% of their respective total assets in preferred stocks,
corporate bonds, notes, warrants, and cash equivalents. Corporate bonds will be
rated at the time of purchase within the three highest ratings categories
assigned by a nationally recognized statistical ratings organization (an
"NRSRO") (e.g., at least "A" by Moody's Investors Services ("Moody's") or S&P)
or, if not rated, found by the Invest-
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10
<PAGE> 84
ment Adviser under guidelines established by the Funds' Board of Trustees to be
of comparable quality.
"Cash equivalents" are deposits or high quality, interest-bearing instruments
with a remaining maturity of one year or less. The purpose of cash equivalents
is to provide liquidity and income at money market rates while minimizing the
risk of decline in value to the maximum extent possible. The instruments may
include, but are not limited to, commercial paper, domestic and Eurodollar
certificates of deposit, repurchase agreements, bankers' acceptances, U.S.
Treasury bills, master demand notes, agency discount notes, bank money market
deposit accounts and money market mutual funds. Each Equity Investment Fund will
only purchase commercial paper rated at the time of purchase within the three
highest ratings categories assigned by an NRSRO (e.g., A-1 by S&P, Prime-1 by
Moody's or F-1 by Fitch Investors Service) or, if not rated, found by the
Investment Adviser under guidelines established by the Funds' Board of Trustees
to be of comparable quality. See "Appendix" to the Statement of Additional
Information for an explanation of these ratings. During temporary defensive
periods as determined by the Investment Adviser, an Equity Investment Fund may
hold up to 100% of its total assets in cash equivalents.
Under normal market conditions, the Balanced Fund will invest in equity
securities consisting of common stocks but may also invest in other equity-type
securities such as warrants, convertible preferred stocks and convertible debt
instruments. The Balanced Fund's equity investments will be in companies
believed by its Investment Adviser to be undervalued. The Balanced Fund's debt
securities will consist of securities such as bonds, notes, debentures and money
market instruments. The average dollar-weighted portfolio maturity of debt
securities held by the Balanced Fund will vary according to market conditions
and interest rate cycles and will range between 1 year and 30 years under normal
market conditions. While securities with longer maturities tend to produce
higher yields, the price of longer maturity securities is also subject to
greater market fluctuations as a result of changes in interest rates. The
Balanced Fund's debt securities will consist of high grade securities, which are
those securities rated within the three highest ratings categories assigned by
an NRSRO at the time of purchase (e.g., at least "A" from Moody's or S&P
(including all sub-classifications indicated by modifiers of such "A" ratings))
or, if not rated, found by the Investment Adviser under guidelines established
by the Funds' Board of Trustees to be of comparable quality.
It is a fundamental policy of the Balanced Fund that it will invest at least 25%
of its total assets in fixed-income securities. For this purpose, fixed-income
securities include debt securities, mortgage-related securities, nonconvertible
preferred stock and that portion of the value of securities convertible into
common stock, including convertible preferred stock and convertible debt, which
is attributable to the fixed-income characteristics of those securities.
Certain debt securities such as, but not limited to, mortgage backed securities
and CMOs, as well as securities subject to prepayment of principal prior to the
stated maturity date, are expected to be repaid prior to their stated maturity
dates. The Adviser determines the "effective maturity" of the securities based
on the expected payment date (which is earlier than the stated maturity dates of
the securities). For purposes of calculating the Balanced Fund's weighted
average portfolio maturity, the effective maturity of such securities, as
determined by the Investment Adviser, will be used.
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<PAGE> 85
INVESTMENT COMPANY SECURITIES
Each of the Equity Investment Funds may invest in shares of other investment
companies, including the American Performance Money Market Funds. However, none
of the Equity Investment Funds may invest more than 5% of its total assets in
the securities of any one investment company, nor may any Equity Investment Fund
own more than 3% of the outstanding securities of any investment company or
invest more than 10% of its total assets in the securities of other investment
companies. These investment companies typically pay an investment advisory fee
out of their assets. Therefore, investments may be subject to duplicate
management, advisory and distribution fees. The Investment Adviser will consider
this fee in its investment analysis when determining whether to purchase shares
of these companies for an Equity Investment Fund. This fee is in addition to the
fees received by an Equity Investment Fund's Investment Adviser and
Administrator. In order to avoid the imposition of additional fees as a result
of investments by an Equity Investment Fund in shares of the American
Performance Money Market Funds, the Investment Adviser and Administrator have
agreed to promptly forward to the Equity Investment Fund any portion of their
usual asset-based service fees from an American Performance Money Market Fund
which is attributable to investment by the Equity Investment Fund in shares of
such American Performance Money Market Fund.
OPTIONS AND FUTURES CONTRACTS
Each Equity Investment Fund may acquire put or call options and futures
contracts and may write covered call options. See the Statement of Additional
Information for more information on these investment activities.
Futures transactions involve brokerage costs and require an Equity Investment
Fund to segregate assets to cover contracts that would require it to purchase
securities. An Equity Investment Fund may lose the expected benefit of futures
transactions if interest rates or securities prices move in an unanticipated
manner. Such unanticipated changes may also result in poorer overall performance
than if the Equity Investment Fund had not entered into any futures
transactions. In addition, the value of an Equity Investment Fund's futures
positions may not prove to be perfectly or even highly correlated with the value
of its portfolio securities, limiting the Equity Investment Fund's ability to
hedge effectively against interest rate and/or market risk and giving rise to
additional risks. There is no assurance of liquidity in the secondary market for
purposes of closing out futures positions.
FOREIGN SECURITIES
Each Equity Investment Fund may invest in foreign securities through the
purchase of sponsored and unsponsored American Depository Receipts and may also
invest in securities issued by foreign branches of U.S. banks and foreign banks,
in Canadian commercial paper, and in Europaper (U.S. dollar-denominated
commercial paper of a foreign issuer). Investment in foreign securities is
subject to special risks, such as future adverse political and economic
developments, possible seizure, nationalization, or expropriation of foreign
investments, less stringent disclosure requirements, the possible establishment
of exchange controls or taxation at the source, or the adoption of other foreign
governmental restrictions.
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SECURITIES LENDING
In order to generate additional income, an Equity Investment Fund may, from time
to time, lend its portfolio securities to broker-dealers, banks, or
institutional borrowers of securities. The Funds will enter into loan agreements
only with broker-dealers, banks, or other institutions that BOK has determined
are creditworthy under guidelines established by the Funds' Board of Trustees.
See the Statement of Additional Information for more information on these
investment activities.
REPURCHASE AGREEMENTS
Securities held by an Equity Investment Fund may be subject to repurchase
agreements. Under the terms of a repurchase agreement, an Equity Investment Fund
would acquire securities from financial institutions such as member banks of the
Federal Deposit Insurance Corporation or registered broker-dealers which the
Investment Adviser deems creditworthy under guidelines approved by the Funds'
Board of Trustees, subject to the seller's agreement to repurchase such
securities at a mutually agreed upon date and price. The repurchase price would
generally equal the price paid by the Equity Investment Fund plus interest
negotiated on the basis of current short-term rates, which may be more or less
than the rate on the underlying portfolio securities. The seller under a
repurchase agreement will be required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest) and the Investment Adviser will monitor the collateral's value
to ensure that it equals or exceeds the repurchase price. Repurchase agreements
are considered to be loans by an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"). See the Statement of Additional
Information for more information regarding this investment practice.
REVERSE REPURCHASE AGREEMENTS
Each Equity Investment Fund may borrow funds for temporary purposes by entering
into reverse repurchase agreements in accordance with the investment
restrictions described below. Pursuant to such agreements, an Equity Investment
Fund would sell portfolio securities to financial institutions such as banks and
broker-dealers and agree to repurchase them at a mutually agreed upon date and
price. At the time an Equity Investment Fund enters into a reverse repurchase
agreement, it will place in a segregated custodial account assets, such as
liquid high quality securities, consistent with the Equity Investment Fund's
investment objective having a value not less than 100% of the repurchase price
(including accrued interest), and the Investment Adviser will subsequently
monitor the account to ensure that such required value is maintained. Reverse
repurchase agreements involve the risk that the market value of the securities
sold by an Equity Investment Fund may decline below the price at which such Fund
is obligated to repurchase the securities. Reverse repurchase agreements are
considered to be borrowings by an investment company under the 1940 Act.
WHEN-ISSUED SECURITIES
Each Equity Investment Fund may purchase securities on a when-issued basis.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield and thereby involve a risk that the
yield obtained in the transaction will be less than those available in the
market when delivery takes place. An Equity Investment Fund will generally not
pay for such securities or start earning interest on them until they are
received. When an Equity Investment Fund agrees to
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purchase such securities, its Custodian will set aside cash or liquid high grade
securities equal to the amount of the commitment in a separate account with the
Custodian or a Sub-Custodian of the Equity Investment Fund. Securities purchased
on a when-issued basis are recorded as an asset and are subject to changes in
value based upon changes in the general level of interest rates. Each Equity
Investment Fund expects that commitments to purchase when-issued securities will
not exceed 25% of the value of its total assets absent unusual market
conditions. In the event that its commitments to purchase when-issued securities
ever exceed 25% of the value of its assets, an Equity Investment Fund's
liquidity and the ability of the Investment Adviser to manage it might be
severely affected. No Equity Investment Fund intends to purchase when-issued
securities for speculative purposes but only in furtherance of its investment
objective.
PRIVATE PLACEMENT INVESTMENTS
The Equity Investment Funds may invest in commercial paper issued in reliance on
the so-called "private placement" exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, and resold to qualified
institutional buyers under Securities Act Rule 144A ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the federal securities
laws, and generally is sold to institutional investors such as the Funds who
agree that they are purchasing the paper for investment and not with a view to
public distribution. Any resale by the purchaser must be in an exempt
transaction and may be accomplished in accordance with Rule 144A. Section 4(2)
paper normally is resold to other institutional investors like the Funds through
or with the assistance of the issuer or investment dealers who make a market in
the Section 4(2) paper, thus providing liquidity. No Equity Investment Fund will
invest more than 10% of its net assets in Section 4(2) paper and illiquid
securities unless the Investment Adviser determines, by continuous reference to
the appropriate trading markets and pursuant to guidelines approved by the Board
of Trustees, that any Section 4(2) paper held by the Equity Investment Fund in
excess of this level is at all times liquid.
Because it is not possible to predict with assurance exactly how this market for
Section 4(2) paper sold and offered under Rule 144A will develop, the Board of
Trustees and the Investment Adviser, pursuant to the guidelines approved by the
Board of Trustees, will carefully monitor the Equity Investment Funds'
investments in these securities, focusing on such important factors, among
others, as valuation, liquidity, and availability of information. Investments in
Section 4(2) paper could have the effect of reducing the Equity Investment
Funds' liquidity to the extent that qualified institutional buyers become for a
time not interested in purchasing these restricted securities.
MORTGAGE RELATED SECURITIES
The Balanced Fund may purchase mortgage-related securities representing pools of
mortgage loans assembled for sale to investors by various governmental agencies
such as the Government National Mortgage Association and government-related
organizations such as the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation, as well as by private issuers such as commercial
banks, savings and loan institutions, mortgage bankers and private mortgage
insurance companies. Although certain mortgage-related securities are guaranteed
by a third party or otherwise similarly secured, the market value of the
security, which may fluctuate, is not so secured. If the Balanced Fund purchases
a mortgage-related security at a premium, that portion may be lost if there is
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a decline in the market value of the security whether resulting from changes in
interest rates or prepayments in the underlying mortgage collateral. As with
other interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true since in periods of declining interest rates, the mortgages
underlying the securities are prone to prepayment. Prepayments occur when the
borrower under an individual mortgage prepays the remaining principal before the
mortgage's scheduled maturity date. As a result of the pass-through of
prepayments of principal on the underlying securities, mortgage-backed
pass-through securities are often subject to more rapid prepayments of principal
than their stated maturity would indicate. Because the prepayment
characteristics of the underlying mortgages vary, it is not possible to predict
accurately the realized yield or average life of a particular issue of
pass-through certificates. Prepayments are important because of their effect on
the yield and price of the securities. During periods of declining interest
rates, such prepayments can be expected to accelerate, and the Funds would be
required to reinvest the proceeds at the lower interest rates then available. In
addition, prepayments of mortgages which underlie securities purchased at a
premium may not have been fully amortized at the time the obligation is repaid.
As a result of these principal prepayment features, mortgage-backed pass-
through securities are generally more volatile investments than other U.S.
government securities. For these and other reasons, a mortgage-related
security's stated maturity may be shortened by unscheduled prepayments on the
underlying mortgages and, therefore, it is not possible to predict accurately
the security's return to the Balanced Fund. In addition, regular payments
received in respect of mortgage-related securities include both interest and
principal. No assurance can be given as to the return the Balanced Fund will
receive when these amounts are reinvested. The Balanced Fund also may invest in
collateralized mortgage obligations structured on pools of mortgage pass-through
certificates or mortgage loans. Collateralized mortgage obligations will be
purchased only if rated at the time of purchase in one of the three highest
rating categories by an NRSRO or, if not rated, found by the Investment Adviser
under guidelines established by the Funds' Board of Trustees to be of comparable
quality. For further discussion concerning the investment considerations
involved, see "INVESTMENT OBJECTIVE AND POLICIES -- Additional Information on
Fund Instruments -- Mortgage-Related Securities" in the Statement of Additional
Information.
INVESTMENT RESTRICTIONS
Each Equity Investment Fund is subject to a number of investment restrictions
that may be changed only by a vote of a majority of the outstanding Shares of
the Equity Investment Fund (as defined in "GENERAL
INFORMATION -- Miscellaneous").
Pursuant to these investment restrictions:
1. Each of the Equity Investment Funds will not purchase a security if,
as a result, with respect to 75% of its portfolio (i) more than 5% of the
value of its total assets would be invested in any one issuer, or (ii) it
would hold more than 10% of any class of securities of such issuer or more
than 10% of the outstanding voting securities of the issuer. There is no
limit on the percentage of assets that may be invested in U.S. Treasury
bills, notes, or other obligations issued or guaranteed by the U.S.
government or its agencies and instrumentalities. For purposes
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of this and the immediately following limitation, a security is considered
to be issued by the government entity (or entities) whose assets and
revenues back the security, or, with respect to a private activity bond
that is backed only by the assets and revenues of a non-governmental user,
such non-governmental user.
2. Each of the Equity Investment Funds will not purchase a security if,
as a result, more than 25% of the value of its total assets would be
invested in securities of one or more issuers conducting their principal
business activities in the same industry, provided that (a) this limitation
shall not apply to obligations issued or guaranteed by the U.S. government
or its agencies and instrumentalities; (b) wholly owned finance companies
will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of their
parents; and (c) utilities will be divided according to their services. For
example, gas, gas transmission, electric and gas, electric, and telephone
will each be considered a separate industry.
3. The Equity Investment Funds may not borrow money or issue senior
securities, except that each Equity Investment Fund may borrow from banks
or enter into reverse repurchase agreements for temporary purposes in
amounts up to 10% of the value of its total assets at the time of such
borrowing; or mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of each Equity
Investment Fund's total assets at the time of its borrowing. No Equity
Investment Fund will purchase securities while its borrowings (including
reverse repurchase agreements) exceed 5% of its total assets.
4. No Equity Investment Fund may make loans, except that each Equity
Investment Fund may, in accordance with its investment objectives and
policies, purchase or hold debt instruments, lend portfolio securities, and
enter into repurchase agreements.
5. No Equity Investment Fund will enter into a repurchase agreement with
a maturity in excess of seven days if such investment, together with other
instruments in the Fund which are not readily marketable, exceeds 10% of
such Fund's net assets.
VALUATION OF SHARES
The net asset value of the Funds are determined and their Shares are priced as
of the close of regular trading of the New York Stock Exchange ("NYSE")
(generally 4:00 p.m. Eastern time) on each Business Day ("Valuation Time"). As
used herein, a "Business Day" constitutes any day on which the NYSE is open for
trading, and the Federal Reserve Bank of Kansas City is open, except days on
which there are not sufficient changes in the value of a Fund's portfolio
securities that the Fund's net asset value might be materially affected, or days
during which no Shares are tendered for redemption and no orders to purchase
Shares are received. Currently, the NYSE or the Federal Reserve Bank of Kansas
City is closed on the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day. Net asset
value per Share for purposes of pricing sales and redemptions is calculated by
dividing the value of all securities and other assets belonging to each
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Equity Investment Fund, less the liabilities charged to each Equity Investment
Fund, by the number of its outstanding Shares.
The securities in each Equity Investment Fund will be valued at market value. If
market quotations are not readily available, the securities will be valued by a
method which the Funds' Board of Trustees believes accurately reflects fair
value. Debt securities with remaining maturities of 60 days or less will be
valued in accordance with the amortized cost method where the Funds' Trustees
determine that amortized cost is fair value. For further information about
valuation of investments, see the Statement of Additional Information.
HOW TO PURCHASE SHARES
Shares of the Equity Investment Funds are sold on a continuous basis and may be
purchased directly from the Funds' Distributor, BISYS, either by mail, by
telephone, or by electronic transfer. Shares may also be purchased through a
bank or broker-dealer who has established a dealer agreement with the
Distributor. Except as described in "Auto Invest Plan" below, the minimum
initial purchase is $1,000, and the minimum for subsequent purchases is only
$100. These minimums may be waived if purchases are made in connection with
Individual Retirement Accounts ("IRAs"), Keoghs, qualified pension plans,
similar plans, or other employer plans. For information on IRAs, Keoghs or
similar plans, contact BOK at (918) 588-6586.
BY MAIL
Investors may purchase Shares of any Equity Investment Fund by completing and
signing an Account Registration form and mailing it, along with a check (or
other negotiable bank instrument or money order) for at least $1,000, payable to
the appropriate Fund, in care of the Funds' Custodian at Bank of Oklahoma, N.A.,
Attention: American Performance Funds, Department 12, Tulsa, Oklahoma 74182.
Subsequent purchases of Shares may be made at any time by mailing a check (or
other negotiable bank draft or money order) for at least $100, payable to the
appropriate Fund, to the above address. The minimum initial investment may be
waived from time to time by the Distributor during certain special promotions.
Account Registration forms can be obtained by calling the Funds at (800)
762-7085.
BY TELEPHONE OR ELECTRONIC TRANSFER
If an investor's Account Registration form has been previously received by the
Distributor, investors may also purchase Shares of the Equity Investment Funds
by telephone or by electronic transfer to the Funds' Custodian. To place an
order by telephone, call the Funds toll-free at (800) 762-7085. Payment for
Shares ordered by telephone may be made by check and must be received by the
Funds' Custodian within the settlement requirements defined under the Securities
Exchange Act of 1934. Shares of the Equity Investment Funds ordered by telephone
will be purchased for the Shareholder's account when the order has been
received. Any questions regarding current settlement requirements or electronic
payment instructions should be directed to the Funds at (800) 762-7085.
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If payment for the Shares is not received within the prescribed time periods, or
if a check timely received does not clear, the purchase will be canceled and the
investor could be liable for any losses or fees incurred.
AUTO INVEST PLAN
The Funds offer an Auto Invest Plan which enables Shareholders of the Equity
Investment Funds to make regular monthly or quarterly purchases of Shares
through automatic deductions from their bank accounts. With Shareholder
authorization, the Transfer Agent deducts the amount specified from the
Shareholder's bank account which is then automatically invested in Shares at net
asset value. The required minimum initial investment when opening an account
using the Auto Invest Plan is $100; the minimum amount for subsequent
investments in an Equity Investment Fund is $50. To participate in the Auto
Invest Plan, Shareholders should complete the appropriate section of the Account
Registration form which can be acquired by calling (800) 762-7085. To change the
Auto Invest instructions, a Shareholder must submit a written request to the
Funds. A Shareholder may discontinue the feature by submitting a written request
to or by calling the Funds.
FUND DIRECT INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS")
A Fund Direct IRA enables individuals, even if they participate in an
employer-sponsored retirement plan, to establish their own retirement program.
IRA contributions may be tax-deductible and earnings are tax-deferred. Under the
Tax Reform Act of 1986, the tax deductibility of IRA contributions is restricted
or eliminated for individuals who participate in certain employer pension plans
and whose annual income exceeds certain limits. Existing IRAs and future
contributions up to the IRA maximums, whether deductible or not, still earn
income on a tax-deferred basis.
All IRA distribution requests must be made in writing to the Funds. Any
additional deposits to an IRA must distinguish the type and year of the
contribution. For more information on an IRA call the Funds at (800) 762-7085.
Shareholders are advised to consult a tax adviser on IRA contribution and
withdrawal requirements and restrictions.
OTHER INFORMATION REGARDING PURCHASES
Shares may also be purchased through procedures established by the Distributor
in connection with the requirements of qualified accounts maintained by or on
behalf of certain persons ("Customers") by Participating Organizations under the
Funds' Distribution Plan (See "DISTRIBUTION"). Shares of any Equity Investment
Fund sold to a Participating Organization on behalf of Customers will normally
be held of record by the Participating Organization and it is the responsibility
of the Participating Organization to transmit purchase or redemption orders to
the Distributor and to deliver funds for the purchase thereof on a timely basis.
Depending upon the terms of a particular Customer account, a Participating
Organization may charge a Customer account fees for services provided in
connection with investment in an Equity Investment Fund. Information concerning
these services and any charges can be obtained from the Participating
Organization or one of its affiliates. This Prospectus should be read in
conjunction with any such information so received.
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Shares of each Equity Investment Fund are purchased at the net asset value per
share (see "VALUATION OF SHARES") next determined after receipt by the
Distributor of an order to purchase Shares in good form, plus any applicable
sales charge as described below. Purchases of Shares in an Equity Investment
Fund will be effected only on a Business Day (as defined in "VALUATION OF
SHARES") of that Equity Investment Fund. An order received prior to the
Valuation Time on any Business Day will be executed at the net asset value
determined as of the Valuation Time on the day of receipt. An order received
after the Valuation Time on any Business Day will be executed at the net asset
value determined as of the Valuation Time on the next Business Day.
In the case of orders for the purchase of Shares placed through a broker-dealer,
the applicable public offering price will be the net asset value as so
determined, but only if the broker-dealer receives the order prior to the
Valuation Time for that day and transmits it to the Distributor prior to the
Valuation Time for that day. The broker-dealer is responsible for transmitting
such orders promptly. If the broker-dealer fails to do so, the investor's right
to that day's closing price must be settled between the investor and the
broker-dealer. If the broker-dealer receives the order after the Valuation Time
for that day, the price will be based on the net asset value determined as of
the Valuation Time for the next day.
Each Equity Investment Fund reserves the right to reject any order for the
purchase of its Shares in whole or in part, including purchases made with
foreign and third party checks.
Every Shareholder will receive a confirmation of each new transaction in the
Shareholder's account, which will show the total number of Shares of such Fund
owned by the Shareholder and the number of Shares being held in safekeeping by
the Transfer Agent for the account of the Shareholder. Confirmation of purchases
and redemptions of Shares of the Equity Investment Funds by a Participating
Organization on behalf of a Customer will be sent by the Participating
Organization. Shareholders may rely on these statements in lieu of certificates.
No certificates representing Shares of any Equity Investment Fund will be
issued.
SALES CHARGES
The public offering price of a Share of each of the Equity Investment Funds
equals its net asset value plus a sales charge. BISYS receives this sales charge
as Distributor and reallows a portion of it as dealer discounts and brokerage
commissions. However, the Distributor, at its sole discretion, may pay certain
dealers all or part of the portion of the sales charge it receives. A broker or
dealer who receives a reallowance in excess of 90% of the sales charge may be
deemed to be an "underwriter" for purposes of the Securities Act of 1933.
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The following table sets forth information pertaining to the Sales Charges for
each of the Equity Investment Funds.
<TABLE>
<CAPTION>
DEALER DISCOUNTS
AND BROKERAGE
SALES CHARGE SALES CHARGE COMMISSIONS AS
AS A PERCENTAGE AS A PERCENTAGE PERCENTAGE OF
OF NET AMOUNT OF NET OFFERING PUBLIC OFFERING
AMOUNT OF PURCHASE INVESTED PRICE PRICE
- ------------------ --------------- --------------- ----------------
<S> <C> <C> <C>
Less than $50,000........................ 5.26% 5.00% 4.50%
$50,000 but less than $100,000........... 3.90% 3.75% 3.25%
$100,000 but less than $250,000.......... 2.83% 2.75% 2.50%
$250,000 but less than $500,000.......... 2.04% 2.00% 1.75%
$500,000 but less than $1,000,000........ 1.78% 1.75% 1.60%
$1,000,000 or more*...................... 0.00% 0.00% 1.00%
</TABLE>
- ---------------
* A Contingent Deferred Sales Load of 1.00% will be assessed against the
proceeds of any redemption request relating to Shares of the Fund that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such redemption
request is made within one year of the date the Shares were purchased.
From time to time dealers who receive dealer discounts and brokerage commissions
from the Distributor may reallow all or a portion of such dealer discounts and
brokerage commissions to other dealers or brokers.
SALES CHARGE WAIVERS
The Distributor may periodically waive the sales charges for all customers with
respect to any of the Equity Investment Funds. In addition, the Distributor may
waive the sales charge for the purchase of a Fund's shares with the proceeds
from the recent redemption of shares of another non-money market mutual fund
that imposes a sales charge.
The sales charges may also be waived for (1) investors who purchase through
accounts with the Investment Adviser and through their existing trust
relationship with the Investment Adviser; (2) employees of the Investment
Adviser or its affiliates; (3) each Trustee of the Funds and any employee of a
company that constitutes the principal business activity of a Trustee; (4)
employees of the Distributor and its affiliates; (5) orders placed on behalf of
other investment companies distributed by The BISYS Group, Inc. or its
affiliated companies; (6) existing Shareholders who own Shares in any of the
Equity Investment Funds within their trust accounts and purchase additional
Shares outside of these trust relationships; (7) investors within wrap accounts;
(8) investors who purchase in connection with 401(k) plans, 403(b) plans, and
other employer-sponsored, qualified retirement plans; and (9) investors who
purchase in connection with non-transactional fee fund programs and programs
offered by fee-based financial planners and other types of financial
institutions.
Each investor described in paragraphs (2), (3), (4), (6), (8), and (9) above
must identify himself or herself at the time of purchase. When an investor who
has previously redeemed Shares of any
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American Performance Fund re-enters the American Performance Funds, the sales
charge on the newly purchased shares will be waived on a one-time basis in an
amount up to the total of any sales charge paid on the Shares previously
redeemed. If the Shareholder exercising this re-entry privilege paid a sales
charge on the redeemed shares and held them for less than 91 days, such
Shareholder must reduce his or her cost basis of the redeemed shares for
purposes of determining any capital gain or loss on the redemption by the lesser
of (1) the sales charge paid for those shares, or (2) the sales charge waived in
connection with the purchase of the new shares. The Funds reserve the right to
alter the terms of their sales charge waiver practices upon sixty days' notice
to Shareholders.
CONCURRENT PURCHASES AND RIGHT OF ACCUMULATION
For purposes of qualifying for a reduced sales charge, investors have the
privilege of combining concurrent purchases of, and holdings in, shares of any
Funds of the Funds sold with a sales charge ("Eligible Shares"). Investors are
permitted to purchase Eligible Shares at the public offering price applicable to
the total of (a) the dollar amount of the Eligible Shares then being purchased
plus (b) an amount equal to the then-current net asset value of the purchaser's
combined holdings of Eligible Shares.
To receive the applicable public offering price pursuant to concurrent purchases
and the right of accumulation, Shareholders must, at the time of purchase, give
the Distributor sufficient information to permit confirmation of qualification.
Investors may combine purchases of Eligible Shares that are made in their
individual capacity with (1) purchases that are made by members of their
immediate household and (2) purchases made by businesses that they own as sole
proprietorships, for purposes of obtaining reduced sales charges pursuant to
concurrent purchases and the right of accumulation. In order to accomplish this,
however, investors must designate on the Account Registration form the accounts
that are to be combined for this purpose. Investors can only designate accounts
that are open at the time of the concurrent purchases and when the right of
accumulation is exercised.
LETTER OF INTENT
You may obtain a reduced sales charge by means of a written Letter of Intent
which expresses your intention to invest, within a period of 13 months, a
certain amount in Shares of any of the American Performance Funds which charge a
sales load. Each purchase of Shares under a Letter of Intent will be made at the
public offering price plus the sales charge applicable at the time of such
purchase to a single transaction of the total dollar amount indicated in the
Letter of Intent. A Letter of Intent may include purchases of Shares made not
more than 90 days prior to the date the investor signs a Letter of Intent;
however, the 13-month period during which the Letter of Intent is in effect will
begin on the date of the earliest purchase to be included.
A Letter of Intent is not a binding obligation upon the investor to purchase the
full amount indicated. The minimum initial investment under a Letter of Intent
is 5% of such amount. Shares purchased with the first 5% of such amount will be
held in escrow (while remaining registered in the name of the investor) to
secure payment of the higher sales charge applicable to the Shares actually
purchased if the full amount indicated is not purchased. Such escrowed Shares
will be involuntarily redeemed to
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pay the additional sales charge, if necessary. Dividends on escrowed Shares,
whether paid in cash or reinvested in additional Shares are not subject to
escrow. The escrowed Shares will not be available for disposal by the investor
until all purchases pursuant to the Letter of Intent have been made or the
higher sales charge has been paid. When the full amount indicated has been
purchased, the escrow will be released.
Additionally, if the total purchases within the 13-month period exceed the
amount specified, an adjustment will be made to reflect further reduced sales
charges applicable to such purchases. Adjustments for these purchases and
purchases made during the 90-day period prior to submission of the Letter of
Intent will be made at the conclusion of the 13-month period and in the form of
additional shares credited to the shareholder's account at the then current
Public Offering Price applicable to a single purchase of the total amount of the
total purchase.
For further information, interested investors should contact the Distributor.
Letter of Intent privileges may be amended or terminated without notice at any
time by the Distributor.
EXCHANGE PRIVILEGE
Shares of any Equity Investment Fund may be exchanged without payment of a sales
charge for Shares of any American Performance Fund having a sales charge equal
to or less than that of the Equity Investment Fund Shares sought to be
exchanged. If the Shareholder exercising the exchange privilege paid a sales
charge on the exchanged Shares that is less than the sales charge applicable to
the Shares sought to be acquired through the exchange, such Shareholder must pay
a sales charge on the exchange equal to the difference between the sales charge
paid for the exchanged Shares and the sales charge applicable to the Shares
sought to be acquired through the exchange. The exchange will be made on the
basis of the relative net asset values of the Shares exchanged. An exchange is
considered a sale of Shares and may result in a capital gain or loss for federal
income tax purposes. If the Shareholder exercising the exchange privilege paid a
sales charge on the exchanged Shares and held them for less than 91 days, for
purposes of determining the amount of the capital gain or loss, such Shareholder
must reduce his or her cost basis of the exchanged Shares by the lesser of (1)
the sales charge paid for those Shares, or (2) the sales charge waived on the
exchange. The sales charge is treated as incurred in connection with the
acquisition of the newly exchanged-for Shares. The exchange privilege may only
be exercised in states where the exchange may legally be made. The Funds reserve
the right to eliminate or to alter the terms of this exchange offer upon sixty
days' notice to Shareholders.
A Shareholder wishing to exchange his or her Shares may do so by contacting the
Funds at (800) 762-7085 or by providing written instructions to the Distributor.
Any Shareholder who wishes to make an exchange must have received a current
Prospectus of the Fund in which he or she wishes to invest before the exchange
will be effected.
HOW TO REDEEM SHARES
Shares may ordinarily be redeemed by mail or by telephone. Shareholders may
redeem their Shares without charge on any day that the net asset value is
calculated (see "VALUATION OF SHARES").
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However, all or part of a Customer's Shares may be redeemed in accordance with
instructions and limitations pertaining to his or her account held at a
Participating Organization.
BY MAIL
Shares may be redeemed by mail by sending a written request to the Distributor
in care of the Funds' Custodian at Bank of Oklahoma, N.A., Attention: American
Performance Funds, Department 12, Tulsa, Oklahoma 74182. The Distributor may
require a signature guarantee by an eligible guarantor institution. For purposes
of this policy, the term "eligible guarantor institution" shall include banks,
brokers, dealers, credit unions, securities exchanges and associations, clearing
agencies and savings associations as those terms are defined in Rule 17Ad-15
under the Securities Exchange Act of 1934. The Distributor reserves the right to
reject any signature guarantee if (i) it has reason to believe that the
signature is not genuine, (ii) it has reason to believe that the transaction
would otherwise be improper, or (iii) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000. The signature guarantee requirements will be
waived if all of the following conditions apply: (1) the redemption check is
payable to the Shareholder(s) of record, and (2) the redemption check is mailed
to the Shareholder(s) at the address of record. The Shareholder may also have
the proceeds mailed or sent electronically to a commercial bank account
previously designated on the Account Registration form or by written instruction
to the Distributor. There is no charge for having redemption requests mailed to
a designated bank account.
BY TELEPHONE
Shares may be redeemed by telephone if the Account Registration form reflects
that the Shareholder has that capability. The Shareholder may have the proceeds
mailed to his or her address or mailed or sent electronically to a commercial
bank account previously designated on the Account Registration form. Under most
circumstances, payments will be transmitted on the next Business Day following
receipt of a valid request for redemption. Electronic payment requests may be
made by the Shareholder by calling the Funds at (800) 762-7085. The Transfer
Agent may reduce the amount of a wire redemption payment by the Custodian's
then-current wire redemption charge (presently $15.00). Neither the Distributor,
the Transfer Agent, the Investment Adviser, nor the Funds will be liable for any
losses, damages, expenses or costs arising out of any telephone transaction
(including exchanges and redemptions) effected in accordance with the Funds'
telephone transaction procedures, upon instructions reasonably believed to be
genuine. The Funds will employ procedures designed to provide reasonable
assurance that the instructions communicated by telephone are genuine; if these
procedures are not followed, the Funds may be liable for any losses due to
unauthorized or fraudulent instructions. These procedures include recording all
phone conversations, sending confirmations to Shareholders within 72 hours of
the telephone transaction, verifying the account name and a Shareholder's
account number or tax identification number and sending redemption proceeds only
to the address of record or to a previously authorized account. If, due to
temporary adverse conditions, investors are unable to effect telephone
transactions, Shareholders may also mail the redemption request to the
Distributor at the address listed above under "HOW TO REDEEM SHARES -- By Mail."
The telephone redemption option will be suspended for a period of 10 days
following a telephonic address change.
prospectus
23
<PAGE> 97
SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan enables Shareholders of the Funds to make regular
monthly or quarterly redemptions of Shares if their account has at least
$10,000. With Shareholder authorization, the Transfer Agent will automatically
redeem Shares at the net asset value on the dates of the withdrawal and have a
check in the amount specified mailed to the Shareholder. The required minimum
withdrawal is $100. To participate in the Systematic Withdrawal Plan,
Shareholders should call (800) 762-7085 for more information. Purchases of
additional Shares concurrent with withdrawals may be disadvantageous to certain
Shareholders because of tax liabilities. To change the Systematic Withdrawal
instructions, a Shareholder must submit a written request to the Distributor. A
Shareholder may discontinue the feature by submitting a written request to or by
calling the Funds.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per Share next
determined after receipt of a valid request for redemption, as described above.
Payment to Shareholders for Shares redeemed will be made within the settlement
requirements defined in the Securities Exchange Act of 1934, after receipt by
the Distributor of the request for redemption. However, to the greatest extent
possible, the Trust will attempt to honor requests from Shareholders for next
Business Day payments upon redemption of Shares if the request for redemption is
received by the Transfer Agent before the last Valuation Time on a Business Day
or, if the request for redemption is received after the last Valuation Time, to
honor requests for payment within two Business Days, unless it would be
disadvantageous to the Trust or the Shareholders of the particular Fund to sell
or liquidate portfolio securities in an amount sufficient to satisfy requests
for payments in that manner.
At various times, an Equity Investment Fund may be requested to redeem Shares
for which it has not yet received good payment. In such circumstances, the
forwarding of proceeds may be delayed for up to 15 days until payment has been
collected for the purchase of such Shares. The Equity Investment Funds intend to
pay cash for all Shares redeemed, but under abnormal conditions which make
payment in cash unwise, payment may be made wholly or partly in readily
marketable portfolio securities with a market value equal to the redemption
price. In such cases, an investor may incur brokerage costs in converting such
securities to cash.
Due to the relatively high cost of handling small investments, each Equity
Investment Fund reserves the right to redeem, at net asset value, the Shares of
any Shareholder if, because of redemptions of Shares by or on behalf of the
Shareholder, the account of such Shareholder in any Equity Investment Fund has a
value of less than $500. Accordingly, an investor purchasing Shares of any
Equity Investment Fund in only the minimum investment amount may be subject to
such involuntary redemption if he or she thereafter redeems some of his or her
Shares. Before any Equity Investment Fund exercises its right to redeem such
Shares and to send the proceeds to the Shareholder, the Shareholder will be
given notice that the value of the Shares in his or her account is less than the
minimum amount and will be allowed 60 days to make an additional investment in
such Fund in an amount which will increase the value of the account to at least
$500.
See the Funds' Statement of Additional Information -- "ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION" -- for examples of when the right of redemption may be
suspended.
prospectus
24
<PAGE> 98
DIVIDENDS
Net investment income of the Equity Fund, the Balanced Fund and the Growth
Equity Fund is declared and paid quarterly as a dividend to persons who are
Shareholders at the close of business on the day of declaration. Net capital
gain income is distributed at least once a year. A Shareholder will
automatically receive all income dividends and capital gains distributions in
additional full and fractional Shares at net asset value as of the ex-dividend
date, unless the Shareholder elects to receive dividends or distributions in
cash. Reinvested dividends receive the same tax treatment as dividends paid in
cash. Such election, or any revocation thereof, must be made in writing to the
Distributor at: BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219 and
will become effective with respect to dividends and distributions having record
dates after its receipt by the Distributor.
Shareholders may elect to have all income, dividends, and capital gains
distributions paid by check or reinvested in the Fund. If you elect to receive
distributions paid by check and the check (1) is returned and marked as
"undeliverable" or (2) remains uncashed for six months, your payment election
will be changed automatically and your future dividend and capital gains
distribution will be reinvested in the Fund at the per share net asset value
determined as of the date of payment of the distribution. In addition, any
undeliverable check that remains uncashed for six months will be canceled and
reinvested in the Fund at the per share net asset value determined as of the
date of cancellation.
FEDERAL INCOME TAXES
Each Equity Investment Fund is treated as a separate entity for federal income
tax purposes. Each Fund intends to qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"), and intends to
distribute all of its net investment income and capital gains so that it is not
required to pay federal income taxes on amounts so distributed to Shareholders.
Shareholders will be advised at least annually as to the federal income tax
consequences of distributions made during the year.
Receipt by a Shareholder of a distribution of ordinary income and/or an excess
of net short-term capital gain over net long-term loss is treated as a receipt
of ordinary income, whether such distribution is paid in cash or additional
shares. The "70 percent dividends-received deduction" for corporations generally
will apply to these distributions to corporate shareholders that meet the
holding period requirement in the Code to the extent the distribution represents
amounts that would qualify for the dividends-received deduction if the Equity
Investment Fund making the distribution were a regular corporation, and to the
extent designated by such Equity Investment Fund as so qualifying.
Distributions designated by each Equity Investment Fund as deriving from net
gains on securities held for more than one year are generally taxable to
Shareholders as such in the year in which they are received, regardless of how
long the Shareholder has held Shares in the Equity Investment Fund. Such capital
gain dividends are not eligible for the dividends-received deduction.
A Shareholder will generally recognize capital gain or loss on the sale or
exchange of Shares in an Equity Investment Fund. If a Shareholder disposes of
Shares in the Equity Investment Fund at a loss before holding such Shares for
longer than six months, such loss will be treated as a long-term capital loss to
the extent the Shareholder has received a capital gain dividend on the Shares.
prospectus
25
<PAGE> 99
Fund investments in foreign securities may be subject to withholding taxes at
the source on dividend or interest payments. In that case, the Fund's yield on
those securities would be decreased.
Distributions are taxable to a shareholder of a Fund even if they are paid from
income or gains earned by the Fund prior to the shareholder's investment (and
thus were included in the price paid by the shareholder).
Additional information regarding federal income taxes is contained in the
Statement of Additional Information under "INVESTMENT OBJECTIVE AND
POLICIES -- Additional Tax Information Concerning All the Funds." However, the
foregoing and the material in the Statement of Additional Information are only
brief summaries of some of the important tax considerations generally affecting
the Equity Investment Funds and their Shareholders. In addition, the foregoing
discussion and the federal tax information in the Statement of Additional
Information are based on tax laws and regulations which are in effect as of the
date of this Prospectus; these laws and regulations may subsequently change.
Prospective investors in an Equity Investment Fund are advised to consult their
tax adviser with special reference to their own tax situations, including the
potential application of foreign, state and local taxes.
DISTRIBUTION
Shares of the Equity Investment Funds are sold on a continuous basis by the
Distributor for the Funds, BISYS Fund Services (the "Distributor"). Under the
Funds' Distribution and Shareholder Services Plan (the "Distribution Plan"), the
Equity Investment Funds will pay a monthly distribution fee (also referred to as
a 12b-1 Fee) to the Distributor as compensation for its services in connection
with the Distribution Plan at an annual rate equal to the lesser of (1) such fee
as may from time to time be agreed upon in writing by the Funds and the
Distributor, or (2) twenty-five one-hundredths of one percent (0.25%) of the
average daily net assets of each of the Equity Investment Funds. The Distributor
may use the distribution fee to provide distribution assistance with respect to
the Equity Investment Funds' Shares or to provide Shareholder services to the
holders of the Equity Investment Funds' Shares ("Customers") purchased through
financial institutions and intermediaries, broker-dealers, or similar entities,
including affiliates or subsidiaries of the Distributor ("Participating
Organizations") pursuant to contractual arrangements with the Distributor under
the Distribution Plan.
The distribution fee will be payable without regard to whether the amount of the
fee is more or less than the actual expenses incurred in a particular year by
the Distributor in connection with distribution assistance or Shareholder
services rendered by the Distributor itself or incurred by the Distributor
pursuant to contractual agreement entered into under the Distribution Plan.
The Glass-Steagall Act and other applicable laws generally prohibit banks from
engaging in the business of underwriting securities, but in general do not
prohibit banks from purchasing securities as agent for and upon the order of
customers. Accordingly, banks acting as Participating Organizations may provide
only those services which, in the banks' opinion, are consistent with the then
current legal requirements. It is possible, however, that future legislative,
judicial or administrative action affecting the securities activities of banks
will cause the Funds to alter or discontinue their arrangements with banks that
act as Participating Organizations, or change their method of operations. It is
prospectus
26
<PAGE> 100
not anticipated, however, that any change in the Funds' method of operations
would affect their net asset value per share or result in financial loss to any
customer. See the Statement of Additional Information for further information
regarding the Distribution Plan and "MANAGEMENT OF THE EQUITY INVESTMENT
FUNDS -- Banking Laws" for information concerning the applicability of the
Glass-Steagall Act to the Investment Adviser's investment advisory services to
the Funds.
MANAGEMENT OF THE EQUITY INVESTMENT FUNDS
TRUSTEES OF THE FUNDS
Overall responsibility for management of the Equity Investment Funds rests with
the Board of Trustees of the Funds, who are elected by the Shareholders of the
Funds. The Funds will be managed by the Trustees in accordance with the laws of
the Commonwealth of Massachusetts governing business trusts. There are currently
four Trustees, of whom three are not "interested persons" of the Funds within
the meaning of that term under the 1940 Act. The Trustees, in turn, elect the
officers of the Funds to supervise actively the Funds' day-to-day operations.
The Trustees of the Funds, their addresses, and their principal occupations
during the past five years, are as follows:
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE FUNDS DURING PAST FIVE YEARS
- --------------------- --------------------- ----------------------
<S> <C> <C>
Walter B. Grimm*, 53 Chairman and Trustee From June, 1992 to present, employee of BISYS Fund
3435 Stelzer Road Services.
Columbus, Ohio 43219
Michael J. Hall, 54 Trustee From December, 1997 to present, Vice President Finance
10701 E. Ute Street and Chief Financial Officer and Director, Matrix
Tulsa, Oklahoma 74136 Service Company; from December, 1995 to November,
1997, Vice President and Chief Financial Officer,
Worldwide Sports & Recreation, Inc.; from January,
1994 to present, Vice President and Chief Financial
Officer, Pexco Holdings, Inc.
Perry A. Wimpey, 67 Trustee From January, 1992 to present, Local Financial and
4843 S. 69th East Avenue Regulatory Consultant.
Tulsa, Oklahoma 74145
I. Edgar Hendrix, 54 Trustee From June, 1983 to present, Vice President and
8 East 3rd Street Treasurer, Parker Drilling Co.
Tulsa, Oklahoma 74103
</TABLE>
- ---------------
*Indicates an "interested person" of the Funds as defined in the 1940 Act.
The Trustees receive fees and are reimbursed for their expenses in connection
with each meeting of the Board of Trustees they attend. However, no officer or
employee of an Investment Adviser or the Administrator of the Funds receives any
compensation from the Funds for acting as a Trustee. The officers of the Funds
receive no compensation directly from the Funds for performing the duties of
their offices. BISYS receives fees from each Fund of the Funds for acting as
Administrator and may receive additional income under the Distribution Plan of
the Funds.
prospectus
27
<PAGE> 101
INVESTMENT ADVISER
Bank of Oklahoma, N.A. serves as investment adviser to the Equity Investment
Funds. BOK, the largest trust company in the State of Oklahoma, is a subsidiary
of BOK Financial Corporation ("BOK Financial"). BOK Financial is controlled by
its principal shareholder, George B. Kaiser. Through its subsidiaries, BOK
Financial provides a full array of trust, commercial banking and retail banking
services. Its non-bank subsidiaries engage in various bank-related services,
including mortgage banking and providing credit life, accident, and health
insurance on certain loans originated by its subsidiaries.
BOK maintains offices in Oklahoma, Arkansas, Texas and New Mexico and offers a
variety of services for both corporate and individual customers. Individual
financial trust services include personal trust management, administration of
estates, and management of individual investments and custodial accounts. For
corporate clients, the array of services includes management, administration and
recordkeeping of pension plans, thrift plans, 401(k) plans and master trust
plans. BOK has experience in providing investment advisory services to the
Funds, and experience in managing collective investment funds with investment
portfolios and objectives comparable to those of the Funds. BOK also serves as
transfer agent and registrar for corporate securities, paying agent for
dividends and interest, and indenture trustee of bond issues. At July 31, 1998
BOK was responsible for approximately $12.3 billion in assets including
approximately $5.7 billion in assets under management and possessed average
equity capital at $429 million.
Subject to the general supervision of the Funds' Board of Trustees and in
accordance with the investment objective and restrictions of each Equity
Investment Fund, BOK manages the Equity Investment Funds, makes decisions with
respect to and places orders for all purchases and sales of their portfolio
securities, and maintains each Equity Investment Fund's records relating to such
purchases.
The persons primarily responsible for the day-to-day management of each Equity
Investment Fund, as well as their previous business experience, are as follows:
<TABLE>
<CAPTION>
PORTFOLIO MANAGER BUSINESS EXPERIENCE
- ----------------- -------------------
<S> <C>
Grafton M. Potter Manager of the Equity Fund, Growth Equity Fund, and Small
Cap Equity Fund since their inception. Since 1988, Mr.
Potter has served as Director of Equity Research for BOK.
Andy H. Hood Manager of the Balanced Fund since its inception. Since
1993, Mr. Hood has been a portfolio manager for BOK. From
1987 to 1993 Mr. Hood was a portfolio manager for Sun Trust
Bank in Florida.
</TABLE>
For the services provided and expenses assumed pursuant to its investment
advisory agreement with the Funds, BOK receives a fee from the Equity Fund, the
Growth Equity Fund, and the Small Cap Equity Fund computed daily and paid
monthly equaling the lesser of (1) such fee as may from time to time be agreed
upon by the Funds and BOK, or (2) sixty-nine one-hundredths of one percent
(0.69%) of each Fund's average daily net assets. BOK receives a fee from the
Balanced Fund computed daily and paid monthly equaling the lesser of (1) such
fee as may from time to time be agreed upon by the Fund and BOK, or (2)
seventy-four-one-hundredths of one percent (0.74%) of the Balanced Fund's
average
prospectus
28
<PAGE> 102
daily net assets. BOK receives fee income from the Funds from several other
sources. (See "SALES CHARGES," "DISTRIBUTION," and "GENERAL
INFORMATION -- Custodian and Transfer Agent.") BOK may periodically waive all or
a portion of its advisory fee with respect to any Equity Investment Fund to
increase the net income of such Equity Investment Fund available for
distribution as dividends. In order to reduce operating expenses, BOK has
currently established the investment advisory fees pertaining to the Equity
Fund, the Balanced Fund and the Growth Equity Fund at 0.50%, 0.17% and 0.50% of
each respective Fund's average daily net assets.
For investment advisory services for the fiscal year ended August 31, 1998, the
Equity Fund paid BOK, after voluntary fee reductions, 0.50% of its average daily
net assets, the Balanced Fund paid BOK investment advisory fees, after voluntary
fee reductions, 0.17% of its average daily net assets. For investment advisory
services for the period from November 1, 1997 to August 31, 1998, the Growth
Equity Fund paid BOK, after voluntary reductions, 0.50% of its average daily net
assets.
ADMINISTRATOR AND DISTRIBUTOR
BISYS is the Administrator for the Funds, and also acts as the Funds' principal
underwriter and Distributor (the "Administrator" or the "Distributor," as the
context indicates). BISYS is a subsidiary of The BISYS Group, Inc., 150 Clove
Road, Little Falls, New Jersey 07424, a publicly owned company engaged in
information processing, loan servicing and 401(k) administration and
recordkeeping services to and through banking and other financial organizations.
The Administrator generally assists in all aspects of each Fund's administration
and operation.
For expenses assumed and services provided as Administrator pursuant to its
management and administration agreement with the Funds, BISYS receives a fee
from each Equity Investment Fund, computed daily and paid periodically, at the
lesser of (1) such fee as may from time to time be agreed upon in writing by the
Funds and the Administrator, or (2) twenty one-hundredths of one percent (0.20%)
of each Equity Investment Fund's average daily net assets. The Administrator may
periodically waive all or a portion of its administrative fee with respect to an
Equity Investment Fund to increase the net income of the Equity Investment Fund
available for distribution as dividends.
For administration services for the Equity Fund and the Balanced Fund, for the
fiscal year ended August 31, 1998, each Fund paid the Administrator 0.20% of its
average daily net assets. For administrative services for the period from
November 1, 1997 to August 31, 1998, the Growth Equity Fund paid the
Administrator 0.20% of its average daily net assets.
SUB-ADMINISTRATOR
BOK serves as the Sub-Administrator to the Funds pursuant to an agreement
between the Administrator and BOK. Pursuant to this agreement, BOK has assumed
many of the Administrator's duties, for which BOK receives a fee, paid by the
Administrator, calculated at an annual rate of five one-hundredths of one
percent (0.05%) of each Fund's average daily net assets.
EXPENSES
The Investment Adviser and the Administrator each bear all expenses in
connection with the performance of their services as investment adviser and
general manager and administrator, respectively,
prospectus
29
<PAGE> 103
other than the cost of securities (including brokerage commissions) purchased
for the Funds. Each Equity Investment Fund bears the following expenses relating
to its respective operations: taxes, interest, brokerage fees and commissions,
fees and travel expenses of the Trustees of the Funds, Securities and Exchange
Commission fees, state securities qualification fees, costs of preparing and
printing prospectuses for regulatory purposes and for distribution to current
Shareholders, outside auditing and legal expenses, advisory and administration
fees, fees and reasonable out-of-pocket expenses of the custodian and transfer
agent, expenses incurred for pricing securities owned by the particular Fund,
certain insurance premiums, costs of maintenance of the Funds' existence, costs
of Shareholders' and Trustees' reports and meetings, and any extraordinary
expenses incurred in each Fund's operation.
BANKING LAWS
The Investment Adviser believes that it may perform the investment advisory
services for the Equity Investment Funds contemplated by its agreements with the
Funds and by this Prospectus without violating the Glass-Steagall Act. Future
changes in federal or state statutes and regulations relating to permissible
activities of banks or bank holding companies and their subsidiaries and
affiliates as well as further judicial or administrative decisions or
interpretations of present and future statutes and regulations could change the
manner in which the Investment Adviser could continue to perform such services
for the Funds. See the Statement of Additional Information under the heading
"MANAGEMENT OF THE FUNDS -- Glass-Steagall Act" for further discussion of
applicable banking laws and regulations.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
GENERAL INFORMATION
DESCRIPTION OF THE FUNDS AND THEIR SHARES
The Equity Fund, the Balanced Fund, the Growth Equity Fund, and the Small Cap
Equity Fund represent four separate series of units of beneficial interest
("Shares") of American Performance Funds, a Massachusetts business trust which
was organized in October of 1987 and began active operations in August of 1990.
The organizational expenses for the Growth Equity Fund were capitalized and will
be amortized during the Fund's first five years of operations. Such amortization
will reduce the amount available for distributions as dividends to Shareholders.
Each Share represents an equal proportionate interest in a Fund with other
Shares of the same series, and is entitled to such dividends and distributions
out of the income earned on the assets belonging to that Fund as are declared at
the discretion of the Trustees.
As of October 15, 1998, Bank of Oklahoma, N.A. (Bank of Oklahoma Tower, One
Williams Center, Tulsa, Oklahoma 74103) and its bank affiliates were the
shareholders of record of 98.41% of the Equity Fund's Shares, 99.55% of the
Balanced Fund's Shares and 97.27% of the Growth Equity Fund's Shares. As of
December 17, 1998, Bank of Oklahoma, N.A. and its bank affiliates were
beneficial shareholders with respect to 71% of the Equity Fund's Shares, 52% of
the Balanced Fund's Shares and
prospectus
30
<PAGE> 104
94% of the Growth Equity Fund's Shares, and, as a consequence, Bank of Oklahoma,
N.A. and its bank affiliates may be deemed to be a controlling person of each of
these Equity Investment Funds under the 1940 Act.
Shareholders are entitled to one vote for each Share, and a proportionate
fractional vote for any fraction of a Share, and will vote in the aggregate and
not by series except as otherwise expressly required by law.
Although the Funds are not required to hold annual meetings of Shareholders,
Shareholders have the right (1) to call a meeting to elect or remove one or more
of the Trustees of the Funds and (2) to be assisted by the Trustees in
communicating with other Shareholders of the Funds. Shareholder inquiries should
be directed to the Secretary of the Funds, at 3435 Stelzer Road, Columbus, Ohio
43219.
Overall responsibility for the management of the Funds is vested in the Board of
Trustees. See "MANAGEMENT OF THE EQUITY INVESTMENT FUNDS -- Trustees of the
Funds." Individual Trustees are elected by the Shareholders and may be removed
by the Board of Trustees or Shareholders in accordance with the provisions of
the Declaration of Trust and By-laws of the Funds and Massachusetts law. See
"ADDITIONAL INFORMATION -- Miscellaneous" in the Statement of Additional
Information for further information.
CUSTODIAN AND TRANSFER AGENT
Bank of Oklahoma, N.A. serves as custodian for the Funds ("Custodian"). BISYS
Fund Services Ohio, Inc., an affiliate of BISYS, serves as the transfer agent
for the Funds ("Transfer Agent") and performs fund accounting services.
PERFORMANCE INFORMATION
From time to time performance information for the Equity Investment Funds
showing their average annual total return and aggregate total return may be
presented in advertisements, sales literature and shareholder reports. Such
performance figures are based on historical earnings and are not intended to
indicate future performance. Total return will be calculated for the period
since the establishment of the Equity Investment Funds and will, unless
otherwise noted, reflect the imposition of the maximum sales charge. For the
information of Shareholders not subject to a sales charge, the Equity Investment
Funds may also publish total return figures which include no sales charge.
Average annual total return is measured by comparing the value of an investment
in an Equity Investment Fund at the beginning of the relevant period to the
redemption value of the investment at the end of the period (assuming immediate
reinvestment of any dividends or capital gains distributions) and annualizing
the result. Aggregate total return is measured similarly to average annual total
return, however the resulting difference is not annualized. The yield of an
Equity Investment Fund is determined by annualizing the Fund's net investment
income per share during a recent specified thirty-day period ending on the last
day of the most recent calendar quarter, and dividing that amount by the Fund's
per share net asset value on the last day of the period.
In addition, from time to time the Funds may present their respective
distribution rates in supplemental sales literature which is accompanied or
preceded by a prospectus and in Shareholder reports.
prospectus
31
<PAGE> 105
Distribution rates will be computed by dividing the distribution per share made
by a Fund over a twelve-month period by the maximum offering price per share.
The calculation of income in the distribution rate includes both income and
capital gain dividends and does not reflect unrealized gains or losses, although
a Fund may also present a distribution rate excluding the effect of capital
gains. The distribution rate differs from the yield, because it includes capital
items which are often non-recurring in nature, whereas yield does not include
such items. Distribution rates may also be presented excluding the effect of a
sales charge, if any.
Investors may also judge the performance of an Equity Investment Fund by
comparing it to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies through various mutual fund
or market indices such as those prepared by Dow Jones & Co., Inc., Standard &
Poor's Corporation, The Russell 2000 Index, and Morningstar, Inc. and to data
prepared by Lipper. Comparisons may also be made to indices or data published in
Money Magazine, Forbes, Barron's, The Wall Street Journal, The New York Times,
Business Week, Pensions and Investments, Fortune, Ibbotson Associates, Inc.,
U.S.A. Today, CDA/Wiesenberger, American Banker, Institutional Investor and
local newspapers. In addition to performance information, general information
about these Funds that appears in a publication such as those mentioned above
may be included in advertisements and in reports to Shareholders.
Total return and yield are functions of the type and quality of instruments held
in the portfolio, operating expenses, and market conditions. Consequently, total
return and yield will fluctuate and are not necessarily representative of future
results. Any fees charged by a Participating Organization with respect to
Customer accounts for investing in shares of Equity Investment Funds will not be
included in performance calculations; such fees, if charged, will reduce the
actual performance from that quoted. Further information regarding Performance
Comparisons may be found in the Statement of Additional Information under
"Performance Comparisons."
Additional information about the performance of each Equity Investment Fund is
contained in the Funds' Annual Report to Shareholders, which is available free
of charge by calling the telephone number on the front page of this Prospectus.
THE GROWTH EQUITY FUND
The Growth Equity Fund commenced operations on November 3, 1997 immediately
subsequent to the transfer of assets by the Equity Growth Trust B to the Growth
Equity Fund in exchange for shares of the Growth Equity Fund. The Fund's
portfolio of investments upon commencement of operations was the same as the
portfolio of the Equity Growth Trust B immediately prior to the transfer.
The Equity Growth Trust B is not a registered investment company as it is exempt
from registration under the 1940 Act. Since, in a practical sense, the common
trust fund constitutes a "predecessor" of the Growth Equity Fund, the Growth
Equity Fund calculates its performance for periods commencing prior to the
transfer of the Equity Growth Trust B's assets to the Growth Equity Fund by
including the Equity Growth Trust B's total return adjusted to reflect the
deduction of anticipated fees and expenses, absent any waivers, applicable to
the Growth Equity Fund as stated in the Fee Table in this prospectus. These fees
and expenses include applicable sales charges and Rule 12b-1 Fees.
prospectus
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<PAGE> 106
The Growth Equity Fund from time to time may advertise certain investment
performance figures, as discussed below. The performance figures shown
immediately below are based on historical earnings of the Equity Growth Trust B,
but past performance data is not necessarily indicative of future performance of
the Fund.
COMPARATIVE PERFORMANCE INFORMATION REGARDING THE EQUITY GROWTH TRUST B AND THE
GROWTH EQUITY FUND
AUGUST 31, 1997
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEAR SINCE INCEPTION
- ---- ------ ------ ---------------
<S> <C> <C> <C>
NO LOAD AVERAGE ANNUAL TOTAL RETURN*
Equity Growth Trust B............................ 44.25% 27.66% 27.14%
AVERAGE ANNUAL TOTAL RETURN
SUBJECT TO SALES LOAD**
Equity Growth Trust B............................ 36.96% 25.48% 25.13%
</TABLE>
- ---------------
* Figures were calculated pursuant to a methodology established by the SEC. The
inception date of the Equity Growth Trust B was June 30, 1994. The one year
and three year total return figures are as of August 31, 1997.
** The maximum sales load is 5.00% for the American Performance Growth Equity
Fund.
The aggregate annual return for the Equity Growth Trust B from June 30, 1994
through August 31, 1997, absent any sales load, was 117.19%. The aggregate
annual return for the Equity Growth Trust B from June 30, 1994 through August
31, 1997, taking into account a sales load, was 106.30%.
The above-quoted performance data is the performance of the Equity Growth Trust
B for the period before the Growth Equity Fund commenced operations adjusted to
reflect the deduction of fees and expenses applicable to the American
Performance Growth Equity Fund as stated in this prospectus in the Fee Table
(i.e., adjusted to reflect anticipated fees and expenses, absent any fee
waivers). The Equity Growth Trust B was not registered under the 1940 Act and
therefore was not subject to certain investment restrictions, limitations and
diversification requirements imposed by the Act and the Code. If the Equity
Growth Trust B had been registered under the 1940 Act, its performance may have
been adversely affected. The investment objective, restrictions and guidelines
of the Growth Equity Fund are substantially similar to the Equity Growth Trust B
and both are managed by the same personnel.
YEAR 2000
The investment services industry is evaluating the capability of existing
application software programs and operating systems to accommodate the date
value for the year 2000. Many existing application software products in the
marketplace were designed only to accommodate a two-digit date position, which
represents the year (e.g., "95" is stored on the system and represents the year
1995). If the year 1999 is the maximum date value these systems are able to
accurately process, the improper identification of the year 2000 could result in
a computer system failure or miscalculations causing a disruption of operations.
The Funds' principal service providers are taking steps the Funds believe are
reasonably designed to address the year 2000 issues with respect to the computer
systems those
prospectus
33
<PAGE> 107
providers operate. However, this is an ongoing process and testing and other
steps are scheduled to be completed in 1999. Nevertheless, the inability of
service providers to successfully address year 2000 issues could result in
interruptions in the Funds' business and have material adverse impact on the
Funds' operations. In addition, year 2000 issues could have a negative effect on
the portfolio securities in which the Funds invest, thereby affecting the
performance of the Funds.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent public accountants.
As used in this Prospectus and in the Statement of Additional Information,
"assets belonging to" a Fund means the consideration received by the Funds upon
the issuance or sale of Shares in that Fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof including any proceeds
from the sale, exchange, or liquidation of such investments, and any funds or
payments derived from any reinvestment of such proceeds, and any general assets
of the Funds not readily identified as belonging to a particular Fund that are
allocated to that Fund by the Funds' Board of Trustees. The Board of Trustees
may allocate such general assets in any manner it deems fair and equitable. It
is anticipated that the factor that will be used by the Board of Trustees in
making allocations of general assets to particular Funds will be the relative
net asset values of the respective Funds at the time of allocation. Assets
belonging to a particular Fund are charged with the direct liabilities and
expenses with respect to that Fund, and with a share of the general liabilities
and expenses of the Funds not readily identified as belonging to a particular
Fund that are allocated to that Fund in proportion to the relative net asset
values of the respective Funds at the time of allocation. The timing of
allocations of general assets and general liabilities and expenses of the Funds
to particular Funds will be determined by the Board of Trustees of the Funds and
will be in accordance with generally accepted accounting principles.
Determinations by the Board of Trustees of the Funds as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular Fund are
conclusive.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of the Funds or a particular Fund
means the affirmative vote, at a meeting of Shareholders duly called, of the
lesser of (a) 67% or more of the outstanding Shares of the Funds or such Fund
present at a meeting at which the holders of more than 50% of the outstanding
Shares of the Funds or such Fund are represented in person or by proxy, or (b)
the holders of more than 50% of the outstanding shares of the Funds or such
Fund.
Inquiries regarding each Equity Investment Fund may be directed in writing to
the Funds at 3435 Stelzer Road, Columbus, Ohio 43219, or by calling toll free
(800) 762-7085.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE EQUITY
INVESTMENT FUNDS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY THE EQUITY INVESTMENT FUNDS OR BY THE DISTRIBUTOR IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
prospectus
34
<PAGE> 108
STATEMENT OF ADDITIONAL INFORMATION
AMERICAN PERFORMANCE FUNDS
AMERICAN PERFORMANCE MONEY MARKET FUNDS
AMERICAN PERFORMANCE BOND INVESTMENT FUNDS
AMERICAN PERFORMANCE EQUITY INVESTMENT FUNDS
February 17, 1999
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectuses for the American Performance Money Market
Funds, the American Performance Bond Investment Fund, and the American
Performance Equity Investment Funds, each dated February 17, 1999. 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> 109
TABLE OF CONTENTS
-----------------
Page
THE FUNDS.....................................................................1
INVESTMENT OBJECTIVE AND POLICIES.............................................1
ADDITIONAL INFORMATION ON FUND INSTRUMENTS...........................1
Bank Obligations............................................1
U.S. Government Obligations.................................3
Purchases of Options........................................3
Covered Calls...............................................4
Puts ...................................................6
Futures Contracts...........................................6
Mortgage-Related Securities.................................7
Loan Participation..........................................9
Foreign Investments.........................................9
When-Issued Securities.....................................10
Securities Lending.........................................10
Repurchase Agreements......................................10
Municipal Securities.......................................11
INVESTMENT RESTRICTIONS.............................................12
PORTFOLIO TURNOVER..................................................14
ADDITIONAL TAX INFORMATION CONCERNING ALL THE FUNDS ................14
ADDITIONAL TAX INFORMATION CONCERNING THE INTERMEDIATE TAX-
FREE BOND FUND.............................................16
VALUATION....................................................................18
THE MONEY MARKET FUNDS..............................................18
THE BOND INVESTMENT FUNDS
AND THE EQUITY INVESTMENT FUNDS............................19
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...............................19
MANAGEMENT AND SERVICE PROVIDERS OF THE FUNDS................................20
TRUSTEES AND OFFICERS...............................................20
INVESTMENT ADVISER AND SUB-ADVISER..................................21
DISTRIBUTION........................................................24
GLASS-STEAGALL ACT..................................................26
PORTFOLIO TRANSACTIONS..............................................27
ADMINISTRATOR.......................................................29
SUB-ADMINISTRATOR...................................................30
DISTRIBUTOR.........................................................31
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CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTANT.......................32
LEGAL COUNSEL.......................................................34
ADDITIONAL INFORMATION.......................................................34
DESCRIPTION OF SHARES...............................................34
SHAREHOLDER AND TRUSTEE LIABILITY...................................35
CALCULATION OF PERFORMANCE DATA ..................................35
PERFORMANCE COMPARISONS.............................................38
MISCELLANEOUS.......................................................39
FINANCIAL STATEMENTS.........................................................44
APPENDIX ....................................................................45
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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 Balanced Fund (the "Balanced Fund"), the American
Performance Growth Equity Fund (the "Growth Equity Fund"), the American
Performance Small Cap Equity Fund (the "Small Cap Equity Fund"), the
American Performance Bond Fund (the "Bond Fund"), the American Performance
Intermediate Bond Fund (the "Intermediate Bond Fund"), the American
Performance Intermediate Tax-Free Bond Fund (the "Intermediate Tax-Free Bond
Fund"), and the American Performance Short-Term Income Fund (the "Short-Term
Income Fund"). The U.S. Treasury Fund and the Cash Management Fund are
sometimes referred to herein as the "Money Market Funds," the Equity Fund,
the Balanced Fund, the Growth Equity Fund, and the Small Cap Equity Fund are
sometimes referred to herein as the "Equity Investment Funds," and the Bond
Fund, the Intermediate Bond Fund, the Intermediate Tax-Free Bond Fund, and
the Short-Term Income Fund are sometimes referred to herein as the "Bond
Investment Funds." Much of the information contained herein expands upon
subjects discussed in the Prospectuses for the respective Funds. No
investment in Shares of a Fund should be made without first reading that
Fund's Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement each Fund's investment objective and
policies as set forth in the respective Prospectus for that Fund.
ADDITIONAL INFORMATION ON FUND INSTRUMENTS
BANK OBLIGATIONS
The Cash Management Fund, the Bond Investment Funds and the Equity
Investment Funds may invest in obligations of the banking industry such as
bankers' acceptances, commercial paper, loan participations, bearer deposit
notes, promissory notes, floating or variable rate obligations, certificates
of deposit, and demand and time deposits. The Cash Management Fund will
normally invest more than 25% of its assets in such investments.
BANKERS' ACCEPTANCES: Bankers' acceptances are negotiable drafts or
bills of exchange typically drawn by an importer or exporter to pay for
specific merchandise, which are "accepted" by a bank, meaning, in effect,
that the bank unconditionally agrees to pay the face value of the instrument
on maturity. The Funds will invest in only those bankers' acceptances
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guaranteed by domestic and foreign banks having, at the time of investment,
total assets in excess of $1 billion (as of the date of their most recently
published financial statements).
CERTIFICATES OF DEPOSIT: Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank for a
definite period of time and earning a specified return. Certificates of
deposit will be those of domestic and foreign branches of U.S. commercial
banks which, at the time of purchase, have total assets in excess of $1
billion (as of the date of their most recently published financial
statements). Certificates of deposit may also include those issued by
foreign banks outside the United States with total assets at the time of
purchase, in excess of the equivalent of $1 billion. The Funds may also
invest in Eurodollar certificates of deposit which are U.S.
dollar-denominated certificates of deposit issued by branches of foreign and
domestic banks located outside the United States and Yankee certificates of
deposit which are certificates of deposit issued by a U.S. branch of a
foreign bank denominated in U.S. dollars and held in the United States.
In addition, the Funds may invest in bearer deposit notes, which are
negotiable time deposits with a specific maturity date issued by a bank, and
time deposits, which are interest bearing non-negotiable deposits at a bank
that have a specific maturity date.
COMMERCIAL PAPER: Commercial paper consists of unsecured promissory
notes issued by corporations. Except as noted below with respect to variable
amount master demand notes, issues of commercial paper normally have
maturities of nine months or less and fixed rates of return.
The above Funds may also invest in Canadian Commercial Paper which is
commercial paper issued by a Canadian corporation or a Canadian counterpart
of a U.S. corporation and in Europaper which is U.S. dollar-denominated
commercial paper of a foreign issuer.
VARIABLE AMOUNT AND FLOATING RATE NOTES: Commercial paper eligible for
investment by the Cash Management Fund, the Equity Investment Funds, and the
Bond Investment Funds may include variable amount and floating rate notes. A
variable rate note is one whose terms provide for the readjustment of its
interest rate on set dates and which, upon such readjustment, can reasonably
be expected to have a fair market value that approximates its par value. A
floating rate note is one whose terms provide for the readjustment of its
interest rate whenever a specified interest rate changes and which, at any
time, can reasonably be expected to have a market value that approximates
its par value. Such notes are frequently not rated by credit rating
agencies; however, unrated variable and floating rate notes purchased by a
Fund will be determined by the Investment Adviser or Sub-Adviser under
guidelines established by the Funds' Board of Trustees to be of comparable
quality, at the time of purchase, to rated instruments which are eligible
for purchase under the Fund's investment policies. In making such
determinations, the Investment Adviser or Sub-Adviser will consider the
earning power, cash flow and other liquidity ratios of the issuers of such
notes (such issuers include financial, merchandising, bank holding and other
companies) and will monitor their financial condition.
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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. sec. 270.2a-7, be deemed to have shorter
maturities in accordance with such Rule.
U.S. GOVERNMENT OBLIGATIONS
The U.S. Treasury Fund invests exclusively in obligations issued or
guaranteed by the U.S. government, some of which may be subject to
repurchase agreements. All of the other Funds may invest in obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities, some of which may be subject to repurchase agreements.
Obligations of certain agencies and instrumentalities of the U.S. government
are supported by the full faith and credit of the U.S. government; others
are supported by the right of the issuer to borrow from the government;
others are supported by the discretionary authority of the U.S. government
to purchase the agency's obligations; and still others are supported only by
the credit of the instrumentality. No assurance can be given that the U.S.
government would provide financial support to U.S. government-sponsored
agencies or instrumentalities if it is not obligated to do so by law. A Fund
(excluding however, the U.S. Treasury Fund) will invest in the obligations
of such agencies or instrumentalities only when the Investment Adviser or
Sub-Adviser believes that the credit risk with respect thereto is minimal.
For information on mortgage-related securities issued by certain agencies or
instrumentalities of the U.S. government, see "Investment Objective and
Policies - Mortgage-Related Securities" in this Statement of Additional
Information.
PURCHASES OF OPTIONS
The Equity Investment Funds and Bond Investment Funds may purchase call
options. A call option gives the purchaser of the option the right to buy,
and a writer has the obligation to sell, the underlying security at the
stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the
writer is consideration for undertaking the obligations under the option
contract. Call options purchased by the foregoing Funds will be valued at
the last sale price, or in the absence of such a price, at the mean between
bid and asked price.
The Equity Investment Funds and Bond Investment Funds may also purchase
index options. Index options (or options on securities indices) are similar
in many respects to options
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on securities, except that an index option gives the holder the right to
receive, upon exercise, cash instead of securities, if the closing level of
the securities index upon which the option is based is greater than the
exercise price of the option.
Purchasing options is a specialized investment technique that entails a
substantial risk of a complete loss of the amounts paid as premiums to
writers of options. Each of the Equity Investment and Bond Investment Funds
will purchase call options and index options only when its total investment
in such options immediately after such purchase, will not exceed 5% of its
total assets.
COVERED CALLS
The Equity Investment Funds and the Bond Investment Funds may write
(sell) "covered" call options and purchase options to close out options
previously written by the Fund. Such options must be listed on a national
securities exchange. The purpose of each Fund in writing covered call
options is to generate additional premium income. This premium income will
serve to enhance the Fund's total return and will reduce the effect of any
price decline of the security involved in the option.
A call option gives the holder (buyer) the "right to purchase" a
security at a specified price (the exercise price) at any time until a
certain date (the expiration date). So long as the obligation of the writer
of a call option continues, the writer may be assigned an exercise notice by
the broker-dealer through whom such option was sold, requiring the writer to
deliver the underlying security against payment of the exercise price. This
obligation terminates upon the expiration of the call option, or such
earlier time at which the writer effects a closing purchase transaction by
purchasing an option identical to that previously sold. To secure the
writer's obligation to deliver the underlying security in the case of a call
option, subject to the rules of the Options Clearing Corporation, a writer
is required to deposit in escrow the underlying security or other assets in
accordance with such rules. The Equity Investment Funds and the Bond
Investment Funds will write only covered call options. This means that a
Fund will only write a call option on a security which a Fund already owns.
In order to comply with the requirements of the securities laws in several
states, a Fund will not write a covered call option if, as a result, the
aggregate market value of all portfolio securities covering call options or
currencies subject to put options exceeds 25% of the market value of the
Fund's net assets.
Portfolio securities on which call options may be written will be
purchased solely on the basis of investment considerations consistent with
each Fund's investment objectives. The writing of covered call options is a
conservative investment technique believed to involve relatively little risk
(in contrast to the writing of naked or uncovered options, which a Fund will
not do), but capable of enhancing the Fund's total return. When writing a
covered call option, a Fund, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security
above the exercise price, but conversely retains the risk of
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loss should the price of the security decline. Unlike one who owns
securities not subject to an option, a Fund has no control over when it may
be required to sell the underlying securities, since it may be assigned an
exercise notice at any time prior to the expiration of its obligation as a
writer. If a call option which a Fund has written expires, a Fund will
realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security during
the option period. If the call option is exercised, a Fund will realize a
gain or loss from the sale of the underlying security. The security covering
the call will be maintained in a segregated account of the Fund's custodian.
The Equity Investment Funds and Bond Investment Funds do not consider a
security covered by a call to be "pledged" as that term is used in each
Fund's policy which limits the pledging or mortgaging of its net assets.
The premium received is the fair market value of an option. The premium
each Fund will receive from writing a call option will reflect, among other
things, the current market price of the underlying security, the
relationship of the exercise price to such market price, the historical
price volatility of the underlying security, and the length of the option
period. Once the decision to write a call option has been made, the
Investment Adviser in determining whether a particular call option should be
written on a particular security, will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will
exist for those options. The premium received by a Fund for writing covered
call options will be recorded as a liability in the Fund's statement of
assets and liabilities. This liability will be adjusted daily to the
option's current market value, which will be the latest sale price at the
time at which the net asset value per Share of the Fund is computed (close
of the New York Stock Exchange ("NYSE")), or, in the absence of such sale,
the latest asked price. The liability will be extinguished upon expiration
of the option, the purchase of an identical option in the closing
transaction, or delivery of the underlying security upon the exercise of the
option.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being
called, or to permit the sale of the underlying security. Furthermore,
effecting a closing transaction will permit a Fund to write another call
option on the underlying security with either a different exercise price or
expiration date or both. If a Fund desires to sell a particular security
from its portfolio on which it has written a call option, it will seek to
effect a closing transaction prior to, or concurrently with, the sale of the
security. There is, of course, no assurance that a Fund will be able to
effect such closing transactions at a favorable price. If a Fund cannot
enter into such a transaction, it may be required to hold a security that it
might otherwise have sold, in which case it would continue to be at market
risk on the security. This could result in higher transaction costs. A Fund
will pay transaction costs in connection with the writing of options to
close out previously written options. Such transaction costs are normally
higher than those applicable to purchases and sales of portfolio securities.
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Call options written by a Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the
options may be below, equal to, or above the current market values of the
underlying securities at the time the options are written. From time to
time, a Fund may purchase an underlying security for delivery in accordance
with an exercise notice of a call option assigned to it, rather than
delivering such security from its portfolio. In such cases, additional costs
will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market
price of a call option will generally reflect increases in the market price
of the underlying security, any loss resulting from the repurchase of a call
option is likely to be offset in whole or in part by appreciation of the
underlying security owned by the Fund.
PUTS
The Equity Investment Funds, Bond Investment Funds and the Cash
Management Fund may acquire "puts" with respect to securities held in their
portfolios. A put is a right to sell a specified security (or securities)
within a specified period of time at a specified exercise price. The Cash
Management Fund may sell, transfer, or assign a put only in conjunction with
the sale, transfer, or assignment of the underlying security or securities.
The amount payable to a Fund upon its exercise of a "put" on debt
securities is normally (i) the Fund's acquisition cost of the securities
(excluding any accrued interest which the portfolio paid on their
acquisition), less any amortized market premium or plus any amortized market
or original issue discount during the period the Fund owned the securities,
plus (ii) all interest accrued on the securities since the last interest
payment date during that period.
Puts may be acquired by a Fund to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of a
Fund's assets at a rate of return more favorable than that of the underlying
security or to limit the potential losses involved in a decline in an equity
security's market value.
Each Fund intends to enter into puts only with dealers, banks, and
broker-dealers which, in the Investment Adviser's or Sub-Adviser's opinion,
present minimal credit risks.
FUTURES CONTRACTS
The Equity Investment Funds and the Bond Investment Funds may enter
into contracts for the future delivery of securities and futures contracts
based on a specific security, class of securities or an index, purchase or
sell options on any such futures contracts, and engage in related closing
transactions. A futures contract on a securities index is an agreement
obligating
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either party to pay, and entitling the other party to receive, while the
contract is outstanding, cash payments based on the level of a specified
securities index.
When interest rates are expected to rise or market values of portfolio
securities are expected to fall, a Fund can seek through the sale of futures
contracts to offset a decline in the value of its portfolio securities. When
interest rates are expected to fall or market values are expected to rise, a
Fund, through the purchase of such contracts, can attempt to secure better
rates or prices for the Fund than might later be available in the market
when it effects anticipated purchases.
The acquisition of put and call options on futures contracts will,
respectively, give a Fund the right (but not the obligation), for a
specified price, to sell or to purchase the underlying futures contract,
upon exercise of the option, at any time during the option period.
Futures transactions involve brokerage costs and require a Fund to
segregate assets to cover contracts that would require it to purchase
securities. A Fund may lose the expected benefit of futures transactions if
interest rates or securities prices move in an unanticipated manner. Such
unanticipated changes may also result in poorer overall performance than if
the Fund had not entered into any futures transactions. In addition, the
value of a Fund's futures positions may not prove to be perfectly or even
highly correlated with the value of its portfolio securities, limiting the
Fund's ability to hedge effectively against interest rate and/or market risk
and giving rise to additional risks. There is no assurance of liquidity in
the secondary market for purposes of closing out futures positions.
Aggregate initial margin deposits for futures contracts, and premiums
paid for related options, may not exceed 5% of an Equity Investment or Bond
Investment Fund's total assets, and the value of securities that are the
subject of such futures and options (both for receipt and delivery) may not
exceed one-third of the market value of an Equity Investment or Bond
Investment Fund's total assets. Futures transactions will be limited to the
extent necessary to maintain each Equity Investment Funds' or Bond
Investment Funds' qualification as a regulated investment company ("RIC").
MORTGAGE-RELATED SECURITIES
Each of the Funds may, consistent with its investment objective,
restrictions and policies, invest in mortgage-related securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. The
Equity Fund, the Aggressive Growth Fund, the Growth Equity Fund and the
Intermediate Tax-Free Bond Fund will each limit its total investment in such
securities to 5% or less of net assets.
Mortgage-related securities, for purposes of the Funds' Prospectuses
and this Statement of Additional Information, represent pools of mortgage
loans assembled for sale to investors by various governmental agencies such
as the Government National Mortgage Association and
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government-related organizations such as the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation, as well as by
nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies.
Although certain mortgage-related securities are guaranteed by a third party
or otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If a Fund purchases a mortgage-related
security at a premium, that portion may be lost if there is a decline in the
market value of the security whether resulting from changes in interest
rates or prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse
is not necessarily true since in periods of declining interest rates the
mortgages underlying the securities are prone to prepayment. For this and
other reasons, a mortgage-related security's stated maturity may be
shortened by unscheduled prepayments on the underlying mortgages and,
therefore, it is not possible to predict accurately the security's return to
a Fund. In addition, regular payments received in respect of
mortgage-related securities include both interest and principal. No
assurance can be given as to the return a Fund will receive when these
amounts are reinvested.
There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related
securities and among the securities that they issue. Mortgage-related
securities issued by the Government National Mortgage Association ("GNMA")
include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and
interest by GNMA and such guarantee is backed by the full faith and credit
of the United States. GNMA is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. GNMA certificates
also are supported by the authority of GNMA to borrow funds from the U.S.
government to make payments under its guarantee. Mortgage-related securities
issued by the Federal National Mortgage Association ("FNMA") include FNMA
Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes")
which are solely the obligations of the FNMA and are not backed by or
entitled to the full faith and credit of the United States. The FNMA is a
government-sponsored organization owned entirely by private stock-holders.
Fannie Maes are guaranteed as to timely payment of principal and interest by
FNMA. Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PCs"). The FHLMC is a corporate
instrumentality of the United States, created pursuant to an Act of
Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs
are not guaranteed by the United States or by any Federal Home Loan Banks
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of
interest, which is guaranteed by the FHLMC. The FHLMC guarantees either
ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. When the FHLMC does not guarantee timely payment
of principal, FHLMC may remit the amount due on account of its guarantee of
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ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
LOAN PARTICIPATION
As noted in its Prospectus, the Cash Management Fund may purchase
certain loan participation interests. Loan participation interests represent
interests in bank loans made to corporations. The contractual arrangement
with the bank transfers the cash stream of the underlying bank loan to the
participating investor. Because the issuing bank does not guarantee the
participations, they are subject to the credit risks generally associated
with the underlying corporate borrower. The secondary market, if any, for
these loan participations is extremely limited and any such participations
purchased by the investor are regarded as illiquid. In addition, because it
may be necessary under the terms of the loan participation for the investor
to assert through the issuing bank such rights as may exist against the
underlying corporate borrower, in the event the underlying corporate
borrower fails to pay principal, and interest when due, the investor may be
subject to delays, expenses and risks that are greater than those that would
have been involved if the investor had purchased a direct obligation (such
as commercial paper) of such borrower. Moreover, under the terms of the loan
participation the investor may be regarded as a creditor of the issuing bank
(rather than of the underlying corporate borrower), so that the issuer may
also be subject to the risk that the issuing bank may become insolvent.
Further, in the event of the bankruptcy or insolvency of the corporate
borrower, the loan participation may be subject to certain defenses that can
be asserted by such borrower as a result of improper conduct by the issuing
bank.
FOREIGN INVESTMENTS
The Cash Management Fund, the Equity Investment Funds, the Bond Fund,
the Intermediate Bond Fund and the Short-Term Income Fund may, subject to
their investment objectives, restrictions and policies, invest in certain
obligations or securities of foreign issuers. Permissible investments may
consist of obligations of foreign branches, agencies or subsidiaries of U.S.
banks and of foreign banks, including European Certificates of Deposit,
European Time Deposits, Canadian Time Deposits and Yankee Certificates of
Deposit, and investments in Canadian Commercial Paper, foreign securities
and Europaper. These instruments may subject a Fund to investment risks that
differ in some respects from those related to investments in obligations of
U.S. domestic issuers. Such risks include future adverse political and
economic developments, the possible imposition of withholding taxes on
interest or other income, possible seizure, nationalization, or
expropriation of foreign deposits, the possible establishment of exchange
controls or taxation at the source, greater fluctuations in value due to
changes in exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and
interest on such obligations. Such investments may also entail higher
custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting
treatment and engage in business practices different from those respecting
domestic
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issuers of similar securities or obligations. Foreign branches of U.S. banks
and foreign banks may be subject to less stringent reserve requirements than
those applicable to domestic branches of U.S. banks. Special U.S. tax
considerations may apply to a Fund's foreign investments.
WHEN-ISSUED SECURITIES
As discussed in the Prospectuses, each of the Funds may purchase
securities on a "when-issued" basis. When a Fund engages in "when-issued"
transactions, it relies on the seller to consummate the trade. Failure of
the seller to do so may result in the Fund's incurring a loss or missing the
opportunity to obtain a price considered to be advantageous.
SECURITIES LENDING
Each of the Funds may lend its portfolio securities to broker-dealers,
banks or institutional borrowers of securities. A Fund must receive 100%
collateral in the form of cash or U.S. government securities. This
collateral must be valued daily by the Fund's Investment Adviser or
Sub-Adviser and should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower will pay the Fund any
dividends or interest paid on such securities. Loans will be subject to
termination by a Fund or the borrower at any time. While a Fund will not
have the right to vote securities in loan, it intends to terminate the loan
and regain the right to vote if that is considered important with respect to
the investment. A Fund will only enter into loan arrangements with
broker-dealers, banks or other institutions which the Investment Adviser or
Sub-Adviser has determined are creditworthy under guidelines established by
the Funds' Board of Trustees. Each Fund will limit securities loans to
33 1/3% of the value of its total net assets.
REPURCHASE AGREEMENTS
Securities held by each of the Funds may be subject to repurchase
agreements. Under the terms of a repurchase agreement, a Fund would acquire
securities from a financial institution such as a member bank of the Federal
Deposit Insurance Corporation or a registered broker-dealer, which the
Investment Adviser or Sub-Adviser deems creditworthy under guidelines
approved by the Board of Trustees, subject to the seller's agreement to
repurchase such securities at a mutually agreed-upon date and price. The
repurchase price would generally equal the price paid by the Fund plus
interest negotiated on the basis of current short-term rates, which may be
more or less than the rate on the underlying portfolio securities. The
seller under a repurchase agreement will be required to maintain the value
of collateral held pursuant to the agreement at not less than the repurchase
price (including accrued interest). If 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
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such securities by the Fund were delayed pending court action. Additionally,
there is no controlling legal precedent confirming that a Fund would be
entitled, as against a claim by such seller or its receiver or trustee in
bankruptcy, to retain the underlying securities, although the Board of
Trustees of the Funds believes that, under the regular procedures normally
in effect for custody of each Fund's securities subject to repurchase
agreements and under applicable federal laws, a court of competent
jurisdiction would rule in favor of a Fund if presented with the question.
Securities subject to repurchase agreements will be held by each Fund's
Custodian, Sub-Custodian, or in the Federal Reserve/Treasury book-entry
system. Repurchase agreements are considered to be loans by an investment
company under the Investment Company Act of 1940, as amended (the "1940
Act").
MUNICIPAL SECURITIES
As a matter of fundamental policy, under normal market conditions, at
least 80% of the net assets of the Intermediate Tax-Free Bond Fund will be
invested in Municipal Securities. The Bond Fund, the Intermediate Bond Fund
and the Short-Term Income Fund, under normal market conditions, may invest
in municipal securities which are not exempt from federal income taxes.
Municipal Securities include debt obligations issued to obtain funds for
various public purposes, such as the construction of a wide range of public
facilities, the refunding of outstanding obligations, the payment of general
operating expenses, and the extension of loans to other public institutions
and facilities. The Intermediate Tax-Free Bond Fund may purchase short-term
tax-exempt General Obligations Notes, Tax Anticipation Notes, Bond
Anticipation Notes, Revenue Anticipation Notes, Project Notes, and other
forms of short-term tax exempt loans. Such notes are issued with a
short-term maturity in anticipation of the receipt of tax funds, the
proceeds of bond placements, or other revenues. In addition, the
Intermediate Tax-Free Bond Fund may invest in other types of tax-exempt
investments, such as municipal bonds, private activity bonds, and pollution
control bonds. The Intermediate Tax-Free Bond Fund may also purchase
tax-exempt commercial paper. While the issuing state or local housing agency
has the primary obligation with respect to its Project Notes, they are also
secured by the full faith and credit of the United States through agreements
with the issuing authority which provide that, if required, the federal
government will lend the issuer an amount equal to the principal of and
interest on the Project Notes.
There are, of course, variations in the quality of Municipal
Securities, both within a particular classification and between
classifications, and the yields on Municipal Securities depend upon a
variety of factors, including general money market conditions, the financial
condition of the issuer, general conditions of the municipal bond market,
the size of a particular offering, the maturity of the obligations, and the
rating of the issue. The ratings of nationally recognized statistical
ratings organizations ("NRSROs") represent their opinions as to the quality
of Municipal Securities. It should be emphasized, however, that ratings are
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
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its purchase by the Intermediate Tax-Free Bond Fund, an issue of Municipal
Securities may cease to be rated or its rating may be reduced below the
minimum rating required for purchase by the Fund. The Fund's Investment
Adviser will consider such an event in determining whether the Fund should
continue to hold the obligations.
Information about the financial condition of issuers of Municipal
Securities may be less available than about corporations a class of whose
securities is registered under the Securities Exchange Act of 1934.
An issuer's obligations under its Municipal Securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the
rights and remedies of creditors, such as the federal bankruptcy code, and
laws, if any, which may be enacted by Congress or state legislatures
extending the time for payment of principal or interest, or both, or
imposing other constraints upon the enforcement of such obligations. The
power or ability of an issuer to meet its obligations for the payment of
interest on and principal of its Municipal Securities may be materially
adversely affected by litigation or other conditions.
INVESTMENT RESTRICTIONS
Unless otherwise specifically noted, the following investment
restrictions may be changed with respect to a particular Fund only by a vote
of a majority of the outstanding Shares of that Fund (as defined under
"GENERAL INFORMATION--Miscellaneous" in each Fund's Prospectus).
None of the Funds may:
1. Purchase securities on margin, sell securities short, or participate
on a joint or joint and several basis in any securities trading account,
except, in the case of the Intermediate Tax-Free Bond Fund, for use of
short-term credit necessary for clearance of purchases of portfolio
securities.
2. Underwrite the securities of other issuers except to the extent that
a Fund may be deemed to be an underwriter under certain securities laws in
the disposition of "restricted securities."
3. Purchase or sell commodities or commodity contracts, except that
each of the Equity Investment Funds and Bond Investment Funds may invest in
futures contracts if, immediately thereafter, the aggregate initial margin
deposits for futures contracts, and premium paid for related options, does
not exceed 5% of the Fund's total assets and the value 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.
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4. Purchase participation or other direct interests in oil, gas or
mineral exploration or development programs or leases (although investments
by the Cash Management Fund, the Equity Investment Funds, and the Bond
Investment Funds in marketable securities of companies engaged in such
activities are not hereby precluded).
5. Invest in any issuer for purposes of exercising control or
management.
6. Purchase or retain securities of any issuer if the officers or
Trustees of the Funds or the officers or directors of its Investment Adviser
owning beneficially more than one-half of 1% of the securities of such
issuer together own beneficially more than 5% of such securities.
7. Invest more than 5% of a Fund's total assets in the securities of
issuers which together with any predecessors have a record of less than
three years of continuous operation.
8. Purchase or sell real estate, including limited partnership
interests, (however, each Fund, except a Money Market Fund, may, to the
extent appropriate to its investment objective, purchase securities secured
by real estate or interests therein or securities issued by companies
investing in real estate or interests therein).
9. Except with respect to the Growth Equity Fund and the Small Cap
Equity Fund, for as long as shares of a Fund are registered in Arkansas and
for so long as the State of Arkansas so requires, invest more than 10% of a
Fund's total assets in the securities of issuers which are restricted as to
disposition, other than restricted securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933.
In addition, the Money Market Funds may not:
1. Buy common stocks or voting securities, or state, municipal, or
private activity bonds.
In addition, the Intermediate Tax-Free Bond Fund may not:
1. Invest in private activity bonds where the payment of principal and
interest are the responsibility of a company (including its predecessors)
with less than three years of continuous operation.
If a percentage restriction is satisfied at the time of investment, a
later increase or decrease in such percentage resulting from a change in
asset value will not constitute a violation of such restriction.
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PORTFOLIO TURNOVER
The portfolio turnover rate for each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the year by the
monthly average value of the portfolio securities. The calculation excludes
all securities whose maturities, at the time of acquisition, were one year
or less. Thus, for regulatory purposes, the portfolio turnovers with respect
to the Money Market Funds will be zero. Fund turnover may vary greatly from
year to year as well as within a particular year, and may also be affected
by cash requirements for redemptions of shares and by requirements which
enable the Funds to receive certain favorable tax treatments. Fund turnover
will not be a limiting factor in making portfolio decisions. High turnover
rates will generally result in higher transaction costs to a Fund and may
result in additional tax consequences (including an increase in short-term
capital gains which are generally taxed at ordinary income tax rates) to a
Fund's Shareholders.
For the fiscal year ended August 31, 1998, the portfolio turnover rates
were as follows: 47.80% for the Bond Fund; 31.98% for the Intermediate Bond
Fund; 72.10% for the Equity Fund; 19.10% for the Intermediate Tax-Free Bond
Fund; 138.15% for the Aggressive Growth Fund; and 60.02% for the Short-Term
Income Fund. The portfolio turnover rate for the Balanced Fund for the
fiscal year ended August 31, 1998, was 117.18% with respect to the common
stock portion of its portfolio and 16.56% with respect to the fixed income
portion of its portfolio. The portfolio turnover rate for the Growth Equity
Fund for the period ended August 31, 1998 was 36.08%.
For the fiscal year ended August 31, 1997, the portfolio turnover rates
were as follows: 83.65% for the Bond Fund; 40.77% for the Intermediate Bond
Fund; 93.82% for the Equity Fund; 11.38% for the Intermediate Tax-Free Bond
Fund; 76.47% for the Aggressive Growth Fund; and 37.55% for the Short-Term
Income Fund. The portfolio turnover rate for the Balanced Fund for the
fiscal year ended August 31, 1997, was 95.92% with respect to the common
stock portion of its portfolio and 15.24% with respect to the fixed income
portion of its portfolio.
The portfolio turnover rate for the Small Cap Equity Fund is not
expected to exceed 100%.
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
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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 the range of the Fund's
investments. If a Fund qualifies as a RIC, it will not be subject to federal
income tax on the part of its net investment income and net realized capital
gains, if any, that it distributes to shareholders, provided the Fund
distributes during its taxable year at least 90% of the sum of its taxable
net investment income, its net tax-exempt income and the excess, if any, of
net short-term capital gains over net long-term capital losses for such
year. Each Fund intends to make sufficient distributions to Shareholders to
meet this requirement.
Distributions from a Fund (other than exempt-interest dividends, as
discussed below) generally will be taxable to shareholders as ordinary
income to the extent derived from the Fund's investment income and
short-term capital gains. Distributions of long-term capital gains
(generally subject to a 20% tax rate) will be taxable to shareholders as
such, regardless of how long a shareholder has held shares of the Fund.
Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and
distributions may economically represent a return of a particular
shareholder's investment. Such distributions are likely to occur in respect
of shares purchased at a time when a Fund's net asset value reflects gains
that are either unrealized, or realized but not distributed. Such realized
gains may be required to be distributed even when a Fund's net asset value
also reflects unrealized losses.
The Code imposes a non-deductible 4% excise tax on RICs that do not
distribute in each calendar year (regardless of whether they otherwise have
a non-calendar taxable year) an amount equal to 98% of their "ordinary
income" (as defined) for the calendar year plus 98% of their capital gain
net income for the one-year period ending on October 31 of such calendar
year, plus any undistributed amounts from the prior year. For the foregoing
purposes, a Fund is treated as having distributed any amount on which it is
subject to income tax for any taxable year ending in such calendar year. A
dividend paid to Shareholders by a Fund in January of a year generally is
deemed to have been paid by the Fund on December 31 of the preceding year,
if the dividend was declared and payable to Shareholders of record on a date
in October, November or December of that preceding year. If distributions
during a calendar year by a Fund did not meet the 98% threshold, that
particular Fund would be subject to this 4% excise tax on the undistributed
amounts. Each Fund generally intends to make distributions sufficient to
avoid the imposition of this 4% excise tax.
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A Fund's transactions in futures contracts, options, and foreign
currency denominated securities, and certain other investment and hedging
activities of the Fund, will be subject to special tax rules. These rules
may accelerate income to the Fund, defer losses to the Fund, cause
adjustments in the holding periods of the Fund's assets, convert short-term
capital losses into long-term capital losses, convert long-term capital
gains into short-term capital gains, or otherwise affect the character of
the Fund's income. Consequently, the amount, timing, and character of
distributions to Shareholders could be affected. Income earned as a result
of these transactions would, in general, not be eligible for the
dividends-received deduction or for treatment as exempt-interest dividends
when distributed to Shareholders. Each Fund will endeavor to make any
available elections pertaining to these transactions in a manner believed to
be in the best interest of the Fund.
The Funds will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends and other distributions paid to
any Shareholder who has provided either an incorrect tax identification
number or no number at all, or who is subject to withholding by the Internal
Revenue Service for failure properly to include on his or her tax return
payments of interest or dividends. This withholding, known as back-up
withholding, is not an additional tax, and any amounts withheld may be
credited against the Shareholder's ultimate U.S. tax liability.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of Shares of each Fund.
Further tax information regarding the Intermediate Tax-Free Bond Fund is
included in the next section of this Statement of Additional Information. No
attempt is made to present a detailed explanation of the federal income tax
treatment of each Fund or its Shareholders, and this discussion is not
intended as a substitute for careful tax planning. Accordingly, potential
purchasers of shares of a Fund are urged to consult their tax advisers with
specific reference to their own tax situation, including the potential
application of foreign, state and local taxes.
The foregoing discussion and the discussion below regarding the
Intermediate Tax-Free Bond Fund are based on tax laws and regulations which
are in effect on the date of this Statement of Additional Information; such
laws and regulations may be changed by legislative or administrative action,
and such changes may be retroactive.
ADDITIONAL TAX INFORMATION CONCERNING THE INTERMEDIATE TAX-
FREE BOND FUND
The Code permits a RIC which invests at least 50% of its assets in
tax-free Municipal Securities and other securities exempt from the regular
federal income tax to pass through to its investors, tax-free, net interest
income from such securities.
The policy of the Intermediate Tax-Free Bond Fund is to pay each year
as dividends substantially all the Fund's interest income net of certain
deductions. An exempt-interest
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dividend is any dividend or part thereof (other than a capital gain
dividend) paid by the Intermediate Tax-Free Bond Fund and designated as an
exempt-interest dividend in a written notice mailed to Shareholders after
the close of the Fund's taxable year. Such dividends will not exceed, in the
aggregate, the net interest the Fund receives during the taxable year from
Municipal Securities and other securities exempt from the regular federal
income tax. The percentage of the total dividends paid for any taxable year
which qualifies as federal exempt-interest dividends will be the same for
all Shareholders receiving dividends from the Intermediate Tax-Free Bond
Fund during such year, regardless of the period for which the Shares were
held.
Exempt-interest dividends may be treated by the Intermediate Tax-Free
Bond Fund's Shareholders as items of interest excludable from their gross
income under Section 103(a) of the Code. However, each Shareholder of an
Intermediate Tax-Free Bond Fund is advised to consult his tax adviser with
respect to whether exempt-interest dividends would retain the exclusion
under Section 103(a) if such Shareholder were treated as a "substantial
user" or a "related person" to such user under Section 147(a) with respect
to facilities financed through any of the tax-exempt obligations held by the
Fund. "Substantial user" is defined under U.S. Treasury Regulations to
include any non-exempt person who regularly uses a part of such facilities
in his or her trade or business and (a)(i) whose gross revenues derived with
respect to the facilities financed by the issuance of bonds are more than 5%
of the total revenues derived by all users of such facilities or (ii) who
occupies more than 5% of the usable area of the facility or (b) for whom
such facilities or a part thereof were specifically constructed,
reconstructed or acquired. "Related persons" include certain related natural
persons, affiliated corporations, partners and partnerships.
Dividends attributable to interest on certain private activity bonds
issued after August 7, 1986 must be included in alternative minimum taxable
income for purposes of determining liability (if any) for the alternative
minimum tax for individuals and corporations. In the case of corporations,
all tax-exempt interest dividends will be taken into account in determining
adjusted current earnings for the purpose of computing the alternative
minimum tax.
The Intermediate Tax-Free Bond Fund may acquire rights regarding
specified portfolio securities under puts. (See "INVESTMENT OBJECTIVE AND
POLICIES - Additional Information on Fund Instruments - Puts" above for
further information.) The policy of the Intermediate Tax-Free Bond Fund is
to limit its acquisition of puts to those under which the Fund will be
treated for federal income tax purposes as the owner of the Municipal
Securities acquired subject to the put and the interest on the Municipal
Securities will be tax-exempt to the Fund. Although the Internal Revenue
Service has issued a published ruling that provides some guidance regarding
the tax consequences of the purchase of puts, there is currently no
definitive rule that establishes the tax consequences of many of the types
of puts that the Funds could acquire under the 1940 Act. Therefore, although
the Intermediate Tax-Free Bond Fund will only acquire a put after concluding
that it will have the tax consequences described above, the Internal Revenue
Service could reach a different conclusion from that of the Fund.
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The Intermediate Tax-Free Bond Fund will distribute at least 90% of any
investment company taxable income for each taxable year. In general, the
Fund's investment company taxable income will be its taxable income subject
to certain adjustments and excluding the excess of any net long-term capital
gain for the taxable year over the net short-term capital loss, if any for
such year. The Intermediate Tax-Free Bond Fund will be taxed on any
undistributed investment company taxable income. To the extent such income
is distributed by the Intermediate Tax-Free Bond Fund (whether in cash or
additional Shares), it will be taxable to Shareholders as ordinary income.
The dividends-received deduction for corporations will not apply to such
distributions.
If for any taxable year the Intermediate Tax-Free Bond Fund does not
qualify for the special tax treatment afforded RICs, all of its taxable
income would be subject to tax at regular corporate rates (without any
deduction for distributions to shareholders), and Municipal Securities
interest income, although not taxable to the Fund, would be taxable to
Shareholders when distributed as dividends.
Income exempt from federal income taxation must be considered when
determining whether Social Security payments or railroad retirement benefits
received by a Shareholder are subject to federal income taxation.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of Shares of the Intermediate
Tax-Free Bond Fund. Additional tax information concerning all of the Funds
is contained in the immediately preceding section of this Statement of
Additional Information. No attempt is made to present a detailed explanation
of the income tax treatment of the Intermediate Tax-Free Bond Fund or its
Shareholders, and this discussion is not intended as a substitute for
careful tax planning. Accordingly, potential purchasers of shares of the
Intermediate Tax-Free Bond Fund are urged to consult their tax advisers with
specific reference to their own tax situation.
VALUATION
THE MONEY MARKET FUNDS
The Money Market Funds have elected to use the amortized cost method of
valuation pursuant to Rule 2a-7 under the 1940 Act. This involves valuing an
instrument at its cost initially and thereafter assuming a constant
amortization to maturity of any discounts or premiums, regardless of the
impact of fluctuating interest rates on the market value of the instrument.
This method may result in periods during which value, as determined by
amortized cost, is higher or lower than the price each Fund would receive if
it sold the instrument. The value of securities in the Funds can be expected
to vary inversely with changes in prevailing interest rates.
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Pursuant to Rule 2a-7, the Money Market Funds will maintain a
dollar-weighted average portfolio maturity appropriate to their objective of
maintaining a stable net asset value per Share, provided that no Fund will
purchase any security with a remaining maturity of more than 397 days
(securities subject to repurchase agreements and certain variable or
floating rate instruments may bear longer maturities) nor maintain a
dollar-weighted average portfolio maturity which exceeds 90 days. The Funds'
Board of Trustees has also undertaken to establish procedures reasonably
designed, taking into account current market conditions and a Fund's
investment objective, to stabilize the net asset value per Share of the
Money Market Funds for purposes of sales and redemptions at $1.00. These
procedures include review by the Trustees, at such intervals as they deem
appropriate, to determine the extent, if any, to which the net asset value
per Share of each Fund calculated by using available market quotations
deviates from $1.00 per Share. In the event such deviation exceeds one half
of one percent, the Rule requires that the Board promptly consider what
action, if any, should be initiated. If the Trustees believe that the extent
of any deviation from a Fund's $1.00 amortized cost price per Share may
result in material dilution or other unfair results to new or existing
investors, they will take such steps as they consider appropriate to
eliminate or reduce to the extent reasonably practicable any such dilution
or unfair results. These steps may include selling portfolio instruments
prior to maturity, shortening the dollar-weighted average portfolio
maturity, withholding or reducing dividends, reducing the number of a Fund's
outstanding Shares without monetary consideration, or utilizing a net asset
value per Share determined by using available market quotations.
THE BOND INVESTMENT FUNDS
AND THE EQUITY INVESTMENT FUNDS
Except as noted below, the Bond Investment Funds and the Equity
Investment Funds will value securities for which the principal market is a
securities exchange, at their fair market values based upon the latest
available sales price or, absent such a price, by reference to the latest
available bid prices in the principal market in which such securities are
normally traded. Securities, the principal market for which is not a
securities exchange, will be valued based on bid quotations in such
principal market. Securities and other assets for which quotations are not
readily available will be valued at their fair market value, as determined
in good faith under procedures established by, and under the general
supervision of, the Trustees of the Funds. Short-term securities are valued
at amortized cost, which approximates current value.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares in each Fund are sold on a continuous basis by BISYS Fund
Services (the "Distributor"), and the Distributor has agreed to use
appropriate efforts to solicit all purchase orders. As described in the
Prospectuses, in addition to purchasing Shares directly from the
Distributor, Shares may be purchased through procedures established by the
Distributor in connection with the requirements of Participating
Organizations under the Funds' Distribution
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and Shareholder Services Plan. Customers purchasing Shares of the Funds may
include officers, directors, or employees of the Investment Adviser and its
affiliates.
The Funds may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the NYSE is
restricted by applicable rules and regulations of the SEC, (b) the NYSE is
closed for other than customary weekend and holiday closings, (c) the SEC
has by order permitted such suspension, or (d) an emergency exists as
determined by the SEC.
The Money Market Funds may redeem Shares involuntarily if redemption
appears appropriate in light of the Funds' responsibilities under the 1940
Act. (See "VALUATION - The Money Market Funds" above for further
information.)
MANAGEMENT AND SERVICE PROVIDERS OF THE FUNDS
TRUSTEES AND OFFICERS
The names of the trustees of the Funds, their addresses, and principal
occupations during the past five years are set forth in each of the Funds'
Prospectuses. The officers of the Funds, their addresses, and principal
occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name, Address And Age With the Funds During Past 5 Years
--------------------- -------------- -------------------
<S> <C> <C>
Walter B. Grimm*, 53 Chairman, From June, 1992 to present,
3435 Stelzer Road President, and employee of BISYS Fund Services.
Columbus, OH 43219 Trustee
Alaina V. Metz*, 31 Assistant Secretary From June, 1995 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, OH 43219 from May 1989 to June 1995,
Supervisor, Mutual Fund Legal
Department, Alliance Capital
Management.
</TABLE>
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<PAGE> 131
<TABLE>
<S> <C> <C>
Joel Engle, 32 Treasurer From September, 1998 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, OH 43219 from March, 1995 to September,
1998, Vice President, The
Northern Trust Company;
from September, 1988 to June 1994,
Manager, Ernst & Young LLP.
Jeffrey Cusick*, 39 Vice President From July, 1995 to present,
3435 Stelzer Road and Secretary employee of BISYS Fund Services;
Columbus, OH 43219 from September 1993 to July 1995,
Assistant Vice President,
Federated Administration Services;
from 1989 to September 1993,
Client Services Manager,
Federated Administration Services.
</TABLE>
----------------
* Messrs. Grimm, Engle and Cusick and Ms. Metz are each considered to be an
"interested person" of the Funds as defined in the 1940 Act.
<TABLE>
<CAPTION>
COMPENSATION TABLE(1)
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 $6,000.00 None None $6,000.00
Perry A. Wimpey $6,000.00 None None $6,000.00
I. Edgar Hendrix $6,000.00 None None $6,000.00
</TABLE>
(1) Figures are for the Funds' fiscal year ended August 31, 1998.
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").
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<PAGE> 132
Under the Advisory Agreement, the Investment Adviser has agreed to
provide to the Funds the investment advisory services described in the
Funds' Prospectuses. For the services provided and expenses assumed pursuant
to the Advisory Agreement, the Investment Adviser is entitled to receive a
fee from each of the Funds, computed daily and paid monthly, based on the
lower of (1) such fee as may, from time to time, be agreed upon in writing
by the Funds and the Investment Adviser or (2) the average daily net assets
of each such Fund as follows: the U.S. Treasury Fund and the Cash Management
Fund - forty one-hundredths of one percent (0.40%) annually; the Equity
Fund, the Growth Equity Fund, and the Small Cap Equity Fund - sixty-nine
one-hundredths of one percent (0.69%) annually; the Balanced Fund
-seventy-four one-hundredths of one percent (0.74%) annually; the Bond Fund,
the Intermediate Bond Fund, the Intermediate Tax-Free Bond Fund and the
Short-Term Income Fund - fifty-five one-hundredths of one percent (0.55%)
annually.
For its investment advisory services during the fiscal year ending
August 31, 1998, BOK received $1,495,245 with respect to the U.S. Treasury
Fund; $1,630,192 with respect to the Cash Management Fund; $162,521, which
is $92,870 less than the maximum amount of advisory fees, if charged, with
respect to the Bond Fund; $284,465, which is $162,552 less than the maximum
amount of advisory fees, if charged, with respect to the Intermediate Bond
Fund; $974,200, which is $370,196 less than the maximum amount of advisory
fees, if charged, with respect to the Equity Fund; $100,362, which is
$57,350 less than the maximum amount of advisory fees, if charged, with
respect to the Intermediate Tax-Free Bond Fund; $188,145, which is $81,755
less than the maximum amount of advisory fees, if charged, with respect to
the Aggressive Growth Fund; $0, which is $117,712 less than the maximum
amount of advisory fees, if charged, with respect to the Short-Term Income
Fund; and $46,817, which is $236,504 less than the maximum amount of
advisory fees, if charged, with respect to the Balanced Fund. For its
investment advisory services during the period ending August 31, 1998, BOK
received $287,102, which is $109,099 less than the maximum amount of
advisory fees if charged, with respect to the Growth Equity Fund.
For its investment advisory services during the fiscal year ending
August 31, 1997, BOK received $984,884 with respect to the U.S. Treasury
Fund; $1,476,099 with respect to the Cash Management Fund; $114,994, which
is $65,711 less than the maximum amount of advisory fees, if charged, with
respect to the Bond Fund; $224,198, which is $128,113 less than the maximum
amount of advisory fees, if charged, with respect to the Intermediate Bond
Fund; $604,087, which is $229,553 less than the amount of advisory fees, if
charged, with respect to the Equity Fund; $95,309, which is $54,462 less
than the amount of advisory fees, if charged, with respect to the
Intermediate Tax-Free Bond Fund; $225,838, which is $85,818 less than the
amount of advisory fees, if charged, with respect to the Aggressive Growth
Fund; $0, which is $80,882 less than the amount of advisory fees, if
charged, with respect to the Short-Term Income Fund; and $0, which is
$196,422 less than the amount of advisory fees, if charged, with respect to
the Balanced Fund.
For its investment advisory services during the fiscal year ending
August 31, 1996, BOK received $801,240 with respect to the U.S. Treasury
Fund; $1,238,786 with respect to the Cash Management Fund; $129,467, which
is $73,915 less than the maximum amount of
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<PAGE> 133
advisory fees, if charged, with respect to the Bond Fund; $227,937, which is
$130,084 less than the maximum amount of such fees, if charged, with respect
to the Intermediate Bond Fund; $407,341, which is $154,982 less than the
maximum amount of such fees, if charged, with respect to the Equity Fund;
$101,273, which is $57,916 less than the maximum amount of advisory fees, if
charged, with respect to the Intermediate Tax-Free Bond Fund; $202,594,
which is $77,088 less than the maximum amount of advisory fees, if charged,
with respect to the Aggressive Growth Fund; $0, which is $65,313 less than
the maximum amount of advisory fees, if charged with respect to the
Short-Term Income Fund; and $0 which is $149,330 less than the maximum
amount of advisory fees, if charged with respect to the Balanced Fund.
Sub-investment advisory services will be provided to the Cash
Management Fund by AMR Investment Services, Inc. ("Sub-Advisor" or "AMR")
until April 30, 1999 pursuant to a Sub-Investment Advisory Agreement between
BOK and AMR dated June 16, 1997 (hereinafter referred to as the
"Sub-Advisory Agreement"). For the services provided and the expenses
assumed pursuant to the Sub-Advisory Agreement, AMR is entitled to receive a
fee from BOK, computed daily and paid monthly, at the annual rate of not
less than fifteen one-hundredths of one percent (0.15%) nor more than forty
one-hundredths of one percent (0.40%) of the average daily net assets of the
Cash Management Fund.
For its sub-advisory services during the fiscal year ending August 31,
1998, AMR received $954,195 with respect to the Cash Management Fund. For
its sub-advisory services during the fiscal year ending August 31, 1997, AMR
received $553,537 with respect to the Cash Management Fund.
The Investment Adviser may periodically set its fees at less than the
maximum allowable amount with respect to any Fund it serves in order to
increase the net income of that Fund available for distribution as
dividends. For information on such voluntary reductions undertaken for the
period ended August 31, 1998, concerning a particular Fund, see "MANAGEMENT
OF THE FUND - Investment Adviser" in the Prospectus pertaining to such Fund.
Unless sooner terminated, the Advisory Agreement will continue in
effect until August 1, 1999. The Advisory Agreement will continue in effect
as to a particular Fund for successive one-year terms after the
aforementioned date, if such continuance is approved at least annually by
the Funds' Board of Trustees or by vote of a majority of the outstanding
voting Shares of such Fund (as defined under "GENERAL
INFORMATION--Miscellaneous" in the Funds' Prospectuses), and a majority of
the Trustees who are not parties to the Advisory 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 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.
B-23
<PAGE> 134
The Advisory and Sub-Advisory Agreements provide that the Investment
Adviser or the Sub-Adviser, as the case may be, shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Funds in
connection with the performance of the respective Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the respective provider of
services to the Funds in the performance of its duties, or from reckless
disregard by it of its duties and obligations thereunder.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Funds
may include descriptions of the Investment Adviser or Sub-Adviser including,
but not limited to, (i) descriptions of the adviser's operations; (ii)
descriptions of certain personnel and their functions; and (iii) statistics
and rankings related to the adviser's operations.
DISTRIBUTION
Shares of the Funds are sold on a continuous basis by the Distributor
for the Funds. Under the Funds' Amended and Restated Distribution and
Shareholder Services Plan (the "Distribution Plan"), each of the Funds will
pay a monthly distribution fee to the Distributor as compensation for its
services in connection with the Distribution Plan at an annual rate equal to
twenty-five one hundredths of one percent (0.25%) of its average daily net
assets. The Distributor may use the distribution fee to provide distribution
assistance with respect to the Funds' Shares or to provide Shareholder
services to the holders of the Funds' Shares. The Distributor may also use
the distribution fee (i) to pay financial institutions and intermediaries
(such as insurance companies, and investment counselors, but not including
banks), broker-dealers, and the Distributor's affiliates and subsidiaries
compensation for services or reimbursement of expenses incurred in
connection with distribution assistance or (ii) to pay banks, other
financial institutions and intermediaries, broker-dealers, and the
Distributor's affiliates and subsidiaries compensation for services or
reimbursement of expenses incurred in connection with the provision of
Shareholder services. All payments by the Distributor for distribution
assistance or Shareholder services under the Distribution Plan will be made
pursuant to an agreement between the Distributor and such bank, other
financial institution or intermediary, broker-dealer, or affiliate or
subsidiary of the Distributor (a "Servicing 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
B-24
<PAGE> 135
legal authority to perform the services contemplated by the Servicing
Agreement without violation of applicable banking laws (including the
Glass-Steagall Act).
The distribution fee will be payable without regard to whether the
amount of the fee is more or less than the actual expenses incurred in a
particular year by the Distributor in connection with distribution
assistance or Shareholder services rendered by the Distributor itself or
incurred by the Distributor pursuant to the Servicing Agreements entered
into under the Distribution Plan. If the amount of the distribution fee is
greater than the Distributor's actual expenses incurred in a particular year
(and the Distributor does not waive that portion of the distribution fee),
the Distributor will realize a profit in that year from the distribution
fee. If the amount of the distribution fee is less than the Distributor's
actual expenses incurred in a particular year, the Distributor will realize
a loss in that year under the Distribution Plan and will not recover from
the Funds the excess of expenses for the year over the distribution fee,
unless actual expenses incurred in a later year in which the Distribution
Plan remains in effect were less than the distribution fee paid in that
later year. The Distributor may periodically waive all or a portion of the
distribution fee to increase the net income attributable to a Fund available
for distribution as dividends to the Fund's Shareholders. To lower operating
expenses, the Distributor may voluntarily reduce its fees under the
Distribution Plan. For information on such voluntary reductions concerning a
particular fund, see "DISTRIBUTION" in the Prospectus pertaining to such
Fund.
Under the Distribution Plan during the fiscal year ended August 31,
1998, the Distributor received the maximum amount receivable under the Plan
with respect to the following Funds and in the following amounts: $116,086
with respect to the Bond Fund; $203,189 with respect to the Intermediate
Bond Fund; $487,100 with respect to the Equity Fund; and $107,572 with
respect to the Aggressive Growth Fund. Under the Distribution Plan during
the fiscal year ended August 31, 1998, the Distributor waived its entire fee
with respect to the following Funds and in the following amounts: $934,531
with respect to the U.S. Treasury Fund; $1,018,870 with respect to the Cash
Management Fund; $71,687 with respect to the Intermediate Tax-Free Bond
Fund; $95,717 with respect to the Balanced Fund; and $53,506 with respect to
the Short-Term Income Fund. Under the Distribution Plan during the period
ended August 31, 1998, the Distributor received the maximum amount
receivable under the Plan, $143,551 with respect to the Growth Equity Fund.
Substantially all of the amount received by the Distributor under the
Distribution Plan during the last fiscal year, the period from September 1,
1997 to August 31, 1998, was spent on compensation to dealers. BISYS
retained 0.56% and spent this amount on printing and mailing of
prospectuses. The total amount spent on compensation to dealers during the
last fiscal year was $1,043,016. The total amount retained by BISYS during
the last fiscal year was $5,885.
GLASS-STEAGALL ACT
In 1971 the United States Supreme Court held in INVESTMENT COMPANY
INSTITUTE V. CAMP that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a
B-25
<PAGE> 136
national bank from operating a fund for the collective investment of
managing agency accounts. Subsequently, the Board of Governors of the
Federal Reserve System (the "Board") issued a regulation and interpretation
to the effect that the Glass-Steagall Act and such decision: (a) forbid a
bank holding company registered under the Federal Bank Holding Company Act
of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or exerting control of a registered, open-end
investment company continuously engaged in the issuance of its shares, but
(b) do not prohibit such a holding company or affiliate from acting as
Investment Adviser, transfer agent, and custodian to such an investment
company. In 1981, the United States Supreme Court held in BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM V. INVESTMENT COMPANY INSTITUTE that the Board
did not exceed its authority under the Holding Company Act when it adopted
its regulation and interpretation authorizing bank holding companies and
their non-bank affiliates to act as investment advisers to registered
closed-end investment companies. In the BOARD OF GOVERNORS case, the Supreme
Court also stated that if a national bank complied with the restrictions
imposed by the Board in its regulation and interpretation authorizing bank
holding companies and their non-bank affiliates to act as investment
advisers to investment companies, a national bank performing investment
advisory services for an investment company would not violate the
Glass-Steagall Act.
BOK believes that it possesses the legal authority to perform the
investment advisory services that are contemplated by its Investment
Advisory Agreement with the Funds and described in the Prospectuses and this
Statement of Additional Information without violation of the Glass-Steagall
Act. Future changes in either federal or state statutes and regulations
relating to the permissible activities of banks or bank holding companies
and the subsidiaries or affiliates of those entities, as well as further
judicial or administrative decisions or interpretations of present and
future statutes and regulations, could prevent or restrict BOK, from
continuing to perform such services for the Funds. Depending upon the nature
of any changes in the services which could be provided by BOK, the Board of
Trustees of the Funds would review the Funds' relationship with BOK, and
consider taking all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of BOK, or other banks serving as
Participating Organizations under the Funds' Distribution and Shareholder
Services Plan, in connection with Customer purchases of 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.
B-26
<PAGE> 137
Purchases and sales of portfolio securities with respect to the Money Market
Funds and the Bond Investment Funds usually are principal transactions in
which portfolio securities are purchased directly from the issuer or from an
underwriter or market maker for the securities. Purchases from underwriters
of portfolio securities include a commission or concession paid by the
issuer to the underwriter and purchases from dealers serving as market
makers may include the spread between the bid and asked price. Transactions
with respect to the Equity Investment Funds on stock exchanges (other than
certain foreign stock exchanges) involve the payment of negotiated brokerage
commissions. Transactions in the over-the-counter market are generally
principal transactions with dealers. With respect to the over-the-counter
market, the Funds, where possible, will deal directly with the dealers who
make a market in the securities involved except in those circumstances where
better price and execution are available elsewhere. While the Investment
Adviser and Sub-Adviser generally seek competitive spreads or commissions,
the Funds may not necessarily pay the lowest spread or commission available
on each transaction, for reasons discussed below.
During the fiscal year ended August 31, 1998, the Equity Fund paid
aggregate brokerage commissions in the amount of $279,771; the Aggressive
Growth Fund paid aggregate brokerage commissions in the amount of $118,045;
the Balanced Fund paid aggregate brokerage commissions in the amount of
$56,206; and the Growth Equity Fund paid aggregate brokerage commissions in
the amount of $61,297.
During the fiscal year ended August 31, 1997, the Equity Fund paid
aggregate brokerage commissions in the amount of $212,467; the Aggressive
Growth Fund paid aggregate brokerage commissions in the amount of $37,432;
and the Balanced Fund paid aggregate brokerage commissions in the amount of
$26,379.
During the fiscal year ended August 31, 1996, the Equity Fund paid
aggregate brokerage commissions in the amount of $106,593. During the fiscal
year ended August 31, 1996, BOK directed brokerage transactions for the
Equity Fund to brokers because of research services provided in the
following amounts: aggregate transactions -- $90,918; aggregate commissions
-- $48,969. During the fiscal year ended August 31, 1996, the Aggressive
Growth Fund paid aggregate brokerage commissions in the amount of $20,047.
During the fiscal year ended August 31, 1996, BOK directed brokerage
transactions for the Aggressive Growth Fund to brokers because of research
services provided in the following amounts: aggregate transactions --
$20,047; aggregate commissions -- $0. During the fiscal year ended August
31, 1996 the Balanced Fund paid aggregate brokerage commissions in the
amount of $25,340. BOK directed brokerage transactions for the Balanced Fund
to brokers because of research services provided in the following amounts:
aggregate transactions -- $19,722 and aggregate commissions -- $5,618.
Allocation of transactions, including their frequency, to various
dealers is determined by the Investment Adviser and/or Sub-Adviser with
respect to the Funds it serves based on its best judgment and in a manner
deemed fair and reasonable to Shareholders. The primary consideration is
prompt execution of orders in an effective manner at the most favorable
price. Subject to this consideration, dealers who provide supplemental
investment research to the
B-27
<PAGE> 138
Investment Adviser and Sub-Adviser may receive orders for transactions by
the Funds. Information so received is in addition to and not in lieu of
services required to be performed by the Investment Adviser and Sub-Adviser
and does not reduce the advisory fees payable to the Investment Adviser and
Sub-Adviser. Such information may be useful to the Investment Adviser and
Sub-Adviser in serving both the Funds and other clients and, conversely,
supplemental information obtained by the placement of business of other
clients may be useful to such adviser in carrying out its obligations to the
Funds.
The Funds will not execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with the Investment Adviser or
Sub-Adviser, its Distributor, or their affiliates except as may be permitted
under the 1940 Act, and will not give preference to correspondents of an
Investment Adviser with respect to such transactions, securities, savings
deposits, repurchase agreements, and reverse repurchase agreements.
Investment decisions for each Fund are made independently from those
for the other Funds or any other investment company or account managed by
the Investment Adviser and Sub-Adviser. Any such other investment company or
account may also invest in the same securities as the Funds. When a purchase
or sale of the same security is made at substantially the same time on
behalf of a given Fund and another Fund, investment company or account, the
transaction will be averaged as to price, and available investments
allocated as to amount, in a manner which the Investment Adviser or
Sub-Adviser believes to be equitable to the Fund(s) and such other
investment company or account. In some instances, this investment procedure
may adversely affect the price paid or received by a Fund or the size of the
position obtained by a Fund. To the extent permitted by law, the Investment
Adviser or Sub-Adviser may aggregate the securities to be sold or purchased
by it for a Fund with those to be sold or purchased by it for other Funds or
for other investment companies or accounts in order to obtain best
execution. As provided by Investment Advisory and Sub-Advisory Agreements,
in making investment recommendations for the Funds, the Investment Adviser
or Sub-Adviser will not inquire or take into consideration whether an issuer
of securities proposed for purchase or sale by the Funds is a customer of
the Investment Adviser or Sub-Adviser or their respective parents or
subsidiaries or affiliates unless legally required to do so and, in dealing
with its 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
B-28
<PAGE> 139
that Fund). The Administrator is a broker-dealer registered with the SEC and
is a member of the National Association of Securities Dealers, Inc.
Under the Administration Agreement, the Administrator has agreed to
price the portfolio securities of each Fund and to compute the net asset
value and net income of those Funds on a daily basis, to maintain office
facilities for the Funds, to maintain the Funds' financial accounts and
records, and to furnish the Funds statistical and research data, data
processing, clerical, accounting, and bookkeeping services, and certain
other services required by the Funds with respect to the Funds. The
Administrator prepares annual and semi-annual reports to the SEC, prepares
federal and state tax returns, prepares filings with state securities
commissions, and generally assists in all aspects of the Funds' operations
other than those performed under the Investment Advisory, Sub-Advisory,
Custodian, Fund Accounting, and Transfer Agency Agreements. Under the
Administration Agreement, the Administrator may delegate all or any part of
its responsibilities thereunder.
The Administrator receives a fee from each Fund for its services
provided and expenses assumed pursuant to the Administration Agreement,
calculated daily and paid monthly, at the annual rate of twenty one
hundredths of one percent (0.20%) of each Fund's average daily net assets.
The Administrator may periodically set its fees at less than the maximum
allowable amount with respect to any Fund in order to increase the net
income of one or more of the Funds available for distribution as dividends.
For information on such voluntary reductions undertaken concerning a
particular fund, see "MANAGEMENT OF THE FUND Administrator, and Distributor"
in the Prospectus pertaining to such Fund.
For management and administrative services during the fiscal year ended
August 31, 1998, BISYS received $747,624 with respect to the U.S. Treasury
Fund; $815,098 with respect to the Cash Management Fund; $92,870 with
respect to the Bond Fund; $162,552 with respect to the Intermediate Bond
Fund; $57,350 with respect to the Intermediate Tax-Free Bond Fund; $389,681
with respect to the Equity Fund; $86,058 with respect to the Aggressive
Growth Fund; $42,805 with respect to the Short-Term Income Fund; and $76,574
with respect to the Balanced Fund. For management and administrative
services during the period ended August 31, 1998, BISYS received $114,841
with respect to the Growth Equity Fund.
For management and administrative services during the fiscal year ended
August 31, 1997, BISYS received $492,442 with respect to the U.S. Treasury
Fund; $738,049 with respect to the Cash Management Fund; $65,711 with
respect to the Bond Fund; $128,113 with respect to the Intermediate Bond
Fund; $54,462 with respect to the Intermediate Tax-Free Bond Fund; $241,635
with respect to the Equity Fund; $90,335 with respect to the Aggressive
Growth Fund; $29,412 with respect to the Short-Term Income Fund; and $53,087
with respect to the Balanced Fund. As of August 31, 1997, the Growth Equity
Fund had not commenced operations.
For management and administration services during the fiscal year ended
August 31, 1996, BISYS received $400,620 with respect to the U.S. Treasury
Fund; $664,393 with respect to the Cash Management Fund; $73,981 with
respect to the Bond Fund; $130,250 with
B-29
<PAGE> 140
respect to the Intermediate Bond Fund; $57,869 with respect to the
Intermediate Tax-Free Bond Fund; $162,936 with respect to the Equity Fund;
$81,038 with respect to the Aggressive Growth Fund; $23,727 with respect to
the Short-Term Income Fund; and $40,306 with respect to the Balanced Fund.
Unless sooner terminated, the Administration Agreement will continue in
effect until December 31, 1999 and thereafter will automatically continue in
effect for successive three-year periods unless written notice not to renew
is given by the non-renewing party at least sixty days prior to the
expiration of the then-current term. Otherwise, the Administration Agreement
is terminable, with respect to a particular Fund only upon mutual agreement
or for "cause" in either case on not less than sixty days' notice by the
Funds' Board of Trustees or by the Administrator. For purposes of the
Administration Agreement, "cause" means (i) willful misfeasance, bad faith,
gross negligence, abandonment, or reckless disregard on the part of either
party with respect to its obligations and duties set forth herein; (ii)
regulatory, administrative, or judicial action initiated against either
party with regard to the violation of any rule, regulation, order, or law;
(iii) the dissolution or liquidation of either party or other cessation of
business other than a reorganization or recapitalization of such party as an
ongoing business; (iv) financial difficulties on the part of either party
which is evidenced by the authorization or commencement of, or involvement
by way of pleading, answer, consent, or acquiescence in, a voluntary or
involuntary case under Title 11 of the United States Code, as, from time to
time, in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to
the modification or alteration of the rights of creditors; or (v) any
circumstance which substantially impairs the performance of either party's
obligations and duties as contemplated herein.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered
by the Funds in connection with the matters to which the Agreement relates,
except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard
by it of its obligations and duties thereunder.
SUB-ADMINISTRATOR
Effective May 12, 1995, BOK became the Sub-Administrator to the Funds
pursuant to an agreement between the Administrator and BOK. Pursuant to this
agreement, BOK assumed many of the Administrator's duties, for which BOK
receives a fee, paid by the Administrator, calculated at an annual rate of
five one-hundredths of one percent (0.05%) of each Fund's average net
assets.
For Sub-Administration services during the fiscal year ended August 31,
1998, BOK received fees in the following amounts from the Administrator:
$373,811 with respect to the U.S. Treasury Fund; $407,548 with respect to
the Cash Management Fund; $63,848 with respect to the Bond Fund; $111,754
with respect to the Intermediate Bond Fund; $39,428 with respect to the
Intermediate Tax-Free Bond Fund; $29,428 with respect to the Short-Term
Income Fund; $70,830 with respect to the Balanced Fund; $336,099 with
respect to the Equity
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<PAGE> 141
Fund; and $74,225 with respect to the Aggressive Growth Fund. For
Sub-Administration services during the period ended August 31, 1998, BOK
received fees of $99,050 from the Administrator with respect to the Growth
Equity Fund.
For Sub-Administration services during the fiscal year ended August 31,
1997, BOK received fees in the following amounts from the Administrator:
$123,111 with respect to the U.S. Treasury Fund; $184,512 with respect to
the Cash Management Fund; $16,428 with respect to the Bond Fund; $32,028
with respect to the Intermediate Bond Fund; $13,616 with respect to the
Intermediate Tax-Free Bond Fund; $7,353 with respect to the Short-Term
Income Fund; $13,272 with respect to the Balanced Fund; $60,409 with respect
to the Equity Fund; and $22,584 with respect to the Aggressive Growth Fund.
As of August 31, 1997, the Growth Equity Fund had not commenced operations.
For Sub-Administration services during the fiscal year ended August 31,
1996, BOK received fees in the following amounts from the Administrator:
$100,155 with respect to the U.S. Treasury Fund; $166,098 with respect to
the Cash Management Fund; $18,495 with respect to the Bond Fund; $32,563
with respect to the Intermediate Bond Fund; $14,468 with respect to the
Intermediate Tax-Free Bond Fund; $5,932 with respect to the Short-Term
Income Fund; $9,970 with respect to the Balanced Fund; $40,734 with respect
to the Equity Fund; and $20,259 with respect to the Aggressive Growth Fund.
DISTRIBUTOR
BISYS serves as distributor to each of the Funds pursuant to its
Distribution Agreement with the Funds dated October 1, 1993 (the
"Distribution Agreement"). Unless otherwise terminated, the Distribution
Agreement will continue in effect until August 1, 1999 and thereafter will
continue for successive one-year periods if approved at least annually (i)
by the Funds' Board of Trustees or by the vote of a majority of the
outstanding voting Shares of the Funds (as defined in "GENERAL
INFORMATION-Miscellaneous" in the Funds' 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
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<PAGE> 142
Fund; (ii) makes receipts and disbursements of money on behalf of each Fund;
(iii) collects and receives all income and other payments and distributions
on account of the Funds' portfolio securities; (iv) responds to
correspondence from security brokers and others relating to its duties; and
(v) makes periodic reports to the Funds' Board of Trustees concerning the
Funds' operations. BOK may, at its own expense, open and maintain a
sub-custody account or accounts on behalf of the Funds, provided that it
shall remain liable for the performance of all of its duties under the
Custodian Agreement.
Under the Custodian Agreement, the Funds have agreed to pay BOK a
custodian fee with respect to each Fund at an annual rate of three one
hundredths of one percent (0.03%) of such Fund's average daily net assets.
BOK is also entitled to be reimbursed by the Funds for its reasonable
out-of-pocket expenses incurred in the performance of its duties under the
Custodian Agreement. BOK may periodically set its custodian fees at less
than the maximum allowable amount with respect to a Fund to increase the
Fund's net income available for distribution as dividends.
For custodian services during the fiscal year ended August 31, 1998,
BOK received $112,143 with respect to the U.S. Treasury Fund; $122,264 with
respect to the Cash Management Fund; $13,930 with respect to the Bond Fund;
$24,383 with respect to the Intermediate Bond Fund; $58,452 with respect to
the Equity Fund; $9,074 with respect to the Intermediate Tax-Free Bond
Fund; and $12,909 with respect to the Aggressive Growth Fund. For custodian
services during the fiscal year ended August 31, 1998, BOK received $4,306,
which is $2,115 less than the maximum amount of custody fees, if charged,
with respect to the Short-Term Income Fund and $8,262, which is $3,224 less
than the maximum amount of custody fees, if charged, with respect to the
Balanced Fund. For custodian services during the period ended August 31,
1998, BOK received $17,226 with respect to the Growth Equity Fund.
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 acounts
B-32
<PAGE> 143
invested in a Fund, $24,000 for 500 or more Shareholder accounts invested
in a Fund, $16 for each additional Shareholder account invested in a Money
Market Fund, and $14 for each additional Shareholder account invested in a
non-daily dividend based fund. (The number of Shareholder accounts for
purposes of determining the base fee is calculated on a monthly basis.)
BISYS Fund Services Ohio, Inc. is also entitled to be reimbursed by the
Funds for postage, handling fees, and reasonable costs of supplies used by
BISYS Fund Services Ohio, Inc. in the performance of its services under the
Transfer Agency Agreement. BISYS Fund Services Ohio, Inc. may periodically
set its transfer agency fees at less than the maximum allowable amount with
respect to a Fund to increase the Fund's net income available for
distribution as dividends.
BISYS Fund Services Ohio, Inc. serves as fund accountant for each Fund
pursuant to a fund accounting agreement with the Funds dated September 5,
1990 (the "Fund Accounting Agreement"). As fund accountant for the Funds,
BISYS Fund Services Ohio, Inc. prices the Funds' Shares, calculates the
Funds' net asset value, and maintains the general ledger accounting records
for each Fund. Under its Fund Accounting Agreement with the Funds, BISYS
Fund Services Ohio, Inc. is entitled to receive a fee (1) from each Fund
(other than the Intermediate Tax-Free Bond Fund) at an annual rate of three
one-hundredths of one percent (0.03%) of the Fund's average daily net assets
plus out-of-pocket expenses, with a minimum monthly fee of $2,500 per Fund
and (2) from the Intermediate Tax-Free Bond Fund at an annual rate of four
one-hundredths of one percent (0.04%) of the Fund's average daily net
assets, plus out-of-pocket expenses, with a minimum monthly fee of $3,500.
BISYS Fund Services Ohio, Inc. may periodically set its fund accounting fees
at less than the maximum allowable amount with respect to a Fund in order to
increase the Fund's net income available for distribution as dividends.
For transfer agency and Fund accounting services during the fiscal year
ended August 31, 1998, BISYS Fund Services Ohio, Inc. received $164,113 with
respect to the U.S. Treasury Fund; $179,164 with respect to the Cash
Management Fund; $39,980 with respect to the Bond Fund; $70,267 with respect
to the Intermediate Bond Fund; $105,495 with respect to the Equity Fund;
$31,831 with respect to the Intermediate Tax-Free Bond Fund; $37,825 with
respect to Aggressive Growth Fund; $31,564 with respect to the Short-Term
Income Fund; and $33,070 with respect to the Balanced Fund. For transfer
agency and Fund accounting services during the period ended August 31, 1998,
BISYS Fund Services Ohio, Inc. received $32,198 with respect to the Growth
Equity Fund.
AUDITORS
KPMG LLP, Two Nationwide Plaza, Columbus, Ohio, 43215, serves as
independent auditors 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.
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<PAGE> 144
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 Short-Term Income Fund, the Equity
Fund, the Balanced Fund, the Growth Equity Fund, and the Small Cap 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.
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.
B-34
<PAGE> 145
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, holders of units of beneficial interest in a
business trust may, under certain circumstances, be held personally liable
as partners for the obligations of the trust. However, the Declaration of
Trust provides that Shareholders shall not be subject to any personal
liability for the obligations of the Funds, and that every written
agreement, obligation, instrument, or undertaking made by the Funds shall
contain a provision to the effect that the Shareholders are not personally
liable thereunder. The Declaration of Trust provides for indemnification out
of the trust property of any Shareholder held personally liable solely by
reason of his being or having been a Shareholder. The Declaration of Trust
also provides that the Funds shall, upon request, assume the defense of any
claim made against any Shareholder for any act or obligation of the Funds,
and shall satisfy any judgment thereon. Thus, the risk of a Shareholder
incurring financial loss on account of Shareholder liability is limited to
circumstances in which the Funds themselves would be unable to meet their
obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Funds shall be personally liable in connection with the
administration or preservation of the assets of the trust or the conduct of
the Funds' business; nor shall any Trustee, officer, or agent be personally
liable to any person for any action or failure to act except for his own bad
faith, willful misfeasance, gross negligence, or reckless disregard of his
duties. The Declaration of Trust also provides that all persons having any
claim against the Trustees or the Funds shall look solely to the assets of
the trust for payment.
CALCULATION OF PERFORMANCE DATA
Based on the seven-day period ended August 31, 1998 (the "base
period"), the yield of the Cash Management Fund was 4.98% and the Fund's
effective yield was 5.10%. Based on the same base period, the yield of the
U.S. Treasury Fund was 4.87% and the Fund's effective yield was 4.99%. Each
Money Market Fund's seven-day yield is computed by determining the
percentage net change, excluding capital changes, in the value of an
investment in one share of the Fund over the base period, and multiplying
the net change by 365/7 (or approximately 52 weeks). Each Money Market
Fund's effective yield represents a compounding of the yield by adding 1 to
the number representing the percentage change in value of the investment
during the base period, raising that sum to a power equal to 365/7, and
subtracting 1 from the result.
Based on the thirty-day period ended August 31, 1998 ("30-day base
period"), the 30-day yields of the Bond Investment Funds were as follows:
the Bond Fund, 5.75% (without load) and 5.52% (with load); the Intermediate
Bond Fund, 5.45% (without load) and 5.29% (with load); and the Intermediate
Tax-Free Bond Fund, 3.25% (without load) and 3.16% (with load); the
Short-Term Income Fund, 5.99% (without load) and 5.87% (with load). The
30-day yield of each Bond Investment Fund is calculated by dividing the net
investment income per-share earned during the 30-day base period by the
maximum offering price per share on the last day of the period, according to
the following formula:
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<PAGE> 146
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.
The average annual total returns for the one-year period ended August
31, 1998 for the Bond Investment Funds, assuming the imposition of a sales
load, were as follows: the Bond Fund, 7.04%; the Intermediate Bond Fund,
5.50%; the Intermediate Tax-Free Bond Fund, 4.09%; and the Short-Term Income
Fund, 6.33%. The average annual total returns for the one-year period ended
August 31, 1998 for the Equity Investment Funds, assuming the imposition of
a sales load, were as follows: the Equity Fund, -4.24%; the Aggressive
Growth Fund, -34.29%; the Balanced Fund, -0.64%; and the Growth Equity Fund,
8.99%.(1)
---------------
(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.
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<PAGE> 147
The average annual total returns, for Shareholders who are not subject
to a sales charge, for the one-year period ended August 31, 1998 were as
follows: the Equity Fund 0.79%, the Aggressive Growth -30.85%, the Bond Fund
11.54%, the Intermediate Bond Fund 8.80%, the Intermediate Tax-Free Bond
Fund 7.28%, the Short-Term Income Fund 8.47%, the Balanced Fund 4.55%, and
the Growth Equity Fund 14.76%.(1)
The average annual total returns for the five-year period ended August
31, 1998 were: 6.02% (without sales charge) and 5.16% (as adjusted for
maximum sales charge) for the Bond Fund; 5.19% (without sales charge) and
4.55% (as adjusted for maximum sales charge) for the Intermediate Bond Fund;
15.99% (without sales charge) and 14.81% (as adjusted for maximum sales
charge) for the Equity Fund; 5.40% (without sales charge) and 4.77% (as
adjusted for maximum sales charge) for the Intermediate Tax-Free Bond Fund;
and 2.15% (without sales charge) and 1.11% (as adjusted for maximum sales
charge) for the Aggressive Growth Fund.
The average annual total returns for the following Funds are:
Short-Term Income Fund from commencement of operations (October 19, 1994) to
August 31, 1998 was 6.66% (without sales charge) and 6.11% (as adjusted for
maximum sales charge); and Balanced Fund from commencement of operations
(June 1, 1995) to August 31, 1998 was 14.81% (without sales charge) and
13.00% (as adjusted for maximum sales charge).
The average annual total returns for the following Funds are: Bond Fund
from commencement of operations (September 28, 1990) to August 31, 1998,
8.50% (without sales charge) and 7.94% (as adjusted for maximum sales
charge); Intermediate Bond Fund from commencement of operations (September
28, 1990) to August 31, 1998, 7.39% (without sales charge) and 6.97% (as
adjusted for maximum sales charge); Intermediate Tax-Free Bond Fund from
commencement of operations (May 29, 1992) to August 31, 1998, 6.66% (without
sales charge) and 6.14% (as adjusted for maximum sales charge), Equity Fund
from commencement of operations (September 28, 1990) to August 31, 1998,
14.34% (without sales charge) and 13.59% (as adjusted for maximum sales
charge); Aggressive Growth Fund from commencement of operations (February 3,
1992) to August 31, 1998, 4.49% (without sales charge) and 3.67% (as
adjusted for maximum sales charge), and Growth Equity Fund from commencement
of operations (June 10, 1994) to August 31, 1998, 24.14% (without sales
charge) and 22.63% (as adjusted for maximum sales charge).(1)
Performance will fluctuate from time to time and is not necessarily
representative of future results. Accordingly, a Fund's performance may not
provide for comparison with bank deposits or other investments that pay a
fixed return for a stated period of time. Performance is a function of a
Fund's quality, composition, and maturity, as well as expenses allocated to
the Fund. Fees imposed upon Customer accounts by Participating Organizations
will reduce a Fund's effective yield to customers.
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<PAGE> 148
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 Inc., a widely recognized
independent service which monitors the performance of mutual funds,
Morningstar, Inc. and the Consumer Price Index. Comparisons may also be made
to indices or data published in Donoghue's MONEY FUND REPORT of Holliston,
Massachusetts 01746, a nationally recognized money market fund reporting
service, Money Magazine, Forbes, Fortune, Ibbotson Associates, Inc.,
CDA/Wiesenberger, American Banker, Institutional Investor, Barron's, The
Wall Street Journal, The Bond Buyer's Weekly 20-Bond Index, The Bond Buyer's
Index, The Bond Buyer, The New York Times, Business Week, Pensions and
Investments, U.S.A. Today and local newspapers. In addition to performance
information, general information about these Funds that appears in a
publication such as those mentioned above may be included in advertisements
and in reports to Shareholders.
From time to time, the Funds may include the following types of
information in advertisements, supplemental sales literature and reports to
Shareholders: (1) discussions of general economic or financial principles
(such as the effects of inflation, the power of compounding and the benefits
of dollar-cost averaging); (2) discussions of general economic trends; (3)
presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for one or more of
the Funds within the Trust; (5) descriptions of investment strategies for
one or more of such Funds; (6) descriptions or comparisons of various
savings and investment products (including but not limited to insured bank
products, annuities, qualified retirement plans and individual stocks and
bonds) which may or may not include the Funds; (7) comparisons of investment
products (including the Funds) with relevant market or industry indices or
other appropriate benchmarks; (8) discussions of fund rankings or ratings by
recognized rating organizations; and (9) testimonials 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
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<PAGE> 149
class. Funds are divided into classes based upon their respective investment
objectives. The one- to five-star ratings represent the following ratings by
Morningstar, respectively: Lowest, Below Average, Neutral, Above Average and
Highest.
Current yields or performance will fluctuate from time to time and are
not necessarily representative of future results. Accordingly, a Fund's
yield or performance may not provide for comparison with bank deposits or
other investments that pay a fixed return for a stated period of time. Yield
and performance are functions of a Fund's quality, composition, and
maturity, as well as expenses allocated to the Fund.
Fees imposed on its affiliated or correspondent banks for cash
management services will reduce a Fund's effective yield to Customers.
MISCELLANEOUS
The Funds are not required to hold a meeting of Shareholders for the
purpose of electing Trustees except that (i) the Funds are required to hold
a Shareholders' meeting for the election of Trustees at such time as less
than a majority of the Trustees holding office have been elected by
Shareholders and (ii) if, as a result of a vacancy on the Board of Trustees,
less than two-thirds of the Trustees holding office have been elected by the
Shareholders, that vacancy may only be filled by a vote of the Shareholders.
In addition, Trustees may be removed from office by a written consent signed
by the holders of Shares representing two-thirds of the outstanding Shares
of the Funds at a meeting duly called for the purpose, which meeting shall
be held upon the written request of the holders of Shares representing not
less than 10% of the outstanding Shares of the Funds. Upon written request
by the holders of Shares representing 1% of the outstanding Shares of the
Funds stating that such Shareholders wish to communicate with the other
Shareholders for the purpose of obtaining the signatures necessary to demand
a meeting to consider removal of a Trustee, the Funds will provide a list of
Shareholders or disseminate appropriate materials (at the expense of the
requesting Shareholders). Except as set forth above, the Trustees may
continue to hold office and may appoint successor Trustees.
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.
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<PAGE> 150
As of October 15, 1998, Bank of Oklahoma, N.A. (Bank of Oklahoma Tower,
One Williams Center, Tulsa, Oklahoma 74103) and its bank affiliates were the
Shareholder of record of 99.61% of the U.S. Treasury Fund's Shares, 99.92%
of the Cash Management Fund's Shares, 98.41% of the Equity Fund's Shares,
92.67% of the Aggressive Growth Fund's Shares, 99.55% of the Balanced Fund's
Shares, 99% of the Bond Fund's Shares, 97.44% of the Intermediate Bond
Fund's Shares, 100% of the Short-Term Income Fund's Shares, 85.46% of the
Intermediate Tax-Free Bond Fund's Shares and 97.27% of the Growth Equity
Fund's Shares. As of December 17, 1998 Bank of Oklahoma, N.A. and its bank
affiliates possessed, were beneficial shareholders with respect to 49% of
the U.S. Treasury Fund's Shares, 62% of the Cash Management Fund's Shares,
71% of the Equity Fund's Shares, 52% of the Balanced Fund's Shares, 81% of
the Bond Fund's Shares, 82% of the Intermediate Bond Fund's Shares, 96% of
the Short-Term Income Fund's Shares, 79% of the Intermediate Tax-Free Bond
Fund's Shares and 94% 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 November 18,
1998, Bank of Oklahoma, N.A. and its bank affiliates were beneficial
shareholders with respect to 98.06% of the Aggressive Growth Fund's Shares,
and, as a consequence, Bank of Oklahoma, N.A. and its bank affiliates may be
deemed to be a controlling person of the Fund under the 1940 Act.
As of October 15, 1998, the trustees and officers of the Funds, as a
group, owned less than one percent of the Shares of each of the Funds.
The following table indicates each additional person known by the Funds
to own beneficially five percent (5%) or more of the Shares of the Funds as
of October 15, 1998:
<TABLE>
<CAPTION>
Amount of Beneficial Percent
Name And Address Ownership (Shares) Of Fund
---------------- ------------------ -------
<S> <C> <C>
CASH MANAGEMENT FUND
NABANK and Co. 99.92%
CASH
P.O. Box 2300
Tulsa, OK 74192
U.S. TREASURY FUND
NABANK and Co. 99.61%
CASH
P.O. Box 2300
Tulsa, OK 74192
</TABLE>
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<PAGE> 151
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
<S> <C>
NABANK and Co. 5.43%
Trust Accounting
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 80.03%
Income CAS/CG
Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
EQUITY FUND
NABANK and Co. 47.91%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 50.50%
Income Cash/CG
Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
BOND FUND
NABANK and Co. 52.04%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 49.96%
Income Cash/CG
Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
INTERMEDIATE BOND FUND
NABANK and Co. 33.79%
All Reinvest Account
</TABLE>
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<TABLE>
<S> <C> <C>
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 63.65%
Income
Cash/CG/Reinvest
P.O. Box 2300
Tulsa, OK 74192
AGGRESSIVE GROWTH FUND
NABANK and Co. 56.41%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 36.26%
Income
Cash/CG/Reinvest
P.O. Box 2300
Tulsa, OK 74192
HC Limited Partnership 5.11%
1300 Belmont No. 209
Chicago, IL 60657
SHORT TERM INCOME FUND
NABANK and Co. 41.21%
All Reinvest Account
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 58.88%
Income
Cash/CG/Reinvest
P.O. Box 2300
Tulsa, OK 74192
BALANCED FUND
NABANK and Co. 99.55%
All Reinvest Account
P.O. Box 2300
</TABLE>
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<TABLE>
Tulsa, OK 74192
<S> <C> <C>
GROWTH EQUITY FUND
NABANK and Co. 73.99%
Income
Cash/CG/Reinvest
P.O. Box 2300
Tulsa, OK 74192
NABANK and Co. 23.28%
All Reinvest
P.O. Box 2300
Tulsa, OK 74192
</TABLE>
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<PAGE> 154
FINANCIAL STATEMENTS
The Independent Auditors' Report for the American Performance Funds for
the year ended August 31, 1998 and Financial Statements for the American
Performance Funds for the five year period ended August 31, 1998, appearing
in the Annual Report, are incorporated by reference in the Statement of
Additional Information. A copy of the Annual Report dated as of August 31,
1998 and the Semi-Annual Report dated as of February 28, 1998 may be
obtained without charge by contacting the Distributor, BISYS Fund Services
at 3435 Stelzer Road, Columbus, Ohio 43219 or by telephoning toll-free at
1-800-762-7085.
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APPENDIX
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by the Funds with regard to
portfolio investments for the Funds include Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Corporation ("S&P"), Duff & Phelps, Inc.
("Duff"), Fitch IBCA, and Thomson BankWatch, Inc. ("Thomson"). Set forth
below is a description of the relevant ratings of each such NRSRO. The
NRSROs that may be utilized by the Funds and the description of each NRSRO's
ratings is as of the date of this Statement of Additional Information, and
may subsequently change.
LONG-TERM DEBT RATINGS (may be assigned, for example, to corporate and
municipal bonds)
Description of the five highest long-term debt ratings by Moody's (Moody's
applies numerical modifiers (1, 2, and 3) in each rating category to
indicate the security's ranking within the category):
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of
such issues.
Aa Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be
as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat
larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment some time in the
future.
Baa Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor
poorly secured). Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded
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<PAGE> 156
during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
Description of the five highest long-term debt ratings by S&P (S&P may apply
a plus (+) or minus (-) to a particular rating classification to show
relative standing within that classification):
AAA An obligation rated AAA has the highest rating assigned by
S&P. The obligor's capacity to meet its financial commitment
on the obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated
obligations only in small degree. The obligor's capacity to
meet its financial commitment on the obligation is very
strong.
A An obligation rated A is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher-rated categories.
However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity
of the obligor to meet its financial commitment on the
obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having
significant speculative characteristics. BB indicates the
least degree of speculation and C the highest. While such
obligations will likely have some quality and protective
characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
BB An obligation rated BB is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the
obligation.
Description of the three highest long-term debt ratings by Duff:
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong.
AA Risk is modest but may vary slightly from time to
AA- time because of economic conditions.
A+ Protection factors are average but adequate. However,
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<PAGE> 157
A risk factors are more variable and greater in periods of
A- economic stress.
Description of the three highest long-term debt ratings by Fitch IBCA (plus
or minus signs are used with a rating symbol to indicate the relative
position of the credit within the rating category):
AAA Obligations which have the highest rating assigned by Fitch
IBCA. Capacity for timely repayment principal and interest is
extremely strong relative to other obligors in the same
country.
AA Obligations for which capacity for timely repayment of
principal and interest is very strong relative to other
obligors in the same country. The risk attached to these
obligations differs only slightly from the country's highest
rated debt.
A Obligations for which capacity for timely repayment of
principal and interest is strong relative to other obligors in
the same country. However, adverse changes in business,
economic or financial conditions are more likely to affect the
capacity for timely repayment than for obligations in higher
rated categories.
SHORT-TERM DEBT RATINGS (may be assigned, for example, to commercial paper,
master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have
a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often
be evidenced by many of the following characteristics:
-Leading market positions in well-established
industries.
-High rates of return on funds employed.
-Conservative capitalization structures with
moderate reliance on debt and ample asset
protection.
-Broad margins in earnings coverage of fixed
financial charges and high internal cash
generation.
-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
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degree. Earnings trends and coverage ratios, while
sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate
liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have
an acceptable ability for repayment of senior
short-term obligations. The effect of industry
characteristics and market compositions may be more
pronounced. Variability in earnings and profitability
may result in changes in the level of debt protection
measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1 A short-term obligation rated A-1 is rated in the highest
category by S&P. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category,
certain obligations are designated with a plus sign (+). This
indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible
to the adverse effects of changes in circumstances and
economic conditions than obligations in higher rating
categories. However, the obligor's capacity to meet its
financial commitment on the obligation is satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity
of the obligor to meet its financial commitment on the
obligation.
Duff's description of its three highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is
just below risk-free U.S. Treasury short-term obligations.
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.
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<PAGE> 159
D-2 Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs
may enlarge total financing requirements, access to capital
markets is good. Risk factors are small.
D-3 Satisfactory liquidity and other protection factors qualify
issues as to investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is
expected.
Fitch IBCA's description of its three highest short-term debt ratings:
Fl Obligations assigned this rating have the highest capacity for
timely repayment under Fitch IBCA's national rating scale for
that country, relative to other obligations in the same
country. Where issues possess a particularly strong credit
feature, a "+" is added to the assigned rating.
F2 Obligations supported by a strong capacity for timely
repayment relative to other obligors in the same country.
However, the relative degree of risk is slightly higher than
for issues classified as 'Al' and capacity for timely
repayment may be susceptible to adverse changes in business,
economic, or financial conditions.
F3 Obligations supported by an adequate capacity for timely
repayment relative to other obligors in the same country. Such
capacity is more susceptible to adverse changes in business,
economic, or financial conditions than for obligations in
higher categories.
SHORT-TERM LOAN/MUNICIPAL NOTE RATINGS
Moody's description of its two highest short-term loan/municipal note
ratings:
MIG-1/VMIG-1 This designation denotes best quality. There
is present strong protection by established
cash flows, superior liquidity support or
demonstrated broad-based access to the
market for refinancing.
MIG-2/VMIG-2 This designation denotes high quality.
Margins of protection are ample although not
so large as in the preceding group.
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.
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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.
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.
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