<PAGE> 1
THE SHELBY FUND
Supplement dated November 30, 1995
to Prospectus dated July 31, 1995
The following information is added to the Prospectus immediately
following the section titled "MANAGEMENT OF THE GROUP - Investment Adviser and
Sub-Investment Adviser:"
Set forth below are certain performance data relating to those common
trust funds and collective investment funds of Shelby County Trust Bank (the
"Commingled Funds") which were managed with full investment authority by
principals of the Sub-Adviser prior to the establishment of the Fund on June
27, 1994. The assets of the Commingled Funds were converted into assets of the
Fund upon the establishment of the Fund. These Commingled Funds were operated
with the same investment objective and used investment strategies and
techniques that are in all material respects equivalent to those used for the
Fund. The investment performance data presented for the Commingled Funds for
the years 1981 to July 1989 are based upon the performance generated by Darrell
Wells, who had full authority to make investment decisions for the Commingled
Funds during that period. For the period July 1989 to June 27, 1994, B. Anthony
Weber was responsible for the day-to-day management of the Commingled Funds,
subject to review and supervision by Mr. Wells. Upon the establishment of the
Fund on June 27, 1994, Mr. Wells and Mr. Weber became the co-managers of the
Fund.
The quoted performance data includes the performance of the Commingled
Funds for periods before the Fund became an investment company registered with
the Securities and Exchange Commission. During this time the Commingled Funds
were not registered under the 1940 Act and therefore were not subject to
certain investment restrictions that are imposed by the Act. If the Commingled
Funds has been registered under the 1940 Act, the Commingled Funds' performance
may have been adversely affected.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE> 2
COMPOSITE PERFORMANCE(1) SHOWING AVERAGE ANNUAL TOTAL RETURNS(2) FOR VARIOUS
PERIODS ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
One Year............................. 44.98%
Three Years.......................... 22.34%
Five Years........................... 26.06%
Ten Years............................ 19.52%
</TABLE>
COMPOSITE PERFORMANCE SHOWING ANNUAL TOTAL RETURNS(3) FROM OCTOBER 1, 1981
THROUGH SEPTEMBER 30, 1995
<TABLE>
<S> <C>
Year Ended September 30, 1995........................... 44.98%
Year Ended September 30, 1994........................... -2.56%
Year Ended September 30, 1993........................... 36.12%
Year Ended September 30, 1992........................... 19.95%
Year Ended September 30, 1991........................... 38.00%
Year Ended September 30, 1990........................... -5.96%
Year Ended September 30, 1989........................... 39.02%
Year Ended September 30, 1988........................... -8.48%
Year Ended September 30, 1987........................... 20.45%
Year Ended September 30, 1986........................... 29.70%
Year Ended September 30, 1985........................... -5.57%
Year Ended September 30, 1984........................... -10.75%
Year Ended September 30, 1983........................... 43.25%
Year Ended September 30, 1982........................... 17.64%
<FN>
- ------------------
(1) The Commingled Funds consisted of (i) Common Trust Fund I,
which commenced operations on January 1, 1981; (ii) The Shelby Fund, which
commenced operations on May 3, 1991; and (iii) Common Trust Fund III which
commenced operations on October 1, 1992.
(2) The above information for the periods prior to inception of the
Fund (June 27, 1994) is the average annual total return for the periods
indicated, assuming reinvestment of all net investment income and taking into
account expenses of 1.48% of average daily net assets, which was the expected
expense ratio of the Shelby Fund at the time of the inception. The average
annual total returns for the periods subsequent to the inception of the Fund
also assume reinvestment of all net investment income and realized capital
gains and take into account actual expenses of the Fund.
(3) The above information for the periods prior to inception of the
Fund (June 27, 1994) is the annual total return for the periods indicated,
assuming reinvestment of all net investment income and taking into account
expenses of 1.48% of average daily net assets, which was the expected expense
ratio of the Shelby Fund at the time of inception. The annual total returns for
the periods subsequent to the inception of the Fund also assume reinvest of all
net investment income and realized capital gains and take into account actual
expenses of the Fund.
</TABLE>
<PAGE> 3
THE SHELBY FUND
<TABLE>
<S> <C>
1900 East Dublin-Granville Road For current yield, purchase, and redemption
Columbus, Ohio 43229 information, call 800-774-3529
</TABLE>
The Coventry Group (the "Group") is an open-end management investment
company that consists of several separate investment portfolios. This Prospectus
relates only to The Shelby Fund (the "Fund"). The Fund is a diversified
investment portfolio of the Group.
The Fund's investment objective is to seek capital appreciation. The Fund
invests primarily in a diversified portfolio of equity securities. There can be
no assurance that the Fund will be successful in achieving its investment
objective.
Shelby County Trust Bank, Shelbyville, Kentucky (the "Adviser") acts as the
investment adviser to the Fund. SMC Capital, Inc., Louisville, Kentucky (the
"Sub-Adviser") acts as sub-investment adviser to the Fund.
The Winsbury Company, Columbus, Ohio (the "Distributor") acts as the Fund's
administrator and distributor. BISYS Fund Services Ohio, Inc., Columbus, Ohio,
an affiliate of The Winsbury Company, acts as the Fund's transfer agent (the
"Transfer Agent") and performs certain accounting services for the Fund.
A Statement of Additional Information bearing the same date as this
Prospectus, containing additional and more detailed information about the Fund,
has been filed with the Securities and Exchange Commission (the "Commission")
and is incorporated by reference in its entirety into this Prospectus. It is
available upon request without charge by writing to the Fund at its address or
by calling the Fund at the telephone number shown above.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read this
Prospectus and retain it for future reference.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY SHELBY COUNTY TRUST BANK OR ITS AFFILIATES, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY.
INVESTMENTS IN THE FUND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------
THE DATE OF THIS PROSPECTUS IS JULY 31, 1995
<PAGE> 4
PROSPECTUS SUMMARY
<TABLE>
<S> <C>
The Fund........................... The Shelby Fund (the "Fund"), a diversified investment
portfolio of The Coventry Group, an open-end,
management investment company organized as a
Massachusetts business trust (the "Group").
Shares Offered..................... Shares of beneficial interest ("Shares") of the Fund.
Offering Price..................... The public offering price of the Fund is equal to the
net asset value per Share.
Minimum Purchase................... The minimum initial investment is $25,000. The minimum
amount for subsequent investments is $500.
Investment Objective............... The Fund seeks capital appreciation.
Investment Policy.................. Under normal market conditions, the Fund will invest
primarily in a diversified portfolio of equity
securities.
Investment Adviser and
Sub-Investment Adviser............. Shelby County Trust Bank serves as the investment
adviser (the "Adviser") and SMC Capital Inc. (the
"Sub-Adviser") serves as the sub-investment adviser
to the Fund.
Dividends and Capital Gains........ Dividends from net income are declared quarterly and
paid quarterly. Net realized capital gains are
distributed at least annually.
Distributor........................ The Winsbury Company, Columbus, Ohio (the
"Distributor").
</TABLE>
2
<PAGE> 5
FEE TABLE
<TABLE>
<S> <C>
Shareholder Transaction Expenses(1)............................................... None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees.............................................................. 1.00%
Other Expenses (After Fee Waiver)(2)......................................... .41%
Total Fund Operating Expenses (After Fee Waiver)(3).......................... 1.41%
<FN>
- ---------
(1) A wire redemption charge (currently $10) is deducted from the amount of a wire
redemption payment made at the request of a shareholder.
(2) During the period, the Administrator voluntarily waived a portion of its
administration fee. Absent the waiver of these fees, "Other Expenses" as a
percentage of average daily net assets would have been .46%.
(3) If the Administrator had not voluntarily agreed to the waiver of a portion of
its administration fee, "Total Fund Operating Expenses" as a percentage of
average daily net assets would have been 1.46%.
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ --------
<S> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming (i) a
5% annual return, and (ii) redemption at the end of each time period...... $ 14 $ 45
</TABLE>
The purpose of the above table is to assist a potential investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly.
THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
3
<PAGE> 6
FINANCIAL HIGHLIGHTS
The table below sets forth certain financial information for the Fund for
the period July 1, 1994 (commencement of operations) to March 31, 1995. These
financial highlights have been derived from financial statements audited by
Arthur Andersen LLP, independent certified public accountants, whose report
thereon is incorporated by reference in the Statement of Additional Information.
<TABLE>
<CAPTION>
JULY 1, 1994
TO MARCH 31, 1995(a)
--------------------
<S> <C>
Net Asset Value, Beginning of Period...................................... $10.00
INVESTMENT ACTIVITIES
Net investment income................................................... 0.06
Net realized and unrealized gains on investments........................ 1.04
------
Total from Investment Activities................................... 1.10
------
DISTRIBUTIONS
Net investment income................................................... (0.06)
Net realized capital gains.............................................. (0.05)
------
Total Distributions................................................ (.11)
------
NET ASSET VALUE, END OF PERIOD............................................ $10.99
======
TOTAL RETURN.............................................................. 11.04%(b)
RATIOS/SUPPLEMENTAL DATA
Net Assets at end of period (000)......................................... $ 64,157
Ratio of expenses to average net assets................................... 1.41%(c)
Ratio of net investment income to average net assets...................... 0.74%(c)
Ratio of expenses to average net assets*.................................. 1.46%(c)
Ratio of net investment income to average net assets*..................... 0.69%(c)
Portfolio turnover........................................................ 102%
<FN>
- ---------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the rates would have been as indicated.
(a) Period from commencement of operations.
(b) Aggregate total return.
(c) Annualized.
</TABLE>
4
<PAGE> 7
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek capital appreciation. The Fund
will invest primarily in a diversified portfolio of equity securities of
companies that the Adviser and the Sub-Adviser have identified as having
accelerating cash flows. Such accelerating cash flows will typically be
generated by expanding unit volume growth, new product development and expanding
margins. These companies will consist of entities with various sized market
capitalizations with the primary focus on small ($1 billion and under in market
capitalization) to mid-size ($1 to 3 billion in market capitalization)
companies. By focusing on companies whose cash flows are accelerating, the
stocks selected typically experience increased earnings expectations from the
investment community. There can be no assurance that the Fund will achieve its
investment objective.
Under normal market conditions, the Fund will invest at least 65% of its
assets in equity securities, which are defined as common stocks, preferred
stocks, securities convertible into common stocks, warrants and any rights to
purchase common stocks. The remainder of the Fund's assets may be invested in
corporate debt securities, U.S. Government securities, repurchase agreements and
money market instruments rated within the two highest rating categories of one
or more nationally recognized statistical rating organizations ("NRSROs") or, if
unrated, are deemed by the Adviser to be of comparable quality. The Fund may
also engage in certain options transactions described below and invest in
securities of other investment companies.
The investment objective of the Fund is a fundamental policy and, as such, 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). The
other policies of the Fund may be changed without a vote of the holders of a
majority of Shares unless (i) the policy is expressly deemed to be a fundamental
policy of the Fund or (ii) the policy is expressly deemed to be changeable only
by such majority vote.
CONVERTIBLE SECURITIES. The Fund may invest in convertible securities. A
convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the holder
to receive interest generally paid or accrued on debt or the dividend paid on
preferred stock until the convertible security matures or is redeemed, converted
or exchanged. Convertible securities have several unique investment
characteristics such as (1) higher yields than common stock, but lower yields
than comparable nonconvertible securities, (2) a lesser degree of fluctuation in
value than the underlying stock since they have fixed income characteristics,
and (3) the potential for capital appreciation if the market price of the
underlying common stock increases. A convertible security might be subject to
redemption at the option of the issuer at a price established in the convertible
security's governing instrument. If a convertible security held by the Fund is
called for redemption, the Fund may be required to permit the issuer to redeem
the security, convert it into the underlying common stock or sell it to a third
party.
CORPORATE DEBT SECURITIES. The Fund may invest in certain debt securities
consisting of bonds, notes and debentures of various U.S. corporate issuers.
Because the market value of debt securities can be expected to vary inversely to
changes in prevailing interest rates, investing in such debt securities can
provide an opportunity for capital appreciation when interest rates are expected
to decline. The Fund will invest in those debt securities that are, at the time
of purchase, rated investment grade by one or more NRSROs, or, if unrated, are
deemed by the Adviser to be of comparable quality to those securities that are
rated investment grade. Securities rated in the fourth highest rating category
may have speculative characteristics even though they are of investment grade
quality, and changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity to make principal and interest payments
than is the case with higher grade bonds.
5
<PAGE> 8
In the event a security was rated, at the time of purchase, in the top four
rating categories of one or more of the specified rating agencies, and such
security either ceases to be rated or has its rating reduced below such levels,
the Adviser may, but is not required to, sell or exchange such security within a
reasonable time thereafter, taking into consideration such factors as price,
credit risk, market conditions and interest rates. For a description of
securities rated within the fourth highest rating category of NRSROs, see
"INVESTMENT OBJECTIVE AND POLICIES" in the Statement of Additional Information.
U.S. GOVERNMENT SECURITIES. The types of U.S. Government obligations invested
in by the Fund will include obligations issued or guaranteed as to payment of
principal and interest by the full faith and credit of the U.S. Treasury
consisting of Treasury bills, notes, bonds and certificates of indebtedness, and
obligations issued or guaranteed by agencies or instrumentalities of the U.S.
Government, but not supported by such full faith and credit. The guarantee that
is provided by the U.S. Government, its agencies and instrumentalities extends
only to the payment of principal and interest by the issuer of the underlying
security. It does not extend to the market value of such security, nor does it
extend to the value of the Fund's shares.
FOREIGN SECURITIES. The Fund may invest up to 10% of its total assets
directly in the debt and equity securities of foreign issuers. In addition, the
Fund may also indirectly invest in foreign securities through the purchase of
sponsored American Depositary Receipts ("ADRs") and European Depositary Receipts
("EDRs") 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). For a discussion of
the risks associated with investments in foreign securities, see "INVESTMENT
OBJECTIVE AND POLICIES--Risk Factors and Special Considerations."
OTHER INVESTMENT TECHNIQUES
REPURCHASE AGREEMENTS. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund would
acquire securities from member banks of the Federal Deposit Insurance
Corporation and from registered broker-dealers which the Adviser deems
creditworthy under guidelines approved by the Group's Board of Trustees. The
seller agrees 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. Securities
subject to repurchase agreements must be of the same type and quality as those
in which the Fund may invest directly. The seller under a repurchase agreement
will be required to maintain at all times the value of collateral held pursuant
to the agreement at an amount equal to the repurchase price (including accrued
interest). This requirement will be continually monitored by the Adviser. In
addition, securities subject to a repurchase agreement will be held in a
segregated account. If the seller were to default on its repurchase obligation
or become insolvent, the Fund would suffer a loss if the proceeds from a sale of
the underlying portfolio securities were less than the repurchase price under
the agreement, or the disposition of such securities by the Fund were delayed
pending court action. Repurchase agreements are considered to be loans
collateralized by the underlying security under the Investment Company Act of
1940 (the "1940 Act"). For further information about repurchase agreements, see
"INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS--Additional Information on
Portfolio Instruments--Repurchase Agreements" in the Statement of Additional
Information.
REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, the Fund
would sell certain of its securities to financial institutions such
6
<PAGE> 9
as banks and broker-dealers, and agree to repurchase them at a mutually agreed
upon date and price. At the time the Fund enters into a reverse repurchase
agreement, it will place in a segregated custodial account liquid high grade
debt securities, such as U.S. Government securities, consistent with its
investment restrictions, having a value equal to the repurchase price (including
accrued interest), and will subsequently continually monitor the account to
ensure that such equivalent value is maintained at all times. Reverse repurchase
agreements involve the risk that the market value of securities sold by the Fund
may decline below the price at which it is obligated to repurchase the
securities. A reverse repurchase agreement is considered to be a borrowing by an
investment company under the 1940 Act. For further information about reverse
repurchase agreements, see "INVESTMENT OBJECTIVES, POLICIES AND RISK
FACTORS--Additional Information on Portfolio Instruments--Reverse Repurchase
Agreements" in the Statement of Additional Information.
SHORT SALES. The Fund may sell securities short "against-the-box." A short
sale "against-the-box" is a short sale (i.e., a sale made in anticipation of the
drop in value of a particular stock) in which the Fund owns an equal amount of
the securities sold short or securities convertible into or exchangeable without
payment of further consideration for securities of the same issue as, and equal
in amount to, the securities sold short. In the event that the Fund were to sell
securities short "against the box" and the price of such securities were to then
increase rather than decrease, the Fund would forego the potential realization
of the increased value of the shares sold short.
LENDING OF PORTFOLIO SECURITIES. From time to time, in order to generate
additional income, the Fund may lend its portfolio securities, provided such
action is consistent with its investment objective, policies, and restrictions.
During the time portfolio securities are on loan, the borrower will pay the Fund
any dividends or interest paid on the securities. In addition, loans will be
subject to termination by the Fund or the borrower at any time.
The Fund will enter into loan arrangements only with broker-dealers, banks or
other institutions that are not affiliated directly or indirectly with the Group
and which the Adviser has determined are creditworthy under guidelines
established by the Group's Board of Trustees. While the lending of securities
may subject the Fund to certain risks, such as delays or an inability to regain
the securities in the event the borrower defaults on its lending agreement or
enters into bankruptcy, the Fund will receive 102% of the collateral on loaned
securities in the form of cash or U.S. Government securities. This collateral
will be valued daily by the Adviser and, should the market value of the loaned
securities increase, the borrower will be required to furnish additional
collateral to the Fund. Although the Fund does not expect to do so on a regular
basis, it may lend portfolio securities in amounts representing up to one-third
of the value of the Fund's total assets.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS. The Fund may purchase debt
securities on a when-issued or delayed-delivery basis. The Fund will engage in
when-issued and delayed-delivery transactions only for the purpose of acquiring
portfolio securities consistent with its investment objective, policies and
restrictions, not for investment leverage. When-issued securities are securities
purchased for delivery beyond the normal settlement date at a stated price and
yield and thereby may involve a risk that the yield obtained in the transaction
will be less than those available in the market when delivery takes place. The
Fund will generally not pay for such securities or start earning interest on
them until they are received. When the Fund agrees to purchase such securities,
however, the Fund's 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 the
value based upon changes in the general level of interest rates. In when-issued
and delayed-delivery transactions, the Fund relies on the seller to complete the
transaction; the seller's failure to do so may cause the Fund to miss a price or
yield considered to be advantageous.
7
<PAGE> 10
The Fund's commitment to purchase when-issued securities will not exceed 25%
of its total assets absent unusual market conditions.
RESTRICTED SECURITIES. The Fund may invest up to 5% of its total assets in
restricted securities excluding restricted securities that are eligible for
resale under Rule 144A under the Securities Act of 1933. Restricted securities
are securities subject to legal or contractual restrictions on their resale.
Such restrictions might prevent the sale of restricted securities at a time when
sale would otherwise be desirable.
OTHER INVESTMENT COMPANIES. The Fund may invest up to 10% of its total assets
in the securities of other investment companies. As a result of the Fund
investing in other investment companies, shareholders of the Fund will
indirectly bear a proportionate share of the expenses of these underlying funds
during the period while the Fund is invested in these funds. For further
information about investments in other investment companies, see "INVESTMENT
OBJECTIVES, POLICIES AND RISK FACTORS--Additional Information on Portfolio
Instruments--Securities of Other Investment Companies" in the Statement of
Additional Information.
TEMPORARY INVESTMENTS. The Fund may, for daily cash management purposes, also
invest in high quality money market securities (commercial paper, certificates
of deposit and bankers' acceptances), as well as the repurchase agreements
referred to above. The Fund may invest, without limit, in any combination of the
U.S. Government securities, money market instruments and repurchase agreements
referred to above when, in the opinion of the Adviser, it is determined that a
temporary defensive position is in the best interests of the Fund based upon
current market conditions.
OPTIONS. The Fund may purchase put and call options in an amount not
exceeding 5% of its total assets. Such options may or may not be listed on a
domestic or foreign securities exchange, and may or may not be issued by the
Options Clearing Corporation. Such options may relate to particular securities
or to various stock or bond indices. Purchasing options is a specialized
investment technique which entails the risk of a complete loss of the amounts
paid as premiums to the option writer. Such transactions will be entered into
only as a hedge against fluctuations in the value of securities which the Fund
holds or intends to purchase.
The Fund may also write covered call options. A covered call option is an
option to acquire a security that the Fund owns or has the right to acquire
during the option period. Such options may or may not be listed on a national
securities exchange and may or may not be issued by the Options Clearing
Corporation. The aggregate value of the securities subject to covered call
options written by the Fund will not exceed 25% of its total assets. In order to
close out an option position, the Fund may enter into a "closing purchase
transaction"--the purchase of a covered call option on the same security with
the same exercise price and expiration date as the option which the Fund
previously wrote. By writing a covered call option, the Fund forgoes the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price but retains the risk of loss should the price
of the security decline. The use of covered call options will not be a primary
investment technique of the Fund.
The Fund will invest and trade in unlisted over-the-counter options only with
firms deemed creditworthy by the Adviser. However, unlisted options are not
subject to the protections afforded purchasers of listed options by the Options
Clearing Corporation, which fulfills the obligations of its members which fail
to perform them in connection with the purchase or sale of options. For further
information about options trading, see "INVESTMENT OBJECTIVES, POLICIES AND RISK
FACTORS--Additional Information on Portfolio Instruments--Options Trading" in
the Statement of Additional Information.
RISK FACTORS AND SPECIAL CONSIDERATIONS
The principal risk factor associated with an investment in the Fund is the
fluctuation in the principal value of equity securities. To the extent that the
Fund may invest in foreign securities, it will
8
<PAGE> 11
be subject to the special risks that are generally associated with such
investments.
Investment in securities of foreign issuers is subject to special risks, such
as future adverse political and economic developments, possible seizure,
currency blockage, 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. Additional risks include currency exchange risks,
less publicly available information, the risk that companies may not be subject
to the accounting, auditing and financial reporting standards and requirements
of U.S. companies, the risk that foreign securities markets may have less volume
and therefore less liquidity and greater price volatility than U.S. securities,
and custodian and brokerage costs that may be higher. Further, the Fund may
encounter difficulties or be unable to pursue legal remedies and obtain
judgments in foreign courts. To the extent that the Fund may invest in
securities of foreign issuers which are not traded on any exchange, there is a
further risk that these securities may not be readily marketable. The Fund will
not hold foreign currency as a result of such investments. For additional
information regarding these risks, see "INVESTMENT OBJECTIVE AND
POLICIES--Additional Information on Portfolio Instruments--Foreign Investments"
in the Statement of Additional Information.
PORTFOLIO TURNOVER
The portfolio turnover rate for the Fund is calculated by dividing the lesser
of the Fund's purchases or sales of portfolio securities for the year by the
monthly average value of the portfolio securities. The calculation excludes all
securities whose remaining maturities at the time of acquisition were one year
or less.
For the fiscal year ended March 31, 1995, the annual portfolio turnover rate
for the Fund was 102%. Portfolio turnover for the Fund may vary greatly from
year to year as well as within a particular year. High turnover rates will
generally result in higher transaction costs to the Fund. Portfolio turnover
will not be a limiting factor in making investment decisions.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of fundamental investment restrictions that
may be changed only by a vote of a majority of the outstanding Shares of the
Fund (as defined in the Statement of Additional Information). Among the more
significant restrictions, the Fund will not:
1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, if,
immediately after such purchase, with respect to 75% of its portfolio, more
than 5% of the value of the total assets of the Fund would be invested in such
issuer, or the Fund would hold more than 10% of any class of securities of the
issuer or more than 10% of the outstanding voting securities of the issuer.
2. Purchase any securities which would cause more than 25% of the value of
the 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 (i) there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities; (ii) 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 (iii) 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 the Fund may borrow
from banks or
9
<PAGE> 12
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 the Fund's total assets at the time of its
borrowing. The Fund will not purchase securities while borrowings (including
reverse repurchase agreements) in excess of 5% of its total assets are
outstanding.
4. Make loans, except that the Fund may purchase or hold debt securities and
lend portfolio securities in accordance with its investment objective and
policies, and may enter into repurchase agreements.
In addition to the above investment restrictions, the Fund is subject to
certain other investment restrictions set forth under "INVESTMENT OBJECTIVE AND
POLICIES--Investment Restrictions" in the Statement of Additional Information.
VALUATION OF SHARES
The net asset value of the Fund is determined and its Shares are priced as of
4:00 p.m. (Eastern Time) (the "Valuation Time") on each Business Day. A
"Business Day" is a day on which the New York Stock Exchange is open for trading
and any other day (other than a day on which no Shares of the Fund are tendered
for redemption and no order to purchase any Shares is received) during which
there is sufficient trading in its portfolio instruments such that the Fund's
net asset value per share might be materially affected. The New York Stock
Exchange will not be open in observance of the following holidays: New Year's
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. Net asset value per Share for purposes of pricing
sales and redemptions is calculated by dividing the value of all securities and
other assets belonging to the Fund, less the liabilities charged to the Fund, by
the number of the Fund's outstanding Shares.
The net asset value per Share will fluctuate as the value of the investment
portfolio of the Fund changes. The securities in the Fund will be valued at
market value. If market quotations are not available, the securities will be
valued by a method which the Board of Trustees believes accurately reflects fair
value. For further information about valuation of investments, see "NET ASSET
VALUE" in the Statement of Additional Information.
HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares in the Fund are sold on a continuous basis by The Winsbury Company, the
Group's distributor. The principal office of the Distributor is 1900 East
Dublin-Granville Road, Columbus, Ohio 43229. If you wish to purchase Shares,
telephone the Fund at (800) 774-3529.
PURCHASES OF SHARES
Shares of the Fund may be purchased at net asset value without a sales charge.
The minimum investment amount is $25,000 for the initial purchase of Shares and
$500 for subsequent purchases. Shares may 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 Shelby
County Trust Bank, its related companies or their correspondents ("Banks").
Shares of the Fund sold to the Banks acting in a fiduciary, advisory, custodial,
or other similar capacity on behalf of Customers will normally be held of record
by the Banks. With respect to Shares so sold, it is the responsibility of the
Banks to transmit purchase or redemption orders to the Distributor and to
deliver funds for the purchase thereof on a timely basis. Beneficial ownership
of the Shares will be recorded by the Banks
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<PAGE> 13
and reflected in the account statements provided by the Banks to Customers.
Every Shareholder will receive a confirmation of each new transaction in such
Shareholder's account, which will also show the total number of Shares of the
Fund owned by the Shareholder. Sending confirmations for purchases and
redemptions of Shares held by a Bank on behalf of its Customer will be the
responsibility of the Bank.
Depending upon the terms of the particular Customer account, a Bank may charge
a Customer account fees for services provided in connection with investments in
the Fund. Information concerning these services and any charges will be provided
by the Bank. This Prospectus should be read in conjunction with any such
information so received from a Bank.
Shares of the Fund are purchased at the net asset value per Share next
determined after receipt by the Distributor of a purchase order in proper form.
An order to purchase Shares will be deemed to have been received by the
Distributor in proper form only when Federal funds with respect thereto are
available to the Fund's custodian for investment.
If a purchase order for Shares is received in proper form by the Valuation
Time on the day the purchase order is received, the order will be effected that
day. Purchase orders will be accepted only on Business Days. See "VALUATION OF
SHARES."
OTHER PURCHASE INFORMATION. Purchases of the Fund's Shares will be made in
full and fractional Shares.
The Fund reserves the right, in its sole discretion, to suspend the offering
of Shares, reject any proposed new account or reject any purchase order
(including purchases made with foreign and third party drafts or checks) when,
in the judgement of its management, such suspension or rejection is in the best
interests of the Fund; to waive any minimum initial and subsequent investment
requirements for certain investors; and to redeem Shares if information provided
in the application proves to be incorrect in any material manner.
REDEMPTION OF SHARES
The Fund will redeem its Shares at the net asset value next determined
following receipt of a redemption request in proper form. Redemptions may be
made by written request, by calling the Fund at (800) 774-3529, by telegraph, or
by other wire communication. Shares redeemed may be worth more or less than the
purchase price of the Shares, depending on the market value of the investment
securities held by the Fund at the time of redemption. The Fund may suspend the
right of redemption or postpone the payment date at times when the New York
Stock Exchange is closed, or during certain other periods as permitted under the
Federal securities laws.
At various times, the Fund may be requested to redeem Shares for which it has
not yet received good payment. In such circumstances, the Fund may delay the
forwarding of proceeds until payment has been collected for the purchase of such
Shares, which delay may be for up to 15 days or more. The Fund reserves the
right to pay any portion of redemption proceeds in whole or in part by a
distribution in kind of securities held by the Fund in lieu of cash. It is
highly unlikely that Shares would ever be redeemed in kind. If Shares are
redeemed in kind, however, the redeeming Shareholder would incur transaction
costs upon the disposition of the securities received in the distribution.
A written request for redemption must be received by the Fund in order to
honor the request. The Fund's address is: 1900 East Dublin-Granville Road,
Columbus, Ohio 43229. The Transfer Agent 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 Transfer Agent 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 insti-
11
<PAGE> 14
tution 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
requirement will be waived if all of the following conditions apply: (i) the
redemption check is payable to the Shareholder(s) of record and (ii) the
redemption check is mailed to the Shareholder(s) at the address of record or the
proceeds are either mailed or wired to a commercial bank account previously
designated on the account application. Such wire redemption requests may be made
by the Shareholder by telephone to the Fund. There is no charge for having
redemption requests mailed to a designated bank account.
Shares may be redeemed by telephone if the Shareholder selected that option on
the account application. The Shareholder may have the proceeds mailed to his or
her address or mailed, wired or electronically transferred to a commercial bank
account previously designated on the account application. Under most
circumstances, wire payments will be transmitted on the next Business Day and
electronic transfer will be on the Second Business Day. Wire redemption requests
may be made by the Shareholder by telephone to the Fund at (800) 774-3529. The
then-current wire redemption charge, presently $10.00, will be deducted from the
proceeds of a wire redemption. It is not necessary for Shareholders to confirm
telephone redemption requests in writing. During periods of significant economic
or market change, telephone redemptions may be difficult to complete. If a
Shareholder is unable to contact the Fund by telephone, a Shareholder may also
mail the redemption request to the Distributor at the address listed above.
Neither the Distributor, the Transfer Agent, the Fund nor the Adviser or
Sub-Adviser will be liable for any losses, damages, expense or cost arising out
of any telephone transaction (including exchanges and redemptions) effected in
accordance with the Fund's telephone transaction procedures, upon instructions
believed to be genuine. The Fund will employ procedures reasonably designed to
provide assurance that instructions by telephone are genuine; if these
procedures are not followed, the Fund or its service contractors may be liable
for any losses due to unauthorized or fraudulent instructions. These procedures
include recording all telephone conversations, sending confirmations to
Shareholder within 72 hours of the telephone transaction, verification of
account name and account number or tax identification number, and sending
redemption proceeds only to the address of record or to a previously authorized
bank account.
DIVIDENDS AND TAXES
DIVIDENDS
The Fund generally intends to declare its net investment income quarterly as a
dividend to Shareholders at the close of business on the day of declaration, and
will generally pay such dividends quarterly. The Fund also intends to distribute
its capital gains, if any, at least annually, normally in December of each year.
A Shareholder will automatically receive all ordinary income and capital gain
dividends in additional full and fractional Shares of the Fund at the net asset
value as of the date of payment, unless the Shareholder elects to receive such
dividends in cash. Such election must be made on the account application, and
any change in such election must be made in writing to the Transfer Agent at
1900 East Dublin-Granville Road, Columbus, Ohio 43229, and will become effective
with respect to dividends having record dates after its receipt by the Transfer
Agent. Dividends are paid in cash no later than seven business days after a
Shareholder's complete redemption of his or her Shares. Dividends will generally
be taxable to a Shareholder as ordinary income to the extent of the
Shareholder's ratable share of the Fund's earnings and profits as determined for
tax purposes.
FEDERAL TAXES
The following discussion is intended for general information only. An investor
should consult with his or her own tax adviser as to the tax consequences of an
investment in the Fund, including the
12
<PAGE> 15
status of distributions from the Fund under applicable State or local law.
The Fund intends to qualify annually and elect to be treated as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). To qualify, the Fund must meet certain income, distribution and
diversification requirements. In any year in which the Fund qualifies as a
regulated investment company and timely distributes all of its income, the Fund
generally will not pay any U.S. federal income or excise tax.
A distribution will be treated as paid on December 31 of the current calendar
year if it is declared in October, November or December with a record date in
such a month and paid by the Fund during January of the following calendar year.
Such distributions will be treated as received by Shareholders in the calendar
year in which the distributions are declared, rather than the calendar year in
which the distributions are received.
Dividends paid out of the Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to a U.S.
Shareholder as ordinary income. A portion of the Fund's income may consist of
dividends paid by U.S. corporations. Therefore, a portion of the dividends paid
by the Fund may be eligible for the corporate dividends-received deduction.
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses), if any, designated as capital gain
dividends are taxable as long-term capital gains, regardless of how long the
Shareholder has held the Fund's Shares. Dividends are taxable to Shareholders in
the same manner whether received in cash or reinvested in additional Fund
Shares.
Prior to purchasing Shares, the impact of ordinary income or capital gain
dividends which are expected to be declared or have been declared, but have not
been paid, should be carefully considered. Ordinary income and capital gains
dividends paid after a purchase of Shares are subject to federal income taxes,
although in some circumstances the dividends may be, as an economic matter, a
return of capital. A Shareholder should consult his or her adviser for special
advice.
Each year, the Fund will notify Shareholders of the tax status of dividends
and distributions.
Any gain or loss realized by a Shareholder upon the sale or other disposition
of Shares of the Fund, or upon receipt of a distribution in complete liquidation
of the Fund, generally will be a capital gain or loss which will be long-term or
short-term, generally depending upon the Shareholder's holding period for the
Shares.
The Fund may be required to withhold U.S. Federal income tax at the rate of
31% of all taxable distributions payable to Shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against the Shareholder's U.S. federal income tax
liability.
Further information relating to tax consequences is contained in the Statement
of Additional Information.
STATE AND LOCAL TAXES
The Group is organized as a Massachusetts business trust and, under current
law, neither the Group nor the Fund is liable for any income or franchise tax in
the Commonwealth of Massachusetts as long as it qualifies as a regulated
investment company under the Code.
Fund distributions may be subject to state and local taxes. Shareholders
should consult their own tax advisers regarding the particular tax consequences
to them of an investment in the Fund, including the application of state and
local tax laws.
13
<PAGE> 16
MANAGEMENT OF THE GROUP
TRUSTEES OF THE GROUP
Overall responsibility for management of the Group rests with its Board of
Trustees, who are elected by the shareholders of the Group's funds. There are
currently five Trustees, two of whom are "interested persons" of the Group
within the meaning of that term under the 1940 Act. The Group will be managed by
the Trustees in accordance with the laws of Massachusetts governing business
trusts. The Trustees, in turn, elect the officers of the Group to supervise
actively its day-to-day operations.
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 Winsbury or BISYS Fund Services Ohio, Inc. receives any compensation
from the Group for acting as a Trustee of the Group. The officers of the Group
(see the Statement of Additional Information) receive no compensation directly
from the Group for performing the duties of their offices. Winsbury receives
fees from the Fund for acting as administrator. BISYS Fund Services Ohio, Inc.
receives fees from the Fund for acting as transfer agent and for providing
certain fund accounting services.
INVESTMENT ADVISER AND SUB-INVESTMENT ADVISER
Shelby County Trust Bank, Shelbyville, Kentucky 40066, (the "Adviser"), is the
investment adviser for the Fund. Shelby County Trust Bank was organized in 1881,
is a full service bank and trust company and is a wholly-owned subsidiary of
Commonwealth Bancshares Inc. of Shelbyville, Kentucky.
SMC Capital, Inc., Louisville, Kentucky 40207 (the "Sub-Adviser"), is the
sub-investment adviser for the Fund and has been engaged to provide day-to-day
investment advisory services to the Fund. SMC Capital, Inc. is a registered
investment adviser established in 1993.
The following individuals serve as managers for the Fund:
DARRELL R. WELLS, Chairman and Chief Executive Officer of SMC Capital, Inc.,
Harvard University, A.B. (1965); SMC Capital, Inc. (1993-present); Security
Management (1972-present)
B. ANTHONY WEBER, President of SMC Capital, Inc., Centre College, B.A.
(1981), SMC Capital Inc. (1993-present); Shelby County Trust Bank (1989-1993);
Fred Alger Management (1983-1989); First Kentucky Trust Company (1981-1983)
Subject to the general supervision of the Group's Board of Trustees and in
accordance with the Fund's investment objective, policies and restrictions, the
advisers manage the investments of the Fund, make decisions with respect to and
places orders for all purchases and sales of the Fund's portfolio securities,
and maintain the Fund's records relating to such purchases and sales.
For the services provided and expenses assumed pursuant to its investment
advisory agreement with the Fund, the Adviser receives a fee from the Fund
computed daily and paid monthly, at the annual rate of up to one percent (1.00%)
of the Fund's average daily net assets. The Adviser in turn pays the Sub-Adviser
a fee equal to .40% of the Fund's first $30 million in net assets, .50% of the
next $10 million of the Fund's net assets, and .60% of the Fund's net assets in
excess of $40 million. The advisory fees paid by the Fund exceed those paid by
most other investment companies.
ADMINISTRATOR AND DISTRIBUTOR
Winsbury is the administrator for the Fund and also acts as the Fund's
principal underwriter and distributor (the "Administrator" or the "Distributor,"
as the context indicates).
The Administrator generally assists in all aspects of the Fund's
administration and operation. For expenses assumed and services provided as
administrator pursuant to its management and administration agreement with the
Fund, the Administrator receives a fee from the Fund computed daily and
14
<PAGE> 17
paid periodically, calculated at an annual rate of up to 0.20% of the Fund's
average daily net assets. The Administrator may periodically waive all or a
portion of its administrative fee to increase the net income of the Fund
available for distribution as dividends. The Administrator may not seek
reimbursement of such waived fees at a later date. The waiver of such fee will
cause the yield and total return of the Fund to be higher than it would
otherwise be in the absence of such a waiver.
The Distributor acts as agent for the Fund in the distribution of its Shares
and, in such capacity, solicits orders for the sale of Shares, advertises, and
pays the costs of advertising, office space and its personnel involved in such
activities. The Distributor receives no compensation under the Group's
Distribution Agreement for providing these services to the Fund.
EXPENSES AND PORTFOLIO TRANSACTIONS
The Adviser and the Administrator each bear all expenses in connection with
the performance of their services as investment adviser and administrator,
respectively, other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund.
The policy of the Fund, regarding purchases and sales of securities for its
portfolio, is that primary consideration is to be given to obtaining the most
favorable prices and efficient execution of transactions. In seeking to
implement the Fund's policies, the Adviser effects transactions with those
brokers and dealers whom the Adviser believes provide the most favorable prices
and are capable of providing efficient executions. If the Adviser believes such
price and executions are obtainable from more than one broker or dealer, it may
give consideration to placing portfolio transactions with those brokers and
dealers who also furnish research and other services to the Fund or the Adviser.
Such services may include, but are not limited to, any one or more of the
following: information as to the availability of securities for purchase or
sale; statistical or factual information or opinions pertaining to investments;
wire services; and appraisals or evaluations of portfolio securities. Such
information may be useful to the Adviser in serving both the Fund and other
clients and, conversely, supplemental information obtained by the placement of
business of other clients may be useful to the Adviser in carrying out it
obligations to the Fund.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research or execution services. In order to cause the Fund
to pay such higher commissions, the Adviser must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage and/or
research services provided by such executing broker-dealers, viewed in terms of
a particular transaction or the Adviser's overall responsibilities to the Fund.
In reaching this determination, the Adviser will not attempt to place a specific
dollar value on the brokerage and/or research services provided, or to determine
what portion of the compensation should be related to those services.
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
BISYS Fund Services Ohio, Inc., 1900 East Dublin-Granville Road, Columbus,
Ohio 43229, serves as the Fund's transfer agent (the "Transfer Agent") pursuant
to a Transfer Agency Agreement with the Group and receives a fee for such
services. BISYS Fund Services Ohio, Inc. also provides certain accounting
services for the Fund pursuant to a Fund Accounting Agreement and receives a fee
for such services. See "MANAGEMENT OF THE GROUP--Transfer Agency and Fund
Accounting Services" in the Statement of Additional Information for further
information.
While BISYS Fund Services Ohio, Inc. is a distinct legal entity from The
Winsbury Company (the Fund's Administrator and Distributor), it is considered to
be an affiliated person of The Winsbury Company 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 Winsbury.
15
<PAGE> 18
CUSTODIAN
Fifth Third Bank, Cincinnati, Ohio (the "Custodian") serves as custodian for
the Fund. Pursuant to the Custodian Agreement with the Group, the Custodian
receives compensation from the Fund for such services in an amount equal to a
designated annual fee plus fixed fees charged for certain portfolio transactions
and out-of-pocket expenses.
BANKING LAWS
The Adviser believes that it possesses the legal authority to perform the
advisory services for the Fund contemplated by the investment advisory
agreement, as described in this Prospectus, without violation of applicable
banking laws and regulations. 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 Adviser could continue to
perform such services for the Fund. It is not anticipated, however, that any
change in the Fund's method of operations would affect its net asset value per
share or result in financial losses to any Shareholder. See "MANAGEMENT OF THE
GROUP--Banking Laws" in the Statement of Additional Information for further
discussion of applicable law and regulations.
GENERAL INFORMATION
DESCRIPTION OF THE GROUP AND ITS SHARES
The Group was organized as a Massachusetts business trust on January 8, 1992.
The Group consists of several funds organized as separate series of shares. Each
share represents an equal proportionate interest in a fund with other shares of
the same fund, 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 (see "Miscellaneous" below).
Shareholders are entitled to one vote for each full share held and a
proportionate fractional vote for any fractional shares held, and will vote in
the aggregate and not by series except as otherwise expressly required by law.
For example, shareholders of each fund will vote in the aggregate with other
shareholders of the Group with respect to the election of Trustees and
ratification of the selection of independent accountants. However, shareholders
of a particular fund will vote as a fund, and not in the aggregate with other
shareholders of the Group, for purposes of approval of that fund's investment
advisory agreement.
Overall responsibility for the management of the Fund is vested in the Board
of Trustees of the Group. See "MANAGEMENT OF THE GROUP--Trustees of the Group."
Individual Trustees are elected by the shareholders of the Group 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 Group and
Massachusetts law. See "ADDITIONAL INFORMATION--Miscellaneous" in the Statement
of Additional Information for further information.
Annual or special meetings of shareholders are not generally required by the
Declaration of Trust, the 1940 Act or other applicable authority. To the extent
that such meetings are not required, the Group may elect not to have an annual
or special meeting. The Group has undertaken that the Trustees will call a
special meeting of shareholders for purposes of considering the removal of one
or more Trustees upon written request therefor from shareholders holding not
less than 10% of the outstanding votes of the Group. At such a meeting, a quorum
of shareholders (constituting a majority of votes attributable to all
outstanding shares of the Group), by majority vote, has the power to remove one
or more Trustees.
16
<PAGE> 19
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its average annual total return,
aggregate total return, yield and effective yield in advertisements, sales
literature and shareholder reports. SUCH PERFORMANCE FIGURES ARE BASED ON
HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. Average
annual total return will be calculated for the period since the establishment of
the Fund. Average annual total return is measured by comparing the value of an
investment in the Fund at the beginning of the relevant period to the ending
redeemable value of the investment at the end of the period (assuming immediate
reinvestment of any dividends or capital gains distributions). Aggregate total
return is calculated similarly to average annual total return except that the
return figure is aggregated over the relevant period instead of annualized.
Yield will be computed by dividing the Fund's net investment income per Share
(as calculated on a yield to maturity basis) earned during a recent 30-day
period by the Fund's per Share maximum offering price on the last day of the
period and annualizing the result.
In addition, from time to time, the Fund may present its distribution rates in
supplemental sales literature that is accompanied or preceded by a prospectus
and in Shareholder reports. Distribution rates will be computed by dividing the
distribution per Share made by the Fund over a twelve-month period by the
maximum offering price per Share on the last day of the period. The calculation
of income in the distribution rate includes both income and capital gain
dividends and does not reflect unrealized gains or losses. The distribution rate
differs from the yield, because, among other things, it includes capital items
which are often non-recurring in nature, whereas yield does not include such
items.
Investors may also judge the performance of the Fund by comparing or
referencing its performance to the performance of other mutual funds with
comparable investment objectives and policies through various mutual fund or
market indices and to data prepared by various services which may be published
by such services or by other services or publications. In addition to
performance information, general information about the Fund that appears in such
publications may be included in advertisements and in reports to Shareholders.
Yield and total return are functions of the type and quality of instruments
held in the portfolio, operating expenses, and market conditions. Consequently,
current yields and total return will fluctuate and are not necessarily
representative of future results. To the extent the Adviser or Winsbury
voluntarily waives all or part of their respective fees with respect to the
Fund, the yield and total return of the Fund will be higher than they would be
in the absence of such voluntary fee waivers.
Additional information regarding the investment performance of the Fund is
contained in the annual report of the Fund which may be obtained without charge
by writing or calling the Fund.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and audited annual
reports describing the investment operations of the Fund.
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 amounts derived from any reinvestment of such proceeds, and any general
assets of the Group not readily identified as belonging to a particular fund
that are allocated to the Fund by the Group's Board of Trustees. The Board of
Trustees may allocate such general assets in any manner it deems fair and
equitable. Determinations by the Board of Trustees of the Group 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 the Fund are conclusive.
17
<PAGE> 20
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of the Fund means the affirmative
vote, at a meeting of Shareholders duly called, of the lesser of (i) 67% or more
of the votes of Shareholders of the Fund present at a meeting at which the
holders of more than 50% of the votes attributable to Shareholders of record of
the Fund are represented in person or by proxy, or (ii) the holders of more than
50% of the outstanding votes of Shareholders of the Fund.
Inquiries regarding the Fund may be directed in writing to the Fund at 1900
East Dublin-Granville Road, Columbus, Ohio 43229, or by calling toll free (800)
774-3529.
18
<PAGE> 21
INVESTMENT ADVISER
Shelby County Trust Bank
P.O. Box 249
Shelbyville, Kentucky 40066
SUB-INVESTMENT ADVISER
SMC Capital, Inc.
4350 Brownsboro Road
Suite 310
Louisville, Kentucky 40207
ADMINISTRATOR AND DISTRIBUTOR
The Winsbury Company
1900 East Dublin-Granville Road
Columbus, Ohio 43229
LEGAL COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
AUDITORS
Arthur Andersen LLP
2300 Meidinger Tower
Louisville Galleria
Louisville, Kentucky 40202
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 2
Fee Table............................. 3
Financial Highlights.................. 4
Investment Objective and Policies..... 5
Investment Restrictions............... 9
Valuation of Shares................... 10
How to Purchase and Redeem Shares..... 10
Dividends and Taxes................... 12
Management of the Group............... 14
General Information................... 16
</TABLE>
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 GROUP
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND
OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
[SHELBY LOGO]
SHELBY COUNTY TRUST BANK
INVESTMENT ADVISER
SMC CAPITAL, INC.
SUB-INVESTMENT ADVISER
THE WINSBURY COMPANY(R)
PROSPECTUS DATED JULY 31, 1995
